Sugar Land, Texas, November 5, 2026 /PRNewswire/ — Applied Optoelectronics, Inc. (Nasdaq: AAOI, “AOI”) today announced its financial results for the third quarter ended September 30, 2026. The company is a leading supplier of advanced optical communication and HFC network products that enable AI.
Dr. Thompson Lin, Founder, President, and CEO of AOI, said: “We are pleased to have achieved record revenue for the sixth consecutive quarter and returned to GAAP profitability in the third quarter. We have made substantial progress in expanding our manufacturing capacity, particularly for 800G and 1.6T products, to meet what we believe is accelerating demand for AI-related optical technologies. We recently signed a multi-year strategic agreement with a leading hyperscale data center customer, which we believe provides us with greater long-term visibility and strengthens our confidence in future opportunities as demand for high-bandwidth, energy-efficient optical interconnect products continues to grow.”
Dr. Stefan Murry, AOI’s Chief Financial Officer and Chief Strategy Officer, said: “We delivered another strong quarter, with accelerated revenue growth and improved profitability, primarily driven by robust demand for our data center and CATV businesses, as well as manufacturing expansion. Our current total manufacturing equipment capacity is nearing 330,000 units per month. Due to longer-than-expected timelines for securing necessary power and other construction-related challenges, we now anticipate that the completion of our U.S. capacity expansion plan for 2027 will be delayed compared to our original schedule. As these construction issues are gradually resolved, we now expect that by the end of 2026, our installed manufacturing equipment will be sufficient to produce over 500,000 units per month of 800G and 1.6 Tb products; and by the end of 2027, we anticipate scaling our manufacturing capacity for 800G and 1.6 Tb transceivers to over one million units per month. We remain focused on executing our capacity expansion plan and believe the company is well-positioned for the next phase of AI data center deployments.”
Q3 2026 Financial Summary
- GAAP revenue was $269.9 million, an increase from $118.6 million in the third quarter of 2025 and $191.9 million in the second quarter of 2026.
- GAAP gross margin was 28.2%, higher than 28.0% in the third quarter of 2025 and higher than 27.7% in the second quarter of 2026. Non-GAAP gross margin was 28.7%, lower than 31.0% in the third quarter of 2025 and lower than 29.8% in the second quarter of 2026.
- GAAP net income was $6.3 million, or $0.07 basic earnings per share; compared to a net loss of $17.9 million, or $0.28 basic loss per share, in the same period last year; and a net loss of $22.8 million, or $0.28 basic loss per share, in the second quarter of 2026.
- Non-GAAP net income was $14.8 million, or $0.17 diluted earnings per share; compared to a non-GAAP net loss of $5.4 million, or $0.09 basic loss per share, in the same period last year; and non-GAAP net income of $5.5 million, or $0.06 diluted earnings per share, in the second quarter of 2026.
The reconciliation of all GAAP to non-GAAP information above is presented in the table below. For an explanation of these non-GAAP financial measures, see “Non-GAAP Financial Measures” below.
Q4 2026 Business Outlook (+)
For the fourth quarter of 2026, the company currently expects:
- Revenue is between $385 million and $420 million.
- Non-GAAP gross margin is between 29.5% and 31%.
- Non-GAAP net income is expected to be between $45.9 million and $60.4 million, with non-GAAP earnings per share between $0.48 and $0.63, based on approximately 96 million shares outstanding.
(+) Please refer to the disclosures below regarding forward-looking statements and related risks, as well as the disclosures regarding non-GAAP financial measures.
Telephone conference scheduling
The company will hold a conference call and webcast today, November 5, 2026, for analysts and investors to discuss its third-quarter 2026 financial results and fourth-quarter 2026 guidance. The call will begin at 4:30 p.m. Eastern Time / 3:30 p.m. Central Time. The call is open to the public; investors may access it by dialing 888-880-3330 (U.S.) or 646-357-8766 (international). A live audio webcast of the conference call and supplemental financial information will also be available on the company’s website at investors.ao-inc.com. An archived version of the webcast will be available on the website for one year. A telephone replay will be available one hour after the conclusion of the call and will remain accessible for five business days by dialing (800) 770-2030 (U.S.) or (609) 800-9909 (international), using the passcode 4754976#.
Forward-looking information
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “could,” “will,” “aim,” “seek,” “intend,” “predict,” “think,” “target,” “optimistic,” “new,” “goal,” “priority,” “strategy,” “potential,” “possible,” “will,” “expect,” “momentum,” “plan,” “project,” “enable,” “positioned,” or other similar expressions conveying uncertainty about future events or outcomes. These statements include management’s views and expectations regarding its outlook for the fourth quarter of 2026 and the remainder of the year. Such forward-looking statements reflect management’s opinions as of the date such statements are made and involve risks, uncertainties, and assumptions and current expectations that could cause the company’s actual results to differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include, but are not limited to: reductions in the size or volume of customer orders; changes in demand for the company’s products due to industry conditions; changes in manufacturing operations; fluctuations in manufacturing costs; delays in product shipments; supply chain disruptions; changes in the rate of design wins or customer adoption of new products; the company’s high dependence on a limited number of customers; potential pricing pressures; declines in customer product demand or slower deployment of their products; general conditions in the internet data center, cable television (CATV) broadband, telecommunications, or fiber-to-the-home (FTTH) markets; changes in global economic conditions, particularly in the United States and China; changes in international trade regulations and taxation, including the imposition of tariffs; fluctuations in exchange rates; adverse seasonal effects; and other risks and uncertainties more fully described in documents filed with or furnished to the U.S. Securities and Exchange Commission by the company, including its Annual Report on Form 10-K for the year ended December 31, 2025, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2026. For information regarding these and other risks that may affect the company’s business, please refer to the “Risk Factors” section in the company’s quarterly and annual reports filed with the U.S. Securities and Exchange Commission. You should not regard forward-looking statements as predictions of future events. All forward-looking statements in this press release are based on information available to the company as of the date of issuance and are subject to the full scope of the foregoing cautionary statements. Except as required by law, the company undertakes no obligation to update any forward-looking statements after issuance to reflect actual results or changes in the company’s expectations.
Non-GAAP financial measures
The company provides non-GAAP gross margin, non-GAAP net income (loss), non-GAAP earnings (loss) per share, and non-GAAP adjusted EBITDA to exclude items that the company believes do not reflect its overall operating performance. To calculate non-GAAP gross margin, the company excludes stock-based compensation expenses, expenses related to discontinued products, and non-recurring (income) expenses (if any) from GAAP gross margin. To calculate non-GAAP net income (loss), the company excludes amortization of intangible assets, stock-based compensation expenses, expenses related to discontinued products, non-cash expenses related to discontinued products, non-recurring (income) expenses, unrealized foreign exchange gains (losses), and non-GAAP tax benefits (expenses) from GAAP net income (loss). The company’s non-recurring expenses in the third quarter of 2026 and the third quarter of 2025 include employee severance costs (if any), legal expenses related to litigation, and certain legal and consulting expenses associated with terminated acquisitions or patent protection. In calculating non-GAAP tax benefits (expenses), the company applies an estimated annual effective tax rate to pre-tax net income. The company’s non-GAAP adjusted EBITDA is calculated by starting with GAAP net income (loss), excluding depreciation expenses, non-GAAP tax benefits (expenses), and interest (income) expenses, as well as the items excluded from non-GAAP net income (loss). The company’s non-GAAP diluted earnings (loss) per share is calculated by dividing non-GAAP net income (loss) by the fully diluted share count (during periods when non-GAAP net income is positive) or the basic share count (during periods when non-GAAP net income is negative).
The company believes that non-GAAP metrics assist investors in evaluating its operating performance for the following reasons:
- The company believes it is appropriate to exclude amortization of intangible assets, share-based compensation expenses, non-recurring income and expenses, losses on disposal of idle assets, unrealized foreign exchange gains and losses, and depreciation related to certain equipment being reconfigured, as the treatment of these items may vary due to reasons unrelated to overall operating performance;
- The company believes it is appropriate to exclude expenses related to discontinued products, including depreciation and inventory obsolescence, as these expenses do not reflect ongoing operations;
- The company believes that estimating non-GAAP income taxes facilitates comparison with historical periods and provides additional insight into the potential formation of future deferred tax assets;
- The company believes that non-GAAP metrics allow for better comparisons with its historical financial performance, results across periods, and peer companies, as many peers also use similar non-GAAP financial measures; and
- The company expects investors and securities analysts to use non-GAAP measures as supplements to GAAP measures to evaluate overall operating performance.
The company has provided a reconciliation between GAAP net income (loss), GAAP gross profit, and GAAP earnings (loss) per share, and non-GAAP net income (loss), non-GAAP gross profit, adjusted EBITDA, and earnings (loss) per share for the third quarter of 2026, with corresponding reconciliations for the third quarter of 2025.
Non-GAAP metrics should not be considered substitutes for gross profit, net income (loss), earnings per share (loss), or any other financial performance measures calculated and presented in accordance with GAAP. Because other companies may not calculate similar metrics in the same manner, the company’s non-GAAP metrics may not be comparable to similarly titled metrics of other companies. The company has not reconciled the non-GAAP metrics included in this guidance to the corresponding GAAP financial measures because, on a forward-looking basis, the GAAP measures cannot be reasonably determined. GAAP items that could impact the company’s non-GAAP financial metrics include share-based compensation expenses, non-recurring expenses, amortization of intangible assets, unrealized foreign exchange gains (losses), asset impairment losses, gains or losses on disposal of idle assets, and changes in the fair value of convertible notes. Because these GAAP items cannot be reasonably predicted and may directly affect the company’s non-GAAP gross margin, non-GAAP net income, and non-GAAP fully diluted earnings per share, it is not possible to provide a reconciliation of non-GAAP guidance to corresponding GAAP measures without unreasonable effort. Additionally, some of these items are outside the company’s control.
About Applied Optoelectronics
Applied Optoelectronics, Inc. (AOI) is a leading developer and manufacturer of advanced optical communication and HFC network products that serve as essential building blocks for global AI data centers, CATV, and broadband fiber access networks. AOI provides these critical infrastructure products to frontline customers in the cloud computing, CATV broadband, telecommunications, and FTTH markets. The company maintains R&D facilities in Atlanta, Georgia, and engineering and manufacturing facilities at its headquarters in Sugar Land, Texas, as well as in Taipei, Taiwan, and Ningbo, China. For more information, visit www.ao-inc.com.