• Revenue: $100 million, up 66% year-over-year and 54% sequentially.
• Non-GAAP Gross Margin: 28.9%, within guidance range of 27.5% to 29.5%.
• Non-GAAP Loss Per Share: $0.02, within guidance range of a loss of $0.04 to earnings of $0.04 per share.
• Datacenter Revenue: $44.2 million, flat year-over-year, up 8% sequentially.
• CATV Revenue: $52.2 million, more than 4x year-over-year and more than doubled sequentially.
• Telecom Revenue: $3.5 million, up 26% year-over-year and 25% sequentially.
• Top 10 Customers: Represented 97% of revenue.
• GAAP Net Loss: $119.7 million or $2.60 per basic share, including a onetime charge of $112 million.
• Total Cash and Equivalents: $79.1 million at the end of Q4.
• Total Debt (Excluding Convertible Debt): $46 million.
• Inventory: $88.1 million, up from $64.4 million in Q3.
• Capital Expenditures (CapEx): $25.7 million in Q4, $48.8 million for the year.
• Q1 2025 Revenue Outlook: $94 million to $104 million.
• Q1 2025 Non-GAAP Gross Margin Outlook: 29% to 30.5%.
• Q1 2025 Non-GAAP Net Income Outlook: Loss of $3.6 million to breakeven.

• Warning! GuruFocus has detected 5 Warning Signs with AAOI.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Applied Optoelectronics Inc (NASDAQ:AAOI) reported Q4 revenue of $100 million, aligning with their guidance range of $94 million to $104 million.
• The company saw a significant increase in CATV segment revenue, which was up more than 4x year-over-year and more than doubled sequentially.
• There was a substantial order for Quantum Bandwidth networking products from a top North American cable operator, indicating strong demand.
• The company is expanding production capabilities, including retrofitting a facility in Texas and leasing additional space in Taiwan.
• AAOI is poised for a sustained period of growth in both datacenter and CATV businesses, with plans for significant capital expansion.

Negative Points

• The company reported a non-GAAP loss per share of $0.02, within the guidance range but still a loss.
• GAAP net loss for Q4 was $119.7 million, significantly impacted by a one-time charge related to convertible notes.
• Non-GAAP operating loss in Q4 was $2.5 million, compared to an operating income of $0.4 million in the prior year.
• The increase in inventory to $88.1 million from $64.4 million in Q3 indicates potential overstocking or slower-than-expected sales.
• The company's Q1 2025 outlook includes a potential non-GAAP net loss of up to $3.6 million, indicating ongoing financial challenges.

Q & A Highlights

Q: Can you provide details on the capacity investments and how they are distributed between datacenter and cable TV? A: The capital expenditures are primarily focused on datacenter, with some spending on cable TV. The investments are aimed at increasing production capacity for 800G and 1.6 terabit products, mostly in the U.S. We are planning to reach a capacity of 120,000 to 140,000 units per month for single-mode transceivers by the end of this year or early next year. - Stefan Murry, CFO and Chief Strategy Officer

Q: Can you quantify the demand forecasts from hyperscale customers for 800G products? A: The demand forecasts are in line with our production capacity plans. We are targeting aggregated demand across multiple hyperscale customers, consistent with the production figures mentioned earlier. - Stefan Murry, CFO and Chief Strategy Officer

Q: How does the Quantum Bandwidth order relate to the 1.8 gigahertz amplifiers? A: The Quantum Bandwidth is a suite of products, including the 1.8 gigahertz amplifiers. The order referenced is specifically for these amplifiers, which drove the sequential increase in the quarter. - Stefan Murry, CFO and Chief Strategy Officer

Q: How is the datacenter business performing relative to expectations, and what are the trends for 400G and 800G products? A: The datacenter business is in line with expectations. 400G products are up significantly year-over-year, while 100G is declining. We expect 800G to ramp later this year, with 1.6 terabit products likely ramping in 2026. - Stefan Murry, CFO and Chief Strategy Officer

Q: What is the status of 800G product qualifications and shipments? A: We have shipped 800G products for final qualification to multiple customers. These shipments are part of the final qualification process beyond lab testing. - Thompson Lin, Founder, Chairman and CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.