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Applied Optoelectronics reported Q3 revenue of $269.9 million, above the consensus estimate of $268.1 million. Adjusted earnings per share were $0.17, compared with the consensus estimate of $0.14. Revenue was within the company’s own Q3 forecast of $255.0 million to $290.0 million.
Revenue rose 127.5% from $118.6 million a year earlier. The company attributed the increase primarily to a $111.7 million rise in data center product revenue, driven by customer demand and deployments, and a $40.3 million increase in cable television product revenue, reflecting higher volumes.
Gross margin was 28.2%, compared with 28.0% a year earlier, while operating margin was −0.53%, compared with −15.3%. On a non-GAAP basis, gross margin was 28.7%, below the company’s earlier forecast of 29.0% to 30.5%.
Applied Optoelectronics reported diluted earnings of $0.07 per share, compared with a loss of −$0.28 per share a year earlier. Free cash flow was −$3.1 million, compared with −$78.8 million a year earlier.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $269.9 million | $118.6 million | 127.5% |
| Diluted EPS | $0.07 | −$0.28 | — |
| Gross margin | 28.2% | 28.0% | 0.2 percentage points |
| Operating margin | −0.53% | −15.3% | 14.8 percentage points |
| Free cash flow | −$3.1 million | −$78.8 million | — |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Revenue | $191.9 million | $191.1 million | In line |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
| Against its own guidance | For | Guided | Reported | Result |
|---|---|---|---|---|
| Revenue | Q3 FY2026 | $255.0 million–$290.0 million | $269.9 million | Within the guide |
What management said on the call
Applied Optoelectronics’ latest earnings call was not available for review.
Guidance
Applied Optoelectronics forecasts Q4 revenue of $385.0 million to $420.0 million and non-GAAP gross margin of 29.5% to 31.0%. It expects non-GAAP net income of $45.9 million to $60.4 million and non-GAAP income per share of $0.48 to $0.63.
For Q3, the company’s prior forecast was revenue of $255.0 million to $290.0 million and non-GAAP gross margin of 29.0% to 30.5%.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Capex | Q4 FY2026 | Applied Optoelectronics expects Q4 FY2026 capital expenditures to be higher than in Q3. | — | — |
| Net margin | FY2027 | 20.0% | — | New |
| Gross margin | FY2027 | Applied Optoelectronics expects a higher gross margin by the end of FY2027. | — | — |
| Revenue, Data Center Monthly Run Rate | FY2027 | $470.0 million | — | New |
| Revenue, Data Center Monthly Run Rate | Q4 FY2026 | $100.0 million | — | New |
| Revenue, 1 6t | Q4 FY2026 | $50.0 million–$70.0 million | — | New |
| Revenue, 400g | Q4 FY2026 | Applied Optoelectronics expects an incremental increase in 400G revenue in Q4 FY2026. | — | — |
| Revenue, 800g | Q4 FY2026 | Applied Optoelectronics expects continued 800G revenue growth in Q4 FY2026. | — | — |
| EPS, non-GAAP | Q4 FY2026 | $0.48–$0.63 | Q3 FY2026: $0.11–$0.26 | Raised |
| Net income, non-GAAP | Q4 FY2026 | $45.9 million–$60.4 million | Q3 FY2026: $10.1 million–$24.0 million | Raised |
| Gross margin, non-GAAP | Q4 FY2026 | 29.5%–31.0% | Q3 FY2026: 29.0%–30.5% | Raised |
| Revenue | Q4 FY2026 | $385.0 million–$420.0 million | Q3 FY2026: $255.0 million–$290.0 million; reported $269.9 million | Raised |
| Revenue | FY2026 | Applied Optoelectronics expects steady sequential revenue growth in FY2026. | — | — |
| Units, 800g and 1.6tb Production Capacity | FY2026 | 650,000 | — | — |
| Units, Elsfp | FY2028 | 400,000 | — | — |
| Units, 800g and 1 6t Production Capacity | FY2026 | 930,000 | — | — |
| Net income, non-GAAP | FY2026 | Applied Optoelectronics expects continued non-GAAP profitability in FY2026. | — | — |
| Revenue, Data Center Transceivers | FY2027 | $471.0 million | — | New |
| Revenue, 1 6t | FY2027 | $164.0 million | — | New |
| Revenue, 800g | FY2027 | $217.0 million | — | New |
| Revenue, 100g and 400g | FY2027 | $90.0 million | — | New |
| Revenue, 1 6t | FY2026 | Applied Optoelectronics expects 1.6T products to begin contributing revenue in FY2026. | — | — |
| Revenue, Catv Software | FY2026 | Applied Optoelectronics expects some software revenue in FY2026. | — | — |
| Revenue | FY2026 | $1.1 billion | — | New |