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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 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.
Total Revenue $118.6 million, increased 82% year-over-year and 15% sequentially. The increase was driven by strong demand in the CATV market, which achieved record revenue, and offset by a slight decline in data center revenue due to timing of shipments.
CATV Revenue $70.6 million, more than tripled year-over-year and increased 26% sequentially. The growth was due to a ramp in orders for 1.8GHz amplifier products for both existing and new customers.
Data Center Revenue $43.9 million, increased 7% year-over-year but decreased 2% sequentially. Sales of 100G products increased 32% year-over-year, while 400G products decreased 65% year-over-year due to timing of shipments.
Non-GAAP Gross Margin 31%, up from 25% in Q3 2024 and 30.4% in Q2 2025. The increase was driven by favorable product mix.
Non-GAAP Operating Expenses $47.1 million, increased from $27.9 million in Q3 2024. The rise was largely driven by increased shipping costs related to higher business activity in the CATV segment.
Non-GAAP Net Loss $5.4 million or $0.09 per share, compared to a loss of $8.8 million or $0.21 per share in Q3 2024. The improvement was due to higher revenue and gross margin.
Inventory $170.2 million, up from $138.9 million in Q2 2025. The increase was due to purchases of raw materials for future production.
Capital Investments $49.9 million in Q3 2025, mainly for manufacturing capacity expansion for 400G and 800G transceiver products.
800G Products: Progress on customer qualifications nearing final stages with several customers. Expecting meaningful shipments in Q4. Production capacity expansion underway, aiming for 35,000 transceivers per month by year-end and over 200,000 per month by mid-2026.
1.8GHz Amplifier Products: Strong demand with record revenue in Q3. Continued ramp in orders from existing and new customers. Positive feedback from customers on performance and features.
QuantumLink Software: Introduced 4 new software modules to enhance network performance and reduce costs. Positive customer feedback.
CATV Market: Achieved record revenue of $70.6 million in Q3, tripling year-over-year. Strong demand for 1.8GHz amplifier products.
Data Center Market: Revenue of $43.9 million in Q3, up 7% year-over-year but down sequentially. Growth expected in Q4 driven by 400G and 800G products.
Production Expansion: Leased additional facility in Texas to scale production. Plans to increase 800G and 1.6 terabit transceiver production by 8.5x by year-end.
In-House Laser Manufacturing: Expanded capability to avoid laser shortages, providing a competitive advantage.
Domestic Production Focus: Prioritizing U.S.-based production to meet customer preferences. Reducing reliance on Chinese components, aiming for near-zero China content in 800G and 1.6 terabit transceivers.
Capital Investments: Invested $49.9 million in Q3 for manufacturing capacity expansion. Total 2025 CapEx projected at $120-$150 million.
Shipping and Receiving Delays: Approximately $6.6 million in shipments of 400G transceivers to a large hyperscale customer could not be turned into revenue during the quarter due to shipping and receiving delays, impacting financial results.
Dependence on Customer Qualifications: Progress on customer qualifications for 800G products is constrained by the ability to build and qualify production capacity, which could delay meaningful shipments.
Tariff Impact: Direct tariffs had a $1.1 million impact on the income statement during the third quarter, and tariffs on capital equipment were $1.9 million, potentially affecting costs and profitability.
Inventory Build-Up: Inventory increased to $170.2 million, primarily due to raw material purchases for future production, which could lead to cash flow challenges if demand does not materialize as expected.
Revenue Concentration: Two customers accounted for 90% of total revenue, indicating a high dependence on a limited customer base, which poses a risk if these customers reduce orders.
Production Capacity Constraints: The ability to scale production for 800G and 1.6 terabit transceivers is limited by equipment lead times and skilled labor availability, potentially delaying revenue growth.
Regulatory and Supply Chain Risks: Efforts to reduce reliance on Chinese components to near zero and discussions with suppliers to onshore production could face regulatory and logistical challenges.
Operating Expense Increase: Non-GAAP operating expenses rose to $47.1 million, driven by increased shipping costs, which could pressure margins if not managed effectively.
Q4 2025 Revenue: Expected to be between $125 million and $140 million, accounting for a sequential decrease in CATV revenue and a more substantial sequential increase in datacenter revenue.
Non-GAAP Gross Margin: Expected to be in the range of 29% to 31% for Q4 2025.
Non-GAAP Net Income: Expected to be in the range of a loss of $9 million to a loss of $2.8 million for Q4 2025.
Non-GAAP Earnings Per Share: Expected to be between a loss of $0.13 per share and a loss of $0.04 per share for Q4 2025.
800G Product Shipments: Meaningful shipments expected in Q4 2025, with production ramping up to achieve the largest domestic production capacity for 800G or 1.6 terabit transceivers by the end of 2025.
Production Capacity Expansion: By mid-2026, expected to produce over 200,000 pieces per month, with the majority produced in Texas. Expansion includes a new facility in Sugar Land, Texas, with construction starting later in 2025.
CATV Revenue: Expected to moderate to between $50 million and $55 million in Q4 2025, following exceptionally strong results in Q3.
Capital Expenditures: Tracking at or above projections of $120 million to $150 million for 2025, mainly for manufacturing capacity expansion for 400G, 800G, and 1.6 terabit datacenter products.
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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