Applied Optoelectronics Forecasts Faster Growth as Datacenter Sales Double
The company’s third-quarter revenue outlook implies about 42% sequential growth at the midpoint.
Applied Optoelectronics (AAOI), an optical-networking equipment maker, posted a fifth consecutive quarterly revenue record and returned to adjusted profitability as its 800G transceiver ramp gathered pace.
Revenue reached $191.9 million, up 86% from a year earlier and 27% sequentially, accelerating from roughly 13% growth in each of the previous two quarters. Non-GAAP net income was $5.5 million, or $0.06 a diluted share, compared with a loss of $4.9 million, or $0.07 a share, in the first quarter and a loss of $8.8 million, or $0.16 a share, a year earlier.
Datacenter revenue more than doubled to $107.7 million and accounted for about 56% of total sales, up from 44% a year earlier. CATV revenue rose 44% to $80.6 million, though its share declined to about 42% as datacenter sales grew faster.
The shift followed rising 800G volumes, which more than doubled sequentially after initial volume shipments began in the first quarter. Manufacturing capacity approached 200,000 units a month, nearly twice the level at the end of the prior quarter, and the company is targeting monthly capacity of about 650,000 800G and 1.6-terabit units by year-end.
Profitability remained divided between adjusted and reported results. GAAP gross margin narrowed to 27.7% from 29.1% sequentially and 30.3% a year earlier, while the GAAP net loss widened to $22.8 million despite the revenue growth. Operating expenses rose 65% to $77.9 million, and the quarter included $3.6 million of costs tied to discontinued products that reduced GAAP gross profit and were excluded from adjusted results.
Second-quarter revenue fell within the company’s earlier outlook, while adjusted net income and earnings exceeded the top ends of its forecasts. For the third quarter, Applied Optoelectronics expects revenue of $255 million to $290 million, representing sequential growth of about 33% to 51%. It projects non-GAAP net income of $10.1 million to $24.0 million, or $0.11 to $0.26 a share, a step up from the second quarter’s forecast range of a $2.5 million loss to $2.8 million of income.
Demand for its 800G and 1.6-terabit products is expected to exceed production capacity through mid-2027, extending the constraint well beyond its planned year-end expansion.