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01/09 23:04
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows strong year-over-year growth in key areas like datacenter and CATV revenue, along with improvements in operating losses. The Q&A session reveals management's plans for expanding production and engaging with Tier 1 customers, suggesting future growth. Despite some vague responses, the overall sentiment is positive due to strong revenue performance and optimistic guidance, particularly in the datacenter segment. The lack of market cap data means we can't assess the exact impact, but overall, the sentiment points to a positive stock price movement.
Revenue $103 million, which more than doubled year-over-year and increased 3% sequentially. The increase was driven by strong demand in both datacenter and CATV businesses.
Non-GAAP Gross Margin 30.4%, up from 22.5% in Q2 2024. The increase was driven by favorable product mix, including growth in CATV revenue and newer-generation datacenter products.
Datacenter Revenue $44.8 million, up 30% year-over-year and 40% sequentially. Growth was largely due to increased demand for 100G and 400G products.
100G Product Revenue Increased 25% year-over-year, driven by growing customer demand.
400G Product Revenue Increased 43% year-over-year, driven by growing customer demand and higher ASP and gross margin for single-mode transceivers.
CATV Revenue $56 million, up more than 8x year-over-year but down 13% sequentially. The year-over-year increase was due to the ramp in orders for 1.8 gigahertz amplifier products, while the sequential decline was due to retooling production to Motorola-style amplifiers.
Non-GAAP Operating Expenses $42.1 million, up from $26 million in Q2 2024. The increase was due to strategic investments in R&D and SG&A expenses driven by increased business activity.
Non-GAAP Operating Loss $10.8 million, compared to $16.2 million in Q2 2024. The improvement was due to higher revenue and gross margin.
GAAP Net Loss $9.1 million, compared to $26.1 million in Q2 2024. The improvement was due to higher revenue and gross margin.
Inventory $138.9 million, up from $102.3 million in Q1 2025. The increase was due to purchases of raw materials for future production.
800G and 1.6Tb transceivers: Strategic investments in R&D and SG&A expenses are driving new customer qualification efforts for these products, translating into higher customer engagement and revenue opportunities.
400G datacenter transceivers: Completed first volume shipment to a major hyperscale customer and observed increased demand from other hyperscalers.
1.8 GHz amplifiers and QuantumLink software: Completed testing and certification with Charter, with plans for deployment. Strong demand from Charter and six other MSO customers.
Datacenter business: Revenue increased 30% year-over-year and 40% sequentially, driven by demand for 100G and 400G products.
CATV segment: Revenue increased more than 8x year-over-year, driven by 1.8 GHz amplifier products.
Manufacturing capacity expansion: Progress in expanding production capacity for 800G and higher transceivers in Texas and Taiwan, with plans to produce 40,000 transceivers per month domestically by late summer 2025.
Inventory management: Inventory increased to $138.9 million due to raw material purchases for upcoming production.
Onshoring manufacturing: Received a $2 million incentive from Sugar Land, Texas, for onshoring manufacturing and expanding the local footprint.
Supply chain diversification: Efforts to reduce reliance on China-sourced components for 800G and 1.6Tb transceivers, aiming for near-zero China content.
Elevated Operating Expenses: The company reported higher-than-expected operating expenses, primarily due to increased R&D and SG&A costs. This rise was attributed to new customer qualification efforts, shipping costs, and trade show expenses, which negatively impacted EPS.
Currency Fluctuations: The rapid strengthening of the Taiwan dollar unfavorably impacted operating expenses, although the company expects this effect to be muted in Q3.
Tariff Risks: While tariffs had a limited impact in Q2, the evolving nature of tariff developments poses a risk to costs and supply chain operations. The company is working to reduce reliance on Chinese components and onshore production to mitigate this risk.
Production Capacity Constraints: The ramp-up of 800G product production is constrained by the company's ability to build and qualify production capacity, potentially delaying revenue realization.
Inventory Build-Up: The company reported a significant increase in inventory levels, primarily due to raw material purchases for future production. This could pose a risk if demand does not materialize as expected.
Customer Concentration: The top 10 customers represented 98% of revenue, with two customers accounting for 88% of total revenue. This high concentration increases vulnerability to changes in customer demand or relationships.
Economic Uncertainty: The company faces risks from broader economic uncertainties, which could impact customer demand and operational costs.
Revenue Outlook for Q3 2025: Expected to be between $115 million and $127 million, reflecting a modest sequential increase in CATV revenue and datacenter revenue.
Non-GAAP Gross Margin for Q3 2025: Expected to be in the range of 29.5% to 31%.
Non-GAAP Net Income for Q3 2025: Expected to be in the range of a loss of $5.9 million to a loss of $2 million.
Non-GAAP Earnings Per Share for Q3 2025: Expected to be between a loss of $0.10 per share and a loss of $0.03 per share, based on a weighted average basic share count of approximately 62.3 million shares.
800G Product Qualification and Production: Meaningful shipments of 800G products are expected in the second half of 2025, likely in late Q3 or Q4, with a quick ramp in revenue anticipated once production is ready.
U.S.-Based Production Expansion: Initial U.S.-based production of 800G transceivers is on track to begin later in the summer of 2025, with plans to produce approximately 40,000 transceivers per month by year-end and over 200,000 pieces per month by mid-2026.
Capital Expenditures for 2025: Expected to be between $120 million and $150 million, primarily for manufacturing capacity expansion for 400G, 800G, and 1.6 terabit datacenter products.
Long-Term Gross Margin Goal: Committed to achieving a non-GAAP gross margin of around 40% in the long term.
The selected topic was not discussed during the call.
The earnings call reveals strong CATV revenue and gross margin improvements, but data center revenue declined slightly, and operating expenses increased. Management's optimistic guidance on future transceiver shipments and revenue is tempered by the need for additional fundraising and vague responses regarding CapEx and competitive positioning. The Q&A highlighted unresolved issues with shipping delays and unclear management responses, which may concern investors. Overall, the mixed signals and uncertainties suggest a neutral stock price movement in the short term.
The earnings call shows strong year-over-year growth in key areas like datacenter and CATV revenue, along with improvements in operating losses. The Q&A session reveals management's plans for expanding production and engaging with Tier 1 customers, suggesting future growth. Despite some vague responses, the overall sentiment is positive due to strong revenue performance and optimistic guidance, particularly in the datacenter segment. The lack of market cap data means we can't assess the exact impact, but overall, the sentiment points to a positive stock price movement.
The earnings call presents a mixed picture. Financial performance shows improvement, with revenue doubling YoY and margin expansion. However, guidance indicates potential losses, and high customer concentration poses risks. The Q&A reveals confidence in inventory management and significant future demand for 800G products, but also highlights uncertainties like tariff impacts and unclear responses from management. The share repurchase program is positive, yet the new offering dilutes this effect. Overall, these factors balance out, suggesting a neutral stock price movement in the short term.
The earnings call presents a mixed outlook: strong revenue growth and a positive share repurchase program are offset by high customer concentration risk, regulatory challenges, and increased R&D and CapEx expenses. The Q&A reveals some uncertainty in capacity planning and lack of guidance on future CapEx, which may concern investors. Despite the revenue increase, the financials show a significant net loss, and the guidance suggests continued volatility. These factors combined suggest a neutral impact on the stock price in the short term.
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