Applied Optoelectronics, Inc.

Good day and welcome to the Applied Opto-Electronics First Quarter 2024 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by 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. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Lindsay Savarese, Investor Relations for AIO. Please go ahead.

Thank you. I'm Lindsay Savarese, Investor Relations for Applied Optoelectronics. I am pleased to welcome you to AOI's first quarter 2024 financial results conference call. After the market closed today, AOI issued a press release announcing its first quarter 2024 financial results and provided its outlook for the second quarter of 2024. 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 Q1 results, and Stephan will provide financial details and the outlook for the second quarter of 2024. 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 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 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, suggest, 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. 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 2024. 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 and the company's quarterly reports on Form 10-Q. 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. Before moving to the financial results, I'd like to announce that AOI Management will virtually participate at the Needham Technology Media and Consumer Conference on May 16th. And I'd like to note that the date of our second quarter 2024 earnings call is currently scheduled for August 8th, 2024. 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. Our revenue and Nungat cost margin for the first quarter came in below our expectations, and our Nungat EPS was in line with our expectations despite the slow start to the year. Based on our current forecast and very constructive customer interactions, we remain very positive on improvement in the second half of the years. During the fourth quarter, we delivered revenue of $40.7 million, which was just below our guidance range of $41 to $46 million. We delivered non-GAAP gross margin of 18.9%, which was below our guidance range of 21 to 23%, mainly driven by difference in product mix Our non-game loss per share was $0.31 per share, which was within our guidance range of a loss of $0.28 to a loss of $0.33 per share. Total revenue for our data center product of $29 million was up 42% year-over-year and was down 35% sequentially. Leveling for our 1G product increased 33% year-over-year, and leveling for our 4G products more than doubled in the same period. Total leveling in our CATV segment was $8.7 million, which was down 69% year-over-year and down 30% sequentially, largely driven by continued generally slow sales of DOSIS 3.1 equipment. As the industry prepares, to transition to DOCSIS 4.0. With that, I will turn the call over to Stephan to review the details of our Q1 performance and outlook for Q2. Stephan. Thank you, Thompson.