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    Applied Optoelectronics Inc (AAOI)

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    Business Description

    Applied Optoelectronics, Inc. (AOI) is a leading provider of fiber-optic networking products, primarily targeting internet data centers, cable television (CATV), telecommunications (telecom), and fiber-to-the-home (FTTH) markets. The company designs and manufactures a range of optical communications products, including components, subassemblies, modules, and complete turn-key equipment. AOI employs a vertically integrated manufacturing model, which allows for rapid product development and greater control over product quality and costs.

    1. Data Center - Provides high-capacity optical networking technology for internet data centers, supporting speeds of 800 Gbps and above, and caters to the increasing demand for bandwidth-intensive applications like artificial intelligence.
    2. CATV (Cable Television) - Supplies a broad array of products, including lasers, transmitters, transceivers, and turn-key equipment, benefiting from the move to higher bandwidth networks and the outsourcing of system design by CATV equipment vendors.
    3. Telecom - Supports telecom service providers with high-speed fiber-optic networks, including 5G, enhancing network capacity, reliability, and capability.
    4. FTTH (Fiber-to-the-Home) - Benefits from passive optical network deployments and system upgrades among telecom service providers.
    5. Other - Includes various optical components and products that do not fall into the main segments, contributing to niche market needs.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDQ1 2014Q2 2014Q3 2014FY 2014Q1 2015Q2 2015Q3 2015FY 2015Q1 2016Q2 2016Q3 2016FY 2016Q1 2017Q2 2017Q3 2017FY 2017Q1 2018Q2 2018Q3 2018FY 2018Q3 2019FY 2019Q2 2020Q3 2020FY 2020Q1 2021Q2 2021Q3 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024Q1 2025
    Data Center44.48141.21328.9934.35240.94544.21148.532.049
    CATV12.5559.9428.745.81820.94752.287.764.501
    Telecom2.8213.8312.272.3792.7983.5511.02.937
    FTTH-0.0560.000.0000.000-0.0030
    Other0.62.6040.680.7210.4610.242.10.372
    Total Revenue60.45217.64640.6743.27065.151100.31249.499.859
    Revenue by Geography - in Millions of USDQ1 2014Q2 2014Q3 2014FY 2014Q1 2015Q2 2015Q3 2015FY 2015Q1 2016Q2 2016Q3 2016FY 2016Q1 2017Q2 2017Q3 2017FY 2017Q1 2018Q2 2018Q3 2018FY 2018Q3 2019FY 2019Q2 2020Q3 2020FY 2020Q1 2021Q2 2021Q3 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024Q1 2025
    United States1.830.7982.711.9671.664.5810.9211.15
    Taiwan29.68143.52824.7028.85934.6638.42126.63970.88
    China28.9843.32013.2612.44428.8357.27111.80527.83
    Total Revenue60.45217.64640.6743.27065.15100.28249.36599.86
    KPIs - Metric (Unit, Scale)Q1 2014Q2 2014Q3 2014FY 2014Q1 2015Q2 2015Q3 2015FY 2015Q1 2016Q2 2016Q3 2016FY 2016Q1 2017Q2 2017Q3 2017FY 2017Q1 2018Q2 2018Q3 2018FY 2018Q3 2019FY 2019Q2 2020Q3 2020FY 2020Q1 2021Q2 2021Q3 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024Q1 2025
    Number of design wins (count)-6----8-
    Employee turnover rate in China factory (percentage)-53.8----17.2-
    Number of total patents issued (count)-326----335-

    Questions to Ask Management

    1. Based on your disclosures about major MSO customers and the fact that three customers now account for a significant portion of your revenue, how do you plan to mitigate concentration risk if one of these large cable operators alters its purchasing strategy?

    2. You indicated that 800G product qualifications are nearly complete with lead times of 8–10 weeks; how will you address potential capacity mismatches if demand forecasts for 800G ramp up faster than your production ability?

    3. With Q1 revenue being impacted by New Year manpower constraints rather than a lack of demand, what specific strategies are in place to accelerate workforce and production scaling in the subsequent quarters?

    4. Given the evolving product mix between 400G, single-mode, and multimode transceivers, how do you expect these shifts to influence your gross margins and overall operational efficiency in the near term?

    5. You mentioned ongoing discussions for strategic investments to help finance your aggressive CapEx plan; can you detail the criteria for pursuing such investments and the potential impact on future production if those discussions face delays?

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    CompanyDescription

    Coherent Corp

    The company experiences intense competition in each product area from a number of manufacturers, including this competitor, and anticipates that competition will increase. Many competitors are larger and have significantly greater financial, marketing, and other resources.

    Foxconn Interconnect Technology Ltd.

    This competitor is mentioned as one of the major competitors in one or more of the company's markets, highlighting the intense competition in the optical networking market.

    InnoLight Technology (Suzhou) Ltd.

    The company faces competition from this manufacturer in one or more of its markets, emphasizing the broad nature of its product offerings and the competitive landscape.

    Intel Corp

    This competitor is listed among the major competitors in one or more of the company's markets, reflecting the intense competition in the optical networking industry.

    Lumentum Holdings Inc

    The company identifies this competitor as one of the major players in one or more of its markets, noting the intense competition in the industry.

    Mitsubishi UFJ Financial Group Inc

    This competitor is mentioned as one of the major competitors in one or more of the company's markets, highlighting the competitive challenges faced by the company.

    Molex, LLC

    The company lists this competitor as one of the major competitors in one or more of its markets, emphasizing the intense competition in the optical networking market.

    Source Photonics, Inc.

    This competitor is identified as one of the major competitors in one or more of the company's markets, reflecting the competitive dynamics in the industry.

    Sumitomo Electric Industries, Ltd.

    The company mentions this competitor as one of the major players in one or more of its markets, noting the intense competition in the optical networking market.

    Customer Concentration

    CustomerRelationshipSegmentDetails

    Microsoft

    Key data center partner leveraging optical transceivers.

    Data center

    Revenue: 43.7% (2024) , 46.6% (2023) , 18.4% (2022) ; AR: 16.8% (2024).

    Digicomm

    Logistics solutions provider and distributor to CATV MSOs.

    CATV

    Revenue: 35.1% (2024) , 11.3% (2023) ; AR: 66.6% (2024).

    Oracle

    Relies on optical transceivers for data center operations.

    Data center

    Revenue: 12.4% (2024) , 8.8% (2023) , 5.9% (2022).

    ATX

    Previously a CATV segment customer (no 2024 revenue).

    CATV

    Revenue: 15.6% (2023) , 0.0% (2024) ; AR: 21.4% (2023).

    Latest news

    Recent press releases and 8-K filings for AAOI.

    Applied Optoelectronics Enters Equity Distribution Agreement
    •AAOI
    New Projects/Investments
    • Equity Distribution Agreement executed on May 28, 2025 with Sales Agents to permit at-the-market issuances of common stock for up to $100 million.
    • Shares are registered under the Securities Act with listing on the Nasdaq Global Market, and the Sales Agents are set to receive a 2% commission on gross sales.
    • The filing details extensive legal representations, indemnification provisions, and compliance measures to ensure proper registration and trading of the Shares.
    May 28, 2025, 12:00 AM
    8-K
    AOI Reports Q1 2025 Earnings Results with Record CATV and Expanded Capacity
    •AAOI
    Earnings
    Revenue Acceleration/Inflection
    New Projects/Investments
    Guidance Update
    • AOI delivered $99.9 million in GAAP revenue for Q1 2025, with record quarterly CATV performance highlighted by $64.5 million in CATV products
    • The company achieved a non-GAAP gross margin of 30.7% with a $0.02 loss per share, while GAAP results reflected a 30.6% gross margin and a net loss of $9.2 million
    • Q1 data center revenue reached $32 million, driven by multiple design wins with hyperscale customers and progress in ramping 800G transceiver production
    • AOI is expanding its manufacturing capacity by scaling domestic production in Texas and increasing capacity in Taiwan, targeting over 100,000 units per month of 800G transceivers
    • The company also provided Q2 guidance with a revenue forecast of $100–$110 million and reported a more than doubling of revenue compared to Q1 2024
    May 8, 2025, 8:31 PM
    Transcript8-K
    Applied Optoelectronics, Inc. Reports Special Meeting Vote Results
    •AAOI
    Proxy Vote Outcomes
    • Special Meeting Held on April 10, 2025: The company conducted a Special Meeting of Stockholders with 42.76% of eligible shares represented to vote on key proposals.
    • Key Vote Outcome: Shareholders approved an amendment to the 2021 Equity Incentive Plan, increasing reserved shares by 2,000,000 and adjusting annual award limits; in addition, a proposal to adjourn the meeting if votes were insufficient was put to vote.
    Apr 10, 2025, 12:00 AM
    8-K
    Applied Optoelectronics Signs Transaction Agreement with Amazon
    •AAOI
    M&A
    • Applied Optoelectronics, Inc. entered into a material definitive Transaction Agreement with Amazon to issue a warrant for purchasing up to 7,945,399 shares of its common stock, with 1,324,233 shares vesting upon issuance.
    • The warrant carries an exercise price of $23.6954 per share and is exercisable until March 13, 2035, with vesting conditions tied to discretionary purchases by Amazon and its affiliates.
    Mar 13, 2025, 12:00 AM
    8-K
    Applied Optoelectronics Initiates Equity Distribution Agreement
    •AAOI
    • The company entered into an Equity Distribution Agreement with Raymond James to issue and sell shares with aggregate gross proceeds of up to $100 million, using at‑the‑market offerings as detailed in the prospectus supplement filed on February 28, 2025.
    • The offering will be executed under the company’s shelf registration statement on Form S‑3, with shares sold subject to the outlined terms and compensation, including a 2% fee for Raymond James.
    Feb 28, 2025, 12:00 AM
    8-K
    Applied Optoelectronics Q4 2024 Earnings & Guidance Update
    •AAOI
    Earnings
    Revenue Acceleration/Inflection
    Guidance Update
    New Projects/Investments
    • Q4 2024 Financials: GAAP revenue of $100.3M and GAAP net loss of $119.7M (one-time charge)
    • Q1 2025 Guidance: Revenue expected between $94–$104M with non-GAAP gross margins of 29%–30.5%, reflecting capacity constraints and cautious optimism
    • Segment Highlights: Q4 revenue comprised CATV ($52.2M)—a ramp driven by orders for 1.8 GHz amplifier products—and datacenter ($44.2M) contributions
    • FY 2024 Overview: Full year revenue reached $249.4M with notable gross margin improvements and robust datacenter demand
    • Non-GAAP Performance: Reported non-GAAP gross margin of 28.9% alongside a non-GAAP net loss of $1M ($0.02 per share)
    • Capital Investments: Q4 CapEx of $25.7M contributed to 2024 CapEx of $48.8M, with 2025 guidance between $120M–$150M for capacity expansion
    Feb 26, 2025, 12:00 AM
    Transcript8-K