Applied Optoelectronics Q2 Earnings Call Highlights: Mixed Sentiment with Strong Revenue Growth and Increased Expenses

Applied Optoelectronics reported Q2 revenue of $103mln, doubling YoY and up 3% sequentially. Datacenter revenue rose 30% YoY, while CATV revenue surged eightfold YoY to $56mln. However, the company's non-GAAP loss per share of $0.16 fell below guidance due to elevated operating expenses. Applied Optoelectronics expects Q3 revenue between $115mln and $127mln, with a stable gross margin forecast of 29.5%-31%.

Applied Optoelectronics (AAOI) reported its fiscal Q2 2025 results, showcasing a significant revenue increase of 3% sequentially and a 100% year-over-year (YoY) growth, reaching $103 million. The company's data center revenue rose by 30% YoY to $44.8 million, with the CATV segment experiencing an eightfold YoY surge to $56 million. Despite these impressive top-line figures, the company's non-GAAP loss per share of $0.16 fell below the non-GAAP guidance range of $0.09 to $0.03, primarily due to higher-than-expected operating expenses.

Thompson Lin, the founder, chairman, and CEO of Applied Optoelectronics, highlighted the strong fundamentals of the business, noting that while the earnings per share (EPS) fell short of expectations, the company's top-line performance was robust. The company's data center segment saw a 25% YoY increase in 100G revenue and a 43% YoY increase in 400G revenue, driven by demand for higher-speed optical products. The CATV segment's revenue growth was particularly noteworthy, with a more than eightfold YoY increase, although it declined by 13% sequentially compared to Q1.

Stefan Murry, the Chief Financial Officer, attributed the elevated operating expenses to increased spending on research and development (R&D) and selling, general, and administrative (SG&A) expenses. These expenses were driven by new product development and customer initiatives. The strengthening Taiwan dollar accounted for less than 10% of the non-GAAP operating expense increase.

Looking ahead, Applied Optoelectronics expects Q3 revenue to range between $115 million and $127 million, with a stable non-GAAP gross margin forecast of 29.5% to 31%. The company anticipates a non-GAAP net loss of $5.9 million to $2 million for Q3, with a non-GAAP loss per share of $0.10 to $0.03 on 62.3 million weighted shares.

The company's capital expenditures (CapEx) for the full year are expected to range between $120 million and $150 million, with a focus on 400G, 800G, and 1.6T data center products. Applied Optoelectronics has also secured customer qualification for its 800G products and is on track to begin US-based production in the late summer of 2025.

In summary, Applied Optoelectronics delivered a strong Q2 performance with significant revenue growth in both the data center and CATV segments. However, the company's non-GAAP loss per share fell below guidance due to higher-than-expected operating expenses. The company's outlook for Q3 remains positive, with a stable gross margin forecast and a projected revenue range of $115 million to $127 million.

References:
[1] https://www.fool.com/earnings/call-transcripts/2025/08/07/applied-optoelectronics-aaoi-earnings-call/