Applied Optoelectronics, Inc.

Good afternoon. I will be your conference operator. At this time, I would like to welcome everyone to applied OptinElectronics second quarter 2024 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, please press star then one on your telephone keypad. To withdraw your question, please press star then two. So, if you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please also note, today's call is being recorded. I would now like to turn the call over to Lindsay Savarese, Investor Relations for AOI. Mrs. Savarese, you may begin.

Thank you. I'm Lindsay Savarese, Investor Relations for Applied Optoelectronics. I am pleased to welcome you to AOI's second quarter 2024 Financial Results Conference call. After the market closed today, AOI issued a press release announcing its second quarter 2024 financial results and provided its outlook for the third 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 Q2 results, and Stephan will provide financial details and the outlook for the third 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 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, 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 believes, forecasts, anticipates, estimates, suggests, 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 third 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 Rosenblatt 4th Annual Technology Summit, The Age of AI, on August 20th, and is attending the Jeffries Semis IT Hardware and Communications Technology Summit on August 28th. I'd also like to note that the date of our third quarter 2024 earnings call is currently scheduled for November 7th, 2024. 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, our revenue for the second quarter of E9 with our expectations. While our non-GAAP gross margin came in below our expectations, primarily due to product mix, our non-GAAP loss per share was favorable compared to our expectations. During the second quarter, we delivered a labeling of $43.3 million, which was within our guidance range of $41.5 million to $46.5 million. We delivered non-GAAP gross margin of 22.5%, which was below our guidance range of 25.5% to 27.5%. Our non-GAAP loss per share was 28 cents, which was favorable compared to our guidance range of a loss of 29 cents to 35 cents per share. Our revenue for our data center products of $34.4 million was up 25% year-over-year and 19% sequentially. Dribbling for our 100G products increased 21% year-over-year and dribbling for our 400G products more than doubled in the same period. We are pleased to report that we have begun to receive initial orders for 400G products from another large, hyperscale customer, and we are very excited about this new customer interaction. With this new customer, we now are shipping 400 products to three out of the five largest hyperscale data center customers in the U.S. Total revenue in our CATV segment was $5.8 million, which was down 38% year-over-year and 33% sequentially, largely driven by continued, generally slow sales of DOSIS 3.1 equipment. As the industry prepares to transition to DOCSIS 4.0, we believe that this transition is underway and expect our CATV-6 to begin to ramp in Q3s. With that, I'll turn the call over to Stephen to review the details of our Q2 performance and outlook for Q3, Stephen. Thank you, Thompson.