Applied Optoelectronics’ Earnings Call Highlights Record Revenue

Applied Optoelectronics Inc ((AAOI)) has held its Q3 earnings call. Read on for the main highlights of the call.

Applied Optoelectronics Inc. recently held its earnings call, reflecting a strong performance with record-breaking revenue, primarily driven by the CATV segment. Despite facing challenges in the datacenter segment due to shipment delays and higher-than-expected operating expenses, the overall sentiment was positive, showcasing the benefits of diversified revenue streams.

Record-Breaking Revenue

Applied Optoelectronics achieved its highest quarterly revenue in company history, reaching $118.6 million. This impressive figure represents a 15% sequential increase and an 82% year-over-year growth, underscoring the company’s robust financial performance.

Strong CATV Segment Performance

The CATV segment was a standout performer, with revenue more than tripling year-over-year to $70.6 million. This 26% sequential increase was fueled by high demand for the company’s 1.8GHz amplifier products, highlighting the segment’s pivotal role in the company’s success.

Diversified Revenue Streams

The company’s strategy of maintaining diversified revenue streams paid off, with overall revenue increasing by 15% sequentially and 82% year-over-year. This diversification helped mitigate challenges faced in the datacenter segment.

Progress in 800G Product Qualification

Applied Optoelectronics is nearing the final stages of qualification with several customers for its 800G products. The company expects meaningful shipments in the fourth quarter, indicating progress in this high-demand area.

U.S. Production Expansion

In a strategic move to support domestic production expansion, the company signed a lease for a new facility in Sugar Land, Texas. This expansion aligns with the company’s goals to enhance its production capabilities.

Laser Production Capability

The expansion of in-house laser manufacturing capability has been crucial in preventing shortages that could affect product delivery, ensuring the company meets its production targets.

Data Center Revenue Challenges

The datacenter segment faced challenges, with revenue falling slightly below expectations due to timing issues. A $6.6 million shipment was delayed to the fourth quarter due to receiving delays from a large hyperscale customer.

400G Product Revenue Decline

Revenue from 400G products saw a significant decline, down 65% year-over-year, primarily due to delayed shipments, highlighting an area of concern for the company.

Higher Operating Expenses

Non-GAAP operating expenses in the third quarter were $47.1 million, driven by increased shipping costs, which were higher than forecasted, impacting the company’s overall financial performance.

Forward-Looking Guidance

Looking ahead, Applied Optoelectronics provided a positive outlook for the fourth quarter of 2025, despite some logistical challenges in the third quarter. The company expects revenue to range between $125 million and $140 million, with a decrease in CATV revenue but a significant increase in datacenter revenue. The non-GAAP gross margin is projected to be between 29% and 31%, with non-GAAP net income expected to range from a loss of $9 million to a loss of $2.8 million. The company anticipates growth in 400G and 800G transceiver shipments, driven by strong customer demand and expanded production capacity.

In summary, Applied Optoelectronics Inc.’s earnings call highlighted a strong performance with record-breaking revenue, driven by the CATV segment and diversified revenue streams. Despite challenges in the datacenter segment and higher operating expenses, the company’s forward-looking guidance remains positive, with expectations of increased revenue and growth in key product areas.