Applied Optoelectronics (AAOI) investor relations material

Executive summary

• Achieved record revenue for the fifth consecutive quarter, reaching $191.9 million in Q2 2026, up 86% year-over-year and 27% sequentially, driven by strong demand in data center and CATV segments.

• Returned to non-GAAP profitability with $0.06 non-GAAP EPS and non-GAAP net income of $5.5 million, exceeding guidance and reversing prior losses.

• Demand for next-gen AI infrastructure and high-speed optics products is outpacing production capacity, with customer demand exceeding supply through mid-2027.

• Net loss for Q2 2026 was $22.8 million, compared to $9.1 million in Q2 2025, reflecting higher operating expenses and increased investment in R&D and infrastructure.

• Significant capital raised through at-the-market equity offerings, totaling over $1 billion in net proceeds during the first half of 2026.

Financial highlights

• Q2 2026 revenue was $191.9 million, up 86% year-over-year and 27% sequentially; six-month revenue reached $343.1 million, up 69.2% year-over-year.

• Non-GAAP gross margin was 29.8%, in line with guidance; GAAP gross margin was 27.7%, down from 30.3% year-over-year.

• Non-GAAP net income was $5.5 million ($0.06 per share); GAAP net loss was $22.8 million ($0.28 per share).

• Operating expenses for Q2 2026 were $77.9 million, up 65.3% year-over-year, driven by R&D, sales, and G&A increases.

• Cash, cash equivalents, and investments at June 30, 2026, totaled $508.8 million.

Outlook and guidance

• Q3 2026 revenue expected between $255 million and $290 million, with non-GAAP gross margin forecasted at 29%-30.5% and non-GAAP net income projected between $10.1 million and $24 million.

• 2026 full-year revenue forecasted at $1.1 billion, with growth constrained by production capacity.

• Management expects gross margin to improve in future periods due to product mix, cost optimization, and production efficiencies.

• Continued elevated capital expenditures anticipated through 2027 to expand manufacturing capacity for data center and broadband products.

• Demand for high-speed optics and CATV products expected to outpace production capacity through mid-2027.