Applied Optoelectronics Sees 83% Revenue Surge, Margin Beat but 800G Glitches
Applied Optoelectronics posted record 2025 revenue of $456 million, up 83% year-over-year, driven by data-center sales of $196 million (32% growth) and CATV revenue of $245 million, while non-GAAP gross margin reached 31.4%. Q4 800G revenue fell below $4 million due to firmware glitches, contributing to a $7.1 million non-GAAP loss and reflecting capacity constraints.
1. Record Revenue and Margin Improvement
Applied Optoelectronics reported full-year 2025 revenue of $456 million, marking an 83% increase over 2024. Data-center sales grew 32% to $196 million and CATV revenue nearly tripled to $245 million, driving non-GAAP gross margin up to 31.4%, above the 29%–31% guidance range.
2. 800G Product Setbacks
Fourth-quarter 800G product revenue fell below $4 million due to ongoing firmware optimizations, delaying recognition of AI data center demand. Management expects the firmware issues to be resolved by Q1 2026, with meaningful 800G growth returning in Q2.
3. Operating Loss and Expense Growth
Non-GAAP operating expenses rose to $49.3 million (37% of revenue) from 31% in the prior year, resulting in a Q4 non-GAAP operating loss of $7.1 million versus a $2.5 million loss last year. Tariff impacts of $1.2 million and supply-chain challenges further weighed on short-term profitability.
4. Capacity Expansion and Future Outlook
The company is expanding manufacturing capacity in Texas to meet growing demand for 800G and 1.6 terabit products. Management targets 35%–38% gross margin on 1.6 terabit offerings by Q2 2027, rising to 40% later in the year, and plans to internalize most laser production by year-end.