Sugar Land, Texas, May 7, 2020 – Applied Optoelectronics, Inc. (NASDAQ: AAOI), a leading provider of fiber-optic access network products for the internet datacenter, cable broadband, telecom and fiber-to-the-home (FTTH) markets, today announced financial results for its first quarter 2020 ended March 31, 2020.

“We are disappointed with our first quarter financial results, which were impacted by the COVID-19 pandemic, including an unanticipated shutdown of our China factory of nearly 3 weeks’ duration. However, acknowledging heightened uncertainty due to the virus, we are encouraged by the improved datacenter demand we are seeing and increasing 5G-related activity, particularly in China,” said Dr. Thompson Lin, Applied Optoelectronics Inc. Founder, President and Chief Executive Officer. “We have taken numerous measures to adapt to the current environment, our factory in China has returned to normal staffing levels, and our entire team has worked diligently to keep AOI operating and on track during this challenging time.”

A reconciliation between all GAAP and non-GAAP information referenced above is contained in the tables below. Please also refer to “Non-GAAP Financial Measures” below for a description of these non-GAAP financial measures.

⁽⁺⁾Please refer to the note below on forward-looking statements and the risks involved with such statements as well as the note on non-GAAP financial measures.

The company will host a conference call and webcast for analysts and investors on May 7, 2020 to discuss its first quarter 2020 results and outlook for its second quarter of 2020 at 4:30 p.m. Eastern time / 3:30 p.m. Central time. Open to the public, investors may access the call by dialing 844-890-1794 (domestic) or 412-717-9586 (international). A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company's website at investors.ao-inc.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will run for five business days and may be accessed by dialing 877-344-7529 (domestic) or 412-317-0088 (international) and entering passcode 10142908.

This press release 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 2020. 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: the impact of the COVID-19 pandemic on our business and financial results; 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; 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, 2019. 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.

We provide non-GAAP gross margin, non-GAAP net income (loss), and non-GAAP earnings 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 expense, expenses associated with discontinued products, and non-recurring 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 gain (loss), losses from the disposal of idle assets, if any, non-GAAP tax expenses (benefits), and expenses associated with discontinued products, if any, from our GAAP net income (loss). Included in our non-recurring expenses in Q1 2020 and Q1 2019 are certain one-time legal (if any) and consulting fees (if any) and employee severance expenses (if any). In computing our non-GAAP income tax expense (benefit), we have applied an estimate of our annual effective income tax rate and applied it to our net income before income taxes. Our non-GAAP earnings per share is calculated by dividing our non-GAAP net income 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:

A reconciliation of our GAAP net income (loss) and GAAP earnings (loss) per share for the quarter ended March 31, 2020 to our non-GAAP net income (loss) and earnings (loss) per share is provided below, together with corresponding reconciliations for the quarter period ended March 31, 2019.

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, and loss (gain) from disposal of idle assets. 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.

Applied Optoelectronics Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules and equipment. AOI's products are the building blocks for broadband fiber access networks around the world, where they are used in the internet datacenter, CATV broadband, telecom and FTTH markets. AOI supplies optical networking lasers, components and equipment to tier-1 customers in all four of these markets. In addition to its corporate headquarters, wafer fab and advanced engineering and production facilities in Sugar Land, TX, AOI has engineering and manufacturing facilities in Taipei, Taiwan and Ningbo, China. For additional information, visit www.ao-inc.com.

(a) Provided for the purpose of calculating gross profit as a percentage of revenue (gross margin).

Delaware	001-36083	76-0533927
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par value $0.001	AAOI	NASDAQ Global Market

	99.1	Press release dated May 7, 2020, issued by Applied Optoelectronics, Inc., filed herewith.
	104	Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document).

	Applied Optoelectronics, Inc.

	By:	/s/ STEFAN J. MURRY
		Stefan J. Murry Chief Financial Officer

	March 31, 2020		December 31, 2019

ASSETS
CURRENT ASSETS
Cash, Cash Equivalents and Restricted Cash	$	62,517	$	67,028
Accounts Receivable, Net		25,783		34,655
Inventories		87,109		85,028
Prepaid Income Tax		375		224
Prepaid Expenses and Other Current Assets		6,904		5,869
Total Current Assets		182,688		192,804

Property, Plant And Equipment, Net		243,717		248,444
Land Use Rights, Net		5,481		5,598
Right of Use Asset		7,756		7,887
Intangible Assets, Net		4,051		4,081
Deferred Income Tax Assets		9,078		7,287
Other Assets		765		724
TOTAL ASSETS	$	453,536	$	466,825

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts Payable	$	36,236	$	32,828
Accrued Expenses		10,677		17,864
Current Lease Liability		955		982
Bank Acceptance Payable		9,550		6,310
Current Portion of Notes Payable and Long Term Debt		38,096		33,371
Total Current Liabilities		95,514		91,355

Notes Payable and Long Term Debt		15,315		16,552
Convertible Senior Notes		77,235		77,041
Other Long-Term Liabilities		7,973		8,083
TOTAL LIABILITIES		196,037		193,031

STOCKHOLDERS' EQUITY
TOTAL STOCKHOLDERS' EQUITY		257,499		273,794

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	453,536	$	466,825

	Three Months Ended March 31,
Revenue	2020			2019
Datacenter	$	33,264		$	38,499
CATV		4,223			11,962
Telecom		2,560			1,738
FTTH		–			94
Other		420			426
Total Revenue		40,467			52,719

Total Cost of Goods Sold		34,129			40,368

Total Gross Profit		6,338			12,351

Operating Expenses:
Research and Development		10,558			11,185
Sales and Marketing		2,936			2,595
General and Administrative		10,638			10,440
Total Operating Expenses		24,132			24,220

Operating Loss		(17,794	)		(11,869	)

Other Income (Expense):
Interest Income		147			72
Interest Expense		(1,455	)		(996	)
Other Income		117			78
Foreign Exchange Gain		139			(233	)
Total Other Income (Expense):		(1,052	)		(1,079	)

Net loss before Income Taxes		(18,846	)		(12,948	)

Income Tax Benefit		2,049			2,474

Net loss		(16,797	)		(10,474	)
Net loss per share attributable to common stockholders
basic	$	(0.83	)	$	(0.53	)
diluted	$	(0.83	)	$	(0.53	)

Weighted-average shares used to compute net loss per share attributable to common stockholders
basic		20,208			19,863
diluted		20,208			19,863

Cover	Apr. 17, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 07, 2020
Entity File Number	001-36083
Entity Registrant Name	Applied Optoelectronics, Inc.
Entity Central Index Key	0001158114
Entity Tax Identification Number	76-0533927
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	13139 Jess Pirtle Blvd.
Entity Address, City or Town	Sugar Land
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77478
City Area Code	(281)
Local Phone Number	295-1800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, Par value $0.001
Trading Symbol	AAOI
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false