Applied Optoelectronics Reports Third Quarter 2026 Results
APPLIED OPTOELECTRONICS, INC. (AAOI) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Applied Optoelectronics Reports Third Quarter 2026 Results Sugar Land, Texas, November 5, 2026 – Applied Optoelectronics, Inc. (NASDAQ: AAOI) (“AOI”), a leading provider of advanced optical and HFC networking products that power AI, today announced financial results
How this was made
The 30-second read
Why it matters
Strong earnings and guidance could trigger a short‑cover rally and attract new buyers.
Market read
First‑report earnings with guidance for a micro‑cap AI‑related hardware supplier.
What to watch
Potential power supply constraints and reliance on a few large customers.
Applied Optoelectronics Reports Third Quarter 2026 Results
Record GAAP revenue of $269.9 million, a return to GAAP profitability, and fourth-quarter revenue guidance of $385 million to $420 million were accompanied by datacenter and CATV growth, although non-GAAP gross margin declined from both comparison periods and the U.S. capacity expansion timeline has extended.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 total revenueGAAP | $269.9M | – | – |
| Q3 2026 total gross profitGAAP | $76.16M | – | – |
| Q3 2026 gross marginGAAP | 28.2% | – | – |
| Q3 2026 non-GAAP total gross profitnon-GAAP | $77.44M | – | – |
| Q3 2026 non-GAAP gross marginnon-GAAP | 28.7% | – | – |
| Q3 2026 research and development expenseGAAP | $38.11M | – | – |
| Q3 2026 sales and marketing expenseGAAP | $7.88M | – | – |
| Q3 2026 general and administrative expenseGAAP | $31.61M | – | – |
| Q3 2026 total operating expensesGAAP | $77.60M | – | – |
| Q3 2026 operating lossGAAP | −$1.44M | – | – |
| Q3 2026 net incomeGAAP | $6.3M | – | – |
| Q3 2026 net income per basic shareGAAP | $0.07 per basic share | – | – |
| Q3 2026 net income per diluted shareGAAP | $0.07 per diluted share | – | – |
| Q3 2026 non-GAAP net incomenon-GAAP | $14.8M | – | – |
| Q3 2026 non-GAAP diluted net earnings per sharenon-GAAP | $0.17 per diluted share | – | – |
| Q3 2026 Adjusted EBITDAnon-GAAP | $28.54M | – | – |
| Nine Months Ended September 30, 2026 total revenueGAAP | $612.9M | – | – |
| Nine Months Ended September 30, 2026 total gross profitGAAP | $173.3M | – | – |
| Nine Months Ended September 30, 2026 total operating expensesGAAP | $212.4M | – | – |
| Nine Months Ended September 30, 2026 operating lossGAAP | −$39.16M | – | – |
| Nine Months Ended September 30, 2026 net lossGAAP | −$30.76M | – | – |
| Nine Months Ended September 30, 2026 basic net loss per shareGAAP | $(0.38) | – | – |
| Nine Months Ended September 30, 2026 non-GAAP net incomenon-GAAP | $15.33M | – | – |
| Nine Months Ended September 30, 2026 non-GAAP diluted net earnings per sharenon-GAAP | $0.18 | – | – |
| Nine Months Ended September 30, 2026 Adjusted EBITDAnon-GAAP | $28.96M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| CATVManagement cited robust demand and manufacturing expansion in its CATV business. | $110.9M | – | – |
| DatacenterManagement cited robust demand and manufacturing expansion in its datacenter business and progress scaling 800G and 1.6T products. | $155.6M | – | – |
| Telecom | $2.73M | – | – |
| Other | $660K | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fourth quarter of 2026 outlook
- Revenue$385 million to $420 million
- Gross marginNon-GAAP gross margin in the range of 29.5% to 31%
- NoteNon-GAAP net income in the range of $45.9 million to $60.4 million
- NoteNon-GAAP income per share in the range of $0.48 to $0.63 using approximately 96 million shares
What drove it
- Management reported record revenue for its sixth consecutive quarter.
- Management cited robust demand and manufacturing expansion in both datacenter and CATV businesses.
- The company recently secured a multi-year strategic agreement with a Tier 1 hyperscale datacenter customer.
- Total manufacturing equipment capacity was approaching 330,000 units per month.
- The company expects by the end of 2026 to have sufficient manufacturing equipment installed to produce over 500,000 pieces of 800G and 1.6 Tb products per month.
Concerns
- Non-GAAP gross margin was 28.7%, compared with 31.0% in the third quarter of 2025 and 29.8% in the second quarter of 2026.
- The company expects its 2027 capacity expansion plan in the US to take longer to complete due to longer than expected time to obtain necessary electrical power among other construction related issues.
- The company identified reliance on a small number of customers for a substantial portion of revenues, potential pricing pressure, supply-chain disruptions, shipment delays, and volatility in manufacturing costs as risks.
What to watch
- Execution against fourth-quarter revenue guidance of $385 million to $420 million.
- Fourth-quarter non-GAAP gross margin guidance of 29.5% to 31%.
- Progress toward manufacturing equipment sufficient to produce over 500,000 pieces of 800G and 1.6 Tb products per month by the end of 2026.
- Timing and execution of the U.S. capacity expansion and the stated objective to grow capacity to over 1 million pieces of 800G and 1.6 Tb transceivers per month by the end of 2027.
- Datacenter and CATV demand and customer acceptance of new products.
Balance sheet and cash flow
- Cash, Cash Equivalents and Restricted Cash: $621,457 (In thousands) as of September 30, 2026, compared with $216,035 (In thousands) as of December 31, 2025
- Inventories: $377,991 (In thousands) as of September 30, 2026, compared with $183,105 (In thousands) as of December 31, 2025
- Accounts Receivable, Net: $413,760 (In thousands) as of September 30, 2026, compared with $244,404 (In thousands) as of December 31, 2025
- Property, Plant And Equipment, Net: $1,043,993 (In thousands) as of September 30, 2026, compared with $376,050 (In thousands) as of December 31, 2025
- Current Portion of Notes Payable and Long Term Debt: $59,990 (In thousands) as of September 30, 2026, compared with $33,975 (In thousands) as of December 31, 2025
- Convertible Senior Notes: $128,836 (In thousands) as of September 30, 2026, compared with $129,829 (In thousands) as of December 31, 2025
- Total liabilities: $894,278 (In thousands) as of September 30, 2026, compared with $434,505 (In thousands) as of December 31, 2025
Analysis
AOI reported Q3 2026 GAAP revenue of $269.9 million, compared with $118.6 million in the third quarter of 2025 and $191.9 million in the second quarter of 2026. Management characterized the result as record revenue for a sixth consecutive quarter. Datacenter revenue was $155,609 (In thousands) and CATV revenue was $110,879 (In thousands), while Telecom and Other revenue were $2,727 (In thousands) and $660 (In thousands), respectively. Management attributed the period to robust demand and manufacturing expansion in datacenter and CATV, alongside scaling of 800G and 1.6T products.
Profitability improved materially at the bottom line. GAAP net income was $6.3 million, or $0.07 per basic share, versus a net loss of $17.9 million, or $0.28 per basic share, in the third quarter of 2025 and a net loss of $22.8 million, or $0.28 per basic share, in the second quarter of 2026. Non-GAAP net income was $14.8 million, or $0.17 per diluted share, compared with a non-GAAP net loss of $5.4 million in the third quarter of 2025 and non-GAAP net income of $5.5 million in the second quarter of 2026. GAAP operating loss remained $(1,442) (In thousands), but Adjusted EBITDA was $28,537 (In thousands), compared with $2,005 (In thousands) a year earlier.
Gross-margin performance was mixed. GAAP gross margin reached 28.2%, compared with 28.0% in the third quarter of 2025 and 27.7% in the second quarter of 2026. Non-GAAP gross margin was 28.7%, below 31.0% in the third quarter of 2025 and 29.8% in the second quarter of 2026. Operating expenses increased to $77,597 (In thousands) from $51,450 (In thousands) a year earlier, including research and development expense of $38,109 (In thousands) and general and administrative expense of $31,613 (In thousands).
The balance sheet reflects substantial manufacturing investment and working-capital growth. Cash, Cash Equivalents and Restricted Cash were $621,457 (In thousands), Property, Plant And Equipment, Net was $1,043,993 (In thousands), accounts receivable were $413,760 (In thousands), and inventories were $377,991 (In thousands) at September 30, 2026. Management said total manufacturing equipment capacity was approaching 330,000 units per month, expects sufficient installed equipment for over 500,000 pieces of 800G and 1.6 Tb products per month by the end of 2026, and expects capacity of over 1 million pieces of 800G and 1.6 Tb transceivers per month by the end of 2027. The stated U.S. expansion timetable has lengthened because of electrical-power and construction issues.
Fourth-quarter guidance calls for revenue of $385 million to $420 million, non-GAAP gross margin of 29.5% to 31%, non-GAAP net income of $45.9 million to $60.4 million, and non-GAAP income per share of $0.48 to $0.63 using approximately 96 million shares. The guide places attention on continued demand conversion, margin recovery from the Q3 non-GAAP level, and the company’s ability to execute manufacturing expansion while addressing the disclosed construction constraints.
Management, verbatim
We are pleased to have generated record revenue for our sixth consecutive quarter and to have returned to GAAP profitability in Q3.
Dr. Thompson Lin, Founder, President and Chief Executive Officer
We have recently secured a multi-year strategic agreement with a Tier 1 hyperscale datacenter customer, which we think provides us with improved long-term visibility and reinforces our confidence in the opportunity ahead as demand for high-bandwidth, energy-efficient optical connectivity products continues to grow.
Dr. Thompson Lin, Founder, President and Chief Executive Officer
We delivered another solid quarter, including accelerating revenue growth and improving profitability, driven by robust demand and manufacturing expansion in both our datacenter and CATV businesses.
Dr. Stefan Murry, Chief Financial Officer and Chief Strategy Officer
Not in the filing
stated, not guessed- Operating cash flow
- Free cash flow
- Capital expenditures
- Share repurchases
- Dividends
- Prior-quarter segment revenue
- Segment revenue percentage changes
- Prior fourth-quarter outlook for comparison
- GAAP reconciliations for fourth-quarter non-GAAP guidance
- Fourth-quarter operating-expense guidance
- Fourth-quarter tax-rate guidance
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The filing is an SEC Form 8‑K announcing quarterly results and forward outlook.
Ticker impact
Applied Optoelectronics reported Q3 2026 results with record revenue and GAAP profitability, and issued Q4 guidance of $385M-$420M revenue.
potential upside as market prices in the strong Q4 outlook
Record Q3 revenue, return to GAAP profit, and upbeat guidance suggest improved fundamentals, likely attracting buying pressure.
Market effects
Positive signal for AI datacenter optical component suppliers.
May boost sentiment for US tech hardware firms.
Limited to niche optical networking market.
Counterpoint
If capacity expansion delays persist, the guidance could be overly optimistic.
Key entities
- companyApplied Optoelectronics, Inc.
Provider of optical networking products for AI datacenters.
