祥茂光電 (AAOI) 2016 Q3 法說會逐字稿

Good afternoon, everyone. At this time, I'd like to welcome everyone to the Applied Optoelectronics third quarter 2016 earnings conference call. All lines have been placed on mute to prevent any background noise.

大家下午好。現在，我歡迎大家參加應用光電公司2016年第三季度財報電話會議。所有線路均已靜音，以防止任何背景噪音。

(Operator Instructions)

（操作員說明）

Please also note that today's event is being recorded.

另請注意，今天的活動正在錄製中。

At this time, I would like to turn the conference call over to Maria Riley, Investor Relations for AOI. Ms. Riley, you may begin.

現在，我想將電話會議轉給 AOI 投資者關係部的 Maria Riley。萊利女士，您可以開始了。

Thank you. I'm Maria Riley, Applied Optoelectronics Investor Relations, and I'm pleased to welcome you to AOI's third quarter 2016 financial results conference call.

謝謝。我是應用光電公司投資者關係部的 Maria Riley，我很高興歡迎您參加 AOI 2016 年第三季度財務業績電話會議。

After the market closed today, AOI issued a press release announcing its third quarter 2016 financial results and provided its outlook for the fourth quarter. The release is also available on the Company's website at ao-inc.com. This call is being recorded and webcast live. A link to that recording can be found on the Investor Relations page of the AOI website and will be archived for one year.

今天收盤後，AOI 發布新聞稿，公佈 2016 年第三季度財務業績，並提供第四季度展望。該新聞稿還可在公司網站 ao-inc.com 上獲取。此次通話正在錄音並進行網絡直播。該記錄的鏈接可以在 AOI 網站的投資者關係頁面上找到，並將存檔一年。

Joining us on today's call is Dr. Thompson Lin, AOI's Founder, Chairman and CEO; and Dr. Stefan Murry, AOI's Chief Financial Officer and Chief Strategy Officer. Thompson will give an overview of AOI's Q3 results and Stefan will provide financial details and an outlook for the fourth quarter. A question-and-answer session will follow our prepared remarks.

參加今天電話會議的還有 AOI 創始人、董事長兼首席執行官 Thompson Lin 博士；以及 AOI 首席財務官兼首席戰略官 Stefan Murry 博士。 Thompson 將概述 AOI 第三季度的業績，Stefan 將提供財務細節和第四季度的展望。在我們準備好的發言之後將舉行問答環節。

Before we begin, I would like to remind you to review AOI's Safe Harbor statement. On today's call, management will make forward-looking statements. 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. You can identify forward-looking statements by terminology, such as may, well, should, expect, plan, anticipate, believe or estimate and by other similar expressions. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this earnings call, to confirm these statements to actual results or to changes in the Company's expectation. More information about other risks that may impact the Company's business is set forth in the Risk Factor section of the Company's reports on file with the SEC.

在我們開始之前，我想提醒您查看 AOI 的安全港聲明。在今天的電話會議上，管理層將發表前瞻性聲明。這些前瞻性陳述涉及風險和不確定性以及假設和當前預期，可能導致公司的實際結果與此類前瞻性陳述中的預期存在重大差異。您可以通過術語（例如“可能”、“好”、“應該”、“期望”、“計劃”、“預期”、“相信”或“估計”）以及其他類似表達來識別前瞻性陳述。除法律要求外，我們不承擔在本次財報電話會議之後以任何理由更新前瞻性陳述、確認這些陳述的實際結果或公司預期變化的義務。有關可能影響公司業務的其他風險的更多信息，請參閱公司向 SEC 歸檔的報告的風險因素部分。

Also, with the exception of revenue, all financial numbers discussed today are on a non-GAAP basis unless specifically noted otherwise. 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 our non-GAAP measures, as well as our discussion of why we present non-GAAP financial measures, are included in our earnings press release that is available on our website.

此外，除收入外，今天討論的所有財務數據均基於非公認會計原則（Non-GAAP），除非另有特別說明。非公認會計原則財務指標不應被孤立考慮，也不能替代根據公認會計原則編制的結果。我們的 GAAP 和非 GAAP 指標之間的調節，以及我們對為何提出非 GAAP 財務指標的討論，均包含在我們網站上的收益新聞稿中。

Now I would like to turn the call over to Dr. Thompson Lin, Applied Optoelectronics' Founder, Chairman and CEO. Thompson?

現在我想把電話轉給應用光電創始人、董事長兼首席執行官林湯普博士。湯普森？

Thank you, Maria. Thank you for joining us today. AOI deliver a strong third quarter with record revenue and we exceeded both our top and bottom line guidance. We grew revenue 23% over last year to reach a record $70.1 million, which was way above our updated guidance range of $63 million to $65 million.

謝謝你，瑪麗亞。感謝您今天加入我們。 AOI 第三季度業績強勁，收入創歷史新高，我們的營收和利潤均超出了預期。我們的收入比去年增長了 23%，達到創紀錄的 7010 萬美元，遠高於我們更新的 6300 萬美元至 6500 萬美元的指導範圍。

Our results were driven by a broad-based increase in demand and strong execution by the AOI team. We grew datacenter revenue 37% over last year and achieve record datacenter revenue for the sixth consecutive quarter. In CATV, we achieved revenue of $12.9 million, which was up 35% sequentially as cable providers continue to upgrade their network to fiber deep architectures with DOCSIS3.1. Our non-GAAP gross margin in the quarter improved 170 basis points sequentially to 33.1%, driven by our improved execution and cost leadership. We delivered improved profitability with non-GAAP earning per share of $0.38; well above our updated guidance range of $0.26 to $0.29 per share. And lastly, we may progress in expanding our customer footprint during the quarter. As we announced in late August, we secured initial orders with a new hyper scale datacenter customer for our 40G and 100G datacenter products. We believe these initial orders are testament to our leadership and growing brand in the datacenter optics market, and we are excited about the opportunity to demonstrate our capabilities to this new customer as the relationship deepens overtime.

我們的業績是由需求的廣泛增長和 AOI 團隊的強大執行力推動的。我們的數據中心收入比去年增長了 37%，並連續第六個季度實現創紀錄的數據中心收入。在有線電視領域，我們實現了 1290 萬美元的收入，隨著有線電視提供商繼續將其網絡升級到採用 DOCSIS3.1 的光纖深度架構，該收入環比增長了 35%。在我們改進的執行力和成本領先優勢的推動下，我們本季度的非 GAAP 毛利率環比提高了 170 個基點，達到 33.1%。我們的盈利能力有所提高，非 GAAP 每股收益為 0.38 美元；遠高於我們最新的每股 0.26 美元至 0.29 美元的指導範圍。最後，本季度我們可能會在擴大客戶足跡方面取得進展。正如我們在 8 月下旬宣布的那樣，我們為我們的 40G 和 100G 數據中心產品獲得了新的超大規模數據中心客戶的初始訂單。我們相信這些初始訂單證明了我們在數據中心光學市場的領導地位和不斷增長的品牌，隨著關係的不斷加深，我們很高興有機會向這個新客戶展示我們的能力。

In summary, AOI delivered an outstanding third quarter and we are very pleased with our performance. With our new Sugar Land facility online and fully operational, we were able to scale to meet demand, and I am especially proud of our team's ability to execute in this high-demand environment. Our growth in a quarter demonstrates our growing market share in advanced optics and reflects our continued commitment to operational excellence. We remain focused on building our momentum to drive growth and achieve our long-term financial objective.

總而言之，AOI 第三季度的表現非常出色，我們對我們的表現非常滿意。隨著我們新的 Sugar Land 設施上線並全面投入運營，我們能夠進行擴展以滿足需求，我對我們團隊在這種高需求環境中執行的能力感到特別自豪。我們一個季度的增長表明我們在先進光學領域的市場份額不斷增長，並反映了我們對卓越運營的持續承諾。我們仍然專注於建立動力以推動增長並實現我們的長期財務目標。

With that, I'll turn call over to Stefan to review the details of our Q3 performance and outlook for Q4. Stefan?

接下來，我將致電 Stefan，回顧我們第三季度業績的詳細信息和第四季度的前景。斯特凡？

Thank you, Thompson. Total revenue for the third quarter grew 23% year-over-year to reach a record $70.1 million; well above our updated guidance range of $63 million to $65 million. Our results in the quarter were driven by strong accelerated demand for our market-leading datacenter and cable TV products and strong execution by the AOI team.

謝謝你，湯普森。第三季度總收入同比增長 23%，達到創紀錄的 7010 萬美元；遠高於我們最新的 6300 萬美元至 6500 萬美元的指導範圍。我們本季度的業績得益於市場領先的數據中心和有線電視產品的強勁加速需求以及 AOI 團隊的強大執行力。

Datacenter revenue in the third quarter grew to a record $52.9 million, which represents an increase of 37% year-over-year. Our growth in the quarter was driven by record demand for both our 40G and 100G products. In this quarter, 77% of our datacenter revenue was derived from our 40G datacenter product. And 14% was from our 100G products. Overall, we are very encouraged by the accelerated demand we are seeing from our datacenter customers. As Thompson mentioned, during the quarter we made progress in extending our customer footprint. After an extensive period of product testing and qualification, we received initial orders for our market leading 40G and 100G datacenter products with another hyper scale datacenter customer. With this new customer, we now serve three of the top four web scale datacenter operators, and we are encouraged by the volume of award we've received from this customer to date.

第三季度數據中心收入增長至創紀錄的 5290 萬美元，同比增長 37%。我們本季度的增長是由 40G 和 100G 產品創紀錄的需求推動的。本季度，我們77%的數據中心收入來自我們的40G數據中心產品。 14%來自我們的100G產品。總的來說，我們對數據中心客戶需求的加速增長感到非常鼓舞。正如湯普森提到的，本季度我們在擴大客戶足跡方面取得了進展。經過長時間的產品測試和鑑定，我們收到了另一家超大規模數據中心客戶的市場領先的 40G 和 100G 數據中心產品的初始訂單。有了這個新客戶，我們現在為四大網絡規模數據中心運營商中的三個提供服務，迄今為止我們從該客戶那裡獲得的大量獎項讓我們深受鼓舞。

Turning to our cable television market; revenue from our CATV products in the third quarter was $12.9 million compared with $14.2 million in Q3 of last year. On a sequential basis, CATV revenue grew 35%, which reflects an improving demand environment due to the DOCSIS3.1 upgrade. With DOCSIS3.1 enabling the gigabit H CATV network, cable operators are in a race for internet speed. Earlier this year, Comcast announced plan to offer gigabit internet service using DOCSIS3.1 technology and is the first cable operator to aggressively deploy this service to optimize the capacity of their existing network. This is driving a lot of excitement in the market and we continue to believe we are well positioned to capitalize on the industry move to DOCSIS3.1.

轉向我們的有線電視市場；第三季度我們的 CATV 產品收入為 1,290 萬美元，而去年第三季度為 1,420 萬美元。有線電視收入環比增長35%，反映出DOCSIS3.1升級帶來的需求環境改善。隨著 DOCSIS3.1 支持千兆位 H CATV 網絡，有線電視運營商正在爭奪互聯網速度。今年早些時候，康卡斯特宣布計劃使用 DOCSIS3.1 技術提供千兆位互聯網服務，並且是第一家積極部署該服務以優化其現有網絡容量的有線電視運營商。這讓市場興奮不已，我們仍然相信我們處於有利位置，可以利用行業向 DOCSIS3.1 的轉變。

Additionally, as cable operators upgrade to more fiber deep architecture with DOCSIS3.1, they anticipate a need to reduce congestion in the HFC head end and Remote PHY is leading technological approach to solving this problem. We recently showcased our newly launched Remote PHY product at the SCTE Cable-Tec Expo, and the initial customer response was very positive. With our technical expertise in both advanced optics and radio frequency design, we believe we are well positioned to capture leading market share as this network architecture evolve.

此外，隨著有線運營商升級到採用 DOCSIS3.1 的更深光纖架構，他們預計需要減少 HFC 頭端的擁塞，而遠程 PHY 是解決這一問題的領先技術方法。我們最近在 SCTE Cable-Tec Expo 上展示了新推出的 Remote PHY 產品，最初的客戶反應非常積極。憑藉我們在先進光學和射頻設計方面的技術專長，我們相信，隨著網絡架構的發展，我們能夠佔據領先的市場份額。

Our telecom segment delivered revenue of $3.4 million, up 12% year-over-year, driven by continued demand from our telecom customers and new design wins. For the quarter, 75% of our revenue was from datacenter products; 18% from CATV products with the remaining 7% from FTTH, telecom and other. In the third quarter, we had two 10% or greater customers in the datacenter business that contributed 56% and 19% of total revenue, respectively.

在電信客戶的持續需求和新設計的推動下，我們的電信部門實現了 340 萬美元的收入，同比增長 12%。本季度，我們 75% 的收入來自數據中心產品； 18%來自CATV產品，其餘7%來自FTTH、電信和其他。第三季度，我們的數據中心業務有兩個10%或以上的客戶，分別貢獻了總收入的56%和19%。

Moving down the income statement; our Q3 non-GAAP gross margin was 33.1%, ahead of our guidance, and within our target model. Our non-GAAP gross margin increased 170 basis points when compared with the 31.4% reported in Q2 of 2016, and increased 140 basis points from the 31.7% reported in Q3 of last year. The sequential improvement in our Q3 gross margin was driven by our improved execution and the benefit of our cost reduced 100G transceivers.

損益表下移；我們第三季度的非 GAAP 毛利率為 33.1%，超出了我們的指導，並且在我們的目標模型之內。我們的非 GAAP 毛利率較 2016 年第二季度的 31.4% 增加了 170 個基點，較去年第三季度的 31.7% 增加了 140 個基點。我們第三季度毛利率的連續改善是由我們改進的執行力和我們降低成本的 100G 收發器帶來的好處推動的。

In total, R&D expense was $8.2 million or 11.7% of revenue, compared with $7.7 million, or 13.9% of revenue in the prior quarter. The increase in R&D expenses primarily due to additional spending on 200G and 400G datacenter product development in addition to increase spending in Remote PHY, as we see adoption schedules for this product being earlier than originally planned.

研發費用總計為 820 萬美元，佔收入的 11.7%，而上一季度的研發費用為 770 萬美元，佔收入的 13.9%。研發費用的增加主要是由於 200G 和 400G 數據中心產品開發的額外支出以及遠程 PHY 支出的增加，因為我們看到該產品的採用時間表早於原計劃。

Sales and marketing expense was $1.5 million or 2.1% of revenue, compared with $1.5 million or 2.7% of revenue in the prior quarter. G&A expense was $5.5 million or 7.8% of total revenue, compared with $4.7 million or 8.5% of total revenue in the prior quarter. The sequential increase includes additional expenses associated with the new facility that we brought online in the quarter. This brings total operating expenses in the third quarter to $15.2 million, or 21.6% of revenue; up approximately $1.3 million when compared with $13.9 million or 25.1% of revenue in the prior quarter.

銷售和營銷費用為 150 萬美元，佔收入的 2.1%，而上一季度為 150 萬美元，佔收入的 2.7%。一般及行政費用為 550 萬美元，佔總收入的 7.8%，而上一季度為 470 萬美元，佔總收入的 8.5%。環比增長包括與我們在本季度上線的新設施相關的額外費用。這使得第三季度的總運營支出達到 1520 萬美元，佔收入的 21.6%；與上一季度的 1,390 萬美元或收入的 25.1% 相比，增加了約 130 萬美元。

Non-GAAP operating income in Q3 was $8.1 million compared with operating loss of $3.5 million in the prior quarter and operating income of $6.9 million in Q3 of last year. Our non-GAAP operating margin in the quarter was 11.5%, up 520 basis points from the prior quarter and down 60 basis points from Q3 of last year. Non-GAAP net income after tax for the third quarter was $7 million compared with net income of $2.8 million in the prior quarter and net income of $6.7 million in Q3 of last year. We reported non-GAAP net income of $0.38 per diluted share compared with the non-GAAP net income of $0.16 per diluted share in the prior quarter, and non-GAAP net income of $0.40 per diluted share in Q3 of last year.

第三季度非公認會計原則營業收入為 810 萬美元，而上一季度營業虧損為 350 萬美元，去年第三季度營業收入為 690 萬美元。本季度我們的非 GAAP 營業利潤率為 11.5%，比上一季度上升 520 個基點，比去年第三季度下降 60 個基點。第三季度非公認會計準則稅後淨利潤為 700 萬美元，而上一季度淨利潤為 280 萬美元，去年第三季度淨利潤為 670 萬美元。我們公佈的非 GAAP 每股攤薄淨利潤為 0.38 美元，而上一季度的非 GAAP 攤薄每股淨利潤為 0.16 美元，去年第三季度的非 GAAP 攤薄每股淨利潤為 0.40 美元。

GAAP net income for Q3 was $17.7 million or $0.97 per diluted share, compared with GAAP net income of $0.6 million or $0.03 per diluted share in prior quarter. And GAAP net income of $2.7 million, or $0.16 per diluted share in Q3 of last year. The Q3 weighted average fully diluted share count was approximately 18.4 million shares. After considering all available evidence, we've concluded that a full evaluation allowance against our deferred tax asset is no longer appropriate. As a result, AOI has reversed this evaluation allowance against its US deferred tax asset, which resulted in a non-recurring tax benefit of $11.9 million. We have excluded the net non-cash income tax benefit in the quarter from our non-GAAP net income. As a reminder, please refer to our earnings release for more details about our use of non-GAAP performance measures.

第三季度 GAAP 淨利潤為 1770 萬美元，或稀釋後每股 0.97 美元，而上一季度 GAAP 淨利潤為 60 萬美元，或稀釋後每股 0.03 美元。去年第三季度 GAAP 淨利潤為 270 萬美元，即稀釋後每股收益 0.16 美元。第三季度加權平均完全稀釋股數約為 1,840 萬股。在考慮了所有可用的證據後，我們得出的結論是，針對我們的遞延稅資產提供全額評估津貼不再合適。因此，AOI 已根據其美國遞延稅資產沖銷了此項評估津貼，從而獲得了 1190 萬美元的非經常性稅收優惠。我們已將本季度的淨非現金所得稅收益從我們的非公認會計準則淨利潤中排除。提醒一下，請參閱我們的收益發布，了解有關我們使用非公認會計準則績效指標的更多詳細信息。

Turning now to the balance sheet; we ended Q3 with $60.2 million in cash, cash equivalents, short-term investments and restricted cash compared with $47.3 million at the end of the previous quarter. Accounts receivable increased to $44.2 million compared with $41.5 million last quarter, and accounts payable decreased approximately $0.7 million over Q2. Our free cash flow in the quarter was approximately $0.8 million, which represents the first quarter that we were free cash flow positive since 2012. Our capital investments in the quarter decreased to $6.6 million, which includes $3.3 million in production equipment and machinery, and $2.8 million on construction and building improvement. As of September 30, we had $54.9 million in inventory; a decrease from $59.8 million in Q2.

現在轉向資產負債表；截至第三季度末，我們的現金、現金等價物、短期投資和限制性現金為 6020 萬美元，而上一季度末為 4730 萬美元。應收賬款增加至 4420 萬美元，而上季度為 4150 萬美元，應付賬款比第二季度減少約 70 萬美元。本季度我們的自由現金流約為 80 萬美元，這是自 2012 年以來我們第一個自由現金流為正的季度。本季度我們的資本投資減少至 660 萬美元，其中包括 330 萬美元的生產設備和機械，以及 2.8 美元的資本投資。萬元用於建設和建築改善。截至 9 月 30 日，我們的庫存為 5,490 萬美元；較第二季度的 5980 萬美元有所下降。

Moving to our outlook; we expect Q5 revenue to be between $75 million and $79 million, which reflect an increase in CATV demand as well as a continuation of the accelerated spend from our datacenter customers. We expect Q4 non-GAAP gross margin to be in the range of 34% to 35.5%. Non-GAAP net income is expected to be in the range of $8.5 million to $9.5 million, and non-GAAP earning per share between $0.46 and $0.51 per share using a weighted average fully diluted share count of approximately 18.5 million shares.

轉向我們的展望；我們預計第五季度的收入將在 7500 萬美元至 7900 萬美元之間，這反映了 CATV 需求的增長以及我們數據中心客戶的加速支出的持續。我們預計第四季度非 GAAP 毛利率將在 34% 至 35.5% 之間。根據約 1850 萬股的加權平均完全稀釋股數，預計非 GAAP 淨利潤將在 850 萬至 950 萬美元之間，非 GAAP 每股收益將在 0.46 至 0.51 美元之間。

Before I open up the call for questions, I would like to make a few comments for modeling purposes. While we have not historically experience Q1 seasonality in the datacenter business, please note that we are now producing some of our datacenter products in our China facility. And in the first quarter, we will have fewer production days for these products in comparison to the fourth quarter due to the Chinese New Year holiday. And lastly on a GAAP basis with the release of the tax allowance, we expect our midterm annual effective tax rate starting in 2017 to be approximately 20%. We expect to be able to utilize our net deferred tax assets to offset cash taxes as we discussed above concerning our release.

在開始提問之前，我想出於建模目的發表一些評論。雖然我們的數據中心業務歷來沒有經歷過第一季度的季節性，但請注意，我們現在正在中國工廠生產一些數據中心產品。由於農曆新年假期，第一季度這些產品的生產天數將比第四季度減少。最後，根據 GAAP 基礎上的稅收減免的發布，我們預計從 2017 年開始的中期年度有效稅率約為 20%。正如我們上面關於我們的發布所討論的那樣，我們希望能夠利用我們的淨遞延稅資產來抵消現金稅。

With that, I will turn it back over to the operator for the Q&A session. Operator?

這樣，我會將其轉回給操作員進行問答環節。操作員？

(Operator Instructions) Simon Leopold from Raymond James.

（操作員說明）來自 Raymond James 的 Simon Leopold。

This is Mauricio in for Simon. Stefan, just wanted to ask you a couple of questions. First one, could you please give us an update on your view of the current pricing environment and your expectations on the upcoming annual price negotiations going into fiscal year 2017?

這是西蒙的毛里西奧。斯特凡，只是想問你幾個問題。首先，您能否向我們介紹一下您對當前定價環境的最新看法以及您對 2017 財年即將舉行的年度價格談判的期望？

Yes, Mauricio. I think the pricing that we saw this quarter was in line with our expectations and we think we have a pretty good rerun where the pricing is going to be into the year. I would point that this concept of annual price negotiations is really more -- it is a concept that applies more to telecom than the datacom market or the datacenter market, specifically, that we are in. The datacenter market tends to be characterized by -- it is not characterized by all customers doing a price negotiation annually at the same, which just kind of typical of the telecom market. But as far as the quarter win and the successive quarters it is in line with our expectations.

是的，毛里西奧。我認為我們本季度看到的定價符合我們的預期，我們認為我們的重播效果非常好，定價將進入今年。我想指出的是，年度價格談判的概念實際上更適用於電信，而不是數據通信市場或數據中心市場，特別是我們所處的數據中心市場。數據中心市場的特點往往是——它的特點並不是所有客戶每年都進行相同的價格談判，這只是電信市場的典型現象。但就本季度的勝利和連續幾個季度的勝利而言，這符合我們的預期。

And then on 100Gig, I think you mentioned that the mix from 100 gig product was approximately 14% in the quarter, but then looks like your gross margin came in quite strong. So I just wanted to ask you on if this increase in gross margin due to your ability to ship higher than activated gen2 100Gig product this quarter?

然後在 100Gig 上，我想您提到本季度 100 Gig 產品的混合比例約為 14%，但看起來您的毛利率相當強勁。所以我想問一下，毛利率的增加是否是因為你們本季度出貨量高於激活的第 2 代 100Gig 產品的能力？

Yes. The percentage that we talked about, just to make sure we are all in the same page, it was 14% of our datacenter product. On our fully revenue with 14% of datacenter revenue. And, yes, the growth in 100Gig was one of the things that affected that gross margin positively. As we mentioned, we do have this cost reduced platform. I think as we mentioned in our prepared remarks, I mean, I really can't say enough how proud I am of the entire AOI team for being able to execute better than expected in the quarter. And I think the better execution includes delivery of the cost reduced 100Gig product as well as some of the 40Gig product which also contributed.

是的。我們談論的百分比只是為了確保我們都在同一頁面上，它占我們數據中心產品的 14%。我們的全部收入佔數據中心收入的 14%。是的，100Gig 的增長是對毛利率產生積極影響的因素之一。正如我們提到的，我們確實擁有這個降低成本的平台。我想，正如我們在準備好的發言中提到的，我的意思是，我真的無法用言語表達我對整個 AOI 團隊能夠在本季度執行得比預期更好的結果感到多麼自豪。我認為更好的執行包括交付成本降低的 100Gig 產品以及一些也做出貢獻的 40Gig 產品。

Yes. 40Gig seems to have also accelerated this quarter. And we heard comments from some of your competitors suggesting a potential delay in volume chips of 100Gig due to a delay at the chip sale level? I know you don't provide comments on the availability of third party equipment, but I was just wondering if you've seen any sort of bottleneck at the chipset and switching level that could potentially affect short term demand for 100Gig.

是的。 40Gig 本季度似乎也有所加速。我們聽到了你們的一些競爭對手的評論，暗示由於芯片銷售水平的延遲，100Gig 量產芯片可能會延遲？我知道您不會對第三方設備的可用性發表評論，但我只是想知道您是否發現芯片組和交換級別存在任何可能影響 100Gig 短期需求的瓶頸。

Well, I mean, this was our record quarter for us in terms of 100Gig. So I guess I have to say that we certainly didn't see any evidence of slowdown in demand; quite the opposite, I mean, it picked up quite a bit from last quarter. So, no, as far as the availability of the chipset, like I said, I can't really comment on because we don't buy those chipsets. But the customers are taking product at a rate that they had let us to expect based on the forecast. So it doesn't seem like there was anything unusual that happened among our customer base in the quarter.

嗯，我的意思是，就 100Gig 而言，這是我們創紀錄的季度。所以我想我不得不說，我們當然沒有看到任何需求放緩的證據；恰恰相反，我的意思是，它比上季度有所回升。所以，不，就芯片組的可用性而言，正如我所說，我無法真正發表評論，因為我們不購買這些芯片組。但客戶正在以他們根據預測讓我們預期的速度購買產品。因此，本季度我們的客戶群中似乎沒有發生任何異常情況。

(Operator Instructions) Richard Shannon from Craig-Hallum.

（操作員說明）來自 Craig-Hallum 的 Richard Shannon。

Maybe I'll follow up on a couple of these past questions here, Stefan. Maybe I'll ask a little bit more directly. How do you see the trend between 40Gig and 100Gig for this quarter and to the extent your visibility beyond that, tell us how you think it's going to go here in 2017?

也許我會在這裡跟進幾個過去的問題，Stefan。也許我會更直接地問一些。您如何看待本季度 40Gig 和 100Gig 之間的趨勢？就您對此之外的可見度而言，請告訴我們您認為 2017 年會如何發展？

Well, we don't really give guidance more than a quarter out and certainly not on individual product basis. But I can say that we saw obviously good growth in 40Gig and 100Gig in this quarter; we have, as we mentioned before, we have a new customer that we brought on board during the quarter we announced it during the quarter. The revenue contribution in this quarter was not high for that customer, and they are a customer for 40Gig as well as 100Gig. So if you kind of put that altogether it would not be -- not be a stretched thing we could certainly see continue growth in 40 gig even if our existing customers were to decline, which is not necessarily what I am saying will happen. But I mean, my point is for us we might see growth even if that's not necessarily apparent in our existing customer base.

嗯，我們實際上並沒有給出超過四分之一的指導，當然也不是基於單個產品。但我可以說，本季度我們看到了 40Gig 和 100Gig 明顯良好的增長；正如我們之前提到的，我們有一個新客戶，是我們在本季度宣布的季度引入的。該客戶本季度的收入貢獻並不高，他們是 40Gig 和 100Gig 的客戶。因此，如果你把所有這些都放在一起的話，那就不會是——這不是一件捉襟見肘的事情，即使我們現有的客戶數量減少，我們也肯定會看到 40 場演出的持續增長，而這並不一定會發生我所說的情況。但我的意思是，我的觀點是，對我們來說，我們可能會看到增長，即使這在我們現有的客戶群中並不一定明顯。

As far as the longer term trend, I mean I think clearly 100Gig is -- we are on the 100Gig upgrade cycle now for sure. It is going to be the technology the future which means eventually overtime 40Gig will decline. How fast that happens and the dynamics between our existing customers and the new one is something we'll have to wait and see but we definitely see 100Gig continuing to grow from this point.

就長期趨勢而言，我的意思是，我認為 100Gig 顯然是——我們現在肯定處於 100Gig 升級週期。這將是未來的技術，這意味著加班 40Gig 最終將會下降。這種情況發生的速度有多快以及我們現有客戶和新客戶之間的動態是我們必須拭目以待的事情，但我們肯定會看到 100Gig 從這一點開始繼續增長。

I guess the follow on to that is in the discussion on gross margin here, obviously you had a very good third quarter and your guidance for fourth quarter is up nicely beyond that. So I guess I am curious part of the reason I asked that question was to understand what's driving the gross margin pretty nice and permitting into the fourth quarter. In other words, if you are not seeing 100Gig growing meaningfully faster than 40Gig in the fourth quarter, can you help us understand what's driving the moving up versus this utilization or something else? If you can us understand that will be great.

我想接下來是關於毛利率的討論，顯然你們的第三季度表現非常好，你們對第四季度的指導也遠遠超出了這一水平。所以我想我很好奇我問這個問題的部分原因是為了了解是什麼推動了毛利率相當好並允許進入第四季度。換句話說，如果您在第四季度沒有看到 100Gig 的增長明顯快於 40Gig，您能否幫助我們了解是什麼推動了利用率的上升或其他因素？如果您能讓我們理解那就太好了。

Yes. I mean, I guess I could say 100Gig should grow faster than 40Gig okay. And also it is worth mentioning, as I kind of alluded to earlier, that the 100Gig cost reduced platform wasn't shipping for the entire quarter. We didn't start shipping that until mid to late in the quarter. So we didn't have a full quarter worth of impact of that cost reduced 100Gig platform. So by virtue of having a full quarter of that platform shipping, I think that should give you an idea that the gross margin even in the 100Gig has some room for improvement.

是的。我的意思是，我想我可以說 100Gig 應該比 40Gig 增長得更快，好吧。而且值得一提的是，正如我之前提到的，100Gig 成本降低的平台並未在整個季度發貨。直到本季度中後期我們才開始發貨。因此，我們並沒有看到成本降低的 100Gig 平台帶來的整個季度的影響。因此，憑藉該平台四分之一的出貨量，我認為這應該讓您知道，即使在 100Gig 中，毛利率也有一些改進的空間。

So question on capacity here. Sounds like you are attributing the gross margins to also your execution of your operations team here. I guess, is there any comments suggesting that you have been capacity constraint in one or product SKUs in any manner?

所以這裡有關於容量的問題。聽起來您將毛利率歸因於您的運營團隊的執行力。我想，是否有任何評論表明您以任何方式限制了一個或多個產品 SKU 的產能？

We like to operate near capacity. By that, I mean that's most sort of efficient operating point for us. And we've been adding, as you know, looking at our CapEx and it came down for the Analyst Day so you've seen the new facility here in Sugar Land, we've got significant capacity additions that we brought on board. So the capacity that we have is not fixed number right. It is kind of moving target. But as far as that goes we like to add capacity as we see the forecast forming up particularly among our major customer. So we like to operate at close to full capacity.

我們喜歡在接近產能的情況下運營。我的意思是，這對我們來說是最有效的操作點。正如你所知，我們一直在增加我們的資本支出，它是在分析師日下降的，所以你已經看到了糖城的新設施，我們已經大幅增加了產能。所以我們擁有的容量並不是固定的。這是一種移動目標。但就目前而言，我們希望增加產能，因為我們看到預測尤其是在我們的主要客戶中形成。因此，我們希望以接近滿負荷的方式運營。

You noted in my comments there that we talked a little bit about the impact of an extended Chinese New Year holiday in China in comparison to our Taiwan facility where we had previously manufactured most of the datacenter product. So you get the idea that we don't have a lot of excess capacity, but the most important thing is that we are keeping up with customer demand. We are shipping to what customers need and we are adding capacity as we need to be able to maintain both our cost leadership and the ability to deliver to customers, which is what customers love about AOI, that's our -- that's what we do well right. We ship what customers need on time and at a very attractive cost point for us.

您在我的評論中指出，我們討論了與我們之前生產大部分數據中心產品的台灣工廠相比，中國農曆新年假期延長的影響。所以你會覺得我們沒有太多過剩產能，但最重要的是我們能夠滿足客戶的需求。我們正在運送客戶需要的東西，我們正在增加產能，因為我們需要能夠保持我們的成本領先地位和向客戶交付的能力，這就是客戶對 AOI 的喜愛，這就是我們——這就是我們做得很好的地方。我們按時交付客戶所需的產品，並且成本對我們來說非常有吸引力。

And just one last quick follow up on the CapEx here. Stefan, I apologize, I missed the number you quoted for production equipment CapEx in the quarter and what should we expect going forward as far as I guess into the fourth quarter then?

這裡只是對資本支出的最後一個快速跟進。 Stefan，我很抱歉，我錯過了您在本季度引用的生產設備資本支出數字，據我猜測，到第四季度我們應該期待什麼？

Yes. So the number in the third quarter was $3.3 million. So it is the half of our CapEx. We didn't really give guidance on the fourth quarter. It is one of those things where we had some annual guidance out there I believe it was $50 million to $55 million. We haven't changed that number in the quarter so you can go back and look at other three quarters to see what's left.

是的。所以第三季度的數字是 330 萬美元。所以這是我們資本支出的一半。我們並沒有真正給出第四季度的指導。這是我們有一些年度指導的事情之一，我相信它是 5000 萬至 5500 萬美元。我們在本季度沒有改變這個數字，所以你可以回去看看其他三個季度，看看還剩下什麼。

(Operator Instructions) And ladies and gentlemen, at this time I am showing no further questions. I'd like to turn conference call back over to Dr. Thompson Lin for any closing remarks.

（操作員指示）女士們、先生們，目前我沒有提出任何進一步的問題。我想將電話會議轉回給 Thompson Lin 博士，讓他發表結束語。

Thank you for joining us today. As always, we thank our investors, customers and employees for your continued support.

感謝您今天加入我們。一如既往，我們感謝投資者、客戶和員工的持續支持。

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your telephone lines.

女士們先生們，今天的電話會議到此結束。我們非常感謝您參加今天的演講。您現在可以斷開電話線。