Applied Optoelectronics reported revenue of $191.9 million in the second quarter of 2026, an 86% increase year on year. However, heavy capital expenditures drove free cash flow sharply negative, highlighting the burden of expanding production capacity.
Applied Optoelectronics reported revenue of $191.9 million for the second quarter of 2026, up 86% year on year. The results suggested a return to profitability on a non-GAAP basis, and the company reaffirmed its full-year revenue target. At the same time, the company said that production capacity expansion in the quarter is expected to provide support.
Capital expenditures for the June quarter reached $565.5 million, including $280.0 million in advance payments for equipment, while cash flow deteriorated to negative $563.7 million. This underscored the significant impact of capital spending associated with expanding production capacity.
The weighted-average number of diluted shares outstanding increased by approximately 93%, from 42.3 million to 81.6 million. The company raised capital through two at-the-market equity offering programs.
Insiders CFO Stefan Murry and SVP Joshua Yeh each sold shares 4 times in August and September as the share price rose, reducing their holdings. The Street's price target rose to $163.40 over the same period.