祥茂光電 (AAOI) 2018 Q4 法說會逐字稿

Good afternoon.

下午好。

I will be your conference operator.

我將是您的會議運營商。

At this time, I would like to welcome everyone to Applied Optoelectronics Fourth Quarter and Year 2018 Earnings Conference Call.

在這個時候，我想歡迎大家參加應用光電2018年第四季度和年度收益電話會議。

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

（操作員說明）請注意，此通話正在錄音中。

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

我現在想把電話轉給 AOI 投資者關係部的 Maria Riley。

Ms. Riley, you may begin.

萊利女士，您可以開始了。

Thank you.

謝謝你。

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.

我是 Applied Optoelectronics 投資者關係部的 Maria Riley，很高興歡迎您參加 AOI 2018 年第四季度和年度財務業績電話會議。

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.

今天收盤後，AOI 發布了一份新聞稿，公佈了其 2018 年第四季度和全年的業績，並提供了 2019 年第一季度的展望。

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

錄音鏈接可在 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 Q4 results and Stefan will provide financial details and the outlook for the first quarter 2019.

Thompson 將概述 AOI 的第四季度業績，Stefan 將提供財務細節和 2019 年第一季度的展望。

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，管理層將做出前瞻性陳述。

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, will, should, expects, plans, anticipates, believes or estimates and by other similar expressions.

您可以通過可能、將、應該、期望、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 conform these statements to actual results or to changes in the company's expectations.

除非法律要求，否則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，以使這些陳述符合實際結果或公司預期的變化。

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.

有關可能影響公司業務的其他媒體的更多信息，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, all financial numbers discussed today are on a non-GAAP basis unless specially noted otherwise.

此外，除非另有特別說明，否則今天討論的所有財務數據均基於非公認會計原則。

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 a 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對我們為什麼提出非 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 we will host an investor session at OFC on March 5th at the San Diego Convention Center.

在介紹財務結果之前，我想宣布我們將於 3 月 5 日在聖地亞哥會議中心的 OFC 舉辦投資者會議。

This discussion will be webcast live and a link to the webcast will be available on the Investor Relations page of the AOI website.

該討論將進行網絡直播，網絡直播的鏈接將在 AOI 網站的投資者關係頁面上提供。

We hope to have the opportunity to see many of you there.

我們希望有機會在那裡見到你們中的許多人。

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 年第一季度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.

現在，我想把電話轉給 Applied Optoelectronics 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。

Good afternoon, everyone, and thank you for joining us today.

大家下午好，感謝您今天加入我們。

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.

在總結我們本季度的業績時，我們實現了 5890 萬美元的非 GAAP 收入和 0.02 美元的非 GAAP 每股收益虧損，這符合我們的指導。

However, our gross margin was below our expectations, as we incurred higher than anticipated costs to resolve the inventory issue we experienced last quarter.

然而，我們的毛利率低於我們的預期，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.

展望未來，我們預計毛利率將從本季度開始逐步改善。

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.

全年，AOI 實現收入 2.684 億美元，毛利率為 35.5%，非 GAAP 每股攤薄收益為 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.

雖然 2018 年對整個光學市場和 AOI 都充滿挑戰，但我想指出我們的一些成就，我們認為這些成就有助於鞏固我們的長期地位。

First, while our customer base continues to be concentrated, we have made progress in our initiative to broaden this base.

首先，在我們的客戶群繼續集中的同時，我們在擴大客戶群方面取得了進展。

This started with a large purchase commitment early in the year from a third hyperscale datacenter customer based in the US.

這始於今年年初來自美國的第三個超大規模數據中心客戶的大量採購承諾。

And during the summer, we gained a design win with a large datacenter operator in China.

在夏季，我們贏得了中國一家大型數據中心運營商的設計。

Diversifying our customer base is a top priority for AOI and we are pleased with the progress we made on this front in 2018.

使我們的客戶群多樣化是 AOI 的首要任務，我們對 2018 年在這方面取得的進展感到滿意。

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.

全年，我們總共獲得了 26 個新設計中標，其中 12 個是新客戶，包括我們在本季度獲得的一個大型美國數據中心客戶。

This compares favorably with 2017, where we had 19 design wins in total and 10 with new customers.

這與 2017 年相比毫不遜色，我們在 2017 年總共贏得了 19 項設計，其中 10 項贏得了新客戶。

We believe that the emphasis we have placed on diversifying our customer base has continued to bear fruit.

我們相信，我們對多元化客戶群的重視繼續取得成果。

Second, we continued to demonstrate our strong commitment to our customers.

其次，我們繼續展示我們對客戶的堅定承諾。

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.

雖然有時這需要我們做出短期權衡的艱難選擇，但我們相信，我們對客戶的關注建立了持久的關係，這種關係可以在 2019 年及以後繼續發展。

I'm proud to say that we have maintained all of our top customers.

我很自豪地說，我們維護了所有的頂級客戶。

Third, we continue to innovate and expand our technology leadership in advanced optics.

第三，我們繼續創新並擴大我們在先進光學領域的技術領先地位。

This included advance in 200G and 400G in the datacenter and RemotePhy for our CATV customers.

這包括為我們的 CATV 客戶在數據中心和 RemotePhy 中推進 200G 和 400G。

Just last month, we released a silicon photonics-based 400G optical module that is now currently available for customer sampling.

就在上個月，我們發布了基於矽光子學的 400G 光模塊，目前可供客戶提供樣品。

This technology platform will enable our datacenter customers to scale the infrastructure beyond 400G to ultimately 1.6 terabits per second.

該技術平台將使我們的數據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.

客戶對我們領先的產品套件的反應非常積極，我們仍然相信我們有能力隨著市場的發展和採用下一代技術將我們的創新貨幣化。

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.

第四，我們通過向多家電信客戶運送產品以測試其在下一代 5G 移動網絡中的使用，繼續我們的市場多元化努力。

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.

這些 5G 光學產品中有許多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 應用的類似條件下使用的光學設備方面的經驗將幫助我們在這個市場站穩腳跟。

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.

雖然我們仍處於 5G 週期的早期，但我們相信 5G 可能會在今年晚些時候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.

總的來說，我們對今年取得的技術成就、我們在擴大客戶群方面取得的進展以及我們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.

我要感謝 AOI 團隊這一年來的辛勤工作和奉獻精神。

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.

在我將電話轉給 Stefan 更詳細地討論我們的結果之前，我想對我們目前在數據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.

最近幾週，其他幾家行業參與者對中國的低能見度和數據中心市場的庫存過剩情況發表了評論，我們也不能倖免。

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.

從我們與超大規模數據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。

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.

雖然現在仍處於年初且能見度有限，但我們認為 2019 年下半年將強於上半年，因為在接下來的幾個季度中庫存會減少。

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.

我們還看到，由於擔心中國經濟增長放緩，我們在中國的一些數據中心客戶在資本支出部署方面採取了更為保守的方法。

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.

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潛在趨勢沒有改變，我們在客戶中的地位也沒有改變。

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.

我們為世界上一些最具活力和快速發展的公司提供服務，並相信他們對高速計算能力的需求仍然是他們業務的基礎。

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.

憑藉我們已經開發併計劃推向市場的技術，我們相信隨著需求的增加，我們在滿足客戶需求方面處於強大的競爭地位。

We remain focused on building on our strong foundation as a leader in advanced optical technology and expanding our footprint within the market.

我們仍然專注於鞏固我們作為先進光學技術領導者的堅實基礎，並擴大我們在市場上的足跡。

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

有了這個，我將把電話轉給 Stefan，審查我們第四季度業績的細節和本季度的展望。

Stefan?

斯特凡？

Thank you.

謝謝你。

Thompson.

湯普森。

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.

第四季度非美國通用會計準則收入為 5890 萬美元，符合我們 5600 萬至 6300 萬美元的指導範圍。

Our datacenter revenue came in at $42.6 million compared with $62 million in Q4 of last year.

我們的數據中心收入為 4260 萬美元，而去年第四季度為 6200 萬美元。

In the quarter, 60% of our datacenter revenue was derived from our 100G datacenter products and 38% was from our 40G products.

本季度，我們數據中心收入的 60% 來自我們的 100G 數據中心產品，38% 來自我們的 40G 產品。

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.

由於我們上個季度實施了額外的產品測試步驟，以從我們的庫存中篩選任何可能有問題的激光設備，包括在製品，我們的生產能力在本季度仍然受到限制。

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.

正如上個季度所討論的那樣，我們確定並解決了影響我們少數激光器的問題的根本原因，並且我們增加了額外的測試步驟，包括用於篩選現有庫存的臨時步驟。

We remain on track to return to normal lead times by the end of this quarter.

我們仍有望在本季度末恢復正常的交貨時間。

This quarter we also issued a $900,000 credit to a customer.

本季度，我們還向一位客戶提供了 900,000 美元的信貸。

We expect this credit to be non-recurring and have therefore, adjusted out of our GAAP revenue.

我們預計這筆信貸是非經常性的，因此已從我們的 GAAP 收入中調整。

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.

正如 Thompson 提到的，根據與我們的超大規模數據中心客戶的對話，我們認為隨著客戶向 100G 過渡，供應鏈中出現了一些庫存。

We believe this will obfuscate demand and visibility in 2019.

我們認為這將混淆 2019 年的需求和可見性。

We currently expect demand in the first 2 quarters of the year will be sequentially down from our most recent quarters.

我們目前預計今年前兩個季度的需求將比最近幾個季度連續下降。

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.

我們目前預計下半年會比上半年有所改善，但是，我們仍處於年初，可見度有限。

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.

我們繼續轉向並與我們所有的超大規模客戶建立良好關係，並相信當市場狀況改善時，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.

我們繼續與客戶保持密切的技術合作，並在開發下一代數據中心產品方面取得了良好進展。

Last month, we announced the released of a silicon photonics-based 400G optical module that is now currently available for customer sampling.

上個月，我們宣布發布了一款基於矽光子學的 400G 光模塊，目前可供客戶提供樣品。

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.

這些模塊符合機載光學的要求，並結合了多項新技術，包括先進的基於矽光子學的光學組件，這是 AOI 和我們的技術合作夥伴多年研發努力的成果。

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.

這個下一代模塊意義重大，因為技術套件和集成將使未來的類似模塊能夠擴展到超過 400G，最終達到每秒 1.6 太比特。

Thereby enabling continued scaling of our customers infrastructure.

從而使我們的客戶基礎架構能夠持續擴展。

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.

我們在去年的歐洲光通信會議上展示早期原型時收集了非常積極的反饋，並期待在下個月的 OFC 上展示該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.

我們相信，我們開發的新創新技術和降低成本的努力，使我們能夠很好地繼續將我們的產品覆蓋範圍擴大到更廣泛的數據中心客戶群，並使我們的客戶群多樣化。

While we will always rely on a relatively concentrated number of customers, diversifying our customer base remains a top priority.

雖然我們將始終依賴相對集中的客戶數量，但使我們的客戶群多樣化仍然是重中之重。

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.

在本季度，我們贏得了 3 項設計，其中一項是美國數據中心的大型客戶，這是 AOI 的新客戶。

This brings our total number of design wins to 26 for the year, including 12 with new customers to AOI.

這使我們今年贏得的設計總數達到 26 個，其中 12 個是 AOI 的新客戶。

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.

這超過了我們 2017 年贏得設計和贏得新客戶的總數，證明了我們不斷努力使客戶群多樣化的有效性。

In our cable television business, we remain encouraged by the customer activity in this market.

在我們的有線電視業務中，我們仍然對這個市場的客戶活動感到鼓舞。

We generated revenue of $12.7 million compared with $14.3 million reported in Q4 of last year.

我們創造了 1270 萬美元的收入，而去年第四季度報告的收入為 1430 萬美元。

This was result of some weakness in demand, mainly in Europe and Asia, partially offset by demand from North American MSOs.

這是需求疲軟的結果，主要是在歐洲和亞洲，部分被北美 MSO 的需求所抵消。

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.

在本季度，我們開始為我們的 Remote PHY 產品發貨批量訂單，並且我們仍在與另外 4 個客戶進行這項技術的積極資格試驗。

Our telecom products delivered revenue of $2.8 million compared with $3.2 million in Q4 of last year.

我們的電信產品實現了 280 萬美元的收入，而去年第四季度為 320 萬美元。

For the quarter, 72% of our revenue was from datacenter products, 21% from CATV products with the remaining 7% from FTTH telecom and other.

本季度，我們 72% 的收入來自數據中心產品，21% 來自 CATV 產品，其餘 7% 來自 FTTH 電信和其他產品。

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.

本季度，我們有 4 個 10% 或更大的客戶，其中 3 個來自數據中心業務，分別貢獻了總收入的 38%、18% 和 11%，還有一個來自 CATV 業務，貢獻了總收入的 11%。

For the year 2018, these same 4 customers represented 39%, 22%, 12% and 10%, respectively of total revenue.

2018 年，這 4 家客戶分別佔總收入的 39%、22%、12% 和 10%。

Moving beyond revenue.

超越收入。

In the quarter, we generated gross margin of 24.7% compared with the 34% recorded last quarter.

本季度，我們的毛利率為 24.7%，而上一季度為 34%。

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.

由於發生的成本高於預期，我們的毛利率低於我們的預期，而我們正在努力解決上個季度遇到的庫存問題。

Looking ahead, we expect gross margin to improve gradually starting this quarter.

展望未來，我們預計毛利率將從本季度開始逐步改善。

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.

本季度總運營費用為 1870 萬美元，佔收入的 31.8%，上一季度為 2280 萬美元，佔收入的 40.4%。

In the quarter, our operating expenses decreased sequentially due to lower bonus accruals as a result of our performance in the year.

本季度，由於我們的年度業績導致應計獎金減少，我們的運營費用環比下降。

Operating loss in Q4 was $4.2 million compared with an operating loss of $3.6 million in the prior quarter.

第四季度的運營虧損為 420 萬美元，而上一季度的運營虧損為 360 萬美元。

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.

第四季度非 GAAP 稅後淨虧損為 50 萬美元或每股基本股虧損 0.02 美元，而 2017 年第四季度的淨收入為 1790 萬美元或每股攤薄收益 0.89 美元。

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.

第四季度的 GAAP 淨虧損為 860 萬美元或每股基本股虧損 0.43 美元，而去年第四季度的 GAAP 淨收入為 570 萬美元或每股攤薄收益 0.28 美元。

The basic shares outstanding used for computing the net loss in Q4 were 19.8 million shares.

用於計算第四季度淨虧損的已發行基本股為 1980 萬股。

Turning now to the balance sheet.

現在轉向資產負債表。

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.

第四季度末，我們的現金、現金等價物、短期投資和受限現金總額為 5800 萬美元，而上一季度末為 6410 萬美元。

As of December 31, we had $93.3 million in inventory, a decrease from $107.9 million in Q3.

截至 12 月 31 日，我們的庫存為 9330 萬美元，低於第三季度的 1.079 億美元。

Our cash balance reflects the use of approximately $11.6 million in cash to fund operations during the quarter.

我們的現金餘額反映出本季度使用了大約 1,160 萬美元的現金來為運營提供資金。

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.

我們在本季度進行了總計 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和 160 萬美元的建築和建築改造。

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.

這使我們今年的總資本投資達到約 7,740 萬美元，低於我們最近 9,000 萬美元的資本支出預測，因為我們減少了某些設備的採購以維持產量符合需求，同時投資於額外的測試滿足上個季度實施的新測試要求所需的設備。

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.

展望未來，我們預計 2019 年的資本支出約為 5600 萬美元，這將繼續在中國建設新工廠。

We continue to monitor end market conditions and may adjust our spending plans as necessary.

我們將繼續監控終端市場狀況，並可能在必要時調整我們的支出計劃。

Our total debt at year-end was $84 million, up from approximately $50 million at the end of 2017.

我們年末的總債務為 8400 萬美元，高於 2017 年底的約 5000 萬美元。

Much of this debt is associated with our capital expansion activities with maturities extending out several years.

大部分債務與我們的資本擴張活動有關，期限會延長數年。

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.

正如我們不斷監控我們的支出計劃以適應市場條件一樣，我們定期評估我們的資本結構以確保我們為當前運營和未來擴張提供正確的資金組合。

Moving now to our Q1 outlook.

現在轉到我們的第一季度展望。

We expect Q1 revenue to be between $50 million and $55 million.

我們預計第一季度收入將在 5000 萬美元至 5500 萬美元之間。

We expect Q1 non-GAAP gross margin to be in the range of 26.5% to 28.5%.

我們預計第一季度非美國通用會計準則毛利率在 26.5% 至 28.5% 之間。

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.

使用約 1990 萬股的加權平均基本股數，淨虧損預計在 370 萬美元至 580 萬美元之間，非 GAAP 每股虧損在每股 0.18 美元至 0.29 美元之間。

We expect our Q1 effective tax rate on our non-GAAP net income to be between 32% and 40%.

我們預計第一季度非 GAAP 淨收入的有效稅率將在 32% 至 40% 之間。

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

有了這個，我會把它轉回給接線員進行問答環節。

Operator?

操作員？

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

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

I think that you made this in the prepared remarks, but I just want to make sure that I clarify.

我認為你在準備好的評論中已經做到了這一點，但我只是想確保我澄清一下。

I believe you stated that your relationships with your key web scale customers remains sound.

我相信您說過您與主要網絡規模客戶的關係仍然良好。

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.

我知道有很多人猜測你一年前談到的 Facebook 交易已經被修改、改變或取消。

Could you just clarify your standing with Facebook, please?

你能澄清一下你在 Facebook 上的地位嗎？

Yes.

是的。

Simon, So I can't obviously comment due to non-disclosure agreements on specific individual customers.

西蒙，由於針對特定個人客戶的保密協議，我顯然不能發表評論。

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.

然而，正如我們在準備好的評論中指出的那樣，我會再說一遍，我們相信我們所有主要的超大規模數據中心客戶關係都保持不變。

Great.

偉大的。

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?

接下來，當你談到渠道中的庫存時，這是否集中在一個客戶、2 個客戶、3 個客戶，我們應該如何考慮你提到的庫存積累的集中度？

Well, I think, first of all, we're not the only company that's reported this, has talked about this a little bit.

好吧，我認為，首先，我們不是唯一一家報告此事的公司，也談過一點。

I think what we're seeing is kind of consistent across the industry.

我認為我們所看到的在整個行業中都是一致的。

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.

但我們看到多個客戶的庫存有所增加，顯然或多或少取決於您所談論的客戶。

Thanks.

謝謝。

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.

最後一個，如果可以的話，你最近提交了一份關於修改一些貸款協議、信貸額度、信貸協議和其中一句話的 8-K，這引起了我的注意，銀行要求提供月度財務報告而不是季度報告。

That kind of surprised me, that's sort of a classic yellow flag that somebody is concerned about cash flow.

這有點讓我感到驚訝，這是有人擔心現金流的經典黃旗。

Could you help us understand, what was behind that?

你能幫我們理解，那背後是什麼嗎？

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.

實際上，我的意思是，銀行要求這樣做已經有一段時間了，而我之前在我們簽訂另一份貸款協議時已經同意了。

I mean, I didn't want to amend just for that one item.

我的意思是，我不想只針對那一項進行修改。

I don't think there's really much more to it within that.

我認為其中並沒有更多內容。

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?

Stefan，能否幫助我們從更廣泛的角度了解 100 gig PSM4 定價環境的動態？

And then also the pricing environment by CWDM4, do you see the same level of heightened price decline as you saw last year?

然後是 CWDM4 的定價環境，您是否看到與去年相同的價格下降水平？

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?

它是否開始正常化，也許如果你對產品市場更細化一點，這可能有助於我們了解庫存問題之外發生的事情？

Yes.

是的。

Well, Fahad, as you know, we don't guide more than 1 quarter out and generally not on a product-by-product basis.

好吧，Fahad，如你所知，我們不會指導超過 1 個季度，而且通常不會逐個產品。

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.

我認為總體而言，就定價而言，我們預計今年會看到，定價下降與去年相似，可能少一點，但數量大致相同。

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.

至於 CWDM 和 PSM 之間將如何突破，我們不會再一次在那種細粒度的基礎上提供那種指導。

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.

如果我可能會問 - 堅持更廣泛的前景，一些 - 一定程度的整合 Luxtera 被思科收購，這是你的 CATV 產品客戶，你有 Oclaro 被 Lumentum 收購，正在出售給一些中國買家的彩色芯片顯然是有效的財務描述。

To that extent any change in the market and competitive dynamics?

就此而言，市場和競爭動態有何變化？

Are you seeing a noticeable development in that front?

你在這方面看到了顯著的發展嗎？

And also can you comment on any prospective risk of share losses that your customers, do you think you are maintaining your share?

您還可以評論您的客戶的任何潛在份額損失風險，您是否認為您正在維持您的份額？

Or is this a purely a function of quarterly cash flows?

還是這純粹是季度現金流量的函數？

Okay.

好的。

So there is a couple of questions embedded in there.

因此，其中嵌入了幾個問題。

I will try to address them one at a time.

我將嘗試一次解決一個問題。

First of all, regarding kind of the broader topic of consolidation.

首先，關於更廣泛的整合主題。

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.

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，當供應商數量減少時，他們的選擇就會減少，這或許對 AOI 來說是個好兆頭。

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.

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，我們一直在談論諸如技術路線圖之類的事情，你的路線圖與他們未來需求的一致性如何還有價格和質量，諸如此類。

So on balance, I think, the consolidation is probably neutral, but it doesn't hurt AOI, I would say.

所以總的來說，我認為合併可能是中性的，但我會說它不會損害 AOI。

Yes, specifically about Luxtera or Cisco's acquisition of Luxtera.

是的，特別是關於 Luxtera 或思科對 Luxtera 的收購。

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.

我想我可以在這方面說，AOI 沒有向思科提供任何可以與 Luxtera 產品競爭的產品。

As you mentioned in your question, we're supplier mainly of cable TV product.

正如您在問題中提到的，我們主要是有線電視產品的供應商。

So -- and to my knowledge, Luxtera didn't have any of those products.

所以——據我所知，Luxtera 沒有任何這些產品。

So I don't think there's really any risks to AOI's business there.

所以我認為 AOI 在那裡的業務真的沒有任何風險。

And there was one more question in there, I forgot what it was, I am sorry, could you repeat back?

還有一個問題，我忘了是什麼，對不起，你能再說一遍嗎？

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?

如果你能對整個——你在超大規模客戶中各自的份額發表評論，你認為你在每個客戶中保持份額嗎？

So, again, we obviously can't comment on specific customers.

因此，同樣，我們顯然不能對特定客戶發表評論。

What I can say is, we have very good relationships with all of our large hyperscale customers, as we mentioned in our prepared remarks.

我可以說的是，正如我們在準備好的評論中提到的那樣，我們與所有大型超大規模客戶都有很好的關係。

And I think what we're really excited about now is, as those customers start to look ahead to 200G and particularly 400G.

我認為我們現在真正感到興奮的是，因為這些客戶開始展望 200G，尤其是 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.

我們正在進行的討論，非常詳細的討論和討論的重點，我認為對我們來說是非常有希望的。

So we're excited about that transition.

所以我們對這種轉變感到興奮。

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.

而且我認為沒有跡象表明我們不會在短期和長期內成為我們客戶計劃的主要部分。

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

（操作員說明）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.

這實際上是 Lee Krowl 代替 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?

首先，我只是想問，也許這有點微不足道，但鑑於這種不溫不火的近期需求趨勢，相對於您之前的評論，您是否期望在 2019 年仍然能夠將 100G 容量翻一番？

When we say that the demand picture in the second half of the year particularly is uncertain.

當我們說下半年的需求情況尤其不確定時。

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.

這正是我們的意思，可以說，我不想在地圖上標記我們認為我們可以去的地方。

I think there's -- the near-term demand is looking muted, that's for sure.

我認為 - 近期需求看起來很低迷，這是肯定的。

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.

今年下半年可能會出現一些非常積極的進展，我們正在與我們的一些客戶合作，看看進展如何。

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.

我們在最近幾次財報電話會議上談過，實際上，如果你回顧一年左右，新設計獲勝的節奏越來越快，並且其中一些設計獲勝可能會在今年晚些時候開始做出貢獻，那可能會非常令人興奮。

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.

但同樣，正如我們所說，可見度是有限的，我不想——基於有限的可見度，我不想給你一個指示。

Got it.

知道了。

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?

然後我猜你有點回答了它，但你有點表示 Q1 下降導致 Q2 有點表明收入低谷，但是下半年是否有任何特定的需求驅動因素你可以指出這會給你對收入在第三季度環比增長的信心？

Yes, I mean, we're hearing indications of early adoption of 400 gig technology by certain customers, for example.

是的，我的意思是，例如，我們聽到某些客戶早期採用 400 gig 技術的跡象。

And we're also very excited about the progress that we're making in terms of 5G technology.

我們也對我們在 5G 技術方面取得的進展感到非常興奮。

Now that's probably more of a 2020 thing.

現在這可能更像是 2020 年的事情。

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.

但它 - 電信市場是一個我們以前沒有成為主要參與者的市場，我認為並不需要大量的設計勝利和銷售進入該市場才能真正改善我們在那裡的活力。

So we talked also about Remote PHY.

所以我們還談到了 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.

我認為有線電視市場的各種跡像都表明 Remote PHY 技術將在今年下半年佔據更大的份額，當然比上半年要大。

So there's a number of positive demand trends there.

因此，那裡有許多積極的需求趨勢。

I think counterbalancing that obviously is the uncertainty surrounding particularly China.

我認為平衡這顯然是圍繞著中國的不確定性。

Again, we're certainly not the only company that's talked about uncertain demand environment in China.

同樣，我們當然不是唯一一家談論中國不確定需求環境的公司。

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.

我認為我們那裡的許多客戶都在關注那裡經濟放緩的可能性，並圍繞他們認為這對他們的業務意味著什麼重新評估他們的計劃，他們都在努力做出這個決定。

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.

因此 - 我認為設計獲勝的數量和我們擁有的東西的好處，下行風險是我們不太確定中國的事情會如何發展。

I will point out in terms of China.

我會在中國方面指出。

Historically, we have not been -- a large percentage of our revenue has not derived from China.

從歷史上看，我們沒有——我們收入的很大一部分不是來自中國。

A number of our newer design wins have been -- however, in China.

我們的一些較新的設計贏得了——但是，在中國。

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.

因此，與其說我們會失去那裡現有的業務，不如說我們會在今年早些時候取得一些設計勝利，現在看來它們可能會在今年晚些時候出現，而且在這一點上，它們發生的程度有點難以校準。

Got it.

知道了。

And then just a last one from me.

然後是我的最後一個。

Could you maybe talk about the inventory situation and maybe delineate inventory backup in the channel relative -- 40G relative to 100G?

您能否談談庫存情況，並描述渠道相關的庫存備份——40G 相對於 100G？

I think the inventory backup is probably more about 100G than it is about 40G.

我認為庫存備份可能更多的是 100G 左右，而不是 40G 左右。

But I can't really quantify that exact backup for you.

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.

很抱歉我接電話有點晚了，所以我可能錯過了一些事情。

First of all, Stefan, did I hear you say that 100 gig was 72% of datacenter?

首先，Stefan，我有沒有聽到你說 100 gig 是數據中心的 72%？

I believe that's right, let me just check the number here.

我相信這是對的，讓我在這裡檢查一下數字。

Datacenter was 72% of our revenue, you're asking about 100 gig versus 40 gig?

數據中心占我們收入的 72%，你問的是 100 gig 還是 40 gig？

Yes, please.

是的，請。

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

我們數據中心收入的 60% 來自 100 gig，38% 來自 40 gig。

Okay.

好的。

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

所以 60% 比上一季度的 34% 高了很多，對吧？

That's correct.

這是正確的。

Yes.

是的。

Okay, excellent.

好的，優秀。

This year, you talked about a design win with a large U.S. datacenter customer.

今年，您談到了與一家大型美國數據中心客戶的設計勝利。

Can you describe that any detail like specifically on speed?

你能描述一下具體的速度細節嗎？

And how you expect that to progress to eventually generating volume revenues are?

您如何期望最終產生大量收入？

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.

我不能提供太多細節，因為您可以想像我們與該客戶簽訂了保密協議，但客戶我會將此客戶歸類為可識別的名稱，但就規模而言並沒有那麼大作為我們其他一些較大的超大規模數據中心客戶。

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.

所以這是一個較小的客戶，它可能不會像我們其他一些較大的數據中心客戶那樣做出有意義的貢獻。

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.

但是，我認為值得指出的是，我們在這裡真正想證明的是，我們為擴大客戶群所做的努力正在取得成功。

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.

所以我們正在增加新客戶，我們正在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客戶那樣大大型超大規模客戶。

There just aren't that many of those types of customers out there.

那裡的這類客戶並不多。

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.

但隨著時間的推移，通過大量的努力和對這些客戶需求的關注，我們正在設法在更廣泛的客戶群中站穩腳跟，我認為從長遠來看，這對 AOI 來說確實是非常健康的。

Okay, that's helpful.

好的，這很有幫助。

Thanks for that.

感謝那。

Couple more from me.

從我這裡耦合更多。

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?

Stefan，你能幫我們了解曝光率嗎，我不知道你是想談談什麼時候看到它或者在年底混音什麼的，但是你的貢獻，你可以從 200 場演出中看到和 400 演出？

Yes.

是的。

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.

所以 200 gig 我認為我們一直非常一致地說 200 gig 將是一個相對較小的市場，我認為，我們沒有看到 - 很少有客戶肯定對此感興趣，有些已經從我們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。

I think 400 gig is a much bigger potential market, I think that's the next stepping stone for a lot of our customers.

我認為 400 gig 是一個更大的潛在市場，我認為這是我們很多客戶的下一個墊腳石。

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.

而且我 - 正如我之前所說，我認為我們看到一些客戶對 400 演出很感興趣，一些客戶表示他們希望在今年晚些時候看到 400 演出，我們會看到，我們我們肯定會非常努力地實現這個時間框架，我相信我們的競爭對手也是如此，所以希望這個生態系統會存在，希望客戶決定邁出這一步，因為我認為這是 AOI 在行業。

Okay, helpful.

好的，有幫助。

My last question, probably if you Stefan on gross margins.

我的最後一個問題，可能是關於毛利率的斯特凡。

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.

我沒有所有的細節，因為我只是去我這裡的辦公室旅行，但我們應該如何考慮從第一季度指南水平開始的毛利率趨勢，我想你說第二季度會增長，想想你在過去幾個季度所處的位置，以及你之前傳達的目標，我想是在 30 多歲或 40 多歲的低位，我實際上不記得了。

If you can help us think about the context of gross margins, that'd be great, please?

如果你能幫助我們考慮毛利率的背景，那就太好了，好嗎？

Yes.

是的。

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.

因此，我們確實預計從本季度開始毛利率會逐漸提高，我認為我們在收入和總體市場狀況方面的很多不確定性也會對毛利率有所影響，但我認為總的來說，我們會預計全年毛利率將有所改善。

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.

為了獲得更高的毛利率，我的意思是，我們需要努力通過我們談到的所有額外測試措施。

As we said in our prepared remarks that's going to be, that should be largely finished by the end of this quarter.

正如我們在準備好的評論中所說的那樣，這應該在本季度末基本完成。

And we're going to continue insourcing more of the bill materials that we've been building in line with our previous goals.

我們將繼續內包更多我們根據之前的目標構建的賬單材料。

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.

我認為這些內包工作中的一些在某種程度上讓位於額外的測試和對我們需要實施的流程進行一些更改，並且當我們恢復時，我認為我們將能夠看到其中的一些好處也跌至毛利率線。

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.

就我們未來看到的毛利率而言，我認為從 30 多歲到 40 多歲的高水平對我們來說是一個可以實現的範圍。

I don't want to put a timeframe on when we can get there, but I think it's achievable.

我不想確定我們何時可以到達那裡，但我認為這是可以實現的。

At this time, we show no further questions.

目前，我們沒有進一步的問題。

And I will turn the call over to Dr. Thompson Lin for closing remarks.

我將把電話轉給 Thompson Lin 博士作結束語。

Okay.

好的。

Thank you for joining us today.

感謝您今天加入我們。

As always we thank all investors, customers and employees for your continuous support.

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.

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.

您現在可以斷開連接。