祥茂光電 (AAOI) 2018 Q3 法說會逐字稿

Hello, and welcome to the Applied Optoelectronics' 3Q '18 Financial Results Conference Call.

您好，歡迎來到 Applied Optoelectronics 的 18 年第三季度財務業績電話會議。

(Operator Instructions) Please note, this event is being recorded.

（操作員說明）請注意，正在記錄此事件。

I'd now like to turn the conference over to Maria Riley, Investor Relations for AOI.

我現在想把會議轉交給 AOI 投資者關係部的 Maria Riley。

Please go ahead, ma'am.

請繼續，女士。

Thank you.

謝謝你。

I'm Maria Riley, Applied Optoelectronics Investor Relations, and I'm pleased to welcome you to AOI's Third Quarter 2018 Financial Results Conference Call.

我是應用光電投資者關係部門的 Maria Riley，很高興歡迎您參加 AOI 2018 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 2018 financial results and provided its outlook for the fourth quarter of 2018.

今天收盤後，AOI 發布了一份新聞稿，公佈了其 2018 年第三季度的財務業績，並提供了 2018 年第四季度的展望。

The release is also available on the company's website at ao-inc.com.

該新聞稿也可在公司網站 ao-inc.com 上獲取。

This call is being recorded and webcast live.

此通話正在錄音和網絡直播中。

A link to that recording can be found on the Investor Relations page of the AOI website and will be archived for 1 year.

該錄音的鏈接可在 AOI 網站的投資者關係頁面上找到，並將存檔 1 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.

與我們一起參加今天電話會議的還有 AOI 的創始人、董事長兼首席執行官 Thompson Lin 博士；以及 AOI 的首席財務官兼首席戰略官 Stefan Murry 博士。

Thompson will give an overview of AOI's Q3 results, and Stefan will provide financial details and the outlook for the fourth quarter of 2018.

Thompson 將概述 AOI 第三季度的業績，Stefan 將提供財務細節和 2018 年第四季度的展望。

A question-and-answer session will follow our prepared remarks.

問答環節將遵循我們準備好的評論。

Before we begin, I would like to remind you to review AOI's safe harbor statement.

在我們開始之前，我想提醒您閱讀 AOI 的安全港聲明。

On today's call, management will make forward-looking statements.

在今天的電話會議上，管理層將發表前瞻性陳述。

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.

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，這可能導致公司的實際結果與此類前瞻性陳述中預期的結果存在重大差異。

You can identify forward-looking statements by terminologies such as may, well, should, expects, plans, anticipates, believes or estimates and by other similar expressions.

您可以通過諸如可能、良好、應該、預期、計劃、預期、相信或估計等術語以及其他類似表達來識別前瞻性陳述。

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 expectations.

除法律要求外，我們沒有義務在本次財報電話會議之後以任何理由更新前瞻性陳述，以確認這些陳述與實際結果或公司預期的變化。

More information about other risks that may impact the company's business are set forth in the Risk Factors section of the company's reports on file with the SEC.

有關可能影響公司業務的其他風險的更多信息，請參見公司提交給美國證券交易委員會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.

此外，除收入外，今天討論的所有財務數據均基於非 GAAP 基礎，除非另有特別說明。

Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

非 GAAP 財務措施不應孤立地考慮或替代根據 GAAP 編制的結果。

A reconciliation between our GAAP and 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.

我們的 GAAP 和非 GAAP 措施之間的協調以及我們對為什麼我們提出非 GAAP 財務措施的討論包含在我們網站上提供的收益新聞稿中。

Before moving to the financial results, I'd like to announce that AOI management will attend the Needham Network & Security Conference on November 13 and the Raymond James Technology Conference in New York on December 4. We hope to have the opportunity to see many of you there.

在談到財務業績之前，我想宣布 AOI 管理層將出席 11 月 13 日的 Needham 網絡與安全會議和 12 月 4 日在紐約舉行的 Raymond James 技術會議。我們希望有機會看到許多你在那裡。

Additionally, I'd like to note the date of our fourth quarter 2018 earnings conference call is currently scheduled for Thursday, February 21, 2019.

此外，我想指出我們 2018 年第四季度收益電話會議的日期目前定於 2019 年 2 月 21 日星期四。

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

現在我想把電話轉給 Applied Optoelectronics 的創始人、董事長兼首席執行官 Thompson Lin 博士。

Thompson?

湯普森？

Thank you, Maria.

謝謝你，瑪麗亞。

Thank you, everyone, for joining us today in reviewing our third quarter results.

感謝大家今天加入我們回顧我們的第三季度業績。

AOI delivered revenue of $56.4 million and gross margin of 34%, which grew our net income to $2.7 million or $0.14 per diluted shares.

AOI 實現了 5640 萬美元的收入和 34% 的毛利率，這使我們的淨收入增加到 270 萬美元或攤薄後每股收益 0.14 美元。

As we announced this September, our revenue was below our expectations due to an issue we identified with a small percentage of 25G lasers, which led to a temporary delay in 1 of digital receiver shipments to a datacenter customer.

正如我們在今年 9 月宣布的那樣，由於我們發現一小部分 25G 激光器存在問題，導致向數據中心客戶發貨的 1 個數字接收器暫時延遲，因此我們的收入低於預期。

As we worked to troubleshoot the issues, we enact a solution quickly and with agreement of data customer, resumed shipments.

在我們努力解決問題時，我們迅速制定了解決方案，並在徵得數據客戶的同意後，恢復了發貨。

The delay, however, resulted in softer-than-expected datacenter revenue of $39 million.

然而，延遲導致數據中心收入低於預期，為 3900 萬美元。

We continue to have active engagement with this customer and believe we have a solid relationship.

我們繼續與該客戶積極接觸，並相信我們擁有穩固的關係。

Here at AOI, we are committed to a high standard of product quality and customer support.

在 AOI，我們致力於高標準的產品質量和客戶支持。

We believe our customer appreciates the measure we take to truly resolve any issues, and our aim is to go above and beyond.

我們相信我們的客戶讚賞我們為真正解決任何問題而採取的措施，我們的目標是超越。

While we are disappointed with our third quarter performance, we've been encouraged by the demands we are experiencing with our other datacenter customers.

雖然我們對第三季度的業績感到失望，但我們對其他數據中心客戶的需求感到鼓舞。

In CATV, we are also pleased with increased activity and interest we are seeing in this market, especially for our Remote-PHY products.

在 CATV 方面，我們也很高興看到這個市場的活動和興趣有所增加，尤其是我們的 Remote-PHY 產品。

We have continued to focus on expanding the reach of our product to a broad group of customers and diversifying our customer base.

我們繼續專注於將我們的產品覆蓋範圍擴大到更廣泛的客戶群，並使我們的客戶群多樣化。

We are pleased with the progress we continue to make on this front.

我們對我們在這方面繼續取得的進展感到高興。

Building on the last design wins with the datacenter operator in China that we announced last quarter, in Q3, we secured 7 new design wins.

在我們上個季度宣布的與中國數據中心運營商的最後一次設計勝利的基礎上，在第三季度，我們獲得了 7 個新的設計勝利。

This brings our total number of design wins to 46 for the year, which includes design wins for datacenter in other segments.

這使我們今年的設計中標總數達到 46 個，其中包括其他領域數據中心的設計中標。

We also continue to make progress innovating across our optical platform, expanding our vertical integration.

我們還繼續在我們的光學平台創新方面取得進展，擴大我們的垂直整合。

We believe our platform, propriety manufacturing process and vertical integration are keys to our success in the market, and we remain focused on building on this solid foundations.

我們相信我們的平台、適當的製造工藝和垂直整合是我們在市場上取得成功的關鍵，我們將繼續專注於建立這一堅實的基礎。

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

有了這個，我將把電話轉給 Stefan，審查我們第三季度業績的細節和第四季度的前景。

Stefan?

斯特凡？

Thank you, Thompson.

謝謝你，湯普森。

Total revenue for the third quarter was $56.4 million compared with $88.9 million in the prior year period.

第三季度總收入為 5640 萬美元，上年同期為 8890 萬美元。

Our data center revenue was $39 million compared with $65.8 million in Q3 of last year.

我們的數據中心收入為 3900 萬美元，而去年第三季度為 6580 萬美元。

As Thompson mentioned, our revenue in the quarter was impacted by a temporary delay in 100G transceiver shipments to a datacenter customer as we work to troubleshoot an issue we identified with a small percentage of 25G lasers.

正如 Thompson 提到的那樣，我們本季度的收入受到向數據中心客戶發貨的 100G 收發器暫時延遲的影響，因為我們正在努力解決我們發現的一小部分 25G 激光器的問題。

We hold ourselves to a high standard and acted to resolve the quality issue.

我們堅持高標準，並採取行動解決質量問題。

We determined less than 1% of the lasers were impacted, implemented a solution and continued shipments using our internally sourced 25G lasers to the customer.

我們確定不到 1% 的激光器受到影響，實施了解決方案並使用我們內部採購的 25G 激光器繼續向客戶發貨。

We believe the measures we took to resolve this issue reflect our strong commitment to our customers.

我們相信，我們為解決此問題而採取的措施反映了我們對客戶的堅定承諾。

Shipments have resumed to this customer, and we continue to have ongoing discussions and active engagement.

已恢復向該客戶發貨，我們將繼續進行持續討論和積極參與。

We currently expect demand from this customer in Q4 to meet our earlier expectations.

我們目前預計該客戶在第四季度的需求能夠滿足我們之前的預期。

However, our production capacity in Q4 is expected to continue to lag demand, and this is reflected in our Q4 guidance.

然而，我們第四季度的產能預計將繼續落後於需求，這反映在我們的第四季度指引中。

The production capacity in Q4 will be negatively impacted primarily by additional product testing sets that we have implemented in order to further reassure our customer base that we have eliminated any potentially troublesome laser devices from our inventory, including work in process.

第四季度的生產能力將主要受到我們實施的額外產品測試裝置的負面影響，這些測試裝置是為了進一步向我們的客戶群保證我們已經從我們的庫存中消除了任何可能有問題的激光設備，包括在製品。

Most of these additional testing steps are temporary measures to screen existing inventory.

大多數這些額外的測試步驟是篩選現有庫存的臨時措施。

In addition to the reduced production capacity, these costs will also temporarily increase our cost of goods sold and thus negatively impact our gross margin in Q4.

除了產能下降外，這些成本還將暫時增加我們的銷售成本，從而對我們第四季度的毛利率產生負面影響。

We continue to experience good demand with our other top datacenter customers and began shipping volume orders to a large Chinese datacenter operator.

我們繼續感受到其他頂級數據中心客戶的良好需求，並開始向中國一家大型數據中心運營商發送批量訂單。

In the quarter, 63% of our datacenter revenue was derived from our 40G transceiver products and 34% was from our 100G products.

本季度，我們數據中心收入的 63% 來自我們的 40G 收發器產品，34% 來自我們的 100G 產品。

We continue to work diligently to diversify our customer base and remain in active qualification for our 100G and 200G products with customers outside of our core hyperscale customer base.

我們繼續努力使我們的客戶群多樣化，並繼續與核心超大規模客戶群以外的客戶積極認證我們的 100G 和 200G 產品。

In the quarter, we secured 7 design wins, including 4 design wins with 2 large U.S.-based equipment manufacturers.

在本季度，我們獲得了 7 項設計勝利，其中包括與 2 家美國大型設備製造商的 4 項設計勝利。

This brings our total number of design wins to 46 for the year, which includes design wins for datacenter and other segments.

這使我們今年的設計中標總數達到 46 個，其中包括數據中心和其他領域的設計中標。

As a reminder, our transceiver customer base has historically been focused on direct sales to datacenter customers.

提醒一下，我們的收發器客戶群歷來專注於直接銷售給數據中心客戶。

So these design wins with the equipment OEMs are an important step as we continue our push to diversify our customer base.

因此，隨著我們繼續努力使客戶群多樣化，這些與設備原始設備製造商的設計勝利是重要的一步。

In our cable TV business, we continued our momentum in the quarter due to ongoing upgrade projects.

在我們的有線電視業務中，由於正在進行的升級項目，我們在本季度繼續保持增長勢頭。

We generated revenue of $14.3 million, up slightly sequentially and below the record $18.9 million reported in Q3 of last year.

我們的收入為 1430 萬美元，環比略有增長，低於去年第三季度報告的創紀錄的 1890 萬美元。

We are very encouraged by the customer activity we see in this market, especially with our Remote-PHY product.

我們對在這個市場上看到的客戶活動感到非常鼓舞，尤其是我們的 Remote-PHY 產品。

We are currently in trials with 5 customers for our Remote-PHY product, and these trials appear to be going well.

我們目前正在與 5 個客戶一起試用我們的 Remote-PHY 產品，這些試驗似乎進展順利。

At the recent SCTE Expo Conference in Atlanta, AOI was the first company to demonstrate Remote-PHY capability to 1.7 gigahertz, which is a significant technical achievement that will allow MSOs to unlock additional revenue-generating spectrum already installed in their plants.

在最近於亞特蘭大舉行的 SCTE Expo 大會上，AOI 是第一家展示 1.7 GHz 遠程 PHY 能力的公司，這是一項重大的技術成就，將使 MSO 能夠解鎖其工廠中已安裝的額外創收頻譜。

This technology was well received by many attendees at the conference.

該技術受到了與會者的廣泛好評。

Our telecom products delivered $2.7 million in revenue compared with $3.5 million generated in Q3 of last year.

我們的電信產品帶來了 270 萬美元的收入，而去年第三季度為 350 萬美元。

For the quarter, 69% of our revenue was from datacenter products, 25% from CATV products, with the remaining 6% from FTTH telecom and other.

本季度，我們 69% 的收入來自數據中心產品，25% 來自 CATV 產品，其餘 6% 來自 FTTH 電信和其他產品。

In the third quarter, we had 4 10% or greater customers; 3 in the datacenter business that contributed 31%, 22% and 15% of total revenue, respectively; and 1 in the CATV business that contributed 15% of total revenue.

第三季度，我們有 4 個 10% 或更多的客戶； 3在數據中心業務中分別貢獻了總收入的31%、22%和15%；有線電視業務中有 1 家，貢獻了總收入的 15%。

Moving beyond revenue.

超越收入。

We generated a gross margin of 34%, a decrease from the 40.4% reported last quarter.

我們的毛利率為 34%，低於上一季度報告的 40.4%。

Our gross margin came in below our expectations due primarily to capacity under-utilization while we worked to resolve the inventory issue we experienced this quarter.

我們的毛利率低於我們的預期，這主要是由於在我們努力解決本季度遇到的庫存問題時產能利用率不足。

Additionally, we incurred approximately $1.5 million in inventory write-downs related to the quality issue.

此外，我們還因質量問題產生了大約 150 萬美元的庫存減記。

Looking ahead, we expect our gross margin to decline in Q4 due to the temporary increases in testing costs I mentioned earlier.

展望未來，由於我之前提到的測試成本的暫時增加，我們預計第四季度的毛利率將下降。

We expect these additional costs to largely be eliminated by the end of the year and margins are expected to improve starting in Q1.

我們預計這些額外成本將在年底前基本消除，利潤率有望從第一季度開始提高。

Longer term, we remain committed to our 40% gross margin target.

從長遠來看，我們仍然致力於實現 40% 的毛利率目標。

Total operating expenses in the quarter were $22.8 million or 40.4% of revenue compared with $20.8 million or 23.7% of revenue in the prior quarter.

本季度總運營費用為 2280 萬美元，佔收入的 40.4%，上一季度為 2080 萬美元，佔收入的 23.7%。

The sequential increase was mostly due to higher R&D expense incurred to troubleshoot and resolve the issue we experienced in the quarter.

環比增長主要是由於為解決和解決我們在本季度遇到的問題而產生的研發費用增加。

We expect R&D to remain at an elevated level for a few quarters as we continue to invest in new technologies and improve our execution.

隨著我們繼續投資新技術並提高執行力，我們預計研發將在幾個季度內保持較高水平。

Our operating loss in Q3 was $3.6 million compared with operating income of $14.7 million in Q2 of 2018.

我們在第三季度的營業虧損為 360 萬美元，而 2018 年第二季度的營業收入為 1470 萬美元。

Non-GAAP net income after tax for the third quarter was $2.7 million or $0.14 per diluted share compared with income of $12.9 million or $0.64 per diluted share in Q2 of 2018.

第三季度非美國通用會計準則稅後淨收入為 270 萬美元或攤薄後每股收益 0.14 美元，而 2018 年第二季度的收入為 1290 萬美元或攤薄後每股收益 0.64 美元。

GAAP net loss for Q3 was $3.7 million or a loss of $0.19 per diluted share compared with GAAP net income of $8 million or $0.40 per diluted share last quarter.

第三季度的 GAAP 淨虧損為 370 萬美元或攤薄後每股虧損 0.19 美元，而上一季度的 GAAP 淨收入為 800 萬美元或攤薄後每股虧損 0.40 美元。

The Q3 weighted average fully diluted share count was approximately 20.2 million shares.

第三季度加權平均完全攤薄股數約為 2020 萬股。

We recognized approximately $0.6 million in tax benefit from employee options that were exercised and restricted stock divested during the quarter.

我們從本季度行使的員工期權和剝離的限制性股票中確認了大約 60 萬美元的稅收優惠。

Turning now to the balance sheet.

現在轉向資產負債表。

We ended Q3 with $64.1 million in total cash, cash equivalents, short-term investments and restricted cash compared with $77.9 million at the end of the previous quarter.

我們在第三季度末的現金、現金等價物、短期投資和受限制現金總額為 6410 萬美元，而上一季度末為 7790 萬美元。

As of September 30, we had $107.9 million in inventory, an increase from $93.3 million in Q2.

截至 9 月 30 日，我們的庫存為 1.079 億美元，高於第二季度的 9330 萬美元。

The increase is largely due to products in production that could not be completed during the quarter due to additional reliability testing time required.

增加的主要原因是生產中的產品由於需要額外的可靠性測試時間而無法在本季度完成。

Operating cash flow in the quarter totaled $7.5 million compared with $8.1 million in Q3 of last year.

本季度的運營現金流總計 750 萬美元，而去年第三季度為 810 萬美元。

We made a total of $21.4 million in capital investments in the quarter, including $14 million in production equipment and machinery and $6.7 million on construction and building improvements.

本季度我們的資本投資總額為 2140 萬美元，其中 1400 萬美元用於生產設備和機械，670 萬美元用於建築和建築改造。

This brings our total capital investments year-to-date to $57.9 million.

這使我們年初至今的總資本投資達到 5790 萬美元。

Before turning to our outlook, I would like to make a few comments on the tariff situation with China.

在轉向我們的展望之前，我想就與中國的關稅情況發表一些評論。

AOI uses a variety of raw materials and manufactures a diverse set of products.

AOI 使用多種原材料並製造多種產品。

While a small number of these are on the tariffs list, we believe there will be minimal impact overall from tariffs on AOI's business.

雖然其中一小部分在關稅清單上，但我們認為關稅對 AOI 業務的總體影響微乎其微。

If the tariff situation changes, we continue to believe that we are well positioned to adapt and plan for such contingencies.

如果關稅情況發生變化，我們仍然相信我們有能力適應和計劃此類突發事件。

As you know, all 3 of our locations are capable of manufacturing transceivers, with Taiwan and China both capable of manufacturing these products in high volume.

如您所知，我們所有 3 個地點都能夠製造收發器，台灣和中國大陸都能夠大批量製造這些產品。

Moving now to our Q4 outlook.

現在轉到我們的第四季度展望。

We expect Q4 revenue to be between $56 million and $63 million.

我們預計第四季度收入將在 5600 萬美元至 6300 萬美元之間。

Non-GAAP gross margin is expected to be in the range of 30% to 31%.

非美國通用會計準則毛利率預計在 30% 至 31% 之間。

Non-GAAP net income is expected to be in the range of a loss of $1.5 million to income of $0.7 million, and non-GAAP EPS between the loss of $0.07 per share and earnings of $0.04 per share, using a weighted average fully diluted share count of approximately 20.1 million shares.

非 GAAP 淨收入預計在虧損 150 萬美元至收入 70 萬美元之間，非 GAAP 每股收益預計在每股虧損 0.07 美元和每股收益 0.04 美元之間，使用加權平均完全攤薄份額數量約為 2010 萬股。

We expect a Q4 income tax benefit of between $1.4 million and $2 million.

我們預計第四季度的所得稅收益將在 140 萬至 200 萬美元之間。

With that, I'll turn it back over to the operator for the Q&A session.

有了這個，我會把它轉回給問答環節的接線員。

Operator?

操作員？

(Operator Instructions) The first question comes from Simon Leopold with Raymond James.

（操作員說明）第一個問題來自 Simon Leopold 和 Raymond James。

So as I understand it, the fourth quarter is affected by the capacity [limitation].

據我了解，第四季度受到產能[限制]的影響。

Basically, the bottleneck is around the new quality control and testing that you have to do in order to assure that you've resolved all the problems.

基本上，瓶頸在於您必須進行的新質量控制和測試，以確保您已解決所有問題。

Is that the correct way to think about it?

這是正確的思考方式嗎？

Yes, Simon, that's correct.

是的，西蒙，這是正確的。

And just to put a little more color on it, as we mentioned, the additional testing steps -- a lot of the additional testing steps that we're implementing in the quarter are temporary steps, that is we're having to screen existing inventory, work in process, and that's what's temporarily affecting us in Q4.

正如我們提到的，只是為了在上面添加更多顏色，額外的測試步驟——我們在本季度實施的許多額外測試步驟都是臨時步驟，即我們必須篩選現有庫存，在製品中，這就是第四季度暫時影響我們的因素。

There will be some ongoing additional testing steps, but those are expected to be much less than what we're seeing in the fourth quarter.

將會有一些正在進行的額外測試步驟，但預計這些步驟將比我們在第四季度看到的要少得多。

So presumably, this prevents you from achieving the $125 million commitment that you disclosed in the 8-K at the beginning of the year.

因此，據推測，這會阻止您實現年初在 8-K 中披露的 1.25 億美元承諾。

And I guess what I'd like to try to understand is, how does that dovetail into the contractual agreements?

我想我想了解的是，這如何與合同協議相吻合？

Is there some catch-up that then shows up at some point in 2019?

在 2019 年的某個時候是否會出現一些追趕？

Is the contract voided because of the issues?

合同是否因這些問題而無效？

Could you help us understand the relationship between these 2 events?

你能幫助我們理解這兩個事件之間的關係嗎？

What I could say is that we think we'll probably deliver around $90 million of that $125 million in this year, and we continue to have a very strong relationship with this customer as well as our other datacenter customers.

我能說的是，我們認為我們可能會在今年交付這 1.25 億美元中的約 9000 萬美元，並且我們將繼續與該客戶以及我們的其他數據中心客戶保持非常牢固的關係。

And we're working through this issue with them.

我們正在與他們一起解決這個問題。

I guess, what I don't understand is, is there -- based on the way the contract's structured, is there sort of a make good whereas in basically the gap between $90 million and $125 million, that $35 million, does that get added to a 2019?

我想，我不明白的是，根據合同的結構，是否有補償，而基本上在 9000 萬美元和 1.25 億美元之間的差距，即 3500 萬美元，是否會增加到 2019 年？

Should we think of it that way?

我們應該這樣想嗎？

Or should we think of it as that business has gone?

或者我們應該把它看作是業務已經消失了嗎？

How should we treat that?

我們應該如何對待它？

And I can't give you too many specifics on it other than, I mean, to point out that the contract was filed along with the 8-K, so you can read most of those provisions in there.

我不能給你太多關於它的細節，我的意思是，要指出合同是與 8-K 一起提交的，所以你可以閱讀其中的大部分條款。

There isn't a specific provision in there to my knowledge that would be consistent with a sort of catch-up in the way that you're describing it.

據我所知，其中沒有一項具體規定與您描述的某種追趕方式一致。

However, as I mentioned, this customer continues to work very closely with us and they've agreed to take the commitment that they had given us in the fourth quarter, and we're still working with them on the time periods beyond that.

然而，正如我所提到的，該客戶繼續與我們密切合作，他們同意接受他們在第四季度給我們的承諾，我們仍在與他們合作，在此之後的時間段內。

Great.

偉大的。

And you did address this in your prepared remarks, but I want to make crystal clear that I understand.

你在準備好的發言中確實提到了這一點，但我想明確表示我理解。

In terms of the gross margin in the fourth quarter, it's really the effect of the extra testing that when you talked about the 40% gross margin is your long-term target, I presume, essentially, the pricing environment, your pricing agreements and commitments are unchanged from your prior assumptions and, therefore, once you get past this extra testing and these certifications that you're doing for quality control, that the ultimate pricing environment and that 40% kind of gross margin is what we should think about beyond the fourth quarter?

就第四季度的毛利率而言，當您談到 40% 的毛利率是您的長期目標時，這實際上是額外測試的影響，我認為，本質上，定價環境，您的定價協議和承諾與您之前的假設沒有變化，因此，一旦您通過了這種額外的測試和您為質量控制所做的這些認證，最終的定價環境和 40% 的毛利率就是我們應該考慮的超越第四季？

Yes.

是的。

That's correct.

這是正確的。

I mean, the additional testing steps are what's negatively impacting us in the fourth quarter.

我的意思是，額外的測試步驟對我們在第四季度產生了負面影響。

The pricing environment was consistent with what we had expected, and we think that we can get back to that 40% gross margin target sometime in the future.

定價環境與我們的預期一致，我們認為我們可以在未來某個時候回到 40% 的毛利率目標。

And just one last one, if I might.

如果可以的話，就最後一個。

In terms of the shortfall in your revenue versus what we all once expected, is it your sense that essentially that demand was unmet?

就您的收入與我們曾經預期的差距而言，您是否認為基本上沒有滿足需求？

Or do you suspect or have reason to believe that a competitor took that business?

或者您是否懷疑或有理由相信競爭對手接管了該業務？

I think it's reasonable to believe that some of the business went to a competitor in the quarter.

我認為有理由相信某些業務在本季度流向了競爭對手。

I mean, I -- obviously, all of our customers have needs in terms of their datacenter requirements, and if one of their suppliers can't deliver it, then I think it wouldn't be surprising to see that a competitor picked up that share, at least temporarily.

我的意思是，我 - 顯然，我們所有的客戶在他們的數據中心要求方面都有需求，如果他們的供應商之一無法交付，那麼我認為看到競爭對手接手也就不足為奇了分享，至少是暫時的。

And the next question comes from Paul Silverstein with Cowen and Company.

下一個問題來自 Cowen and Company 的 Paul Silverstein。

Stefan, I'm sorry to revisit the issue but I suspect we're all going to be revisiting the issue on this call.

Stefan，我很抱歉重新討論這個問題，但我想我們都會在這次電話會議上重新討論這個問題。

In terms of the specific problem, I think where you referenced 25G lasers, can you give us any more insight why was this isolated to that particular customer?

就具體問題而言，我認為你提到 25G 激光器的地方，你能否給我們更多的見解，為什麼這個特定客戶被隔離了？

I assume there is 1 or more lines that are dedicated to that customer as opposed to other customers.

我假設有 1 條或多條線路專用於該客戶而不是其他客戶。

But what is the nature of the issue?

但問題的本質是什麼？

And with respect to your other customers, I assume there's concern if you had an issue with 1 customer, even if it was a small number of lasers, why aren't other customers concerned?

至於您的其他客戶，我想如果您與 1 個客戶有問題，即使是少量激光器，為什麼其他客戶不擔心？

Why should they believe this is isolated and, therefore, is not a larger issue?

為什麼他們應該相信這是孤立的，因此不是一個更大的問題？

And why shouldn't that in turn impact your revenue with those customers now and in the future?

為什麼這不會反過來影響您現在和將來從這些客戶那裡獲得的收入？

What is that you can share with us?

您可以與我們分享什麼？

Yes, I think, Paul, basically, obviously I can't go into too many customer-specific details about this because we're covered by nondisclosure agreements with virtually all of our customers, but in very broad terms, every customer that we have has different sort of requirements, they operate in different environments and they have different expectations in terms of the performance of these devices.

是的，我認為，保羅，基本上，顯然我不能就此詳細介紹太多客戶特定的細節，因為我們與幾乎所有客戶都簽訂了保密協議，但從廣義上講，我們擁有的每個客戶他們有不同的要求，他們在不同的環境中運行，並且他們對這些設備的性能有不同的期望。

And again, that's a very general statement, I recognize that, but I can't be more specific given the nondisclosure agreements that we have in place.

再一次，這是一個非常籠統的聲明，我承認這一點，但鑑於我們已經簽訂了保密協議，我不能更具體。

But -- so within that context, right, every customer has different requirements, environments and expectations.

但是——所以在這種情況下，每個客戶都有不同的要求、環境和期望。

We haven't seen this problem cropping up with other customers.

我們還沒有看到其他客戶突然出現這個問題。

We've been proactive in going out to all of our major customers and discussing with them what we found, and I think the one thing that I could say is, I'm very proud of the team that we have here in terms of addressing this issue very quickly.

我們一直積極主動地接觸所有主要客戶並與他們討論我們的發現，我想我可以說的一件事是，我為我們在解決問題方面擁有的團隊感到非常自豪這個問題很快。

I think our customers appreciated not only the speed at which we were able to address the problem but our pro-activeness, if you will, in going out and talking to the other customers and giving them the data, being very transparent about what we found.

我認為我們的客戶不僅欣賞我們解決問題的速度，還欣賞我們的積極主動性，如果你願意的話，出去與其他客戶交談並向他們提供數據，對我們的發現非常透明.

So Stefan, the direct follow-up question would be, I trust you don't believe that the issues impacted your business with other customers?

所以 Stefan，直接的後續問題是，我相信你不認為這些問題影響了你與其他客戶的業務？

Or has it?

或者有嗎？

I don't believe it has affected our business with other customers.

我認為這不會影響我們與其他客戶的業務。

And the next question comes from Mark Kelleher with D.A. Davidson.

下一個問題來自 D.A. 的 Mark Kelleher。戴維森。

Maybe we could talk more generally about the competitive environment.

也許我們可以更籠統地談談競爭環境。

You mentioned that you thought maybe some competitor had taken some of that market share there.

你提到你認為可能有一些競爭對手在那裡佔據了一些市場份額。

What are the pricing trends you're seeing?

您看到的定價趨勢是什麼？

Are they consistent with what you've been expecting?

它們與您的預期一致嗎？

Are you seeing any new competitors coming to the market?

您是否看到任何新的競爭對手進入市場？

No.

不。

Pricing trends are consistent with what we had expected.

定價趨勢與我們的預期一致。

And no, I don't really see any new competitors coming into the market.

不，我真的沒有看到任何新的競爭對手進入市場。

All right.

好的。

The new Chinese datacenter customer, you said that just began ramping in the quarter?

新的中國數據中心客戶，您說在本季度才剛剛開始增長？

That's correct, yes.

沒錯，是的。

And do you expect that datacenter customer to be similar in opportunity to the U.S. datacenter customers?

您是否希望該數據中心客戶在機會上與美國數據中心客戶相似？

Yes.

是的。

It's a customer that definitely has the potential to be as big as any of the other datacenter customers that we have in the U.S. It's one of the very largest datacenter operators in the world.

它是一個絕對有潛力與我們在美國擁有的任何其他數據中心客戶一樣大的客戶。它是世界上最大的數據中心運營商之一。

Okay.

好的。

And maybe just a few thoughts on the CATV.

也許只是對有線電視的一些想法。

Talk about what your expectations are there?

談談你的期望是什麼？

I know you kind of highlighted that a little bit.

我知道你有點強調了這一點。

Yes, I think, we just recently finished the SCTE, Society of Cable Telecommunications Engineers Expo, which is sort of a technology conference for the cable TV business.

是的，我想，我們最近剛剛結束了 SCTE，有線電視工程師協會博覽會，這是有線電視業務的技術會議。

It was earlier in October.

那是在十月初。

And we had very good commentary, very good receptivity, I guess you could say, to our Remote-PHY product.

我們對我們的 Remote-PHY 產品有很好的評論，很好的接受度，我想你可以說。

In particular, we were showcasing a 1.7 gigahertz Remote-PHY product at the show.

特別是，我們在展會上展示了 1.7 GHz Remote-PHY 產品。

To my knowledge, we were the only supplier that had such a product, and I think we're seeing very positive trends in the cable business.

據我所知，我們是唯一一家擁有此類產品的供應商，我認為我們在有線電視行業看到了非常積極的趨勢。

A number of the MSOs are either undergoing upgrade projects currently or are about to embark on upgrade projects.

許多 MSO 目前正在進行升級項目或即將著手升級項目。

That's true for North American MSOs as well as MSOs in Europe and Latin America as well.

北美的 MSO 以及歐洲和拉丁美洲的 MSO 都是如此。

And we're seeing very positive signs in terms of both our existing products our sort of DOCSIS 3.1 product and this emerging new Remote-PHY product.

我們在現有產品（我們的 DOCSIS 3.1 產品）和這種新興的 Remote-PHY 產品方面都看到了非常積極的跡象。

And the next question comes from Alex Henderson with Needham & Company.

下一個問題來自 Needham & Company 的 Alex Henderson。

I was hoping you could talk conceptually about how we should be thinking about the CY19 time frame relative to the resolution of this issue.

我希望你能從概念上談談我們應該如何考慮與解決這個問題相關的 CY19 時間框架。

And what the snapback might look like?

回彈可能是什麼樣子的？

Is it reasonable to think that as we get through -- fully through the testing process and start to move into '19, that ultimately you would get back to the type of numbers that had been out on the street beforehand and the expectations that you'd kind of implied for next year where you would be seeing a doubling of demand in 100 gig from '18 to '19?

認為當我們通過 - 完全通過測試過程並開始進入'19'時，最終你會回到之前出現在街上的數字類型以及你的期望是否合理？ d 有點暗示明年你會看到從 18 年到 19 年 100 演出的需求翻了一番？

Or alternatively, are we so constrained by the current situation that we haven't been able to add capacity at a rate that would have got us to that 2019 level that means that we'll be operating at a much lower level because we haven't been able to take our resources and ramp them in the third quarter and fourth quarter because of the troubleshooting problems?

或者，我們是否受到當前形勢的限制，以至於我們無法以達到 2019 年水平的速度增加產能，這意味著我們將以更低的水平運營，因為我們還沒有由於故障排除問題，我們無法在第三季度和第四季度利用我們的資源並增加資源？

No.

不。

As I mentioned earlier, the additional testing that we've implemented is primarily confined to part of the third quarter and the fourth quarter.

正如我之前提到的，我們實施的額外測試主要局限於第三季度和第四季度的部分時間。

Beyond that, there won't be a lot of additional testing that we'll be doing, and certainly it's consistent with our ability to continue to ramp our production capacity.

除此之外，我們不會進行很多額外的測試，當然這與我們繼續提高生產能力的能力是一致的。

If you look at our overall -- we don't give specific guidance more than 1 quarter out as you're aware, but in general, we still think that the volumes can double next year compared to this year.

如果你看一下我們的整體 - 正如你所知，我們不會給出超過 1 個季度的具體指導，但總的來說，我們仍然認為明年的銷量可能會比今年翻一番。

Now admittedly that's on a little bit lower base now because we're -- we missed some of the volume shipments that we expected to have in the third and fourth quarter, but we still expect it to be able to double into next year.

現在不可否認，現在的基數有點低，因為我們 - 我們錯過了我們預計在第三和第四季度的一些批量出貨量，但我們仍然預計它能夠在明年翻一番。

Is it reasonable to say that you thought or you think you could double relative to your prior expectations before you ran into this issue?

在你遇到這個問題之前，你認為或者你認為你可以相對於你之前的期望翻倍，這是否合理？

In other words, that your capacity would be there to supply the original expectations.

換句話說，您的能力將滿足最初的期望。

If you -- once this totally is resolved, assuming it's resolved by year-end, therefore, we'd be back to prior thought process to double your volume from your original expectations as opposed to from the lower base.

如果你 - 一旦這個問題完全解決，假設它在年底前解決，那麼我們將回到先前的思考過程，將你的數量從你最初的預期增加一倍，而不是從較低的基數增加一倍。

So the capacity will be put in place as needed to be able to achieve the demand that we see at the time.

因此，將根據需要部署容量，以滿足我們當時看到的需求。

We don't have to add capacity now to have it ready by the end of next year, for example.

例如，我們現在不必增加容量就可以在明年年底前準備就緒。

So we're continuing to evaluate the needed capacity and add it as we need to.

因此，我們將繼續評估所需的容量並在需要時添加它。

With respect to doubling it, it's really too hard -- too early to have a crystal ball for the entire year, next year, I think there are certainly scenarios where we could double based on our prior expectations, but we feel comfortable saying we think we can double given where we actually came out in 2018 or where we expect to come out 2018.

關於將它翻倍，這真的太難了 - 明年全年都有水晶球還為時過早，我認為肯定有我們可以根據我們之前的預期翻倍的情況，但我們很樂意說我們認為鑑於我們在 2018 年實際出現的地方或我們預計在 2018 年出現的地方，我們可以翻倍。

And do you think that there is any lingering share losses as a result of this with the core customer that you were working with to resolve the issue with?

您是否認為與您一起解決問題的核心客戶因此而導致任何揮之不去的份額損失？

Or is this just a dividend-ly trajectory and your back to where you would have been otherwise once it's fully resolved?

還是這只是一條紅利軌道，一旦它完全解決，你就會回到原本的位置？

It’s hard to say right now.

現在很難說。

We're still working through this, and I can't really say for sure at this point.

我們仍在努力解決這個問題，目前我還不能確定。

What I can say what's really important for us is continuing to diversify our customer base, right?

我能說的是，對我們來說真正重要的是繼續使我們的客戶群多樣化，對嗎？

And we've made great success, and as Thompson highlighted and I mentioned in my remarks as well, we have 7 design wins in the quarter, 3 of those were for 200-gig products.

我們取得了巨大的成功，正如 Thompson 強調的以及我在發言中提到的那樣，本季度我們贏得了 7 項設計，其中 3 項是針對 200 兆產品的。

Several of them were with a new class of customers, that is large equipment manufacturers as opposed to datacenter operators.

其中有幾家是新一類客戶，即大型設備製造商，而不是數據中心運營商。

So I feel very good where we are with our efforts in terms of customer diversification, both in terms of new products, new customers and new classes of customers, that is non-datacenter operators, for example.

因此，我對我們在客戶多元化方面所做的努力感到非常滿意，無論是在新產品、新客戶還是新客戶類別方面，例如非數據中心運營商。

So I think that effort is what's been taking primacy for us.

所以我認為努力是我們的首要任務。

It's our most important effort right now, besides, of course, getting back on track relative to deliveries to the customers that we have now.

這是我們目前最重要的努力，此外，當然，相對於我們現在擁有的客戶交付而言，回到正軌。

And I think, long term, that's really the most important thing for all of us to keep in mind for our business.

我認為，從長遠來看，這確實是我們所有人在開展業務時要牢記的最重要的事情。

And one last question, I know you don't guide out to '19, but for the tax rate, I think you talked about 16% in the past.

最後一個問題，我知道你不會指導 19 年，但關於稅率，我認為你過去談到過 16%。

Is that still kind of the ballpark that you are thinking for '19?

這仍然是您為 19 年考慮的那種球場嗎？

It sounds about right.

聽起來不錯。

Actually, we haven't done our planning process in detail for 2019.

實際上，我們還沒有詳細完成 2019 年的計劃過程。

So it's a bit early to give you a precise guess on the tax rate, but that sounds not unreasonable.

所以現在給你一個準確的稅率猜測有點早，但這聽起來不無道理。

And the next question comes from James Kisner with the Loop Capital Markets.

下一個問題來自 Loop Capital Markets 的 James Kisner。

I just wanted to talk about the balance sheet a little bit.

我只想談談資產負債表。

It looks like you burned some cash here.

看來你在這裡燒掉了一些現金。

I'm just wondering -- in Q3, wondering what your expecting for cash burn in Q4.

我只是想知道 - 在第三季度，想知道你對第四季度現金消耗的期望。

And obviously, inventory built up, a little of that product issue, are you anticipating you might have to write some of that off?

很明顯，庫存增加了，有一點產品問題，你是否預計你可能不得不註銷其中的一些？

Or do you expecting to be able to sell it all?

還是您希望能夠全部出售？

And just kind of relatedly, what are your plans for CapEx?

與此相關的是，您的資本支出計劃是什麼？

Are they adapted at all here just given the cash flow pressure in near term?

鑑於近期的現金流壓力，他們是否完全適應了這裡？

That is a couple questions embedded in there.

這是嵌入其中的幾個問題。

First of all, in terms of the cash balance, it was lower at the end of the quarter.

首先，就現金餘額而言，本季度末現金餘額較低。

A lot of that went into inventories.

其中很多都進入了庫存。

We mentioned we have a lot of inventory that was partway through the manufacturing process and we weren't able to ship all of that out or complete the manufacturing and ship it all out in the quarter.

我們提到我們有很多庫存處於製造過程的中途，我們無法將所有這些產品運出或完成製造並在本季度將其全部運出。

So we expect that will come back down from here.

所以我們預計它會從這裡回落。

We think Q3 was probably the high-water mark in terms of inventory.

我們認為第三季度可能是庫存方面的高水位線。

So that will start turning back into cash, I think, as we move forward.

因此，我認為，隨著我們的前進，這將開始變回現金。

You asked the question about capital expenditures, and as I kind of mentioned in my previous answer, we are evaluating our capital expenditures and the need to add additional equipment and what have you as we see the demand's shaping up.

你問了關於資本支出的問題，正如我在之前的回答中提到的那樣，我們正在評估我們的資本支出和增加額外設備的需求，以及我們看到需求正在形成的情況。

So we don't have to buy equipment a year in advance in most cases, for example.

例如，在大多數情況下，我們不必提前一年購買設備。

We can do that much quicker as we see the demand's shaping up.

當我們看到需求正在形成時，我們可以更快地做到這一點。

So really, our CapEx is defined by what we see in terms of demand over the next couple of quarters, and we'll continue to adjust that as we need to.

所以實際上，我們的資本支出是由我們在未來幾個季度的需求方面所看到的來定義的，我們將根據需要繼續調整它。

And I thought there was another question embedded -- oh, you asked about inventory write-downs.

而且我認為還有另一個問題嵌入 - 哦，你問的是庫存減記。

We had about $1.5 million of inventory write-downs or reserves in the quarter.

本季度我們有大約 150 萬美元的庫存減記或準備金。

I suspect that should be -- most of that should already be -- I mean that's already flushed out in the balance sheet.

我懷疑應該——其中大部分應該已經——我的意思是已經在資產負債表中沖掉了。

Now I wouldn't expect huge inventory adjustments in the fourth quarter but a lot of that depends on the testing that we have ongoing at this point.

現在我預計第四季度不會出現巨大的庫存調整，但這在很大程度上取決於我們目前正在進行的測試。

Okay.

好的。

It helps.

它有助於。

And just sort of be -- [you view this] a little bit better.

只是有點 - [你認為這個] 好一點。

I mean, you can always talk about slowing hyperscale, I mean, in general and just given you're not shipping.

我的意思是，你總是可以談論放慢超大規模，我的意思是，一般來說，只要你不發貨。

Recently, maybe you just don't have a good view on that.

最近，也許您對此沒有很好的看法。

But just, in general, thoughts on the hyperscale demand environment as we exit the year and begin kind of Q1?

但是，總的來說，當我們結束今年並開始第一季度時，對超大規模需求環境的想法？

Is it -- are you seeing kind of a slowdown that others are also seeing?

是嗎 - 您是否看到其他人也看到了某種放緩？

I mean, a lot of people have had slowdowns or talked about slowdowns in particular customers.

我的意思是，很多人都遇到過放緩或談論特定客戶的放緩。

What matters for us, I think, is that we have a few datacenter customers but we don't have all of them yet.

我認為對我們來說重要的是我們有一些數據中心客戶，但我們還沒有擁有所有這些客戶。

And in particular, we talked about this Chinese datacenter operator and a few other operators that we're working very diligently to get.

特別是，我們談到了這個中國數據中心運營商和我們正在努力爭取的其他一些運營商。

So I think what matters to us mostly is continuing to diversify and adding new customers.

所以我認為對我們來說最重要的是繼續多元化和增加新客戶。

And so whatever happens with our existing customer base, these customers, of course, are very, very -- they are very quick to react, they are very diligent about managing their needs in terms of bandwidth.

因此，無論我們現有的客戶群發生什麼情況，這些客戶當然非常非常 - 他們反應非常迅速，他們非常勤奮地管理他們在帶寬方面的需求。

And so as we -- they change their forecast up and down all the time, and if so, the best thing that we can do to react to that, I think, is to get a more diversified customer base and make sure that we can average out any fluctuations that we might see over a larger number of customers.

因此，當我們 - 他們一直上下改變他們的預測，如果是這樣，我認為我們可以做的最好的反應就是獲得更多樣化的客戶群並確保我們能夠對我們可能在大量客戶中看到的任何波動進行平均。

And particularly, if we can get customers that are in different segments, like, for example, the equipment manufactures that we talked about earlier, they're primarily selling to an enterprise-type datacenter market, so that's a completely different dynamic and, I think, one that will help continue to further allow us to minimize our risk associated with any one large customer.

特別是，如果我們能夠獲得不同領域的客戶，例如我們之前談到的設備製造商，他們主要向企業型數據中心市場銷售產品，那麼這是一個完全不同的動態，我認為，這將有助於繼續進一步讓我們將與任何一個大客戶相關的風險降到最低。

And this concludes our question-and-answer session, so I would like to turn the floor back to Thompson Lin for any closing comments.

我們的問答環節到此結束，所以我想把發言權轉回 Thompson Lin，請他發表任何結束評論。

Okay, and thank you for joining us today.

好的，感謝您今天加入我們。

As always, we thank our investors, customers and employees for your continued support.

一如既往，我們感謝我們的投資者、客戶和員工一直以來的支持。

The conference has now concluded.

會議現已結束。

Thank you for attending today's presentation.

感謝您參加今天的演講。

You may now disconnect your lines.

您現在可以斷開線路。