Applied Optoelectronics Reports Mixed Q3 Results with Revenue Growth, Widening Losses

Applied Optoelectronics, Inc. (AOI) reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting a mixed performance in revenue and profitability compared to the previous fiscal period.

For the three months ended September 30, 2024, AOI generated revenue of $65.2 million, a 4.2% increase from $62.5 million in the same period of 2023. However, for the nine months ended September 30, 2024, total revenue decreased by 5.2% to $149.1 million from $157.2 million in the prior year. The Data Center segment contributed $40.9 million (62.8% of total revenue) in Q3 2024, down from $48.8 million (78.0%) in Q3 2023, while the CATV segment saw an increase to $20.9 million (32.2%) from $10.3 million (16.4%).

Gross profit for Q3 2024 was $15.9 million, representing a gross margin of 24.4%, down from $20.2 million (32.3%) in Q3 2023. For the nine-month period, gross profit also declined to $33.1 million (22.2% of revenue) from $37.3 million (23.7%). The decrease in gross profit was attributed to price reductions for certain data center products and increased costs of goods sold, which rose to $49.2 million in Q3 2024 from $42.4 million in Q3 2023.

Operating expenses surged significantly, with total operating expenses for Q3 2024 reaching $32.5 million, up from $26.9 million in Q3 2023. This increase was driven by higher research and development expenses, which rose by 42% due to increased personnel costs and project expenditures. Consequently, AOI reported a loss from operations of $16.5 million for Q3 2024, compared to a loss of $6.7 million in Q3 2023. The net loss for the quarter was $17.8 million, compared to $9.0 million in the prior year.

For the nine months ended September 30, 2024, AOI's net loss was $67.0 million, up from $42.2 million in the same period of 2023. The company’s cash and cash equivalents decreased to $34.1 million as of September 30, 2024, from $45.4 million at the end of 2023.

Strategically, AOI completed a public offering of common stock, generating net proceeds of approximately $38.5 million in Q3 2024, compared to $22.0 million in the same period of 2023. The company also terminated its Equity Distribution Agreement with Raymond James & Associates effective November 6, 2024, after raising a total of $59.9 million through its ATM program.

Overall, AOI's financial results reflect challenges in maintaining profitability amid rising costs and fluctuating revenue streams, particularly in its Data Center segment, while also pursuing strategic financing initiatives to bolster its capital position.