second quarter 2026
Filed Aug 6, 2026Record revenue for the fifth consecutive quarter and a return to non-GAAP profitability, alongside lower gross margins and a wider GAAP net loss.
Revenue reached a record and non-GAAP results turned profitable, supported by high-speed optics and 1.8 GHz CATV demand. However, GAAP gross margin declined from both comparison periods and the GAAP net loss widened.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $191.9 million | – | – |
| Gross marginGAAP | 27.7% | – | – |
| Gross marginnon-GAAP | 29.8% | – | – |
| Net lossGAAP | $22.8 million | – | – |
| Net loss per basic shareGAAP | $0.28 per basic share | – | – |
| Net incomenon-GAAP | $5.5 million | – | – |
| Income per diluted sharenon-GAAP | $0.06 per diluted share | – | – |
| Manufacturing capacityother | approaching 200,000 units per month | – | – |
third quarter of 2026 outlook
- Revenue$255 million to $290 million
- Gross margin29% to 30.5%
- NoteNon-GAAP net income in the range of $10.1 million to $24.0 million.
- NoteNon-GAAP income per share in the range of $0.11 to $0.26 using approximately 92.8 million shares.
- NoteBy the end of this year, capable of producing around 650,000 pieces of 800G and 1.6 Tb products per month.
What drove it
- Strong demand for high-speed optics alongside high-volume adoption of 1.8 GHz CATV products.
- 800G product volume more than doubled sequentially.
- Management cited robust customer engagement around 800G transceivers and 1.6 Tb products.
- The company continued progress on its production-capacity ramp, particularly for 800G and 1.6Tb products.
Concerns
- GAAP gross margin was 27.7%, compared with 30.3% in the second quarter of 2025 and 29.1% in the first quarter of 2026.
- GAAP net loss was $22.8 million, compared with net loss of $9.1 million in the second quarter of 2025 and a net loss of $14.3 million in the first quarter of 2026.
- Management stated that demand is forecast to continue to outpace production capacity through mid-2027.
- The filing identifies risks including customer-order reductions, manufacturing-cost volatility, shipment delays, supply-chain disruptions, pricing pressure, and reliance on a small number of customers for a substantial portion of revenue.
What to watch
- Execution toward production capacity of around 650,000 pieces of 800G and 1.6 Tb products per month by the end of this year.
- Whether the strong volume ramp in 800G products and adoption of 1.8 GHz CATV products continue.
- Third-quarter revenue within the guided range of $255 million to $290 million.
- Third-quarter non-GAAP gross margin within the guided range of 29% to 30.5%.
- Progress in narrowing the GAAP loss while sustaining non-GAAP profitability.
Analysis
Applied Optoelectronics reported $191.9 million of GAAP revenue for the second quarter of 2026, compared with $103.0 million in the second quarter of 2025 and $151.1 million in the first quarter of 2026. Management described this as record revenue for the fifth consecutive quarter. The stated demand drivers were high-speed optics and high-volume adoption of 1.8 GHz CATV products, while 800G product volume more than doubled sequentially.
Profitability showed a split between GAAP and non-GAAP measures. GAAP gross margin was 27.7%, below 30.3% in the second quarter of 2025 and 29.1% in the first quarter of 2026. Non-GAAP gross margin was 29.8%, compared with 30.4% and 29.2%, respectively. GAAP net loss widened to $22.8 million, or $0.28 per basic share, while non-GAAP net income was $5.5 million, or $0.06 per diluted share, compared with non-GAAP net losses in both comparison periods.
The release emphasizes manufacturing capacity as the central operating constraint and investment focus. Management said total manufacturing capacity was approaching 200,000 units per month and expected capacity of around 650,000 pieces of 800G and 1.6 Tb products per month by the end of this year. It also forecast that demand would continue to outpace production capacity through mid-2027, making the pace of the capacity ramp important to revenue conversion.
For the third quarter of 2026, the company expects revenue of $255 million to $290 million and non-GAAP gross margin of 29% to 30.5%. It also guided to non-GAAP net income of $10.1 million to $24.0 million and non-GAAP income per share of $0.11 to $0.26 using approximately 92.8 million shares. The outlook calls for continued sequential revenue growth, but the reported decline in GAAP gross margin and wider GAAP loss remain the principal reported financial points requiring attention.
No segment revenue, cash flow, balance-sheet, debt, dividend, repurchase, or operating-income figures were included in the provided filing text. The company also did not provide a reconciliation of its forward non-GAAP guidance to GAAP measures, stating that the relevant GAAP measures are not readily determinable on a forward-looking basis.
Management, verbatim
Q2 was a pivotal quarter for AOI. We delivered record revenue for our fifth consecutive quarter and achieved an important milestone as we returned to non-GAAP profitability in the quarter. Further, we saw a strong volume ramp of our 800G products, which more than doubled sequentially.
Dr. Thompson Lin, Founder, President and Chief Executive Officer
Strong demand for high-speed optics alongside high-volume adoption of our 1.8 GHz CATV products generated powerful results during the quarter. We continue to see robust customer engagement around our 800G transceivers and 1.6 Tb products, and we forecast that demand will continue to outpace our production capacity through mid-2027.
Dr. Thompson Lin, Founder, President and Chief Executive Officer
During Q2, we continued to make solid progress on our production capacity ramp, particularly for our 800G and 1.6Tb products. We have a total manufacturing capacity approaching 200,000 units per month and continue to expect by the end of this year that we will be capable of producing around 650,000 pieces of 800G and 1.6 Tb products per month.
Dr. Stefan Murry, Chief Financial Officer and Chief Strategy Officer
Not in the filing
stated, not guessed- Segment revenue and segment-level comparisons.
- GAAP operating income or loss.
- Non-GAAP operating income or loss.
- GAAP gross profit and non-GAAP gross profit.
- Adjusted EBITDA value and comparisons.
- Operating cash flow.
- Free cash flow.
- Cash and cash equivalents.
- Debt and other balance-sheet liquidity figures.
- Capital returns, including share repurchases and dividends.
- GAAP third-quarter 2026 guidance.
- Third-quarter 2026 operating-expense guidance.
- Third-quarter 2026 tax-rate guidance.
- Prior-period outlook for comparison with second-quarter 2026 actual results.
- Quantified revenue growth percentages.
- Quantified gross-margin changes.
- Detailed reconciliation tables referenced in the release but not included in the provided filing text.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.