祥茂光電 (AAOI) 2018 Q4 法說會逐字稿

Good afternoon. I will be your conference operator. At this time, I would like to welcome everyone to Applied Optoelectronics Fourth Quarter and Year 2018 Earnings Conference Call. (Operator Instructions) Please note, this call is being recorded.

午安.我將擔任您的會議主持人。現在，我歡迎大家參加應用光電公司 2018 年第四季和全年財報電話會議。（操作員指示）請注意，此通話正在錄音。

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

現在我想將電話轉給 AOI 投資者關係部的 Maria Riley。萊利女士，你可以開始了。

Thank you. I'm Maria Riley, Applied Optoelectronics' Investor Relations, and I'm pleased to welcome you to AOI's Fourth Quarter and Year 2018 Financial Results Conference Call. After the market closed today, AOI issued a press release announcing its fourth quarter and year 2018 results, and provided its outlook for the first quarter of 2019.

謝謝。我是應用光電公司投資者關係部門的瑪麗亞·萊利 (Maria Riley)，很高興歡迎您參加 AOI 2018 年第四季和全年財務業績電話會議。今天收盤後，AOI發布新聞稿，公佈了2018年第四季及全年業績，並對2019年第一季進行了展望。

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 the recording can be found on the Investor Relations page of the AOI website and will be archived for 1-year. 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.

新聞稿也可在本公司網站 ao-inc.com 上查閱。本次通話正在錄音並進行網路直播。您可以在 AOI 網站的投資者關係頁面上找到該錄音的鏈接，該鏈接將存檔 1 年。參加今天電話會議的有 AOI 創辦人、董事長兼執行長 Thompson Lin 博士和 AOI 財務長兼首席策略長 Stefan Murry 博士。

Thompson will give an overview of AOI's Q4 results and Stefan will provide financial details and the outlook for the first quarter 2019. A question-and-answer session will follow our prepared remarks. Before we begin, I would like to remind you to review AOI's safe harbor statement.

湯普森將概述 AOI 第四季的業績，史蒂芬將提供財務細節和 2019 年第一季的展望。我們準備好的發言之後將進行問答環節。在我們開始之前，我想提醒您查看 AOI 的安全港聲明。

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 terminologies such as may, will, should, expects, plans, anticipates, believes or estimates 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 conform these statements to actual results or to changes in the company's expectations. More information about other press 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.

在今天的電話會議上，管理階層將做出前瞻性的陳述。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有重大差異。您可以透過可能、將、應該、預期、計劃、預期、相信或估計等術語以及其他類似的表達來識別前瞻性陳述。除法律要求外，我們不承擔在本次收益電話會議召開日期之後以任何理由更新前瞻性陳述的義務，以使這些陳述符合實際結果或公司預期的變化。有關可能影響公司業務的其他新聞的詳細信息，請參閱公司向美國證券交易委員會提交的報告的“風險因素”部分。

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

此外，除非另有特別說明，今天討論的所有財務數據均基於非 GAAP。非公認會計準則財務指標不應被單獨考慮或取代根據公認會計準則編制的結果。我們的 GAAP 和非 GAAP 指標之間的對帳以及我們為何採用非 GAAP 財務指標的討論均包含在我們網站上的收益新聞稿中。

Before moving to the financial results, I'd like to announce that we will host an investor session at OFC on March 5th at the San Diego Convention Center. This discussion will be webcast live and a link to the webcast will be available on the Investor Relations page of the AOI website. We hope to have the opportunity to see many of you there.

在介紹財務結果之前，我想宣布我們將於 3 月 5 日在聖地牙哥會議中心的 OFC 舉辦一場投資者會議。本次討論將透過網路直播，網路直播連結將在 AOI 網站的投資者關係頁面上提供。我們希望有機會在那裡見到你們。

Lastly, I'd like to note the date of our first quarter of 2019 earnings call is currently scheduled for Wednesday, May 8, 2019.

最後，我想指出，我們 2019 年第一季財報電話會議的日期目前定於 2019 年 5 月 8 日星期三。

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

現在，我想將電話轉交給應用光電公司創辦人、董事長兼執行長 Thompson Lin 博士。湯普森？

Thank you, Maria. Good afternoon, everyone, and thank you for joining us today. In summarizing our performance in the quarter, we delivered non-GAAP revenue of $58.9 million and non-GAAP EPS of a loss of $0.02, which was in line with our guidance. However, our gross margin was below our expectations, as we incurred higher than anticipated costs to resolve the inventory issue we experienced last quarter.

謝謝你，瑪麗亞。大家下午好，感謝大家今天的參與。總結本季的業績，我們實現了非公認會計準則收入 5,890 萬美元，非公認會計準則每股收益虧損 0.02 美元，符合我們的預期。然而，我們的毛利率低於預期，因為我們為解決上個季度遇到的庫存問題而產生的成本高於預期。

Looking ahead, we expect gross margin to begin to gradually improve starting this quarter. For the year, AOI delivered revenue of $268.4 million, generated a gross margin of 35.5% and non-GAAP earnings of $1.04 per diluted share.

展望未來，我們預計毛利率將從本季開始逐步提高。AOI 全年營收為 2.684 億美元，毛利率為 35.5%，非公認會計準則每股收益為 1.04 美元。

While 2018 had its challenges for the overall optics market and for AOI, I would like to note a few of our accomplishments that we believe help strengthen our position in the long term. First, while our customer base continues to be concentrated, we have made progress in our initiative to broaden this base. This started with a large purchase commitment early in the year from a third hyperscale datacenter customer based in the US. And during the summer, we gained a design win with a large datacenter operator in China.

雖然 2018 年對於整個光學市場和 AOI 都面臨挑戰，但我想指出我們所取得的一些成就，我們相信這些成就有助於長期鞏固我們的地位。首先，雖然我們的客戶群仍然集中，但我們在擴大客戶群方面已經取得了進展。這始於今年年初來自美國第三家超大規模資料中心客戶的大筆購買承諾。夏季，我們與中國一家大型資料中心營運商贏得了設計合作。

Diversifying our customer base is a top priority for AOI and we are pleased with the progress we made on this front in 2018. All-in for the year, we secured a total of 26 new design wins, of which 12 were with new customers, including a large U.S.-based datacenter customer that we secured this quarter. This compares favorably with 2017, where we had 19 design wins in total and 10 with new customers. We believe that the emphasis we have placed on diversifying our customer base has continued to bear fruit.

實現客戶群多元化是 AOI 的首要任務，我們對 2018 年在這方面的進展感到滿意。全年我們總共獲得了 26 個新的設計訂單，其中 12 個來自新客戶，包括本季獲得的美國大型資料中心客戶。這與 2017 年相比有所進步，2017 年我們總共贏得了 19 個設計獎項，其中 10 個來自新客戶。我們相信，我們對多元化客戶群的重視已持續取得成效。

Second, we continued to demonstrate our strong commitment to our customers. While at times this required us to make difficult choices with near-term trade-offs, we believe that our focus on our customers builds enduring relationships that can continue to develop in 2019 and beyond. I'm proud to say that we have maintained all of our top customers.

其次，我們持續展現對客戶的堅定承諾。雖然有時這需要我們在短期權衡中做出艱難的選擇，但我們相信，對客戶的關注可以建立持久的關係，這種關係可以在 2019 年及以後繼續發展。我很自豪地說，我們保留了所有頂級客戶。

Third, we continue to innovate and expand our technology leadership in advanced optics. This included advance in 200G and 400G in the datacenter and RemotePhy for our CATV customers. Just last month, we released a silicon photonics-based 400G optical module that is now currently available for customer sampling. This technology platform will enable our datacenter customers to scale the infrastructure beyond 400G to ultimately 1.6 terabits per second.

第三，我們不斷創新，擴大我們在先進光學領域的技術領先地位。這包括資料中心 200G 和 400G 的進步以及為我們的 CATV 客戶提供的 RemotePhy。就在上個月，我們發布了基於矽光子的400G光模組，目前已向客戶提供樣品。該技術平台將使我們的資料中心客戶能夠將基礎設施擴展到 400G 以上，最終達到每秒 1.6 太比特。

The customer response has been very positive for our leading-edge suite of products and we remain confident in our ability to monetize our innovations as the market evolves and adopts next generation technologies.

客戶對我們尖端產品套件的反應非常積極，隨著市場的發展和下一代技術的採用，我們仍然有信心將我們的創新轉化為現實。

Fourth, we continue our market diversification efforts by shipping products to several telecom customers to be tested for use in next-generation 5G mobile networks. Many of these 5G optical products will need to perform well under demanding outdoor temperature conditions, and we believe that our experience in manufacturing optical devices used in similar conditions for CATV applications will help us secure a foothold in this market. While we are still early in the 5G cycle, we believe 5G will be a significant driver of the high-speed optical component market likely starting later this year.

第四，我們繼續努力實現市場多元化，向多家電信客戶運送產品，以測試其在下一代 5G 行動網路中的使用情況。許多 5G 光學產品需要在苛刻的室外溫度條件下表現良好，我們相信，我們在製造用於 CATV 應用的類似條件下的光學設備方面的經驗將幫助我們在這個市場上站穩腳跟。雖然我們仍處於 5G 週期的早期階段，但我們相信 5G 可能會在今年稍後開始成為高速光學元件市場的重要推動力。

Overall, we are pleased with the technical achievements we have made this year, the progress we made in expanding our customer base and our continued support of our existing customers.

總體而言，我們對今年取得的技術成就、擴大客戶群所取得的進展以及對現有客戶的持續支持感到滿意。

I want to thank the AOI team for their hard work and dedication this year. Before I turn the call over to Stefan to discuss our results in more detail, I'd like to make a few comments on the market dynamics we currently see in the datacenter market.

我要感謝 AOI 團隊今年的辛勤工作和奉獻精神。在我將電話轉給 Stefan 以更詳細地討論我們的結果之前，我想對我們目前在資料中心市場看到的市場動態發表一些評論。

Several other industry players have commented in recent weeks about the poor visibility in China and the excess inventory situation in the datacenter market, and we are not immune to these dynamics. It is clear from our conversations with our hyperscale datacenter customers that inventory in the supply chain has gotten ahead of deployment, due in part to the transition to 100G. While it is still early in the year and visibility is limited, we believe that the second half of 2019 will be stronger than the first as the inventory is worked down over the next couple of quarters.

最近幾週，其他幾位業內人士也對中國市場的低迷以及資料中心市場的庫存過剩狀況發表了評論，我們也無法免受這些動態的影響。從我們與超大規模資料中心客戶的對話中可以清楚地看出，供應鏈中的庫存已經領先於部署，部分原因是向 100G 的過渡。雖然現在還處於年初階段，可見度有限，但我們相信，隨著未來幾季庫存減少，2019 年下半年的表現將強於上半年。

We also have seen some of our datacenter customers in China taking a more conservative approach in their CapEx deployment due to concerns of slowing economic growth in the country. While both of this factors will affect our short-term outlook the underlying trends driving demand for our products has not changed, nor has our status with our customers. We serve some of the most dynamic and rapidly-evolving companies in the world and believe their need for high-speed computing power remains fundamental to their business. With the technologies we have developed and plan to bring to market, we believe we are in a strong competitive position to address our customer needs as demand improves. We remain focused on building on our strong foundation as a leader in advanced optical technology and expanding our footprint within the market.

我們也發現，由於擔心中國經濟成長放緩，我們在中國的一些資料中心客戶在資本支出部署方面採取了更保守的態度。雖然這兩個因素都會影響我們的短期前景，但推動我們產品需求的根本趨勢並沒有改變，我們在客戶中的地位也沒有改變。我們為世界上一些最具活力和發展最快的公司提供服務，並相信他們對高速運算能力的需求仍然是其業務的基礎。憑藉我們已開發並計劃推向市場的技術，我們相信，隨著需求的增長，我們將擁有強大的競爭優勢來滿足客戶的需求。我們將繼續致力於鞏固我們在先進光學技術領域的領先地位，並擴大我們在市場上的影響力。

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

說完這些，我將把電話轉給史蒂芬，讓他回顧我們第四季的業績細節以及本季的展望。史蒂芬？

Thank you. Thompson. Non-GAAP revenue for the fourth quarter was $58.9 million, which was in line with our guidance range of $56 million to $63 million. Our datacenter revenue came in at $42.6 million compared with $62 million in Q4 of last year. In the quarter, 60% of our datacenter revenue was derived from our 100G datacenter products and 38% was from our 40G products. Our production capacity remain constrained in the quarter due to the additional product testing steps we implemented last quarter to screen for any potentially troublesome laser devices from our inventory, including work in process. As discussed last quarter, we identified and remedied the root cause of the problem that affected a small number of our lasers and we added additional testing steps including temporary steps to screen existing inventory. We remain on track to return to normal lead times by the end of this quarter.

謝謝。湯普森。第四季非公認會計準則收入為 5,890 萬美元，符合我們 5,600 萬美元至 6,300 萬美元的預期範圍。我們的資料中心收入為 4,260 萬美元，而去年第四季為 6,200 萬美元。本季度，我們資料中心營收的 60% 來自我們的 100G 資料中心產品，38% 來自我們的 40G 產品。由於我們在上個季度實施了額外的產品測試步驟，以從庫存（包括在製品）中篩選出任何可能有問題的雷射設備，因此本季我們的生產能力仍然受到限制。正如上個季度所討論的那樣，我們確定並解決了影響少量雷射器的問題的根本原因，並增加了額外的測試步驟，包括篩選現有庫存的臨時步驟。我們仍有望在本季末恢復正常的交貨時間。

This quarter we also issued a $900,000 credit to a customer. We expect this credit to be non-recurring and have therefore, adjusted out of our GAAP revenue. As Thompson mentioned, based on conversations with our hyperscale datacenter customers, we believe there was some inventory build up in the supply chain as customers transition to 100G. We believe this will obfuscate demand and visibility in 2019. We currently expect demand in the first 2 quarters of the year will be sequentially down from our most recent quarters. We currently expect the second half of the year to improve over the first, however, we are still early in the year and visibility is limited. We continue to shift to and have good relationships with all of our hyperscale customers and believe we are in a solid position to expand our business with them when market conditions improve.

本季我們也向一位客戶發放了 90 萬美元的信用額度。我們預計這筆貸款將是非經常性的，因此已從我們的 GAAP 收入中進行了調整。正如湯普森所提到的，根據與超大規模資料中心客戶的對話，我們認為隨著客戶向 100G 過渡，供應鏈中會出現一些庫存累積。我們認為這將影響 2019 年的需求和可見度。我們目前預計今年前兩個季度的需求將比最近幾季有所下降。我們目前預計下半年的情況將比上半年有所改善，但是，今年仍處於初期階段，可見度有限。我們繼續轉向並與所有超大規模客戶保持良好的關係，並相信當市場條件改善時，我們有能力擴大與他們的業務。

We continue to have strong technical engagement with our customers and are making good progress on developing our next generation of datacenter products. Last month, we announced the released of a silicon photonics-based 400G optical module that is now currently available for customer sampling. These modules adhere to the requirements of onboard optics and incorporates several new technologies, including an advanced silicon photonics-based optical subassembly that is the result of years of R&D effort by AOI and our technology partners.

我們繼續與客戶保持密切的技術合作，並在開發下一代資料中心產品方面取得了良好的進展。上個月，我們宣布推出基於矽光子的 400G 光模組，目前已向客戶提供樣品。這些模組符合機載光學的要求，並採用了多項新技術，包括基於先進矽光子學的光學子組件，這是 AOI 和我們的技術合作夥伴多年研發的成果。

This next generation module is significant because the suite of technologies and incorporates will enable future similar modules to scale beyond 400G ultimately to 1.6 terabits per second. Thereby enabling continued scaling of our customers infrastructure. We gathered very positive feedback while demonstrating early prototypes at the European Conference on Optical Communications last year and look forward to seeing the customer response after showcasing this technology at OFC next month.

這個新一代模組意義重大，因為這套技術和整合將使未來類似的模組能夠擴展到 400G 以上，最終達到每秒 1.6 太比特。從而使我們客戶的基礎設施能夠持續擴展。去年，我們在歐洲光通訊會議上展示早期原型時收集了非常積極的回饋，並期待下個月在 OFC 上展示這項技術後看到客戶的反應。

We believe the new innovative technologies that we have developed and cost reduction efforts, position us well to continue to expand the reach of our products to a broad group of datacenter customers and diversify our customer base. While we will always rely on a relatively concentrated number of customers, diversifying our customer base remains a top priority. In the quarter, we had 3 design wins, including one with a large U.S.-based datacenter customer, which is a new customer to AOI. This brings our total number of design wins to 26 for the year, including 12 with new customers to AOI. This exceeds our 2017 totals in both number of design wins and new customer wins, demonstrating the effectiveness of our continuing efforts to diversify our customer base.

我們相信，我們開發的創新技術和降低成本的努力使我們能夠繼續擴大產品覆蓋範圍，涵蓋廣泛的資料中心客戶群，並使我們的客戶群多樣化。雖然我們始終依賴相對集中的客戶數量，但實現客戶群多元化仍然是我們的首要任務。本季度，我們獲得了 3 項設計勝利，其中一項是與美國一家大型資料中心客戶簽訂的，該客戶是 AOI 的新客戶。這使得我們今年的設計獲勝總數達到 26 個，其中包括 12 個來自 AOI 新客戶的設計獲勝。這超過了我們 2017 年設計得標數量和新客戶中標數量的總數，證明了我們持續努力實現客戶群多元化的有效性。

In our cable television business, we remain encouraged by the customer activity in this market. We generated revenue of $12.7 million compared with $14.3 million reported in Q4 of last year. This was result of some weakness in demand, mainly in Europe and Asia, partially offset by demand from North American MSOs. In the quarter, we started to ship volume orders for our Remote PHY product and we remain in active qualification trials with 4 additional customers for this technology.

在我們的有線電視業務中，我們仍然受到該市場客戶活動的鼓舞。我們實現了 1,270 萬美元的收入，而去年第四季的收入為 1,430 萬美元。這是由於需求疲軟（主要在歐洲和亞洲）造成的，但被北美 MSO 的需求部分抵消。在本季度，我們開始批量發貨遠端 PHY 產品，並且我們仍在與另外 4 個客戶就該技術進行積極的資格試驗。

Our telecom products delivered revenue of $2.8 million compared with $3.2 million in Q4 of last year. For the quarter, 72% of our revenue was from datacenter products, 21% from CATV products with the remaining 7% from FTTH telecom and other. In the quarter, we had 4 10% or greater customers, 3 in the datacenter business that contributed 38%, 18% and 11% of total revenue, respectively and one in the CATV business that contributed 11% of total revenue. For the year 2018, these same 4 customers represented 39%, 22%, 12% and 10%, respectively of total revenue.

我們的電信產品收入為 280 萬美元，而去年第四季為 320 萬美元。本季度，我們的營收 72% 來自資料中心產品，21% 來自有線電視產品，其餘 7% 來自 FTTH 電信和其他。本季度，我們有 4 個 10% 或更高的客戶，其中 3 個來自資料中心業務，分別貢獻了總收入的 38%、18% 和 11%，1 個來自有線電視業務，貢獻了總收入的 11%。2018 年，這 4 個客戶分別佔總收入的 39%、22%、12% 和 10%。

Moving beyond revenue. In the quarter, we generated gross margin of 24.7% compared with the 34% recorded last quarter. Our gross margin came in below our expectations due to higher than anticipated costs incurred, while we work to resolve the inventory issue we experienced last quarter. Looking ahead, we expect gross margin to improve gradually starting this quarter. Total operating expenses in the quarter were $18.7 million or 31.8% of revenue compared with $22.8 million or 40.4% of revenue in the prior quarter.

超越收入。本季度，我們的毛利率為 24.7%，而上一季為 34%。由於成本高於預期，我們的毛利率低於預期，同時我們正在努力解決上個季度遇到的庫存問題。展望未來，我們預計毛利率將從本季開始逐步提高。本季總營運費用為 1,870 萬美元，佔營收的 31.8%，而上一季為 2,280 萬美元，佔營收的 40.4%。

In the quarter, our operating expenses decreased sequentially due to lower bonus accruals as a result of our performance in the year. Operating loss in Q4 was $4.2 million compared with an operating loss of $3.6 million in the prior quarter. Non-GAAP net loss after-tax for the fourth quarter was $0.5 million or a loss of $0.02 per basic share compared with a net income of $17.9 million or $0.89 per diluted share in Q4 of 2017. GAAP net loss for Q4 was $8.6 million or a loss of $0.43 per basic share compared with a GAAP net income of $5.7 million or $0.28 per diluted share in Q4 of last year. The basic shares outstanding used for computing the net loss in Q4 were 19.8 million shares.

本季度，由於我們全年業績表現良好，預計獎金減少，因此我們的營運費用環比下降。第四季營業虧損為 420 萬美元，而上一季的營業虧損為 360 萬美元。第四季非公認會計準則稅後淨虧損為 50 萬美元，即每股基本虧損 0.02 美元，而 2017 年第四季淨收入為 1,790 萬美元，即每股攤薄虧損 0.89 美元。第四季 GAAP 淨虧損為 860 萬美元，即每股基本虧損 0.43 美元，去年第四季 GAAP 淨收入為 570 萬美元，即每股攤薄虧損 0.28 美元。用於計算第四季淨虧損的基本流通股數為1,980萬股。

Turning now to the balance sheet. We ended Q4 with $58 million in total cash, cash equivalents, short-term investments, and restricted cash, compared with $64.1 million at the end of the previous quarter. As of December 31, we had $93.3 million in inventory, a decrease from $107.9 million in Q3. Our cash balance reflects the use of approximately $11.6 million in cash to fund operations during the quarter. We made a total of $19.6 million in capital investments in the quarter, including $17.2 million in production equipment in machinery and $1.6 million on construction and building improvements. This brings our total capital investments for the year to approximately $77.4 million, which was below our most recent $90 million CapEx forecast as we reduced purchases of certain equipment to maintain production volume in line with demand, while at the same time investing in the additional testing equipment needed to meet the new testing requirements implemented last quarter.

現在來看資產負債表。截至第四季末，我們的現金、現金等價物、短期投資和受限現金總額為 5,800 萬美元，而上一季末為 6,410 萬美元。截至 12 月 31 日，我們的庫存為 9,330 萬美元，較第三季的 1.079 億美元有所減少。我們的現金餘額反映了本季使用約 1,160 萬美元現金來資助營運。本季我們共進行了 1,960 萬美元的資本投資，其中包括 1,720 萬美元的機械生產設備投資和 160 萬美元的建築和建築改進投資。這使得我們今年的總資本投資達到約 7740 萬美元，低於我們最近的 9000 萬美元資本支出預測，因為我們減少了某些設備的購買以保持產量與需求一致，同時投資了滿足上個季度實施的新測試要求所需的額外測試設備。

Looking ahead, we expect capital expenditures in 2019, to be approximately $56 million, which factors in a continuation of the construction of our new factory in China. We continue to monitor end market conditions and may adjust our spending plans as necessary. Our total debt at year-end was $84 million, up from approximately $50 million at the end of 2017. Much of this debt is associated with our capital expansion activities with maturities extending out several years. Just as we continuously monitor our spending plans to match market conditions, we regularly assess our capital structure to ensure we have the right mix of funding for current operations and future expansion.

展望未來，我們預計 2019 年的資本支出約為 5,600 萬美元，其中包括繼續在中國建造新工廠。我們將繼續監測終端市場狀況，並根據需要調整我們的支出計劃。我們年底的總債務為 8,400 萬美元，高於 2017 年底的約 5,000 萬美元。這些債務大部分與我們的資本擴張活動有關，其期限長達數年。正如我們不斷監控我們的支出計劃以適應市場狀況一樣，我們定期評估我們的資本結構，以確保我們擁有適合當前營運和未來擴張的資金組合。

Moving now to our Q1 outlook. We expect Q1 revenue to be between $50 million and $55 million. We expect Q1 non-GAAP gross margin to be in the range of 26.5% to 28.5%. Net loss is expected to be in the range of $3.7 million to $5.8 million and non-GAAP loss per share between $0.18 per share and $0.29 per share using a weighted average basic share count of approximately 19.9 million shares. We expect our Q1 effective tax rate on our non-GAAP net income to be between 32% and 40%.

現在轉到我們的第一季展望。我們預計第一季的營收將在 5,000 萬美元至 5,500 萬美元之間。我們預計第一季非公認會計準則毛利率在 26.5% 至 28.5% 之間。預計淨虧損將在 370 萬美元至 580 萬美元之間，非 GAAP 每股虧損將在 0.18 美元至 0.29 美元之間，加權平均基本股數約為 1,990 萬股。我們預計第一季非公認會計準則淨收入的有效稅率在 32% 至 40% 之間。

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

說完這些，我會把話題交還給接線員，進行問答環節。操作員？

(Operator Instructions) Our first question is from Simon Leopold with Raymond James.

（操作員指示）我們的第一個問題來自 Raymond James 的 Simon Leopold。

I think that you made this in the prepared remarks, but I just want to make sure that I clarify. I believe you stated that your relationships with your key web scale customers remains sound. I know there's been a lot of speculation that the Facebook deal that you talked about a year ago has either been revised, or changed, or canceled. Could you just clarify your standing with Facebook, please?

我認為您在準備好的發言中已經提到了這一點，但我只是想確保我已經澄清了。我相信您說過，您與主要網路規模客戶的關係仍然良好。我知道有很多猜測稱，您一年前談到的 Facebook 交易要么被修改了，要么被更改了，要么被取消了。您能否澄清一下您與 Facebook 的關係？

Yes. Simon, So I can't obviously comment due to non-disclosure agreements on specific individual customers. However, as we pointed out in our prepared remarks and I'll say again, we believe all of our major hyperscale datacenter customer relationships remain intact.

是的。西蒙，由於特定個人客戶的保密協議，我顯然無法發表評論。然而，正如我們在準備好的演講中指出的那樣，我再說一遍，我們相信我們所有主要的超大規模資料中心客戶關係仍然完好無損。

Great. And just to follow on, when you talked about the inventory that in the channel, is this concentrated with one customer, 2 customers, 3 customers, how should we think about the concentration of the inventory build up, you referred to?

偉大的。接下來，當您談到通路中的庫存時，庫存是集中在一個客戶、兩個客戶還是三個客戶身上，我們應該如何看待您提到的庫存累積集中度？

Well, I think, first of all, we're not the only company that's reported this, has talked about this a little bit. I think what we're seeing is kind of consistent across the industry. But we see some buildup of inventory across multiple customers, obviously to a greater or lesser extent depending on which customer you're talking about.

嗯，我認為，首先，我們不是唯一一家報道此事的公司，我們也討論過這個問題。我認為我們所看到的情況在整個行業中是一致的。但我們發現多個客戶的庫存都有增加，顯然，增加的程度或多或少取決於你談論的是哪個客戶。

Thanks. And one last one if I might, you recently filed an 8-K regarding modifying some loan agreements, a credit line, credit agreement and one sentence in there caught my attention that the bank is asking for monthly financial reports rather than quarterly reports. That kind of surprised me, that's sort of a classic yellow flag that somebody is concerned about cash flow. Could you help us understand, what was behind that?

謝謝。如果可以的話，我最後再問一句，您最近提交了一份 8-K 表格，涉及修改一些貸款協議、信用額度、信用協議，其中有一句話引起了我的注意，那就是銀行要求提供月度財務報告，而不是季度報告。這讓我有點驚訝，這是一個典型的危險信號，表示有人擔心現金流。您能幫助我們理解背後的原因嗎？

Actually, I mean, the bank has been requesting that for some time and I had previously agreed to it at some point when we did another loan agreement. I mean, I didn't want to amend just for that one item. I don't think there's really much more to it within that.

實際上，我的意思是，銀行已經要求這樣做一段時間了，而且在我們簽訂另一份貸款協議時，我之前也同意過這一點。我的意思是，我不想只修改那一項。我不認為這裡面還有更多內容。

Next question is from Fahad Najam at Cowen.

下一個問題來自 Cowen 的 Fahad Najam。

Stefan, if you could help us understand in terms of the broader picture, the dynamics in 100 gig PSM4 the pricing environment? And then also the pricing environment by CWDM4, do you see the same level of heightened price decline as you saw last year? Is it beginning to normalize and maybe if you be a little bit more granular by product markets that might help us understand what's happening beyond the inventory issues?

史蒂芬，您能否幫助我們從更廣泛的角度了解 100 千兆 PSM4 定價環境的動態？那麼，CWDM4 的定價環境是否也與去年一樣，出現了相同程度的價格下降？它是否開始正常化？如果您能更詳細地了解產品市場，也許可以幫助我們了解庫存問題之外的情況？

Yes. Well, Fahad, as you know, we don't guide more than 1 quarter out and generally not on a product-by-product basis. I think overall in terms of pricing, what we expect to see this year is, for pricing declines to be similar to what they were last year, perhaps a little bit less, but about the same number. And as far as how that's going to breakout between CWDM and PSM, it's again we're not going to give that sort of guidance on that sort of a granular basis.

是的。嗯，法哈德，如你所知，我們的指導不會超過 1 個季度，而且通常不會針對每個產品進行指導。我認為，就定價而言，我們預計今年的價格下降幅度將與去年類似，或許會小一點，但幅度大致相同。至於 CWDM 和 PSM 之間如何分界，我們不會以這種詳細的方式給予指導。

If I may ask -- sticking with the broader picture, a number of -- certain degree of consolidation in the space Luxtera got acquired by Cisco, which is a customer of yours for CATV products, you've got Oclaro that got acquired by Lumentum, color chip which was in the process of being sold to some Chinese buyers apparently valid financial describes. To that extent any change in the market and competitive dynamics? Are you seeing a noticeable development in that front? And also can you comment on any prospective risk of share losses that your customers, do you think you are maintaining your share? Or is this a purely a function of quarterly cash flows?

請容許我問一下——從更廣泛的角度來看，該領域存在一定程度的整合，Luxtera 被思科收購，思科是你們的有線電視產品客戶，而 Oclaro 則被 Lumentum 收購，彩色晶片業務當時正準備出售給一些中國買家，顯然財務描述是合理的。那麼市場和競爭動態有什麼變化嗎？您是否看到這方面有顯著的發展？另外，您能否評論一下您的客戶可能面臨的份額損失風險，您認為您能維持自己的份額嗎？還是這純粹是季度現金流的函數？

Okay. So there is a couple of questions embedded in there. I will try to address them one at a time. First of all, regarding kind of the broader topic of consolidation. I think it's fair to say that customers generally want to have a variety of suppliers to choose from, when that group shrinks, they have less choice and perhaps that could bode well for AOI. But I think ultimately their decision is really based on the same kind of decision-making metrics that they've always used in the past and that we've always talked about things like the technology roadmap, how well your roadmap aligns with their future needs and price and quality, things like that. So on balance, I think, the consolidation is probably neutral, but it doesn't hurt AOI, I would say. Yes, specifically about Luxtera or Cisco's acquisition of Luxtera. I think I can just say on that front that AOI hasn't supplied any products to Cisco that would compete with Luxtera's products. As you mentioned in your question, we're supplier mainly of cable TV product. So -- and to my knowledge, Luxtera didn't have any of those products. So I don't think there's really any risks to AOI's business there. And there was one more question in there, I forgot what it was, I am sorry, could you repeat back?

好的。這裡面有幾個問題。我將嘗試逐一解決這些問題。首先，關於更廣泛的合併話題。我認為可以公平地說，客戶通常希望有多種供應商可供選擇，當該群體縮小時，他們的選擇就更少了，這也許對 AOI 來說是個好兆頭。但我認為，最終他們的決定實際上是基於他們過去一直使用的相同類型的決策指標，而且我們一直在討論諸如技術路線圖之類的事情，你的路線圖與他們未來的需求、價格和質量的契合程度等等。因此，總的來說，我認為合併可能是中性的，但不會損害 AOI。是的，具體是關於 Luxtera 或思科對 Luxtera 的收購。我認為在這方面我可以說 AOI 沒有向思科提供任何與 Luxtera 產品競爭的產品。正如您在問題中提到的，我們主要是一家有線電視產品的供應商。所以 — — 據我所知，Luxtera 沒有任何這些產品。因此我認為 AOI 在那裡的業務實際上不存在任何風險。其中還有一個問題，我忘了是什麼了，對不起，你能再說一次嗎？

If you can comment on the entire -- your respective share at your hyperscale customers, do you think you are maintaining share at each of those customers?

如果您可以對您在超大規模客戶中所佔的份額進行整體評論，您認為您在每個客戶中所佔的份額都保持不變嗎？

So, again, we obviously can't comment on specific customers. What I can say is, we have very good relationships with all of our large hyperscale customers, as we mentioned in our prepared remarks. And I think what we're really excited about now is, as those customers start to look ahead to 200G and particularly 400G. The level of a discussion that we're having, very detailed discussion and the tenor of that discussion, I think is very promising for us. So we're excited about that transition. And I think there is no indication that we're not going to be a major part of our customers plans both in the near term and in the longer term.

因此，我們顯然無法對特定客戶發表評論。我可以說的是，正如我們在準備好的演講中提到的那樣，我們與所有大型超大規模客戶都保持著非常好的關係。我認為我們現在真正興奮的是，這些客戶開始展望 200G，特別是 400G。我認為，我們正在進行的討論的水平、非常詳細的討論以及討論的基調對我們來說非常有希望。所以我們對這一轉變感到非常興奮。我認為，沒有跡象表明我們不會成為客戶短期和長期計劃的重要組成部分。

(Operator Instructions) Our next question comes from Dave Kang at B Riley.

（操作員指示）我們的下一個問題來自 B Riley 的 Dave Kang。

This is actually Lee Krowl filling in for Dave King. First off, I just wanted to ask, maybe it's a little more trivial, but with this tepid near-term demand trend, is it your expectation that you'll still be able to double 100G volume in 2019 relative to your prior comments?

這實際上是 Lee Krowl 代替 Dave King 的。首先，我只是想問一下，也許這有點瑣碎，但在這種不溫不火的近期需求趨勢下，您是否預計 2019 年您仍能將 100G 的銷量翻一番（相對於您之前的評論）？

When we say that the demand picture in the second half of the year particularly is uncertain. That's exactly what we mean and I wouldn't want to put a mark on the map so to speak, in terms of where we think we can go. I think there's -- the near-term demand is looking muted, that's for sure. There are some very positive developments that could happen in the second half of the year that we're working through with some of our customers to try to see how that goes. We've talked in the last few earnings calls and actually if you go back for a year or so about an increasing cadence of new design wins and to the extent that some of those design wins could start to contribute particularly later in the year, that could be very exciting. But again, the visibility is limited as we said and I wouldn't want to -- I wouldn't want to give you an indication, based on that limited visibility.

我們說下半年的需求情勢尤其不確定。這正是我們想要表達的意思，我不想在地圖上標記我們認為可以去的地方。我認為——短期需求看起來疲軟，這是肯定的。今年下半年可能會出現一些非常積極的進展，我們正在與一些客戶合作，看看進展如何。我們在最近的幾次財報電話會議上討論過，實際上，如果回顧一年左右的時間，你會發現新設計的成功頻率越來越高，而且其中一些設計的成功可能會在今年晚些時候開始產生貢獻，這可能會非常令人興奮。但正如我們所說，可見性是有限的，我不想——基於有限的可見性，我不想給你任何暗示。

Got it. And then I guess you sort of answered it, but you kind of indicated Q1 ticks down leading into Q2 kind of indicating the trough in terms of revenue, but are there any specific demand drivers in the second half you could point to that would give you the confidence that revenue can grow sequentially in Q3?

知道了。然後我想您已經回答了這個問題，但是您似乎表示第一季的收入在第二季度下降，這表明收入已經觸底，但是您是否可以指出下半年有哪些具體的需求驅動因素，讓您有信心第三季度的收入能夠連續增長？

Yes, I mean, we're hearing indications of early adoption of 400 gig technology by certain customers, for example. And we're also very excited about the progress that we're making in terms of 5G technology. Now that's probably more of a 2020 thing. But it's -- that telecom market is one where we haven't been a major player previously, and I think it doesn't take a lot of design wins and sales into that market to really improve our dynamic there. So we talked also about Remote PHY. I think there's every indication in the cable TV market that the Remote PHY technology is going to be a bigger part of the second half of the year, certainly than it is in the first. So there's a number of positive demand trends there. I think counterbalancing that obviously is the uncertainty surrounding particularly China. Again, we're certainly not the only company that's talked about uncertain demand environment in China. I think many of our customers there are looking at the potential of a slowing economy over there and sort of reevaluating their plans around what they think that means for their business and they're all in a process of trying to make that determination. And so that -- I suppose the upside of the number of design wins and things that we have, the downside risk is we're not quite sure how things in China are going to go. I will point out in terms of China. Historically, we have not been -- a large percentage of our revenue has not derived from China. A number of our newer design wins have been -- however, in China. And so it's not so much that we're going to be losing existing business there, but the some of the design wins that we expected to kick in earlier in the year, now look like they may be a little later in the year and the extent to which they occur is a little difficult to calibrate at this point.

是的，我的意思是，例如，我們聽到某些客戶提前採用 400 千兆技術的跡象。我們對 5G 技術的進展感到非常興奮。這可能更像是 2020 年的事。但之前我們在電信市場還不是主要參與者，我認為不需要在該市場贏得很多設計勝利和銷售就能真正改善我們在那裡的活力。因此我們也討論了遠端 PHY。我認為有線電視市場的所有跡像都表明，遠端 PHY 技術在下半年將佔據更重要的份額，肯定比上半年更大。因此那裡存在著許多積極的需求趨勢。我認為，顯然與此相反的是圍繞中國的不確定性。再說一次，我們當然不是唯一一家談論中國不確定需求環境的公司。我認為，我們在那裡的許多客戶都在關注經濟放緩的可能性，並重新評估他們的計劃，看看這對他們的業務意味著什麼，他們都在努力做出決定。所以，我認為，我們贏得的設計勝利數量和其他事物的優點在於，缺點在於我們不太確定中國的情況將如何發展。我要從中國的角度指出這一點。從歷史上看，我們很大一部分的收入並非來自中國。然而，我們的許多新設計都在中國獲得。因此，我們不會失去現有的業務，而是我們原本預計在今年早些時候實現的一些設計勝利，現在看來可能會在今年晚些時候實現，而且它們發生的程度目前有點難以衡量。

Got it. And then just a last one from me. Could you maybe talk about the inventory situation and maybe delineate inventory backup in the channel relative -- 40G relative to 100G?

知道了。接下來是我最後一個問題。您能否談談庫存情況並描述渠道相對的庫存備份——40G 相對於 100G？

I think the inventory backup is probably more about 100G than it is about 40G. But I can't really quantify that exact backup for you.

我認為庫存備份可能約為 100G，而不是 40G。但我無法真正為您量化確切的備份。

The next question is from Richard Shannon at Craig-Hallum.

下一個問題來自 Craig-Hallum 的 Richard Shannon。

I apologize I jumped on the call a little late, so I may have missed some things. First of all, Stefan, did I hear you say that 100 gig was 72% of datacenter?

抱歉，我接電話有點晚，所以可能錯過了一些事情。首先，Stefan，我是否聽到您說過 100G 佔資料中心的 72%？

I believe that's right, let me just check the number here. Datacenter was 72% of our revenue, you're asking about 100 gig versus 40 gig?

我認為這是沒錯的，讓我檢查一下這裡的數字。資料中心占我們收入的 72%，您問的是 100G 還是 40G？

Yes, please.

是的，請。

60% of our datacenter revenue is from 100 gig and 38% from 40 gig.

我們的資料中心收入 60% 來自 100G，38% 來自 40G。

Okay. So 60% is up quite a bit from 34% the prior quarter then, right?

好的。那麼 60% 比上一季的 34% 上升了不少，對嗎？

That's correct. Yes.

沒錯。是的。

Okay, excellent. This year, you talked about a design win with a large U.S. datacenter customer. Can you describe that any detail like specifically on speed? And how you expect that to progress to eventually generating volume revenues are?

好的，非常好。今年，您談到了與美國一家大型資料中心客戶達成的設計勝利。能描述一下具體速度方面的細節嗎？您預計這一進程將如何最終實現批量收入？

I can't give too many details, as you can imagine we're under non-disclosure agreement with this customer, but the customer I would classify this customer as a recognizable name, but it's not one that is as big in terms of scale as some of our other larger hyperscale datacenter customers. So this is a smaller customer, and it's likely to not be contributing as meaningfully certainly as some of our other larger datacenter customers. However, I think it's worth pointing out that what we're really trying to demonstrate here is that our efforts towards broadening our customer base are being successful. So we're adding new customers, we're getting a design wins and new business coming from these customers and, yes, it's fair to say, that many of those customers aren't going to be as big as some of our previously announced large hyperscale customers. There just aren't that many of those types of customers out there. But over time incrementally with a lot of hard work and attention to these customers' needs, we're managing to gain a strong foothold in a wider swath of customers, which I think long term is really what's very healthy for AOI.

我不能透露太多細節，正如你所想像的，我們與這位客戶簽訂了保密協議，但我會將該客戶歸類為一個可識別的名稱，但其規模不如我們的其他一些大型超大規模資料中心客戶那麼大。因此，這是一個較小的客戶，並且可能不會像我們的其他一些較大的資料中心客戶那樣做出有意義的貢獻。不過，我認為值得指出的是，我們真正想要證明的是，我們為擴大客戶群所做的努力正在取得成功。因此，我們正在增加新客戶，我們從這些客戶那裡獲得設計勝利和新業務，是的，可以公平地說，其中許多客戶不會像我們之前宣布的一些大型超大規模客戶那麼大。這種類型的客戶並不多。但隨著時間的推移，透過大量的努力和對這些客戶需求的關注，我們成功地在更廣泛的客戶群中站穩了腳跟，我認為從長遠來看，這對 AOI 來說確實非常有利。

Okay, that's helpful. Thanks for that. Couple more from me. Stefan, can you help us understand the exposure, I don't know if you want to talk about in terms of when you'll see it or mix at the end of the year whatever, but your contributions, you could see from 200 gig and 400 gig?

好的，這很有幫助。謝謝。我再說幾句。史蒂芬，您能幫助我們了解曝光度嗎，我不知道您是否想談論何時會看到它或在年底混合什麼，但是您的貢獻，您可以從 200 千兆和 400 千兆中看到嗎？

Yes. So 200 gig I think we've been pretty consistent in saying the 200 gig is going to be a relatively small market I think, we're not seeing -- there are few customers who are certainly interested in it some who've purchased from us or are purchasing from us, but I think it's likely to remain a relatively small part of the market. I think 400 gig is a much bigger potential market, I think that's the next stepping stone for a lot of our customers. And I -- as I said earlier, I think we see a lot of interest in 400 gig from some customers, some customers are indicating that they would like to see that 400 gig in production later in the year and we'll see, we're certainly working very hard to achieve that timeframe, and I'm sure our competitors are as well, so that hopefully that ecosystem will be there and hopefully the customer decides to take that leap because I think it's an important stepping stone for AOI in the industry.

是的。所以 200gig，我認為我們一直一致認為 200gig 將是一個相對較小的市場，我認為，我們沒有看到——很少有客戶對它感興趣，有些人已經從我們這裡購買過或正在從我們這裡購買，但我認為它可能仍然是市場中相對較小的一部分。我認為 400G 是一個更大的潛在市場，我認為這是許多客戶的下一個墊腳石。正如我之前所說，我認為我們看到一些客戶對 400G 很感興趣，一些客戶表示他們希望在今年晚些時候看到 400G 投入生產，我們會看到，我們當然會非常努力地實現這個時間表，我相信我們的競爭對手也是如此，所以希望這個生態系統能夠存在，希望客戶決定邁出這一步，因為我認為這是 AOI 在行業中邁出的重要一步。

Okay, helpful. My last question, probably if you Stefan on gross margins. I don't have all the details given I was just traveling to get to my office here, but how should we think about gross margins trending from the levels of first quarter guide and I think you said it's going to grow in the second quarter and think about the context of where you have been in the last couple of quarters and your previously communicated goals of I think it was in the high 30s or low 40s I actually can't remember. If you can help us think about the context of gross margins, that'd be great, please?

好的，有幫助。我的最後一個問題可能是關於毛利率的問題。由於我只是要去我這裡的辦公室，所以我不掌握所有細節，但我們應該如何看待第一季度指南水平的毛利率趨勢，我認為您說過第二季度毛利率會增長，想想您在過去幾個季度的情況以及您之前傳達的目標，我認為是在 30 多歲或 40 多歲之間，我實際上記不清了。如果您能幫助我們思考一下毛利率的背景，那就太好了，好嗎？

Yes. So we do expect gross margins to gradually improve starting this quarter and I think a lot of the uncertainty that we have regarding sort of revenue and general market conditions also extends a little bit to gross margin, but I think generally speaking, what we'd expect to see is improving the gross margins throughout the year. In order to get to those higher gross margins, I mean, we need to work our way through all the additional testing measures that we talked about. As we said in our prepared remarks that's going to be, that should be largely finished by the end of this quarter. And we're going to continue insourcing more of the bill materials that we've been building in line with our previous goals. I think some of those insourcing efforts kind of took a backseat towards the additional testing and implementing some of the changes to our processes that needed to be implemented and as we resume that I think we'll be able to see some of the benefits of that falling to the gross margin line as well. And as far as, kind of where we see gross margins going in the future, again, I think the range of high 30s to low 40s is an achievable range for us. I don't want to put a timeframe on when we can get there, but I think it's achievable.

是的。因此，我們確實預計毛利率將從本季度開始逐步提高，我認為我們在收入和整體市場狀況方面存在的許多不確定性也會對毛利率產生一定影響，但我認為總體而言，我們預計全年毛利率將會提高。為了獲得更高的毛利率，我的意思是，我們需要努力完成我們討論過的所有額外測試措施。正如我們在準備好的發言中所說，這項工作將在本季結束時基本完成。我們將繼續採購更多我們一直在建立的帳單材料，以實現我們先前的目標。我認為，一些內部採購工作已經退居次要地位，我們需要進行額外的測試並實施一些必要的流程變更，隨著我們恢復這些工作，我認為我們也將能夠看到這些工作對毛利率帶來的一些好處。至於我們對未來毛利率的預期，我認為 30% 多到 40% 出頭是我們可以實現的範圍。我不想為我們何時能夠實現這一目標設定一個時間表，但我認為這是可以實現的。

At this time, we show no further questions. And I will turn the call over to Dr. Thompson Lin for closing remarks.

目前，我們沒有其他問題。現在我將把發言時間交給 Thompson Lin 博士，請他做最後發言。

Okay. Thank you for joining us today. As always we thank all investors, customers and employees for your continuous support.

好的。感謝您今天加入我們。一如既往，我們感謝所有投資者、客戶和員工的持續支持。

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。