Applied Optoelectronics (AAOI) 6 Aug 24 2024 Q2 Earnings call transcript
AInvestWednesday, Aug 7, 2024 7:09 pm ET
1min read
AAOI --

In Applied Optoelectronics' (AOI) second quarter 2024 earnings call, the company reported a revenue of $43.3 million, slightly below the guidance range of $41.5 million to $46.5 million. The revenue was driven primarily by the datacenter products segment, which saw a 25% year-over-year increase, and the CATV segment, which experienced a 38% year-over-year decline.

Datacenter Business Performance

AOI's datacenter products, including 100G and 400G products, showed strong growth with an increase of 25% year-over-year and 19% sequentially. The company also announced that it has begun receiving orders for 400G products from a new large hyperscale customer, expanding their presence in this market. With this development, AOI now supplies 400G products to three of the five largest hyperscale datacenter customers in the U.S.

CATV Segment Challenges

The CATV segment, however, faced challenges, with revenue down 38% year-over-year and 33% sequentially, mainly due to slow sales of DOCSIS 3.1 equipment. Despite this, AOI remains optimistic about the future of the CATV segment as the industry transitions to DOCSIS 4.0. The company expects to see significant improvement in Q3, as the qualification testing for new 1.8 gigahertz amplifier models with major MSO customers has gone well.

Financial Performance and Outlook

AOI's non-GAAP loss per share for the quarter was $0.28, lower than the guidance range of $0.29 to $0.35 per share. The company reported a total revenue of $43.3 million, up 4% year-over-year and 6% sequentially, with 79% of the revenue coming from datacenter products. AOI's Q3 revenue is projected to be between $60 million and $66 million, with a non-GAAP gross margin of 24% to 26% and a non-GAAP net loss of $5.9 million to $8.6 million.

Investor Questions and Answers

During the Q&A session, analysts inquired about the nature of the new hyperscale win, the timing of the CATV revenue ramp, and the resolution of gross margin issues in the cable segment. AOI's management provided insight into the new hyperscale customer, the ramping of 400G and 800G products, and their expectations for gross margin improvement in Q4.

Key Takeaways

Applied Optoelectronics' second quarter 2024 earnings call highlighted the company's strong performance in the datacenter products segment, particularly in 400G products, and the challenges faced in the CATV segment. The company remains optimistic about the future growth prospects of both segments, with a focus on improving gross margins and expanding customer relationships. AOI's strategic initiatives, including the development of 800G products and the transition to DOCSIS 4.0, are expected to drive growth in the coming quarters.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.