Applied Optoelectronics, Inc.

Good afternoon. I will be your conference operator on today's call. At this time, I would like to welcome everyone to Applied Opto-Electronics' fourth quarter and full year 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 one on your telephone keypad. And to withdraw a question, please press star, then two. Please also note that this call is being recorded today. I'll 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. I'm pleased to welcome you to AOI's fourth quarter and full year 2025 Financial Results Conference Call. After the market closed today, AOI issued a press release. announcing its fourth quarter and full year 2025 financial results and provided its outlook for the first quarter of 2026. 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 Q4 results, and Stephan will provide financial details and the outlook for the first quarter of 2026. 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 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 its products into new markets and customer responses to its innovations, as well as statements regarding the company's outlook for the first quarter of 2026 and for the full year of 2026. 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. inform 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 AOI management is attending the Susquehanna Annual Technology Conference virtually tomorrow, as well as the Raymond James Annual Institutional Investors Conference on March 3rd. Additionally, management will host an investor session at OSC on Tuesday, March 17th in Los Angeles. This discussion will be webcast live, and a link to the webcast is available on the Investor Relations section of the AOI website. Lastly, I'd like to note that the date of AOI's first quarter 2026 earnings call is currently scheduled for May 7, 2026. Now, I would like to turn the call over to Dr. Thompson Lin, AOI's founder, chairman, and CEO. Thompson?

Thank you, Lindsay. Thank you for joining our call today. We are pleased to deliver regular fourth quarter results that were in line with or better than our expectations and which came out the strongest year in our company's history. Our results were driven by robust demand in both our CATV and data center business. In 2025, total revenue increased 83% compared to 2024 to a record $456 million. Data center revenue of $196 million increased 32% compared to 2024. While our CATV revenue nearly tripled to $245 million in the same period, we entered 2026 with strong momentum, and due to the softball investment we have made, we have materially expanded our manufacturing capacity. We bear this position as well to meet increasing customer demand and we are lead to accelerating growth this year. During the quarter, we announced that we'd received our fourth Air Energy Valiant Order from one of our major hyperscale customers to support its AI data center growth. This was an important milestone in our next-generation data center roadmap and followed the successful qualification of our Air Energy products by the customer. It also reflects both the strengths of our product portfolio and the deepened relationship we have with this hyperscale customer. We continue to work with this customer to finalize the firmware used in this module to ensure interoperability across their network, which we believe will be completed in March. We have begun ramping up production of this 800G module in anticipation of a strong volume ramp starting in Q2. Focused demand for 800G modules are projected to exceed our production capacity through mid-2027, and we are working to add additional capacity to meet this demand. During the quarter, we saw particular strengths for our 400G products with this customer, which more than offset our 800G revenue. which came in below our expectation of $4 million to $8 million. Due to the ongoing firmware optimizations I mentioned above, looking ahead, we expect continued strength in our 400G business. Also, 800G is expected to dominate our revenue beginning in Q2. As a reminder, our Taiwan facility was already qualified for production of several 800G product types from this hyperscale customer during 2025. Our Texas facility was also qualified for production of some of our 800G products. During the quarter, we made an investment with qualifying additional products from our Texas facility with this customer and expect full qualification by mid-year. We expect that we move throughout the year to ship an increasing amount of AIG products from our Texas facility as we expand our capacity. In addition to this fourth major AIG customer, we have had indications from another existing hyperscale customer that they intend to begin to order AIG from us soon. Finally, a new Hyperscale customer has begun discussion about qualifying our 800G and 1.6T products just within the last few weeks. So we feel increasingly confident about our trajectory in 800G and 1.6T receiver with multiple customers. During the first quarter, we delivered revenue of $134.3 million which was in line with our guidance range of $125 million to $140 million. We recorded non-GAAP gross margin of 31.4%, which was above the high end of our guidance range of 29% to 31%, and our non-GAAP loss per share of $0.01 was narrower than our garden range of a loss of 13 cents to a loss of 4 cents. Total revenue for our data center product of $74.9 million increased 69% year-over-year and 70% sequentially. Sales of our 1G product increased 54% year-over-years and sales for our 4G product increased 141% year-over-years. Total revenue in Q4 in our CATV segment was $54 million, which was up 3% year-over-years and in line with our expectations was down 24% sequentially from a record Q3s. Similar to the last couple of quarters, we ship a significant quantity of 1.8 GHz amplifiers to our largest DATB customers in Q4, and demand from them continues to be robust. In addition to these customers, we continue to see momentum from a new set of MSO customers. With that, I will turn the call over to Stephen to review the details of our Q4 performance and outlook for Q1. Stephen.