Applied Optoelectronics, Inc.

Hello, and welcome to the Applied Optical Electronics Q1 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist for pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To answer your question, please press star then two. Please note, today's event is being recorded. I'd now like to turn the conference over to your host today, Lindsay Severese. Ms. Savarese, please go ahead.

Thank you. I'm Lindsay Savarese, Investor Relations for Applied Optoelectronics, and I am pleased to welcome you to AOI's first quarter 2021 financial results conference call. After the market closed today, AOI issued a press release announcing its first quarter 2021 financial results and provided its outlook for the second quarter of 2021. The release is also available on the company's website at ao-inc.com. This call is being recorded and webcast live. A link to the recording can be found on the investor relations section of the AOI website and will be archived for one year. Joining us on today's call is Dr. Thompson Lin, AOI's founder, chairman, and CEO, and Dr. Stephen Murray, AOI's chief financial officer and chief strategy officer. Thompson will give an overview of AOI's QM results, and Stefan will provide financial details and the outlook for the second quarter of 2021. A question and answer session will follow our prepared remarks. Before we begin, I would like to remind you to review AOI's safe harbor statements. On today's call, management will make forward-looking statements. 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. In some cases, you can identify forward-looking statements by terminology, such as believes, anticipates, estimates, intends, predicts, expects, plans, may, should, could, would, will, or thinks. and by other similar expressions that convey uncertainty of future events or outcomes. Forward-looking statements also include statements regarding management's beliefs and expectations related to the expansion of the reach of our products into new markets and customer responses to our innovations, as well as statements regarding the company's outlook for the second quarter of 2021. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this earnings call to conform these statements to actual results or to changes in the company's expectations. More information about other risks that may impact the company's business are set forth in the risk factors section of the company's reports on file with the SEC, including the company's annual report on Form 10-K, for the year ended December 31, 2020. Also, with the exception of revenue, all financials discussed today are on a non-GAAP basis unless specifically noted otherwise. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation between our GAAP and non-GAAP measures, as well as a discussion of why we present non-GAAP financial measures, are included in our earnings press release that is available on our website. Before moving to the financial results, I'd like to announce that AOI Management will virtually participate at the Needham Technology and Media Conference on May 20th and the Callum Annual Technology, Media, and Telecom Conference on June 2nd. The presentations at these conferences will be webcast live, and links to the webcast will be available on the Investor Relations section of the AOI website. We hope to have the opportunity to interact with many of you virtually. Additionally, I'd like to note the date of our second quarter 2021 earnings call is currently scheduled for August 5th, 2021. Now, I would like to turn the call over to Dr. Thompson Lin, Applied Optoelectronics founder, chairman, and CEO. Thompson?

Thank you, Lindsay, and thank you for joining our call today. We delivered revenue and gross margin enough with our expectations and a narrower non-GAAP loss per share than we anticipated. Total revenue for the fourth quarter of $49.7 million grew 22.8% compared to the fourth quarter in the prior year and was down 5.8% sequentially. As we expected, we experienced generally soft Q1 conditions in the data center segment. We expect their standard business to increase in the second half of the year as our customers begin full energy upgrades and inventory issues along 100G normalized. Nungat gross margin of 24.6% was in line with our guidance range of 23.5% to 25%, and Nungat net loss was narrower than our previous guidance coming at 21 cents per share. In our CATV segment, the overall demand environment was strong as MSO, particularly in North America, continued to upgrade their networks. Total revenue for our CATV products increased to more than four times its prior year level and was increased 17% sequentially of a strong fourth quarter to 18.6 million dollars. This is the highest quarterly revenue for this segment in over three years. Following the pause in 5G deployments from several of our China telecom customers, as we anticipated, we started to see a nice recovery in the fourth quarter. As a result, revenue from our telecom products of $4.5 million was up 75% year-over-year and 28% sequentially. Looking ahead, We believe China will continue to make investment in both their 5G and fiber-tool home infrastructure, and we believe we are well-positioned to sell laser in both of these markets. We look forward to meeting again in person hopefully soon. With that, I will turn the call over to Stephen to review the details of our Q1 performance and outlook for Q2. Stephen.