Applied Optoelectronics falls 5.22% after hours despite Q2 revenue and earnings beat

Applied Optoelectronics shares traded lower after hours after the optical networking company posted a fifth consecutive quarter of record revenue and returned to non-GAAP profitability, while detailing a far larger multi-year manufacturing expansion to serve AI-related demand. Revenue for the quarter ended June 30 rose 86% from a year earlier and 27% sequentially to $191.9 million, within the companys guidance range of $180 million to $198 million. Non-GAAP net income was $5.5 million, or $0.06 per diluted share, compared with the companys forecast range of a loss of $0.03 per share to a profit of $0.03, while GAAP net loss was $22.8 million, or $0.28 per basic share. The data center segment led growth, with revenue rising 140.4% to $107.7 million, topping $100 million for the first time and surpassing the CATV business as the companys largest revenue source. Management said current customer demand exceeds supply capacity by about 20% to 40%, shifting the main constraints to factory buildouts, component availability and customer certification. Applied Optoelectronics said monthly capacity for 800G and 1.6T modules is set to rise from about 100,000 units at the end of the first quarter to more than 930,000 units by the end of 2027, with more than half of that capacity in Texas. The company expects capacity to exceed 650,000 units per month by year-end, with total manufacturing capacity already approaching 200,000 units per month in the second quarter. It said 1.6T certification with a major hyperscale data center customer is expected within two to three weeks, with shipments starting late in the third quarter and fourth-quarter 1.6T revenue seen above $70 million. The outlook continued to reverberate in China, where Zhongji Innolight shares sold off as investors reassessed future competition in high-speed optical modules.