What drove AAOI's earnings beat in Q3?

Applied Optoelectronics (AAOI) reported a diluted EPS of $0.00 in the most recent quarter, which was a surprise of $0.00. The company's revenue for the quarter was $99.98 million, which was a decrease of 19.61% from the previous quarter's estimate revenue of $100.27 million. |code|Ticker|Name|Date|Revenue Surprise|EPS Surprise|market_code| |---|---|---|---|---|---|---| |AAOI|AAOI.O|Applied|2024 Q1|-2917000|-0.02|185| |AAOI|AAOI.O|Applied|2024 Q2|-870000|0.01|185| |AAOI|AAOI.O|Applied|2024 Q3|2551000|-0.04|185| |AAOI|AAOI.O|Applied|2024 Q4|291000|0|185| |code|Ticker|Name|Date|Total Revenue|Diluted EPS|market_code| |---|---|---|---|---|---|---| |AAOI|AAOI.O|Applied|2024 Q1|4.0673E7|-0.6|185| |AAOI|AAOI.O|Applied|2024 Q2|4.327E7|-0.66|185| |AAOI|AAOI.O|Applied|2024 Q3|6.5151E7|-0.42|185| |AAOI|AAOI.O|Applied|2024 Q4|1.00271E8||185| Despite the revenue shortfall, AAOI's earnings beat expectations due to cost management. The company's gross margin improved to 24.3% in Q3 2024, up from 19.2% in Q2 2024, primarily due to improved operating efficiency and reduced costs. This cost management helped offset the impact of lower revenue and resulted in a net income of $0.28 per share, which was better than the consensus estimate of a loss of $0.29 per share. In summary, AAOI's earnings beat expectations due to effective cost management that led to improved gross margins and a positive net income, despite lower revenue.