Applied Optoelectronics Stock Tumbles Despite Q3 Earnings Beat

Applied Optoelectronics Inc (NASDAQ:AAOI) reported financial results for the third quarter after the close on Thursday. Here’s what you need to know from the report.

• Applied Optoelectronics shares are retreating from recent levels. What’s pressuring AAOI stock?

Applied Optoelectronics Q3 Highlights

Applied Optoelectronics posted third-quarter revenue of $269.88 million, beating analyst estimates of $268.11 million, according to Benzinga Pro. The company reported adjusted earnings of 17 cents per share for the quarter, beating estimates of 14 cents per share.

Gross margin was 28.2% in the third quarter, versus 27.7% in the second quarter and 28% in the comparable quarter last year.

“We have made meaningful progress in scaling our manufacturing capabilities, particularly for our 800G and 1.6T products, to address demand for AI-related optical technologies that we believe is accelerating,” said Thompson Lin, founder, president and CEO of Applied Optoelectronics.

“We have recently secured a multi-year strategic agreement with a Tier 1 hyperscale datacenter customer, which we think provides us with improved long-term visibility and reinforces our confidence in the opportunity ahead as demand for high-bandwidth, energy-efficient optical connectivity products continues to grow.”

Applied Optoelectronics expects fourth-quarter revenue to be in the range of $385 million to $420 million versus estimates of $427.26 million. The company anticipates fourth-quarter adjusted earnings in the range of 48 cents to 63 cents per share versus estimates of 56 cents per share.

AAOI Shares Trade Lower After Hours

AAOI Price Action: Applied Optoelectronics shares were down 10% in after-hours, trading at $42.20 at the time of publication on Thursday, according to Benzinga Pro. Overall guidance was weak at the midpoint, which may be weighing on shares after the close.

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