Applied Optoelectronics (AAOI) investor relations material

Executive summary

• Achieved record revenue for the fifth consecutive quarter, reaching $191.9 million in Q2 2026, up 86% year-over-year, driven by strong demand in data center and CATV segments.

• Returned to non-GAAP profitability with $0.06 non-GAAP EPS and non-GAAP net income of $5.5 million, exceeding guidance and reversing prior losses.

• Net loss for Q2 2026 was $22.8 million, reflecting higher operating expenses and increased investment in R&D and infrastructure.

• Demand for next-gen AI infrastructure and high-speed optics products is outpacing production capacity, with customer demand exceeding supply by 20%-40%.

• Over $1 billion was raised through at-the-market equity offerings in H1 2026, supporting major capacity expansion.

Financial highlights

• Q2 2026 revenue was $191.9 million, up 86% year-over-year and 27% sequentially.

• Non-GAAP gross margin was 29.8%; GAAP gross margin was 27.7%.

• GAAP net loss was $22.8 million, or $0.28 per share; non-GAAP EPS was $0.06.

• Operating expenses for Q2 2026 were $77.9 million, driven by R&D, sales, and G&A increases.

• Cash, equivalents, and investments at quarter end were $508.8 million.

Outlook and guidance

• Q3 2026 revenue expected between $255 million and $290 million, up 130% year-over-year at midpoint.

• Non-GAAP gross margin guidance for Q3 is 29%-30.5%; non-GAAP net income expected between $10.1 million and $24 million.

• 2026 full-year revenue expected at $1.1 billion, with growth constrained by production capacity.

• Management expects gross margin to improve in future periods due to product mix, cost optimization, and production efficiencies.

• Continued elevated capital expenditures anticipated through 2027 to expand manufacturing capacity.