Why Shares of Applied Optoelectronics Jumped Today

By Timothy GreenMarketsFool.com

What happened

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Shares of Applied Optoelectronics (NASDAQ: AAOI) jumped on Friday following a first-quarter report that beat analyst expectations. Revenue nearly doubled as the fiber-optic networking company saw strong demand for its products, leading investors to push the shares 16.5% higher by 12:45 p.m. EDT.

So what

Applied Optoelectronics reported first-quarter revenue of $96.2 million, up 91% year over year and a bit more than $1 million higher than the average analyst estimate. Cable broadband revenue rose 90% to $13.1 million, data center revenue jumped 104% to $79.6 million, and fiber-to-the-home revenue contracted 77% to just $98,000.

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Non-GAAP earnings per share came in at $1.10, up from a loss of $0.04 during the first quarter of 2016 and $0.12 better than analysts expected. Non-GAAP gross margin expanded to 43.2%, up from 28.3% in the prior-year period. Higher revenue, a fatter gross margin, and a slow increase in operating expenses led to the surge in the bottom line.

President and CEO Dr. Thompson Lin spoke broadly about the first quarter:

Now what

The company expects to produce second-quarter revenue between $106 million and $112 million, up from $55 million during the second quarter of 2016. Non-GAAP gross margin is expected between 41% and 42.5% and non-GAAP EPS between $1.09 and $1.19.

Applied Optoelectronics kept growing rapidly during the first quarter. With guidance calling for this explosive growth to continue, it's no surprise that investors bid up the stock.

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Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.