Applied Optoelectronics Reports Second Quarter 2022 Results

August 4, 2022

SUGAR LAND, Texas, Aug. 04, 2022 (GLOBE NEWSWIRE) -- Applied Optoelectronics, Inc. (NASDAQ: AAOI), a leading provider of fiber-optic access network products for the internet datacenter, cable broadband, telecom and fiber-to-the-home (FTTH) markets, today announced financial results for its second quarter 2022 ended June 30, 2022.

“Our second quarter revenue was adversely affected by a supply chain issue that resulted in a delay in the completion of several orders from a large CATV customer. We have since fulfilled and shipped substantially all of these orders and, although delayed, we have recognized the resulting revenue in Q3,” said Dr. Thompson Lin, Applied Optoelectronics Inc. Founder, President and Chief Executive Officer. “Despite the supply chain challenges we are encouraged by the continued robust demand in the CATV market and improved conditions in the telecom market. We continue to see good customer traction with our 400G products and we have received nearly $5 million in orders already. We expect that 400G revenue will begin to ramp up in the second half of this year as we begin to increase production volume.”

Second Quarter 2022 Financial Summary

  • GAAP revenue was $52.3 million, compared $54.2 million in the second quarter of 2021 and $52.2 million in the first quarter of 2022.
  • GAAP gross margin was 16.5%, compared with 19.9% in the second quarter of 2021 and 17.3% in the first quarter of 2022. Non-GAAP gross margin was 16.7%, compared with 25.0% in the second quarter of 2021 and 17.5% in the first quarter of 2022.
  • GAAP net loss was $14.5 million, or $0.52 per basic share, compared with net loss of $8.2 million, or $0.31 per basic share in the second quarter of 2021, and a net loss of $16.1 million, or $0.58 per basic share in the first quarter of 2022.
  • Non-GAAP net loss was $7.6 million, or $0.28 per basic share, compared with non-GAAP net loss of $4.1 million, or $0.15 per basic share in the second quarter of 2021, and a non-GAAP net loss of $7.9 million, or $0.29 per basic share in the first quarter of 2022.

A reconciliation between all GAAP and non-GAAP information referenced above is contained in the tables below. Please also refer to “Non-GAAP Financial Measures” below for a description of these non-GAAP financial measures.

Third Quarter 2022 Business Outlook (+)

For the third quarter of 2022, the company currently expects:

  • Revenue in the range of $57 million to $60 million.
  • Non-GAAP gross margin in the range of 16.5% to 18.5%.
  • Non-GAAP net loss in the range of $7.6 million to $9.1 million, and non-GAAP loss per share in the range of $0.27 to $0.32 using approximately 27.9 million shares.

(+) Please refer to the note below on forward-looking statements and the risks involved with such statements as well as the note on non-GAAP financial measures.

Conference Call Information

The company will host a conference call and webcast on August 4, 2022 to discuss its second quarter 2022 results and outlook for its third quarter of 2022 at 4:30 p.m. Eastern time / 3:30 p.m. Central time. The call can be accessed by dialing 844-890-1794 (domestic) or 412-717-9586 (international). A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company's website at Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will be available until August 11, 2022, at 11:59 p.m. Eastern Time / 10:59 p.m. Central Time and may be accessed by dialing 877-344-7529 (domestic) or 412-317-0088 (international) and entering passcode 5584793.

Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "could," "would," "target," "seek," "aim," "predicts," "think," "objectives," "optimistic," "new," "goal," "strategy," "potential," "is likely," "will," "expect," "plan" "project," "permit" or by other similar expressions that convey uncertainty of future events or outcomes. These statements include management’s beliefs and expectations related to our outlook for the second of 2022. half forward-looking statements reflect the views of management at the time such statements are made. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause the company's actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include but are not limited to: the impact of the COVID-19 pandemic on our business and financial results; reduction in the size or quantity of customer orders; change in demand for the company's products due to industry conditions; changes in manufacturing operations; volatility in manufacturing costs; delays in shipments of products; disruptions in the supply chain; change in the rate of design wins or the rate of customer acceptance of new products; the company's reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers' products or their rate of deployment of their products; general conditions in the internet datacenter, cable television (CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in the world economy (particularly in the United States and China); changes in the regulation and taxation of international trade, including the imposition of tariffs; changes in currency exchange rates; the negative effects of seasonality; and other risks and uncertainties described more fully in the company's documents filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2021. More information about these and other risks that may impact the company's business are set forth in the "Risk Factors" section of the company's quarterly and annual reports on file with the Securities and Exchange Commission. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in the company's expectations.

Non-GAAP Financial Measures

We provide non-GAAP gross margin, non-GAAP net income (loss), and non-GAAP earnings per share to eliminate the impact of items that we do not consider indicative of our overall operating performance. To arrive at our non-GAAP gross margin, we exclude stock-based compensation expense, expenses associated with discontinued products, and non-recurring (income) expenses, if any, from our GAAP gross margin. To arrive at our non-GAAP net income (loss), we exclude all amortization of intangible assets, stock-based compensation expense, non-recurring expenses, unrealized foreign exchange loss (gain), losses from the disposal of idle assets, if any, non-GAAP tax benefit (expenses), and expenses associated with discontinued products, from our GAAP net income (loss). Included in our non-recurring expenses in Q2 2022 and Q2 2021 are certain non-recurring expenses related to extreme weather and pandemic events and non-recurring tax expenses or benefits (if any)., and employee severance expenses (if any). In computing our non-GAAP income tax benefit (expense), we have applied an estimate of our annual effective income tax rate and applied it to our net income before income taxes. Our non-GAAP diluted net loss per share is calculated by dividing our non-GAAP net loss by the fully diluted share count (for periods in which non-GAAP net income is positive) or basic share count (for periods in which our non-GAAP net income is negative). We believe that our non-GAAP measures are useful to investors in evaluating our operating performance for the following reasons:

  • We believe that elimination of items such as amortization of intangible assets, stock-based compensation expense, non-recurring revenue and expenses, losses from the disposal of idle assets, unrealized foreign exchange gain or loss, and depreciation on certain equipment undergoing reconfiguration is appropriate because treatment of these items may vary for reasons unrelated to our overall operating performance;
  • We believe that elimination of expenses associated with discontinued products, including depreciation and inventory obsolescence is appropriate because these expenses are not indicative of our ongoing operations;
  • We believe that estimating non-GAAP income taxes allows comparison with prior periods and provides additional information regarding the generation of potential future deferred tax assets;
  • We believe that non-GAAP measures provide better comparability with our past financial performance, period-to-period results and with our peer companies, many of which also use similar non-GAAP financial measures; and
  • We anticipate that investors and securities analysts will utilize non-GAAP measures as a supplement to GAAP measures to evaluate our overall operating performance.

A reconciliation of our GAAP net income (loss) and GAAP earnings (loss) per share for Q2 2022 to our non-GAAP net income (loss) and earnings (loss) per share is provided below, together with corresponding reconciliations for Q2 2021.

Non-GAAP measures should not be considered as an alternative to net income (loss), earnings (loss) per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such other non-GAAP measures in the same manner. We have not reconciled the non-GAAP measures included in our guidance to the appropriate GAAP financial measures because the GAAP measures are not readily determinable on a forward-looking basis. GAAP measures that impact our non-GAAP financial measures may include stock-based compensation expense, non-recurring expenses, amortization of intangible assets, unrealized exchange loss (gain), asset impairment charges, and loss (gain) from disposal of idle assets. These GAAP measures cannot be reasonably predicted and may directly impact our non-GAAP gross margin, our non-GAAP net income and our non-GAAP fully-diluted earnings per share, although changes with respect to certain of these measures may offset other changes. In addition, certain of these measures are out of our control. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

About Applied Optoelectronics

Applied Optoelectronics Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules and equipment. AOI's products are the building blocks for broadband fiber access networks around the world, where they are used in the internet datacenter, CATV broadband, telecom and FTTH markets. AOI supplies optical networking lasers, components and equipment to tier-1 customers in all four of these markets. In addition to its corporate headquarters, wafer fab and advanced engineering and production facilities in Sugar Land, TX, AOI has engineering and manufacturing facilities in Taipei, Taiwan and Ningbo, China. For additional information, visit

Investor Relations Contacts:

The Blueshirt Group, Investor Relations
Lindsay Savarese

Monica Gould

 Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Balance Sheets
(In thousands)
 June 30, 2022
 December 31, 2021
Cash, Cash Equivalents and Restricted Cash$40,650  $41,136 
Accounts Receivable, Net 49,139   47,944 
Notes receivable 212   8,148 
Inventories 98,181   92,516 
Prepaid Income Tax -   1 
Prepaid Expenses and Other Current Assets 6,235   4,334 
Total Current Assets$194,417   194,079 
Property, Plant And Equipment, Net 224,349   243,035 
Land Use Rights, Net 5,500   5,856 
Operating Right of Use Asset 6,165   7,078 
Financing Right of Use Asset 41   57 
Intangible Assets, Net 3,763   3,836 
Other Assets 520   518 
TOTAL ASSETS$434,755  $ 454,459 
Accounts Payable$52,496  $34,402 
Accrued Expenses 12,440   15,587 
Current Lease Liability-Operating 1,023   1,062 
Current Lease Liability-Financing 19   19 
Bank Acceptance Payable 10,273   8,198 
Current Portion of Notes Payable and Long Term Debt 53,565   49,689 
Total Current Liabilities 129,816   108,957 
Notes Payable and Long Term Debt -   5,000 
Convertible Senior Notes 79,090   78,680 
Other Long-Term Liabilities 6,255   7,252 
TOTAL LIABILITIES 215,161   199,889 

 Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Statements of Operations
(In thousands, except per share data)
 Three Months Ended Six Months Ended
 June 30, June 30,
Revenue 2022  2021   2022  2021 
CATV$23,713  27,599  $48,694  46,238 
Datacenter 21,497  22,392   42,911  48,331 
Telecom 6,276  3,333   11,541  7,811 
FTTH 27  298   124  722 
Other 786  567   1,270  788 
Total Revenue 52,299  54,189   104,540  103,890 
Total Cost of Goods Sold 43,671  43,411   86,888  82,393 
Total Gross Profit 8,628  10,778   17,652  21,497 
Operating Expenses:     
Research and Development 8,328  10,914   17,814  21,842 
Sales and Marketing 2,164  2,832   4,722  5,792 
General and Administrative 11,035  10,681   22,254  21,550 
Total Operating Expenses 21,527  24,427   44,790  49,184 
Operating Loss (12,899) (13,649)  (27,138) (27,687)
Other Income (Expense):     
Interest Income 31  16   59  32 
Interest Expense (1,408) (1,367)  (2,810) (2,798)
Other Income 108  6,370   182  6,410 
Foreign Exchange Gain (Loss) (288) 427   (811) 218 
Total Other Expense: (1,557) 5,446   (3,380) 3,862 
Net loss before Income Taxes (14,456) (8,203)  (30,518) (23,825)
Net loss (14,456) (8,203)  (30,518) (23,825)
Net loss per share attributable to common stockholders
basic$(0.52)$(0.31) $(1.11)$(0.89)
diluted$(0.52)$(0.31) $(1.11)$(0.89)
Weighted-average shares used to compute net loss per share attributable to common stockholders   
basic 27,612  26,850   27,537  26,637 
diluted 27,612  26,850   27,537  26,637 

 Applied Optoelectronics, Inc.
Reconciliation of Statements of Operations under GAAP and Non-GAAP
(In thousands, except per share data)
 Three Months Ended June 30, Six Months Ended June 30,
  2022  2021   2022  2021 
GAAP total gross profit (a)$8,628 $10,778  $17,652 $21,497 
Share-based compensation expense 114  266   250  467 
Non-recurring expense -  16   1  35 
Expenses associated with discontinued products -  2,462   -  3,751 
Non-GAAP total gross profit (a) 8,742  13,522   17,903  25,749 
GAAP net loss (14,456) (8,203)  (30,518) (23,825)
Share-based compensation expense 2,144  3,274   4,616  5,792 
Expenses associated with discontinued products -  2,461   -  3,750 
Non-cash expenses associated with discontinued products 1,103  1,213   2,269  2,427 
Amortization of intangible assets 153  152   304  302 
Non-recurring (income) expense 9  (6,246)  34  (5,743)
Unrealized exchange loss (gain) 298  (133)  1,279  710 
Non-GAAP tax benefit 3,151  3,369   6,545  6,960 
Non-GAAP net loss (7,598) (4,113)  (15,471) (9,626)
GAAP diluted net loss per share$(0.52)$(0.31) $(1.11)$(0.89)
Share-based compensation expense 0.08  0.12   0.17  0.22 
Expenses associated with discontinued products -  0.09   -  0.14 
Non-cash expenses associated with discontinued products 0.04  0.05   0.08  0.09 
Amortization of intangible assets 0.01  0.01   0.01  0.01 
Non-recurring (income) expense -  (0.23)  -  (0.22)
Unrealized exchange loss (gain) 0.01  -   0.05  0.03 
Non-GAAP tax benefit 0.10  0.12   0.24  0.26 
Non-GAAP diluted net loss per share$(0.28)$(0.15) $(0.56)$(0.36)
Shares used to compute diluted loss per share 27,612  26,850   27,537  26,637 
Shares used to compute diluted earnings per share 27,612  26,850   27,537  26,637 
(a) Provided for the purpose of calculating gross profit as a percentage of revenue (gross margin).