Applied Optoelectronics, Inc.

Good afternoon. I will be your conference operator. At this time, I would like to welcome everyone to Applied Opto-Electronics' fourth quarter and full year 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, you may press star, then one on your touchtone phone. To withdraw from the question queue, please press star, then two. Please note that this call is being recorded. I will now turn the call over to Lindsay Savarese, Investor Relations for AOI. Ms. Savarese, you may begin.

Thank you. I'm Lindsay Savarese, Investor Relations for Applied Optoelectronics, and I'm pleased to welcome you to AOI's fourth quarter and full year 2022 financial results conference call. After the market closed today, AOI issued a press release announcing its fourth quarter and full year 2022 financial results. and provided its outlook for the first quarter of 2023. 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. Stephan Murray, AOI's chief financial officer, and Chief Strategy Officer. Thompson will give an overview of AOI's QCOR results, and Stephan will provide financial details and the outlook for the first quarter of 2023. 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 Statement. On today's call, management will make four booking statements. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause the company's actual results, levels of activity, performance, or achievements of the company or its industry to differ materially from those expressed or implied in such forward-looking statements. In some cases, you can identify forward-looking statements by terminology, such as believe, forecast, anticipate, estimate, intends, predicts, expects, plans, may, should, could, would, will, potential, or thinks, or by the negative of those terms or other similar expressions that convey uncertainty of future events or outcomes. The company has based these forward-looking statements on its current expectations, assumptions, estimates, and projections. While the company believes these expectations, assumptions, estimates, and projections are reasonable, Such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the company's control, including important factors such as risks related to the company's ability to complete the transaction described on this call, on the proposed term, and schedule or at all. The risk that certain closing conditions may not be timely satisfied or waived. the failure or delay to receive the required regulatory or other government approvals relating to the transaction, and the occurrence of any event, change, or other circumstance that could give rise to the termination of the transaction. Coordinating 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 first quarter of 2023. 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, 2022. Also, all financial results and other financial measures 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. I'd like to note the date of our first quarter earnings call is currently scheduled for May 4th, 2023. Now I would like to turn the call over to Dr. Thompson Lin, Applied Optoelectronics founder, chairman, and CEO. Thompson?

Thank you, Lindsay. Thank you for joining our call today. We are pleased to report fourth quarter result with revenue in line with our expectations, gross margin above our expectations, and a non-gain loss per share better than our expectations. We continue to see strong demand in the CATV market and generated the highest quarterly CATV revenue in the company's history in Q4. During the fourth quarter, we delivered a revenue of $61.6 million. In nine, with our guidance range of $58 million to $64 million, we delivered an on-gap gross margin of 21.4%, above our guidance range of 17.5% to 19.5%, driven by our target cost reductions and favorable product mix. Our non-GAAP loss per share was $0.19, about our guidance range of a loss of $0.28 to $0.34. Corporate revenue in our CATV segment was a common record of $38.2 million, up 53% year-over-year and 22% sequentially of a strong Q3 year-over-year. as we continue to see robust demand in the CATV market. Total revenue for our data center products of $16.5 million decreased 35% year-over-year and 7% sequentially, as customers continue to manage the inventory level of all the products during the transition to 400G. This was partially offset by an increase in 400G revenue which more than doubled sequentially. In Q4, we signed an agreement with a major hyperscale data center operator for a development program to make next-generation lasers for their data center, both for 4NG and beyond. While the development of this new product will take several quarters to be complete, review this country award as validation of the value of our cold laser fabrication ability. With that, I will turn the call over to Stephen to review the details of our Q4 performance and our look for Q1. Stephen.