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OFC, April 1, 2025INVESTOR PRESENTATION Nasdaq: AAOI
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This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "could," "would," "target," "seek," "aim," "predicts," "think," "objectives," "optimistic," "new," "goal," "strategy," "potential," "is likely," "will," "expect," "plan" "project," "permit" or by other similar expressions that convey uncertainty of future events or outcomes. These statements include management’s beliefs and expectations related to our outlook for the first quarter of 2025 and the remainder of 2025. Such forward-looking statements reflect the views of management at the time such statements are made. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause the company's actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include but are not limited to: reduction in the size or quantity of customer orders; change in demand for the company's products due to industry conditions; changes in manufacturing operations; volatility in manufacturing costs; delays in shipments of products; disruptions in the supply chain; change in the rate of design wins or the rate of customer acceptance of new products; the company's reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers' products or their rate of deployment of their products; general conditions in the internet datacenter, cable television (CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in the world economy (particularly in the United States and China); changes in the regulation and taxation of international trade, including the imposition of tariffs; changes in currency exchange rates; the negative effects of seasonality; the impact of the COVID-19 pandemic on our business and financial results; and other risks and uncertainties described more fully in the company's documents filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. More information about these and other risks that may impact the company's business are set forth in the "Risk Factors" section of the company's quarterly and annual reports on file with the Securities and Exchange Commission. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in the company's expectations.In addition, this presentation includes non-GAAP gross margin, non-GAAP net income (loss), adjusted EBITDA, and non-GAAP earnings per share, which eliminate the impact of items that we do not consider indicative of our overall operating performance. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP . A reconciliation between our GAAP and non-GAAP measures, as well as a discussion of why we present non-GAAP financial measures are included in our earnings press release that is available on our website and the appendix of this presentation. Fo r w a r d L o o k i n g S t a t e m e n t s & N o n - G A A P F i n a n c i a l M e a s u r e s 2
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The information contained herein includes information provided by third-parties, such as market research firms. None of the Company, itsaffiliates or any third-parties that provided information to the Company (i) guarantee the accuracy, completeness, timeliness or availability ofany information nor are they (ii) responsible for any error or omission (negligent or otherwise), regardless of the cause or the result obtainedfrom the use of such content nor do they (iii) give any express or implied warranties, including, but not limited to, any warranties ofmerchantability or fitness for a particular purpose or use, and they expressly disclaim any responsibility or liability for direct, indirect, incidental,exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including lost income or profitsand opportunity costs) in connection with the use of the information herein.I n d u s t r y a n d M a r ke t D a t a 3
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INVESTMENTH I G H L I G H T SA Leader in Advanced OpticsDynamic MarketsMarquee CustomersProprietary ManufacturingDiversifying Customer Base4
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A leading provider of optical access products that enable the gigabit age 5
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Q4 2024 Highlights and Q1 2025 Outlook•Revenue of $100.3 million, in-line with our guidance range.•Datacenter revenue rose 8% sequentially, driven by increased adoption of 400G products byour data center customers, along with new customers that we began shipping to during theyear•CATV revenue more than doubled from Q3, largely driven by shipments of 1.8 GHz amplifiersfor a major MSO customer•Non-GAAP Gross Margin of 28.9% vs. 36.4% in Q4 2023, within our guidance range.•Revenue for our 400G products increased 40% year over year and 17% sequentially.•Continued to make progress on 800G products, with customers beginning to give us clear demandforecasts which indicate ramping demand beginning in the second half of 2025.•Received a substantial order for Quantum Bandwidth® networking products from a top NorthAmerican cable operator.•First Quarter 2025 Guidance•Revenue in the range of $94 million to $104 million•Non-GAAP gross margin in the range of 29.0% to 30.5%•Non-GAAP net loss in the range of $3.6 million to $0.0 million, and non-GAAP loss per sharein the range of $(0.07) to $0.00 using approximately 49.6 million shares•Expect to make sizable capex investments over the next several quarters as we prepare forincreased 400G, 800G, and 1.6 Tb datacenter product production in 2025. For the year, we expectbetween $120 million and $150 million in total CapEx.652%44%4%0.3%Q4 2024 Revenue BreakdownCATVDatacenterTelecomFTTH & Other
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Bandwidth Demand Drives Revenue DevicesVideoCloudSocial DATA CENTERCATVTelecomFTTH$0$50$100$150$200$250$300$350$4002014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024ANNUAL REVENUE ($M)CAGR7%** CAGR calculated from 2014 through 2024.7
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Four End-Markets With Strong Demand DriversCable TelevisionDatacenterTelecommunicationsFiber-to-the-Home•DOCSIS 3.1+ & 4.0 upgrade cycle•International market opportunities•New opportunities for HFC nodes and optics•Increasing size and complexity of datacenters, driven by AI•Higher-speed interconnect - 1G to (10G/40G/100G/200G/400G/800G) •Continuous need to expand, refresh and replenish•5G LTE deployment•Backbone network for datacenter interconnect•Aging access networks in need of rebuild•10/25/100 Gbps FTTH networks to replace 2.5Gbps•Telecom carriers need to fiberize to compete with CATV, new entrants•Greenfield economics and BEAD funding in US favor fiber deployment8
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Growth Expected in Datacenter MarketTotal High-Speed (100G or greater) Market to Exceed $25 Billion in 2026 • Source: High-Speed OC Forecast: 2023–29 – Omdia | Nov., 2024• Historical and future data is estimated, based upon a methodology developed by Omdia reseach9$0$5,000$10,000$15,000$20,000$25,000$30,000$35,000$40,0002023 2024 2025 2026 2027 2028 2029Revenue ($M)100G200G400G600G800G1.2T/1.6TSource: Omdia © 2024 Omdia2023-2029 CAGR: 22%800G (23-29) CAGR: 52%
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Text Placeholder Text Placeholder AOI Global OperationsR&DMANUFACTURINGLOCATION•Laser Chips•LD Packaging•Transceivers•139,450sqftHouston400 Employees R&DMANUFACTURINGLOCATION•Transceivers•LD, PD Packaging•CATV Equipment•Factory-1: 460,920sqft•Factory-2: 744,884sqft, begining in May, 2025Ningbo2,000 Employees OMD Production SPD Production MOCVD Headquarter Office Factory Administration Dormitories R&DMANUFACTURINGLOCATION•Transceivers•LD Packaging•Factory-1: 268,797sqft (MFG rel.: 46%)•Factory-2: 83,994sqft, beginning in May, 2025Taipei870 EmployeesR&DR&DLOCATION•CATV R&D•Remote-PHY•12,000sqft•New facility online in Q3/25, ~36,000 sqftAtlanta60 Employees LOCATIONSan JoseDatacenter customer support3 employees
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MANUFACTURING AUTOMATIONC R I T I C A L D I F F E R E N T I A T O RLocation-agnosticEnhanced quality/reproducibiltyHighly scalableFlexible platform (400G/800G/1.6T +)Rapid response to customer & market demand14
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Text Placeholder Text Placeholder AOI self-developed technology Unique Conveyor System 1.Product Compatibility Design 3. Online Inspection4. In-Process Material HandlingProduct Platform2. Advanced Manufacturing Process High PrecisionOverview of AOI’s Automation Engineering CapabilitiesStandard product platform to increase the flexibility of the production automation system.Highly integrated and automated process to increase production precision and efficiencyHuge 9-year dataset for training neural networks on fused dataset combining imagery and test dataStandardized magazine and fixture design integrated throughout the production process to achieve reliable automated in-process material transport. 5. Efficient Test SystemProprietary technology increases test station throughput by 20x.*1.6T testing under developmentTrained AI Neural Networks for In-Process Inspection400G/800G/(1.6T*) GUI Test System
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Text Placeholder Text Placeholder Other Key Process：14. L/W Process15. Laser Soldering Process16. AWG Coupling17. Box Sealing Process13 AOI Automatic Production, Largely In-House Developed 1. Eutectic Process 4. D/B Process5. Lens Coupling Process6. Siph Chip Assembly Process9. FA Coupling Process10. Mechanical Assembly Process11. Housing & Screw Assembly Process12. TRX Testing Process13. Packaging Line3. W/B Process2. COS Inspection Process7. Adhesive dispensingProcess8. Baseplate AssemblyAOI in-house designed equipment, developed between 2016 and 2025
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DPPM (Defective Parts Per Million) << 50 for Multi-Lane Single Mode 800G TRxReduced Manufacturing Cycle Time by More Than 35%Decreased Labor Hours by 85%+16 ResultsAutomated Production is Largely Location-Agnostic, Minimizing Supply-Chain Risks for Customers
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2025-Dec2025-Nov2025-Oct2025-Sep2025-Aug2025-Jul2025-Jun2025-May2025-AprCapacity*LocationProduct120%Taipei, TW400G DR4/FR4140%Taipei, TW400G DR4/FR4145%Taipei, TW800G 2xFR4/DR8235%Taipei, TW800G 2xFR4/DR8255%Taipei, TW800G 2xFR4/DR8365%Taipei, TW800G 2xFR4/DR8440%Taipei, TW800G 2xFR4/DR8100%Texas, US800G 2xFR4/DR8500%Taipei, TW800G 2xFR4/DR8200%Texas, US800G 2xFR4/DR8830%Taipei, TW800G 2xFR4/DR8300%Texas, US800G 2xFR4/DR8400%Texas, US800G 2xFR4/DR8 2025 Capacity Addition PlanMulti-Phase Capacity Addition Plan•AOI is in qualification with multiple hyperscale customers with interest in both Taiwan and Texas plant output. * Capacity Addition Relative to Baseline (March, 2025 for Taiwan, September, 2025 for US)
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202820272026202520242023 Technology Roadmap 800G OSFP 2xDR4/2xFR4 (8:8)800G OSFP SR8 (8:8)800G OSFP DR4 (4:4)800G OSFP FR4 (8:4)1.6T OSFP 2xDR4/2xFR4 (8:8)1.6T OSFP SR8 (8:8)800G OSFP DR4 LPO (4:4)100G/Lane200G/Lane VCSELWire Bonding + Flip Chip Si/TFLN/TFLN + SiN Flip ChipTechnologyProductGbps/Channel6.4T CPO LE Research(32:32) RoadmapHigh Density Form Factor/OIF in definitionSi + SiN SiPho High-Speed SiPho Material1.6T OSFP 2xDR4 RTLR (8:8)400G/Lane
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In-House Automation Team Enables New Manufacturing Models for High-Volume, Scalable ProductionAutomation Can Be Leveraged in Other Businesses as Volume RampsMODULES/TRANSCEIVERSSUBSYSTEM EQUIPMENTOPTICAL SUBASSEMBLYOPTICAL PACKAGED DEVICESEPITAXY WAFERPROCESSED WAFERCHIPS DATA CENTER CATV Telecom FTTH17
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Financial Review 19
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Financial PerformanceANNUAL REVENUE BY END MARKET * Reflects a $900 thousand credit issued to a customer, which is adjusted out of our non-GAAP revenue in Q4/2018. All other revenue is on a GAAP basis.** Reflects a $449 thousand credit issued to a customer, which is adjusted out of our non-GAAP revenue in Q4/2020. All other revenue is on a GAAP basis. $268.4 $190.9 $235.1 $211.6 $222.8 $217.6 $249.4 2018 2019 2020 2021 2022 2023 2024CATVData CenterFTTH & Other15%(2)%5%(10)%23%(29)%(30)%YOY GROWTH* ** 20
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Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025EFTTH & OtherData CenterCATVRecent Financial PerformanceQUARTERLY REVENUE BY END MARKET * Reflects midpoint of Q1 2025 guidance of $94 million to $104 million provided in Q4 2024 earnings press release on 2/26/2521$60.5$40.7$43.3$65.1$99.0*$100.3
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Q4/24 ResultsNON-GAAP* Q4/24$IN MILLIONS EXCEPT %$ 100.3TOTAL REVENUE$ 52.2CATV$ 44.2DATACENTER$ 3.5TELECOM28.9%GROSS MARGIN$ 2.5OPERATING LOSS$ 1.0NET LOSS$ 79.1CASH***Please refer to the Safe Harbor statement on the use of Non-GAAP metrics, as well as the attached GAAP-non-GAAP reconciliation.** Cash: Cash, cash equivalents, short-term investments, and restricted cash.22
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Balance Sheet Highlights 12/31/202412/31/202312/31/2022IN MILLIONS$79$55$36CASH(1) $131$79$45WORKING CAPITAL(2) $219$200$210PROPERTY, PLANT & EQUIPMENT, NET$547$389$408TOTAL ASSETS$46$39$69TOTAL DEBT(3) $229$215$185STOCKHOLDERS’ EQUITY(1) Cash: Cash, cash equivalents, short-term investments, and restricted cash.(2) Working Capital: Total current assets less total current liabilities.(3) Total Debt: Short-term loans, notes and bank acceptances payable and total long-term debt. Convertible notes outstanding are expected to be settled in common stock, not cash, so are excluded from total debt.23
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INVESTMENTSUMMARYA leader In Advanced OpticsFocus on fast growing markets including hyperscale datacentersMarquee global customersExtensive internally developed technologyManufacturing expertise creates differentiation & enhances marginOperating model provides significant leverage24
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APPENDIX 26
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MANAGEMENT TEAM Dr. Fred ChangCOMPONENT BU HEAD2 3 + Y E A R S Joshua YehASIA GM1 9 + Y E A R S Dr. Alex Anselm SEMICONDUCTOR PRODUCTS DIVISION HEAD2 5 + Y E A R S David KuoGENERAL COUNSEL & CHIEFCOMPLIANCE OFFICER1 6 + Y E A R S Dr. Thompson LinFOUNDER, PRESIDENT & CEO2 8 + Y E A R S Dr. Stefan MurryCFO & CSO2 8 + Y E A R S 27
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Non-GAAP Financial Measures• We provide non-GAAP gross margin, non-GAAP net income (loss), and non-GAAP loss per share to eliminate the impact of items that we do not consider indicative of our overall operating performance. To arrive at our non-GAAP gross margin, we exclude stock-based compensation and related expenses, expenses associated with discontinued products, and non-recurring (income) expenses, if any, from our GAAP gross margin. To arrive at our non-GAAP net income (loss), we exclude all amortization of intangible assets, stock-based compensation expense, non-recurring expenses, unrealized foreign exchange loss (gain), losses from the disposal of idle assets, if any, non-GAAP tax benefit (expenses) and cash and non-cash expenses associated with discontinued products, if any, from our GAAP net income (loss). Included in our non-recurring expenses in Q4 2024, Q4 2023, and Q3 2024 are employee severance expenses, legal expenses associated with litigation and certain legal and advisory expenses associated with purchase termination or patent protection (if any), also included in our non-recurring income (expenses) in Q4 2024 and Q4 2023, are certain non-recurring expenses related to the debt extinguishment loss on our convertible notes. In computing our non-GAAP income tax benefit (expense), we have applied an estimate of our annual effective income tax rate and applied it to our net income before income taxes. Our adjusted EBITDA is calculated by excluding depreciation expense, non-GAAP tax benefit (expense), and interest (income) expense, as well as the items excluded from non-GAAP net income (loss), from our GAAP net loss. Our non-GAAP diluted net loss per share is calculated by dividing our non-GAAP net loss by the fully diluted share count (for periods in which non-GAAP net income is positive) or basic share count (for periods in which our non-GAAP net income is negative).We believe that our non-GAAP measures are useful to investors in evaluating our operating performance for the following reasons:• We believe that elimination of items such as amortization of intangible assets, stock-based compensation expense, non-recurring revenue and expenses, including non-recurring expenses from debt extinguishment and losses on convertible note exchange, losses from the disposal of idle assets, unrealized foreign exchange gain or loss, and depreciation on certain equipment undergoing reconfiguration, is appropriate because treatment of these items may vary for reasons unrelated to our overall operating performance;• We believe that elimination of expenses associated with discontinued products, including depreciation and inventory obsolescence is appropriate because these expenses are not indicative of our ongoing operations;• We believe that estimating non-GAAP income taxes allows comparison with prior periods and provides additional information regarding the generation of potential future deferred tax assets;• We believe that non-GAAP measures provide better comparability with our past financial performance, period-to-period results and with our peer companies, many of which also use similar non-GAAP financial measures; and We anticipate that investors and securities analysts will utilize non-GAAP measures as a supplement to GAAP measures to evaluate our overall operating performance. NON-GAAP FINANCIAL MEASURES 28
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A reconciliation of our GAAP net income (loss), GAAP total gross profit, GAAP earnings (loss), and GAAP earnings (loss) per share for Q4 2024 and FY 2024 to our non-GAAP net income (loss), non-GAAP total gross profit, Adjusted EBITDA, and earnings (loss) per share, respectively, is provided below, together with corresponding reconciliations for Q4 2023 and FY 2023.Non-GAAP measures should not be considered as an alternative to net income (loss), earnings (loss) per share, or any other measure of financial performance calculated and presented in accordance with GAAP . Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such other non-GAAP measures in the same manner. We have not reconciled the non-GAAP measures included in our guidance to the appropriate GAAP financial measures because the GAAP measures are not readily determinable on a forward-looking basis. GAAP measures that impact our non-GAAP financial measures may include stock-based compensation expense, non-recurring expenses, amortization of intangible assets, unrealized exchange loss (gain), asset impairment charges, loss (gain) from disposal of idle assets, and changes in the fair value of our convertible notes. These GAAP measures cannot be reasonably predicted and may directly impact our non-GAAP gross margin, our non-GAAP net income and our non-GAAP fully-diluted earnings per share, although changes with respect to certain of these measures may offset other changes. In addition, certain of these measures are out of our control. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.NON-GAAP FINANCIAL MEASURES 29
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NON-GAAP RECONCILIATION 30
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NON-GAAP RECONCILIATION 31