Q1 2024 Earnings Summary
- Data center order momentum: Executives highlighted that orders are trending upward month-over-month, with expectations for June to exceed May and a strong ramp forecast in Q3/Q4 despite one minor delay from Microsoft.
- Compelling 800G and 1.6 terabit opportunity: The 800G product ramp is described as a dramatic expansion, with its potential market size being several times larger than the current 400G opportunities, positioning the company for substantial long‑term revenue growth.
- Favorable DOCSIS 4.0 transition: The anticipated rollout of DOCSIS 4.0 in Q3 is expected to not only drive revenue in the CATV segment but also improve overall margins through high‑gross margin product contributions.
- Delayed Product Ramp: Management acknowledged a delay in a specific Microsoft program and did not provide confirmed production timelines for upcoming 800G products, introducing uncertainty around when revenue from these advanced products will materialize.
- Weakening Cable TV Segment: Executives indicated that cable TV orders, tied to the DOCSIS 4.0 transition, are ramping more slowly than expected, which could weigh on overall revenue growth and margin improvement.
- Elevated Operating Expenses: Higher-than-anticipated R&D spending—reflecting accelerated product development—could pressure margins if the increased costs do not translate into proportional revenue gains.
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Market Opportunity
Q: How is 800G scaling?
A: Management explained that the 800G opportunity is several times larger than 400G, and when combined with upcoming 1.6 terabit products, it expands the market well beyond the $300 million target. -
Order Trends
Q: Are orders rising monthly?
A: They noted a clear month‐over‐month improvement—June is expected to exceed May—even though a slight delay with a Microsoft product was offset by gains from other data center customers. -
Revenue Outlook
Q: How is revenue performing?
A: Despite a Q1 revenue of $40.7 million falling just short of guidance, management remains positive on a steady ramp-up in data center revenue during Q3 and Q4, with cable TV contributions expected to boost margins later. -
Expense Guidance
Q: Why higher operating expenses?
A: They stated that accelerated R&D spending to meet fast-tracked customer demands has pushed quarterly operating expenses to the $24–$26 million range, with only a minimal increase in sales and marketing costs. -
Customer Qualification
Q: What's the deal on contracts?
A: Management clarified that they are focused on deployment planning rather than final contracts, working closely with customers to ensure rapid production ramp-ups in late Q3 and early Q4. -
Product Roadmap
Q: What launches are next?
A: They confirmed that VCSEL-based solutions are already in production, with higher-speed lane VCSELs and EML-based products scheduled to ramp in late Q3 to early Q4, enhancing their future product mix.