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.