Applied Optoelectronics Reports Third Quarter 2021 Results

11/4/2021, 9:10 PM (Source: GlobeNewswire)

SUGAR LAND, Texas, Nov. 04, 2021 (GLOBE NEWSWIRE) -- Applied Optoelectronics, Inc. (NASDAQ: AAOI), a leading provider of fiber-optic access network products for the internet datacenter, cable broadband, telecom and fiber-to-the-home (FTTH) markets, today announced financial results for its third quarter 2021 ended September 30, 2021.

“Demand trends played out largely as we expected in the third quarter,” said Dr. Thompson Lin, Applied Optoelectronics Inc. Founder, President and Chief Executive Officer. “We are encouraged by the continued strength we are seeing in our CATV business and the sequential uptick in datacom, as well as nine design wins across our business in the quarter. As expected, some component shortages impacted our business in the third quarter, and this is expected to continue to be a factor in the fourth quarter, but we believe the demand drivers remain favorable for us and anticipate easing of these supply constraints in the future.”

Third Quarter 2021 Financial Summary

  • Total revenue was $53.3 million, compared with $76.6 million in the third quarter of 2020 and $54.2 million in the second quarter of 2021.
  • GAAP gross margin was 15.3%, compared with 25.0% in the third quarter of 2020 and 19.9% in the second quarter of 2021. Non-GAAP gross margin was 19.9%, compared with 27.4% in the third quarter of 2020 and 25.0% in the second quarter of 2021.
  • GAAP net loss was $15.8 million, or $0.58 per basic share, compared with net loss of $9.6 million, or $0.42 per basic share, in the third quarter of 2020, and a net loss of $8.2 million, or $0.31 per basic share, in the second quarter of 2021.
  • Non-GAAP net loss was $5.3 million, or $0.20 per basic share, compared with non-GAAP net loss of $1.4 million, or $0.06 per basic share in the third quarter of 2020, and a non-GAAP net loss of $4.1 million, or $0.15 per basic share in the second quarter of 2021.

A reconciliation between all GAAP and non-GAAP information referenced above for the third quarters of 2021 and 2020 is contained in the tables below. Please also refer to “Non-GAAP Financial Measures” below for a description of these non-GAAP financial measures.

Fourth Quarter 2021 Business Outlook (+)

For the fourth quarter of 2021, the company currently expects:

  • Revenue in the range of $51 million to $55 million.
  • Non-GAAP gross margin in the range of 18.5% to 20.0%.
  • Non-GAAP net loss in the range of $5.5 million to $6.6 million, and non-GAAP loss per share in the range of $0.20 to $0.24 using approximately 27.4 million shares.

(+) Please refer to the note below on forward-looking statements and the risks involved with such statements as well as the note on non-GAAP financial measures.

Conference Call Information

The company will host a conference call and webcast for analysts and investors on November 4, 2021 to discuss its third quarter 2021 results and outlook for its fourth quarter 2021 at 4:30 p.m. Eastern time / 3:30 p.m. Central time. Open to the public, investors may access the call by dialing 844-890-1794 (domestic) or 412-717-9586 (international). A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company's website at Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will run for five business days and may be accessed by dialing 877-344-7529 (domestic) or 412-317-0088 (international) and entering passcode 10160446.

Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "could," "would," "target," "seek," "aim," "predicts," "think," "objectives," "optimistic," "new," "goal," "strategy," "potential," "is likely," "will," "expect," "plan" "project," "permit" or by other similar expressions that convey uncertainty of future events or outcomes. These statements include management’s beliefs and expectations related to our outlook for the fourth quarter of 2021. Such forward-looking statements reflect the views of management at the time such statements are made. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause the company's actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include but are not limited to: the impact of the COVID-19 pandemic on our business and financial results; reduction in the size or quantity of customer orders; change in demand for the company's products due to industry conditions; changes in manufacturing operations; volatility in manufacturing costs; delays in shipments of products; disruptions in the supply chain; change in the rate of design wins or the rate of customer acceptance of new products; the company's reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers' products or their rate of deployment of their products; general conditions in the internet datacenter, cable television (CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in the world economy (particularly in the United States and China); changes in the regulation and taxation of international trade, including the imposition of tariffs; changes in currency exchange rates; the negative effects of seasonality; and other risks and uncertainties described more fully in the company's documents filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2020 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. More information about these and other risks that may impact the company's business are set forth in the "Risk Factors" section of the company's quarterly and annual reports on file with the Securities and Exchange Commission. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in the company's expectations.

Non-GAAP Financial Measures

We provide non-GAAP gross margin, non-GAAP net income (loss), and non-GAAP earnings per share to eliminate the impact of items that we do not consider indicative of our overall operating performance. To arrive at our non-GAAP gross margin, we exclude stock-based compensation expense, expenses associated with discontinued products, and non-recurring (income) expenses, if any, from our GAAP gross margin. To arrive at our non-GAAP net income (loss), we exclude all amortization of intangible assets, stock-based compensation expense, non-recurring expenses, unrealized foreign exchange gain (loss), losses from the disposal of idle assets, if any, non-GAAP tax expenses (benefits), and expenses associated with discontinued products, if any, from our GAAP net income (loss). Included in our non-recurring expenses in Q3 2021 and Q3 2020 are certain one-time legal (if any) and consulting fees (if any) and employee severance expenses (if any). Also included in our non-recurring (income) expenses in Q3 2020, but not in 2021, were a one-time customer reimbursement of certain incurred expenses, and non-recurring government subsidy income in our Taiwan subsidiary due to COVID-19. In computing our non-GAAP income tax expense (benefit), we have applied an estimate of our annual effective income tax rate and applied it to our net income before income taxes. Our non-GAAP earnings per share is calculated by dividing our non-GAAP net income by the fully diluted share count (for periods in which non-GAAP net income is positive) or basic share count (for periods in which our non-GAAP net income is negative). We believe that our non-GAAP measures are useful to investors in evaluating our operating performance for the following reasons:

  • We believe that elimination of items such as amortization of intangible assets, stock-based compensation expense, non-recurring revenue and expenses, losses from the disposal of idle assets, unrealized foreign exchange gain or loss, unamortized debt issuance costs associated with the extinguishment of debt, and depreciation on certain equipment undergoing reconfiguration is appropriate because treatment of these items may vary for reasons unrelated to our overall operating performance;
  • We believe that elimination of expenses associated with discontinued products, including depreciation and inventory obsolescence is appropriate because these expenses are not indicative of our ongoing operations;
  • We believe that estimating non-GAAP income taxes allows comparison with prior periods and provides additional information regarding the generation of potential future deferred tax assets;
  • We believe that non-GAAP measures provide better comparability with our past financial performance, period-to-period results and with our peer companies, many of which also use similar non-GAAP financial measures; and
  • We anticipate that investors and securities analysts will utilize non-GAAP measures as a supplement to GAAP measures to evaluate our overall operating performance.

A reconciliation of our GAAP net income (loss) and GAAP earnings (loss) per share for the quarter ended September 30, 2021 to our non-GAAP net income (loss) and earnings (loss) per share is provided below, together with corresponding reconciliations for the quarter period ended September 30, 2020.

Non-GAAP measures should not be considered as an alternative to net income (loss), earnings (loss) per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such other non-GAAP measures in the same manner. We have not reconciled the non-GAAP measures included in our guidance to the appropriate GAAP financial measures because the GAAP measures are not readily determinable on a forward-looking basis. GAAP measures that impact our non-GAAP financial measures may include stock-based compensation expense, non-recurring expenses, amortization of intangible assets, unrealized exchange loss (gain), asset impairment charges, and loss (gain) from disposal of idle assets. These GAAP measures cannot be reasonably predicted and may directly impact our non-GAAP gross margin, our non-GAAP net income and our non-GAAP fully-diluted earnings per share, although changes with respect to certain of these measures may offset other changes. In addition, certain of these measures are out of our control. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

About Applied Optoelectronics

Applied Optoelectronics Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules and equipment. AOI's products are the building blocks for broadband fiber access networks around the world, where they are used in the internet datacenter, CATV broadband, telecom and FTTH markets. AOI supplies optical networking lasers, components and equipment to tier-1 customers in all four of these markets. In addition to its corporate headquarters, wafer fab and advanced engineering and production facilities in Sugar Land, TX, AOI has engineering and manufacturing facilities in Taipei, Taiwan and Ningbo, China. For additional information, visit

Investor Relations Contacts:

The Blueshirt Group, Investor Relations
Lindsay Savarese
Office: (212) 331-8417

Monica Gould

 Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Balance Sheets
(In thousands)
 September 30, 2021 
December 31, 2020
Cash, Cash Equivalents and Restricted Cash$48,897 $50,114
Accounts Receivable, Net 43,942  43,042
Notes receivable 8,505  401
Inventories 94,507  110,397
Prepaid Income Tax 2  2
Prepaid Expenses and Other Current Assets 4,717  5,213
Total Current Assets 200,570  209,169
Property, Plant And Equipment, Net 242,452  252,984
Land Use Rights, Net 5,790  5,854
Right of Use Asset 7,342  7,817
Intangible Assets, Net 3,877  3,999
Other Assets 2,493  982
TOTAL ASSETS$ 462,524 $ 480,805
Accounts Payable$28,333 $29,482
Accrued Expenses 16,204  18,511
Current Lease Liability 1,063  1,030
Bank Acceptance Payable 6,481  15,860
Current Portion of Notes Payable and Long Term Debt 41,254  38,265
Total Current Liabilities 93,335  103,148
Notes Payable and Long Term Debt 19,271  13,904
Convertible Senior Notes 78,472  77,854
Other Long-Term Liabilities 7,478  8,008
TOTAL LIABILITIES 198,556  202,914

 Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Statements of Operations
(In thousands, except per share data)
 Three Months Ended September 30, Nine Months Ended September 30,
Revenue 2021  2020   2021  2020 
Datacenter$23,929 $55,336  $72,259 $141,133 
CATV 23,101  11,642   69,339  22,007 
Telecom 5,148  8,870   12,959  17,600 
FTTH 62  67   784  69 
Other 1,027  693   1,816  1,489 
Total Revenue 53,267  76,608   157,157  182,298 
Total Cost of Goods Sold 45,143  57,418   127,537  143,034 
Total Gross Profit 8,124  19,190   29,620  39,264 
Operating Expenses:     
Research and Development 10,149  11,206   31,990  32,567 
Sales and Marketing 2,783  4,491   8,576  10,858 
General and Administrative 10,645  10,272   32,195  31,520 
Total Operating Expenses 23,577  25,969   72,761  74,945 
Operating Loss (15,453)  (6,779)   (43,141 (35,681
Other Income (Expense):     
Interest Income 17  26   49  220 
Interest Expense (1,359 (1,480  (4,158 (4,424
Other Income 999  1,137   7,411  2,078 
Foreign Exchange Gain (Loss) (1 (271  217  18 
Total Other Expense: (344 (588  3,519  (2,108
Net loss before Income Taxes (15,797 (7,367)   (39,622)  (37,789) 
Income Tax Expense -  (2,249  -  (7,224
Net loss (15,797 (9,616)   (39,622)  (45,013) 
Net loss per share attributable to common stockholders
basic$(0.58)$(0.42) $(1.48)$(2.12)
diluted$(0.58)$(0.42) $(1.48)$(2.12)
Weighted-average shares used to compute net loss per share attributable to common stockholders   
basic 27,097  22,744   26,791  21,276 
diluted 27,097  22,744   26,791  21,276 

 Applied Optoelectronics, Inc.
Reconciliation of Statements of Operations under GAAP and Non-GAAP
(In thousands, except per share data)
 Three Months Ended September 30, Nine Months Ended September 30,
  2021   2020   2021   2020 
GAAP total gross profit (a)$8,124  $19,190  $29,620  $39,264 
Share-based compensation expense 222   229   689   712 
Non-recurring expense 52   -   88   972 
Expenses associated with discontinued products 2,220   1,566   5,970   2,997 
Non-GAAP total gross profit (a) 10,618   20,985   36,367   43,945 
GAAP net loss (15,797  (9,616  (39,622  (45,013
Amortization of intangible assets 146   146   449   431 
Share-based compensation expense 3,130   3,265   8,922   9,804 
Non-recurring (income) expense 17   (1,033  (5,727  (227
Expenses associated with discontinued products 2,220   1,566   5,971   2,997 
Non-cash expenses associated with discontinued products 1,235   495   3,662   2,704 
Unrealized exchange loss (gain) 331   (61  1,041   (188
Non-GAAP tax benefit 3,427   3,819   10,365   14,297 
Non-GAAP net loss (5,291  (1,419  (14,939  (15,195
GAAP diluted net loss per share$(0.58) $(0.42) $(1.48) $(2.12)
Amortization of intangible assets 0.01   0.01   0.02   0.02 
Share-based compensation expense 0.11   0.14   0.33   0.46 
Non-recurring (income) expense 0.00   (0.05)  (0.22)  (0.01)
Expenses associated with discontinued products 0.08   0.07   0.22   0.14 
Non-cash expenses associated with discontinued products 0.04   0.02   0.14   0.13 
Unrealized exchange loss (gain) 0.01   (0.00)  0.04   0.00 
Non-GAAP tax benefit 0.13   0.17   0.39   0.67 
Non-GAAP diluted net loss per share$(0.20) $(0.06) $(0.56) $(0.71)
Shares used to compute diluted loss per share 27,097   22,744   26,791   21,276 
Shares used to compute diluted earnings per share 27,097   22,744   26,791   21,276 
(a) Provided for the purpose of calculating gross profit as a percentage of revenue (gross margin).   

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