Key Takeaways:
Applied Optoelectronics (NASDAQ: AAOI) reported second-quarter revenue of $191.9 million, up 86 percent from a year earlier and its fifth straight record, as data-center sales topped $100 million for the first time and the company returned to non-GAAP profitability.
"Demand to support next generation AI infrastructure remains so robust that our near-term revenue is bounded almost entirely by production capacity and key component availability," Chief Executive Officer Thompson Lin said.
Data-center revenue rose 140 percent to $107.7 million, now 56 percent of the total, with 800G transceiver sales of $12.8 million up more than tenfold year over year and more than doubling sequentially. The company guided 800G revenue to grow nearly fivefold in the third quarter, with bookings visibility stretching into mid-2027. CATV revenue hit a record $80.6 million, up 44 percent, after Mediacom selected AOI as primary vendor for DOCSIS 4.0 upgrades.
Non-GAAP net income was $5.5 million, or $0.06 a share, beating guidance of a loss of $0.03 to a gain of $0.03, versus a year-earlier loss of $8.8 million. GAAP net loss widened to $22.8 million, or $0.28 a share, from $9.1 million, as operating expenses rose with the capacity buildout. Gross margin on a non-GAAP basis was 29.8 percent.
The company guided third-quarter revenue of $255 million to $290 million, up 130 percent at the midpoint, with non-GAAP EPS of $0.11 to $0.26, and maintained its full-year target of about $1.1 billion. Management said 800G and 1.6T monthly capacity will climb from roughly 200,000 units now to more than 650,000 by year-end and over 930,000 by the end of 2027, more than half from Texas, where it has secured more than 1.6 million square feet of manufacturing space.
AOI holds more than $200 million in firm 1.6T orders and expects to finish qualification with a major hyperscaler within two to three weeks, becoming its fourth approved supplier. First deliveries begin late this quarter, with fourth-quarter 1.6T revenue targeted above $70 million, constrained by DSP and TIA component supply rather than demand. Chief Financial Officer Stefan Murry said that order "is just the beginning of what we expect to be significant orders from this customer for 1.6T for the foreseeable future."
A customer's inability to source 100G switches because of memory shortages will cut $20 million to $25 million from third-quarter revenue, a factor that otherwise would have pushed sequential growth above 50 percent. Management called the shortfall temporary. Second-quarter capital spending reached $565.5 million, including $280 million in equipment prepayments, and cash and investments stood at $508.8 million after a $538.8 million at-the-market equity raise.
The guidance implies fourth-quarter revenue must carry the weight of the $1.1 billion full-year target, with management expecting more than $500 million in potential quarterly revenue by then. Investors will watch the 1.6T qualification and fourth-quarter ramp, along with gross-margin expansion toward a long-term non-GAAP target of about 40 percent, as the next catalysts.
This article is for informational purposes only and does not constitute investment advice.
