Applied Optoelectronics (AAOI) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue reached $100.3M, up 66% year over year and 54% sequentially, driven by strong data center and CATV demand, in line with guidance of $94M-$104M.

• Full year 2024 revenue was $249.4M, up from $217.6M in 2023, with notable growth in CATV and data center segments.

• Non-GAAP gross margin was 28.9%, within guidance and up from 25% in Q3, but down from 36.4% in Q4 2023.

• Non-GAAP loss per share was $0.02, within guidance; GAAP net loss was $119.7M due to a $112M one-time convertible note charge and other non-recurring expenses.

• Significant order for Quantum Bandwidth networking products received from a top North American cable operator.

Financial highlights

• Q4 2024 datacenter revenue was $44.2M, flat year over year, up 8% sequentially; 400G product revenue rose 40% YoY and 70% sequentially.

• Q4 2024 CATV revenue was $52.2M, up more than 4x YoY and more than doubled sequentially, driven by 1.8 GHz amplifier shipments.

• Q4 2024 telecom revenue was $3.5M, up 26% YoY and 25% sequentially.

• Top 10 customers represented 97% of revenue; three customers contributed over 10% each.

• Non-GAAP operating expenses were $31.5M (31.4% of revenue), up from $21.6M YoY, mainly due to increased R&D.

Outlook and guidance

• Q1 2025 revenue expected between $94M-$104M; non-GAAP gross margin 29%-30.5%.

• Non-GAAP net income for Q1 expected between a loss of $3.6M and a loss of $0.3M.

• Anticipates further ramp in CATV revenue in Q1 and sustained elevated levels through 2025.

• 800G product ramp expected in second half of 2025; 1.6 Tb likely in late 2025 or 2026.

• Management expects continued gross margin improvement from manufacturing efficiencies and product mix.