Applied Optoelectronics, Inc.

Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to Applied Optoelectronics Third Quarter 2025 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 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this call is being recorded. I will now turn the call over to Lindsay Savarese, Investor Relations for Applied Optoelectronics. Ms. Savarese, you may begin.

Thank you. I'm Lindsay Savarese, Investor Relations for Applied Optoelectronics. I'm pleased to welcome you to AOI's third quarter 2025 financial results conference call. After the market closed today, AOI issued a press release announcing its third quarter 2025 financial results and provided its outlook for the fourth quarter of 2025. 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 Q3 results, and Stephan will provide financial details and the outlook for the fourth quarter of 2025. 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, 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 its products into new markets and customer responses to its innovations. as well as statements regarding the company's outlook for the fourth quarter of 2025. Except as required by law, AOI assumes no obligation to update these 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 AOI's reports on file with the SEC, including the company's annual report on Form 10-K and 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 the company's earnings press release that is available on AOI's website. Before moving to the financial results, I'd like to note that the date of AOI's fourth quarter and full year 2025 earnings call is currently scheduled for February 26th, 2026. Now, I would like to turn the call over to Dr. Thompson Lin, AOI's founder, chairman, and CEO. Thompson?

Thank you, Lindsay, and thank you for joining our call today. We successfully deliver revenue, gross margin, and elongate loss per share in line with our expectations. In fact, we recorded the highest quoted revenue in our history, driven by strong demand in the CATV market, which also achieved regular revenue in the third quarter. The strengths we saw in our CATV business more than offset our best-earned revenue, which came in a touch below expectations, largely due to the timing of sudden shipment at quarter end. In per period, we have approximately $6.6 million in shipment of 400G transceiver to a large, high-scale customer, which was not able to return into revenue during the quarter due to various shipping and receiving delays, and which we have booked in Q4. Despite this delay, our financial withdrawal clearly highlights the advantage of having Diversified revenue stream as a result, our total revenue on a combined basis increased 15% sequentially and 82% year-over-year. Number three, we continue to make progress on customer qualification on our 800G product. As we mentioned last quarter, we believe we are near the final stage of qualification with several customers. We expect qualifications in the near term based on conversation that we are having with our customers, and we continue to believe that we will produce meaningful treatment of ARG products in the fourth quarter. During the third quarter, we did a revenue of $118.6 million, which was in line with our guidance range of $115 million to $127 million. We recorded non-GAAP gross margin of 31%, which was in line with our guidance range of 29.5% to 31%. And our non-GAAP loss per share of 9 cents was also in line with our guidance range of a loss of 10 cents to a loss of 3 cents. Total revenue for our data center product of $43.9 million increased 7% year-over-year, but was down 2% sequentially. Revenue for our energy product increased 32% year-over-year, while revenue for our foreign energy product was down 65% year-over-year, or $7.1 million. Primarily due to the timing of certain shipment, a quarter And that I just mentioned. Total revenue in Q3 in our CATV segment was a record $70.6 million, which more than tripled year-over-year and was up 26% sequentially from a strong Q2. This increase is due to the continued rent in orders for our 1.8 GHz amplified products for both existing as well as new customers. With that, I will turn the call over to Stephen to review the details of our Q3 performance and our Q4, Stephen. Thank you, Thompson.