祥茂光電 (AAOI) 2019 Q1 法說會逐字稿

Good day and welcome to the Applied Optoelectronics First Quarter 2019 Earnings Conference Call.

美好的一天，歡迎來到 Applied Optoelectronics 2019 年第一季度收益電話會議。

(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 would now like to turn the conference over to Maria Riley, Investor Relations for AOI.

我現在想將會議轉交給 AOI 投資者關係部的 Maria Riley。

Please go ahead.

請繼續。

Thank you.

謝謝你。

I'm Maria Riley, Applied Optoelectronics Investor Relations, and I'm pleased to welcome you to AOI's First Quarter 2019 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 2019 年第一季度財務業績電話會議。

After the market closed today, AOI issued a press release announcing its first quarter 2019 financial results and provided its outlook for the second quarter of 2019.

今天收盤後，AOI 發布了一份新聞稿，公佈了其 2019 年第一季度的財務業績，並提供了 2019 年第二季度的展望。

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 given an overview of AOI's Q1 and Stefan will provide financial details and the outlook for the second quarter of 2019.

Thompson 將概述 AOI 第一季度，Stefan 將提供財務細節和 2019 年第二季度的展望。

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'd like to remind you to review AOI's safe harbor statement.

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.

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。

In some cases, you can identify forward-looking statements by terminologies such as believes, anticipates, estimates, intends, predicts, expects, plans, may, should, could, will, or thinks, and by other similar expressions that convey uncertainty of future events or outcomes.

在某些情況下，您可以通過相信、預期、估計、打算、預測、預期、計劃、可能、應該、可能、將要或認為等術語，以及其他表達未來不確定性的類似表達來識別前瞻性陳述事件或結果。

Forward-looking statements also include statements regarding management's beliefs and expectations related to the expansion of the reach of our products into new markets and customer responses to our innovations as well as statements regarding the company's outlook for the second quarter of 2019.

前瞻性陳述還包括有關管理層對我們產品擴展到新市場的信念和期望的陳述、客戶對我們創新的反應以及有關公司 2019 年第二季度展望的陳述。

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 expectation.

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，以使這些陳述符合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, including the company's annual report on Form 10-K for the year ended December 31, 2018.

有關可能影響公司業務的其他風險的更多信息，請參見公司向美國證券交易委員會備案的報告的風險因素部分，包括公司截至 2018 年 12 月 31 日止年度的 10-K 表格年度報告。

Also, with the exception of revenue, all financial measures 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指標均基於非公認會計原則，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 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 AOI management will attend the Stifel Cross Sector Insight Conference in Boston on June 11.

在談到財務業績之前，我想宣布 AOI 管理層將於 6 月 11 日參加在波士頓舉行的 Stifel 跨部門洞察會議。

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。

Additionally, I'd like to note the date of our Second Quarter 2019 Earnings Call is currently scheduled for Wednesday, August 7, 2019.

此外，我想指出我們 2019 年第二季度財報電話會議的日期目前定於 2019 年 8 月 7 日，星期三。

Now I'd 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, and thank you everyone for joining us today.

謝謝 Maria，也感謝大家今天加入我們。

In reviewing our first quarter results, AOI delivered revenue of $52.7 million, non-GAAP gross margin of 25.5%, and a non-GAAP net loss of 27 cents per share.

在回顧我們第一季度的業績時，AOI 實現了 5270 萬美元的收入，非 GAAP 毛利率為 25.5%，非 GAAP 每股淨虧損為 27 美分。

In looking at the dynamics in the quarter, the demand environment remained consistent with our expectations.

從本季度的動態來看，需求環境與我們的預期保持一致。

Certain of our datacenter customers in the US continued to work through excess inventory and some of our customers in China remained conservative in their approach to capex deployment.

我們在美國的某些數據中心客戶繼續應對過剩庫存，而我們在中國的一些客戶在資本支出部署方面仍然持保守態度。

While these dynamics will influence our performance in the short-term, we continue to believe the fundamental need for higher bandwidth within datacenters remains intact.

雖然這些動態將影響我們的短期表現，但我們仍然相信數據中心內對更高帶寬的基本需求保持不變。

We have ongoing constructive relationships with our customers to help them address this need and will continue to forge ahead on our efforts to drive future growth.

我們與客戶保持著持續的建設性關係，以幫助他們滿足這一需求，並將繼續努力推動未來增長。

As we have discussed previously, diversifying our customer base is a top priority.

正如我們之前所討論的，使我們的客戶群多樣化是重中之重。

We are having ongoing discussions with new customers about our innovative fiber-optic access products, and in the quarter we secured six design wins, including three with new customers.

我們正在與新客戶就我們的創新光纖接入產品進行持續討論，在本季度我們獲得了六項設計勝利，其中包括三項與新客戶的合作。

All of these customers are outside of our core hyperscale customer base and we are pleased with the progress we continue to make on this front.

所有這些客戶都不在我們的核心超大規模客戶群之外，我們對我們在這方面繼續取得的進展感到高興。

We also continue to make strides in diversifying and expanding the reach of our innovative products into new markets, such as 5G for mobile telecommunications.

我們還繼續在多元化和擴大我們的創新產品進入新市場方面取得進展，例如用於移動通信的 5G。

While we are still early in the 5G cycle, we believe it will be an important driver of the high-speed optical component market.

雖然我們仍處於 5G 週期的早期，但我們相信它將成為高速光學元件市場的重要驅動力。

In CATV, we remain encouraged by the customer activity and increased interest we are seeing for our Remote Phy product.

在 CATV 中，我們仍然對客戶活動以及我們對 Remote Phy 產品的興趣增加感到鼓舞。

As a reminder, AOI pioneered this innovative technology and we continue to believe it will play a significant role as cable MSOs evolve and transition to next-generation node and head-end architectures.

提醒一下，AOI 率先推出了這項創新技術，我們仍然相信，隨著有線 MSO 的發展和向下一代節點和頭端架構的過渡，它將發揮重要作用。

We continue to have strong technical engagement with our customers, and are in active qualifications with our next generation 400G products.

我們繼續與客戶保持密切的技術合作，並積極對我們的下一代 400G 產品進行認證。

We had a great showing at OFC where we demonstrated our suite of next-generation technology and the customer response was very positive.

我們在 OFC 上展示了我們的下一代技術套件，客戶反應非常積極。

We believe our platform, proprietary manufacturing processes and vertical integration are keys to our success in the market and we remain confident in our ability to monetize our innovations as the market improves and moves to next generation technologies.

我們相信我們的平台、專有製造工藝和垂直整合是我們在市場上取得成功的關鍵，並且隨著市場的改善和向下一代技術的發展，我們對我們將創新貨幣化的能力充滿信心。

With that, I will turn the call over to Stefan to review the details of our Q1 performance and outlook for Q2.

有了這個，我將把電話轉給 Stefan，審查我們第一季度業績的細節和第二季度的前景。

Stefan?

斯特凡？

Thank you, Thompson.

謝謝你，湯普森。

Overall, the demand environment in the quarter was consistent with our expectations.

總體而言，本季度的需求環境符合我們的預期。

Total revenue for the first quarter was $52.7 million, which was at the midpoint of our guidance range of $50 million to $55 million.

第一季度的總收入為 5270 萬美元，處於我們 5000 萬至 5500 萬美元指導範圍的中點。

Our datacenter revenue came in at $38.5 million compared with $50.6 million in Q1 of last year.

我們的數據中心收入為 3850 萬美元，而去年第一季度為 5060 萬美元。

In the quarter, 49% of our datacenter revenue was from our 40G transceiver products, and 48% was from our 100G products.

本季度，我們數據中心收入的 49% 來自我們的 40G 收發器產品，48% 來自我們的 100G 產品。

As we discussed in February, we are seeing softness in the datacenter market as customers work through excess inventory due in part to the transition to 100G as well as customers in China taking a more conservative approach with their CapEx deployment due to concerns of slowing economic growth.

正如我們在 2 月份所討論的那樣，我們看到數據中心市場疲軟，因為部分原因是向 100G 過渡導致客戶處理過剩庫存，以及中國客戶出於對經濟增長放緩的擔憂而對其資本支出部署採取更為保守的方法.

These dynamics played out in Q1 as expected and we anticipate this softness to continue into Q2 at a more elevated level.

這些動態在第一季度如預期的那樣發揮作用，我們預計這種疲軟將以更高的水平持續到第二季度。

However, I will reiterate that we believe that we continue to have good relationships with all of our hyperscale datacenter customers and that their need for high-speed optical connectivity remains fundamental to their business.

但是，我要重申，我們相信我們將繼續與所有超大規模數據中心客戶保持良好關係，並且他們對高速光連接的需求仍然是他們業務的基礎。

We are focusing our efforts on continuing to foster relationships with both new and existing customers and expanding our technology leadership, which we believe will best position AOI for growth when market conditions improve.

我們正集中精力繼續培養與新老客戶的關係，並擴大我們的技術領先地位，我們相信這將在市場條件改善時為 AOI 的增長提供最佳定位。

In Q1, we continued to have success in diversifying our customer base.

第一季度，我們在客戶群多元化方面繼續取得成功。

And in the quarter, we secured a total of 6 new design wins, of which 3 were with new customers and include an OEM supplier to the hyperscale and enterprise markets, a telecom equipment manufacturer for 5G and a provider of chemical sensors.

在本季度，我們一共贏得了 6 項新設計，其中 3 項是與新客戶簽訂的，包括面向超大規模和企業市場的 OEM 供應商、5G 電信設備製造商和化學傳感器供應商。

Additionally, in building upon our strong foundation as a leader in advanced optical technology, we announced the availability of a 100 gigabit per second per lambda PIN photodiode that can be leveraged for 100G and 400G optical transceivers.

此外，在我們作為先進光學技術領導者的堅實基礎之上，我們宣布推出可用於 100G 和 400G 光收發器的每秒 100 Gb/lambda PIN 光電二極管。

With the development of this new technology, AOI now has in-house manufacturing for the 2 most critical active optical components required to produce 100G and 400G transceivers.

隨著這項新技術的發展，AOI 現在擁有生產 100G 和 400G 收發器所需的 2 個最關鍵的有源光學元件的內部製造。

This will enable us to maintain low cost and reduce our time to market for these products.

這將使我們能夠保持低成本並縮短這些產品的上市時間。

We remain focused on building industry-leading products and had a great showing at OFC with our suite of next-generation technology, including our 200G and 400G modules as well as our Remote-PHY product and 5G products.

我們始終專注於構建行業領先的產品，並在 OFC 上展示了我們的下一代技術套件，包括我們的 200G 和 400G 模塊以及我們的 Remote-PHY 產品和 5G 產品。

At OFC, we launched a 400G optical module that adheres to the requirements of onboard optics.

在OFC，我們推出了符合板載光學要求的400G光模塊。

We were first to market with this technology and we are very encouraged by the significant customer interest that we're seeing with this product.

我們是第一個將這項技術推向市場的公司，看到客戶對這款產品的濃厚興趣，我們感到非常鼓舞。

And just last month, we announced the availability of our new 400 gigabit per second 8-channel, VCSEL-based, short-reach transceiver that utilizes PAM4 encoding to deliver 50 gigabits per second of data throughput on 8 separate multimode optical channels.

就在上個月，我們宣布推出新的 400 Gbps 8 通道、基於 VCSEL 的短距離收發器，該收發器利用 PAM4 編碼在 8 個獨立的多模光通道上提供 50 Gbps 的數據吞吐量。

Our large datacenter customers will need 400G solutions that cover distances as short as a few meters to as long as several kilometers.

我們的大型數據中心客戶將需要 400G 解決方案，覆蓋距離從幾米到幾公里不等。

Our growing line of 400G products is designed to meet these customer needs while offering the cost advantages of our manufacturing expertise and vertical integration.

我們不斷擴大的 400G 產品系列旨在滿足這些客戶需求，同時提供我們的製造專業知識和垂直整合的成本優勢。

Turning to our CATV market.

轉向我們的有線電視市場。

Revenues from CATV products increased 13% year-over-year to $12 million compared with $10.6 million in Q1 of last year.

CATV 產品的收入同比增長 13% 至 1200 萬美元，而去年第一季度為 1060 萬美元。

Demand for our CATV products was in line with expectations.

對我們有線電視產品的需求符合預期。

We continued to ship orders for our Remote-PHY product and remain in active qualification trials with 3 additional customers for this technology.

我們繼續為我們的 Remote-PHY 產品發貨訂單，並繼續與另外 3 個客戶就此技術進行積極的資格試驗。

Our telecom products delivered revenue of $1.7 million compared with $3.6 million in Q1 of last year.

我們的電信產品實現了 170 萬美元的收入，而去年第一季度為 360 萬美元。

In telecom, we see 5G network deployments poised to become a large driving factor for the optical industry as a whole, the motivation behind the 5G network upgrade cycle is to offer much higher bandwidth and lower latency to support a higher density of mobile users and enable connectivity to billions of new devices, services and applications.

在電信領域，我們看到 5G 網絡部署有望成為整個光學行業的主要驅動因素，5G 網絡升級週期背後的動機是提供更高的帶寬和更低的延遲，以支持更高密度的移動用戶並實現連接到數十億的新設備、服務和應用程序。

In order to enable this ubiquitous coverage, mobile operators will need to install a large number of small antennas and a much larger number of optical devices to handle the front-haul connections between the antenna and a centrally located base station.

為了實現這種無處不在的覆蓋，移動運營商將需要安裝大量小型天線和數量更多的光學設備來處理天線與位於中心的基站之間的前程連接。

Additionally, a mid-haul link may be required from a centralized cloud radio access network back into an aggregation point where it connects to the Internet.

此外，可能需要從集中式云無線電接入網絡返回到連接到互聯網的聚合點的中程鏈路。

The types of products required for the front-haul and mid-haul applications are 25 gigabits per second, 50 gigabits per second and 100 gigabits per second optical transceivers.

前傳和中傳應用所需的產品類型有25Gbps、50Gbps和100Gbps光模塊。

The same data rates used in our datacenter business.

我們的數據中心業務使用相同的數據速率。

Additionally, just like our CATV products, many of these devices will be required to withstand harsh outdoor environments.

此外，就像我們的 CATV 產品一樣，這些設備中的許多都需要能夠承受惡劣的室外環境。

We have significant experience and resources available to us to develop the types of optical modules required for this application and we have a highly automated production process for producing such modules, which we believe will be important when volumes begin to ramp.

我們擁有豐富的經驗和資源，可用於開發此應用所需的光學模塊類型，並且我們擁有用於生產此類模塊的高度自動化生產流程，我們相信這在產量開始增加時將非常重要。

We are currently in qualification with a number of vendors for both front- and mid-haul applications.

我們目前正在與許多供應商就前傳和中傳應用程序進行資格認證。

That said, please keep in mind that given this is an emerging market, the timing of qualification and deployment schedules can be difficult to predict.

也就是說，請記住，鑑於這是一個新興市場，資格認證的時間和部署時間表可能很難預測。

For the quarter, 73% of our revenue was from datacenter products, 23% from CATV products, with the remaining 4% from FTTH telecom and other.

本季度，我們 73% 的收入來自數據中心產品，23% 來自 CATV 產品，其餘 4% 來自 FTTH 電信和其他產品。

In the first quarter, we had four 10% or greater customers, three in the datacenter business that contributed 32%, 19% and 18% of total revenue respectively and one in the CATV business that contributed 12% of total revenue.

第一季度，我們有四個 10% 或更高的客戶，三個在數據中心業務中，分別貢獻了總收入的 32%、19% 和 18%，一個在 CATV 業務中，貢獻了總收入的 12%。

Moving beyond revenue, we generated a gross margin of 25.5%, which modestly improved from 24.7% last quarter.

除了收入，我們的毛利率為 25.5%，較上一季度的 24.7% 略有改善。

It was slightly below our guidance due to somewhat higher-than-expected production cost on a certain of our transceiver products.

由於我們某些收發器產品的生產成本略高於預期，因此略低於我們的指導。

Total operating expenses in the quarter were $20.3 million or 38.4% of revenue compared with $18.7 million or 31.8% of revenue in the prior quarter.

本季度總運營費用為 2030 萬美元，佔收入的 38.4%，上一季度為 1870 萬美元，佔收入的 31.8%。

We continue to be targeted with our investments with an emphasis on developing and enhancing our next generation of optical products while also tightly managing expenses.

我們繼續以我們的投資為目標，重點是開發和增強我們的下一代光學產品，同時嚴格管理費用。

Operating loss in Q1 was $6.8 million compared with an operating loss of $4.2 million in Q4 of 2018.

第一季度的營業虧損為 680 萬美元，而 2018 年第四季度的營業虧損為 420 萬美元。

Non-GAAP net loss after-tax for the first quarter was $5.4 million or a loss of $0.27 per basic share compared with a net income of $5.6 million or $0.28 per diluted share in Q1 of 2018.

第一季度的非美國通用會計準則稅後淨虧損為 540 萬美元或每股基本股虧損 0.27 美元，而 2018 年第一季度的淨收入為 560 萬美元或每股攤薄後虧損 0.28 美元。

GAAP net loss for Q1 was $10.5 million or a loss of $0.53 per basic share compared with GAAP net income of $2.1 million, or $0.11 per diluted share in Q1 of last year.

第一季度的 GAAP 淨虧損為 1050 萬美元，或每股基本股虧損 0.53 美元，而去年第一季度的 GAAP 淨收入為 210 萬美元，或每股稀釋後每股虧損 0.11 美元。

The basic shares outstanding used for computing the net loss in Q1 were $19.9 million.

用於計算第一季度淨虧損的已發行基本股為 1990 萬美元。

Turning now to the balance sheet.

現在轉向資產負債表。

We ended Q1 with $77.5 million in total cash, cash equivalents, short-term investments and restricted cash compared with $58 million at the end of the previous quarter.

第一季度末，我們的現金、現金等價物、短期投資和受限制現金總額為 7750 萬美元，而上一季度末為 5800 萬美元。

This includes net proceeds of approximately $76.4 million from the convertible notes due in 2024, which priced at 5% coupon in February.

這包括 2024 年到期的可轉換票據的淨收益約 7640 萬美元，該票據在 2 月份以 5% 的息票定價。

We incurred approximately $4.1 million in fees and expenses associated with the offering, which we anticipate amortizing ratably over the 5-year life of the notes in accordance with GAAP.

我們產生了約 410 萬美元的與發行相關的費用和支出，我們預計根據 GAAP，我們預計在票據的 5 年期限內按比例攤銷。

Our cash balance was offset by a paydown of $38.2 million to extinguish our capital expenditure loan and real estate term loan with BB&T.

我們的現金餘額被支付的 3820 萬美元抵消，以清償我們與 BB&T 的資本支出貸款和房地產定期貸款。

As of March 31, we had $84.5 million in inventory, a decrease of $8.8 million from Q4.

截至 3 月 31 日，我們的庫存為 8450 萬美元，比第四季度減少了 880 萬美元。

This inventory reduction is consistent with our long-term plan as we continue to rationalize inventory levels.

隨著我們繼續合理化庫存水平，這種庫存減少符合我們的長期計劃。

We made a total of $12.8 million in capital investments in the quarter, including $7.2 million in production equipment and machinery and $5.3 million on construction and building improvements.

本季度我們的資本投資總額為 1,280 萬美元，其中 720 萬美元用於生產設備和機械，530 萬美元用於建築和建築改造。

Looking ahead, we now expect capital expenditures in 2019 to be approximately $52 million, which factors in a continuation of the construction of our new factory in China.

展望未來，我們現在預計 2019 年的資本支出約為 5200 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。

Moving now to our Q2 outlook.

現在轉到我們的第二季度展望。

We expect Q2 revenue to be between $40 million and $45 million and non-GAAP gross margin to be in the range of 25% to 27%.

我們預計第二季度收入將在 4000 萬美元至 4500 萬美元之間，非美國通用會計準則毛利率將在 25% 至 27% 之間。

Non-GAAP net loss is expected to be in the range of $6.9 million to $8.6 million and non-GAAP loss per share between $0.35 per share and $0.43 per share using a weighted average basic share count of approximately $19.9 million.

非 GAAP 淨虧損預計在 690 萬美元至 860 萬美元之間，非 GAAP 每股虧損在每股 0.35 美元至 0.43 美元之間，加權平均基本股數約為 1990 萬美元。

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) And our first question today comes from Simon Leopold with Raymond James.

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

I want to ask one sort of nearer-term and a longer-term question.

我想問一個近期和長期的問題。

First, on the nearer term, could you give us an update on what you're seeing competitively particularly in silicon photonics technologies?

首先，在近期內，您能否向我們介紹一下您所看到的競爭情況，尤其是在矽光子技術方面的最新情況？

And I guess the context to this is, coming out of the optical show in March, we not only heard from Intel, who's been dabbling in this area for a long time, but Cisco had made an acquisition and Juniper has talked about launching some products.

我猜這件事的背景是，從 3 月份的光展出來，我們不僅聽到了長期涉足這一領域的英特爾，而且思科已經進行了收購，Juniper 也談到了推出一些產品.

So maybe some update overall competitive environment but place some context around silicon photonics?

因此，也許有些人更新了整體競爭環境，但圍繞矽光子學放置了一些背景信息？

And then I've got a follow-up.

然後我有一個後續行動。

Okay.

好的。

Simon, I would say in this quarter we haven't seen any sort of meaningful shift with respect to the competitive environment, especially as it pertains to silicon photonics.

西蒙，我想說本季度我們沒有看到競爭環境發生任何有意義的變化，尤其是與硅光子學有關的變化。

You noted a couple of companies who've made investments in silicon photonics.

你提到了幾家投資矽光子學的公司。

All of those companies have had some activity in the past either as the company that they're currently with or as previous firms, and they're not.

所有這些公司在過去都有過一些活動，或者作為他們目前所在的公司，或者作為以前的公司，但他們沒有。

In other words, they're not new entrants to the industry.

換句話說，他們不是該行業的新進入者。

And I haven't really seen any meaningful shift in terms of the way that those types of companies are approaching the market or the way that our technologies differentiate themselves.

在這些類型的公司進入市場的方式或我們的技術使自己脫穎而出的方式方面，我還沒有真正看到任何有意義的轉變。

I think as we've noted in the past conference calls and conferences that we believe our technology competes very favorably with silicon photonics, in terms of cost, in terms of flexibility and in terms of our ability to make modifications and things to the products throughout their lifecycle, which can also help us to maintain an effective cost throughout the lifecycle of the product.

我認為正如我們在過去的電話會議和會議中指出的那樣，我們相信我們的技術在成本、靈活性以及我們對整個產品進行修改和其他方面的能力方面與硅光子學競爭非常有利他們的生命週期，這也可以幫助我們在產品的整個生命週期中保持有效的成本。

So -- but as far as it goes, I haven't seen too much shift really in the competitive environment there.

所以——但就目前而言，我還沒有看到那裡的競爭環境發生太多變化。

And your follow-on question?

你的後續問題？

Yes.

是的。

I wanted to talk a little bit more about how you see the 5G market developing.

我想多談談您如何看待 5G 市場的發展。

I think I appreciate the fact that the harden optics makes this a great opportunity for your technology, but we hear suggestions that this will be a very competitive market with a lot of varied entrants, maybe from emerging markets like China.

我想我很欣賞硬化光學為你們的技術提供了一個很好的機會，但我們聽到的建議是，這將是一個競爭非常激烈的市場，有很多不同的進入者，可能來自像中國這樣的新興市場。

And so I'm sort of struggling to figure out the dynamic of how big is this opportunity?

所以我有點想弄清楚這個機會有多大的動態？

And how does it compare to other markets you've played in?

與您玩過的其他市場相比如何？

So I think it's a little early to parse out the competitive environment.

所以我認為現在分析競爭環境還為時過早。

I think you're right, Simon, it's going to be a competitive market.

我認為你是對的，西蒙，這將是一個競爭激烈的市場。

There's no doubt about that.

毫無疑問。

I would note that as you've seen in our datacenter market, we've been able to compete favorably in highly competitive markets.

我要指出的是，正如您在我們的數據中心市場所看到的那樣，我們已經能夠在競爭激烈的市場中取得有利的競爭。

So I think the fact that it's competitive is really a reflection of the fact that the market is sizable and it's one where optics is going to play a very critical role.

所以我認為它具有競爭力這一事實實際上反映了市場規模龐大的事實，而光學將在其中發揮非常關鍵的作用。

So we think that it's an exciting market and the competitiveness in that market really just reflects that.

所以我們認為這是一個令人興奮的市場，該市場的競爭力確實反映了這一點。

As far as how does this relate to margins and things?

至於這與利潤率和其他事物有何關係？

I think it's a little bit early to say, as we noted in our prepared remarks, we're pretty early in the 5G cycle.

我認為現在說有點早，正如我們在準備好的評論中指出的那樣，我們處於 5G 週期的早期。

We think we have very attractive technologies, not only at the module level, but at the laser photodiode level and optical subassembly level.

我們認為我們擁有非常有吸引力的技術，不僅在模塊級別，而且在激光光電二極管級別和光學組件級別。

And we intend to compete with all the players that we are aware of including those that are in China and elsewhere using our technologies.

我們打算與我們所知道的所有參與者競爭，包括那些在中國和其他地方使用我們技術的參與者。

And we think we compete favorably there.

我們認為我們在那裡競爭有利。

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

我們的下一個問題來自 D.A. 的 Mark Kelleher。戴維森。

Great.

偉大的。

I wanted to just talk about the main business, the datacenter demand.

我只想談談主要業務，即數據中心需求。

What are your customers telling you about the excess inventory situation?

您的客戶告訴您有關庫存過剩情況的哪些信息？

Is this a 1-quarter situation?

這是1季度的情況嗎？

Is this a whole year situation?

這是一整年的情況嗎？

What do you think the cycle is there?

你認為那裡的周期是什麼？

And then with respect to China, is there an opportunity in the datacenter market in China to kind of offset some of the weakness in the U.S.?

然後關於中國，中國的數據中心市場是否有機會抵消美國的一些弱點？

So as far as what customers are saying, I don't think that there's a common cadence across all customers.

因此，就客戶所說的而言，我不認為所有客戶都有共同的節奏。

As you can imagine, inventory levels are not uniform across all different customers.

可以想像，所有不同客戶的庫存水平並不統一。

And so we're hearing different things from different customers.

所以我們從不同的客戶那裡聽到了不同的事情。

Some customers are saying this is going to be a relatively short-term thing, and others, frankly, just aren't giving us a lot of really good visibility into when the situation improves.

一些客戶說這將是一件相對短期的事情，坦率地說，其他人並沒有給我們很多關於情況何時好轉的非常好的可見性。

As far as the datacenter market in China, as we noted on our prepared remarks, we have had a number of design wins with datacenter operators in China, and we have some active qualifications ongoing for future -- what we hope will be future design wins in there, in that area.

就中國的數據中心市場而言，正如我們在準備好的評論中指出的那樣，我們已經與中國的數據中心運營商取得了多項設計勝利，並且我們正在為未來進行一些積極的資格認證——我們希望未來的設計勝利在那裡，在那個地區。

There is some potential that those customers could offset some of the weakness that we're seeing in the U.S. That hasn't proven to be the case so far.

這些客戶有可能抵消我們在美國看到的一些弱點，但到目前為止還沒有證明是這樣。

But I think that it's one of the reasons why, I think there is hope and optimism surrounding the next few quarters, but we ought to get through this period of weakness in the U.S. datacenter market first.

但我認為這是為什麼我認為未來幾個季度充滿希望和樂觀情緒的原因之一，但我們應該首先度過美國數據中心市場的這段疲軟時期。

And then on the cable side, the Remote-PHY.

然後在電纜端，Remote-PHY。

You had a pretty nice growth there on the cable TV side.

你在有線電視方面取得了相當不錯的增長。

Is that some sign that the -- there's some thawing in the cable market?

這是否表明——有線電視市場有所解凍？

Is that demand finally coming through?

這種需求終於實現了嗎？

I think that there's some signs that the thawing is occurring.

我認為有一些跡象表明正在解凍。

I think it's too early to say we're back into a robust growth period yet, but I think that we do expect cable TV to continue to improve.

我認為現在說我們回到強勁增長期還為時過早，但我認為我們確實預計有線電視將繼續改善。

That market is notoriously sort of lumpy and difficult to predict, however.

然而，眾所周知，該市場有點起伏不定且難以預測。

And so I think overall, we think that there's some good tailwinds in cable TV driven by Remote-PHY.

所以我認為總的來說，我們認為 Remote-PHY 驅動的有線電視有一些好的順風。

But again, on any given quarter, the results can be kind of up and down as we've seen over the past several years really.

但同樣，在任何給定的季度，結果可能會有所起伏，正如我們在過去幾年中所看到的那樣。

(Operator Instructions) And our next question comes from Richard Shannon with Craig-Hallum.

（操作員說明）我們的下一個問題來自理查德香農和克雷格哈勒姆。

Probably just a couple for me.

對我來說可能只是一對。

Stefan, I know you're lows to -- typically to talk more than 1 quarter out, but wanted to see if you have any thoughts relative to some other companies who had datacenter exposure and their thoughts about the second half of the year.

Stefan，我知道你很低 - 通常談論超過 1 個季度，但想看看你是否有關於其他一些擁有數據中心風險的公司的想法以及他們對下半年的想法。

Are you seeing any sign of visibility or stabilization that might lead you to think your datacenter revenues can improve in the third quarter versus the second?

您是否看到任何可見性或穩定的跡象，可能會讓您認為您的數據中心收入在第三季度比第二季度有所提高？

Well, I think there's a lot of reasons for optimism.

好吧，我認為有很多樂觀的理由。

We noted that we have some very important new technologies that we talked about, 400G, et cetera.

我們注意到我們談到了一些非常重要的新技術，400G 等等。

There are some customers that are talking aggressively about deploying that.

有些客戶正在積極討論部署它。

I won't put a precise time frame on it, which is really part of the problem with visibility.

我不會給出精確的時間框架，這確實是可見性問題的一部分。

While I do believe that there's a number of very exciting things that are going to happen in the datacenter market.

雖然我確實相信數據中心市場將會發生許多令人興奮的事情。

It's very difficult to predict the timing, and especially with respect to inventory because that's one of the more opaque things that our customers are relatively less inclined to talk about with us.

很難預測時間，尤其是在庫存方面，因為這是我們的客戶相對不太願意與我們談論的更不透明的事情之一。

They're very interested in talking with us as you can imagine about new technologies and their deployment plans for those new technologies.

他們非常有興趣與我們討論新技術以及他們對這些新技術的部署計劃。

They're a little bit less interested in talking to us about the specifics of their inventory situation.

他們對與我們談論他們庫存情況的具體情況不太感興趣。

So that's a little bit hard to get a concrete read on.

因此，很難具體閱讀。

I think it's -- it would be -- question -- it would be a very questionable thing to say that datacenter companies are not going to eventually continue to invest in their infrastructure.

我認為這是——這將是——問題——如果說數據中心公司最終不會繼續投資於他們的基礎設施，那將是一個非常值得懷疑的事情。

They got out a little bit ahead of themselves, I think, in terms of buying inventory, and that's what we're digesting right now.

我認為，在購買庫存方面，他們有點超前了，這就是我們現在正在消化的。

But it seems to me that's really only a matter of time until growth resumes.

但在我看來，恢復增長只是時間問題。

It's just hard to put a precise time frame on that.

很難為此設定一個精確的時間框架。

Okay.

好的。

Well, it's fair enough based on what we've been hearing otherwise.

好吧，根據我們一直聽到的其他信息，這已經足夠公平了。

My second question Stefan is, obviously, you guys are trying to grow into -- to get to back to breakeven here.

我的第二個問題 Stefan 是，很明顯，你們正在努力成長為 - 回到這裡收支平衡。

I'm wondering if you could help us kind of sketch out how you get there in terms of revenues, gross margins, OpEx?

我想知道你是否可以幫助我們勾勒出你是如何在收入、毛利率、運營支出方面達到目標的？

And also maybe that revenue contribution you expect to -- obviously, I would assume, datacenter be a big part of that where they expect new products like 200 and 400 gig or 5G or outside of your main cloud customer base that you have today.

也許你期望的收入貢獻——顯然，我認為，數據中心是其中很大一部分，他們期望新產品，如 200 和 400 gig 或 5G，或者在你今天擁有的主要雲客戶群之外。

Can you just help us understand how you expect to get there?

您能否幫助我們了解您希望如何實現目標？

Well, I think what we've seen so far -- I think, we've -- operating expenses have been relatively stable over the last few quarters.

好吧，我認為我們到目前為止所看到的 - 我認為我們已經 - 過去幾個季度的運營費用相對穩定。

If you take out some of the extraordinary items that we have.

如果你拿出一些我們擁有的非凡物品。

So if you kind of run that forward, you can get an idea where we need to be in terms of gross margin and revenue to cover those operating expenses.

因此，如果你向前推進，你就會知道我們需要在毛利率和收入方面達到什麼水平才能支付這些運營費用。

And so we obviously need to see revenues increased to some extent.

因此，我們顯然需要看到收入在一定程度上有所增加。

And we also believe that we can continue to see some gross margin uptick, and that, that will also contribute to profitability.

而且我們還相信，我們可以繼續看到毛利率有所上升，這也將有助於提高盈利能力。

But as far as putting a precise numbers on that, we don't have sort of an updated model that we've put out there yet.

但就準確的數字而言，我們還沒有我們已經推出的更新模型。

And our next question comes from Liz Pate with Cowen and Company.

我們的下一個問題來自 Cowen and Company 的 Liz Pate。

My first question is, you've talked about a number of new design wins this past quarter and the prior quarter.

我的第一個問題是，你談到了上個季度和上個季度的一些新設計勝利。

Are those translating into any meaningful revenue at this point for you?

在這一點上，這些對您來說是否轉化為任何有意義的收入？

Well, I think they're certainly translating into revenue.

好吧，我認為他們肯定會轉化為收入。

What your level of meaningful, I guess, you'd have to sort of define that a little bit.

我猜你的意義水平是多少，你必須稍微定義一下。

But we've seen some of these design wins that are contributing in the millions of dollar range.

但我們已經看到其中一些設計勝利貢獻了數百萬美元。

Obviously, low single-digit millions given the overall revenue picture.

顯然，考慮到整體收入情況，低個位數的數百萬。

But certainly, some of the recent design wins are contributing.

但可以肯定的是，最近的一些設計勝利正在做出貢獻。

For us, a design win occurs when we've not only completed the technical qualification of the product and also the pricing and other negotiations that go on as part of the qualification process, but also when we've actually received orders.

對我們來說，當我們不僅完成了產品的技術鑑定以及作為鑑定過程的一部分進行的定價和其他談判，而且當我們實際收到訂單時，設計獲勝。

So sort of by definition for us, all of our design wins are contributing revenue or will contribute revenue very shortly after the design win.

因此，根據我們的定義，我們所有的設計獲勝都在貢獻收入，或者將在設計獲勝後不久貢獻收入。

How much of that is sort of meaningful, I guess, again, it sort of depends on your definition, but we -- all of those design wins are contributing revenue essentially.

我想，其中有多少有意義，這又取決於你的定義，但我們——所有這些設計勝利本質上都在貢獻收入。

Right.

正確的。

And in terms of the customer profile, are there Tier 1s in there among the new customers?

就客戶資料而言，新客戶中是否有一級供應商？

I think there's some recognizable names in there, yes.

我認為那裡有一些可識別的名字，是的。

Okay.

好的。

Just my last question is on the pricing trends that you're seeing, incremental price erosion over the past 90 days.

我的最後一個問題是關於您所看到的定價趨勢，即過去 90 天的增量價格侵蝕。

Anything to point to out of the ordinary?

有什麼不尋常的地方嗎？

And kind of what you expected?

和你期望的一樣嗎？

Just any comments there.

那裡有任何評論。

Sure.

當然。

No, I think pricing has been pretty consistent with our expeditions.

不，我認為定價與我們的探險非常一致。

No changes to what we said.

我們所說的沒有改變。

Previously, we said, last year, we prices reduction in core 100 gigabit per second product line of about 20%, and we've said that we expect to see about that same number this year, and that's still our current expectation.

此前，我們曾說過，去年我們將核心 100 Gbps 產品線的價格降低了約 20%，我們曾說過我們預計今年會看到同樣的數字，這仍然是我們目前的預期。

And our next question comes from Dave King with B. Riley FBR.

我們的下一個問題來自 Dave King 和 B. Riley FBR。

This is Lee Krowl filling in for Dave.

我是李·克羅爾，代替戴夫。

Two, if I may.

兩個，如果可以的話。

First, in the past, you guys have kind of talked about verticalization efforts in an effort to kind of aid gross margin.

首先，在過去，你們曾談論過垂直化努力以提高毛利率。

Obviously, with margins where they are today, curious if you had some updated thoughts on the strategies that will kind of help trend gross margins higher as it relates to verticalization?

顯然，鑑於他們今天的利潤率，如果您對與垂直化相關的有助於提高毛利率趨勢的策略有一些更新的想法，您會感到好奇嗎？

Sure.

當然。

We noted in our prepared remarks for example that we've developed a new line of photodiodes, as you know, the 2 principal active optical components that define the performance of an optical transceiver or frankly, any optical link really are the laser in the photodiode, and for many years, we've manufactured the lasers.

例如，我們在準備好的評論中指出，我們開發了一系列新的光電二極管，如您所知，定義光收發器性能的 2 個主要有源光學元件，或者坦率地說，任何光鏈路實際上都是光電二極管中的激光器，多年來，我們一直在製造激光器。

It's only more recently that we've begun to manufacture the photodiodes, the corresponding receiving element within the optical transceiver.

直到最近，我們才開始製造光電二極管，即光收發器中相應的接收元件。

And so that's an example of where that vertical integration strategy is continuing to -- I mean, we'll continue to work forward on that strategy.

因此，這是垂直整合戰略繼續實施的一個例子——我的意思是，我們將繼續推進該戰略。

As far as how we see the gross margin trending up, vertical integration certainly plays a part there, but in addition to that, I think seeing capacity utilization return back to normal levels and getting through some of the additional testing that we put in place in previous quarters.

就我們如何看待毛利率上升趨勢而言，垂直整合肯定在那裡發揮了作用，但除此之外，我認為看到產能利用率恢復到正常水平並通過我們在前幾個季度。

All those things will also contribute to the gross margin.

所有這些也將有助於提高毛利率。

So it's not just one thing that we need to do, we've got several knobs that we will turn to continue to see improvement in gross margin.

因此，這不僅僅是我們需要做的一件事，我們還有幾個旋鈕可以繼續看到毛利率的改善。

Got it.

知道了。

And then I guess with the Chinese facility, could you maybe just remind us when you expect it to be complete?

然後我想對於中國設施，你能不能提醒我們一下你希望它何時完成？

Whether that's fully encapsulated in the CapEx number you guys guiding to?

這是否完全包含在你們指導的資本支出數字中？

And then just as it relates to the Chinese market, will that position you more competitively?

然後就像它與中國市場有關，這會讓你更有競爭力嗎？

Or with better visibility, building increased operations there?

或者通過更好的可見性，在那裡建立更多的業務？

So the building we expect to complete in Q1 of next year, and that is included in the CapEx guide that we gave.

因此，我們預計在明年第一季度完成的建築，包括在我們提供的資本支出指南中。

It accounts for roughly 50% of the CapEx that we anticipate this year.

它約占我們今年預期資本支出的 50%。

That CapEx that we've guided for this year will not complete the building.

我們今年指導的資本支出將無法完成建設。

As I mentioned, it won't be done until Q1 of next year.

正如我提到的，它要到明年第一季度才能完成。

So there will be some additional CapEx next year.

所以明年會有一些額外的資本支出。

But it's relatively small compared to the level that we're spending this year.

但與我們今年的支出水平相比，它相對較小。

As far as what that facility does for us, yes, I think it positions us well for the Chinese market.

就該設施對我們的作用而言，是的，我認為它為我們在中國市場做好了準備。

As we mentioned, there are some sizable markets in China, for example, the 5G market, I think, is going to be first active probably in China or at least certainly in one of the largest markets for 5G is going to be in China.

正如我們提到的，中國有一些相當大的市場，例如，我認為 5G 市場將首先在中國活躍，或者至少肯定是 5G 最大的市場之一將在中國。

And having a Chinese -- an expanded presence in China will no doubt help us in that area.

擁有中國人——擴大在中國的影響力無疑將在該領域幫助我們。

And also, the datacenter operators in China are becoming more larger-scale and more advanced in their infrastructure, similar to what we've seen with some of our domestic U.S.-based and European-based operators.

而且，中國的數據中心運營商的基礎設施規模越來越大，基礎設施越來越先進，類似於我們在美國和歐洲的一些國內運營商所看到的情況。

And so having a capability -- an expanded capability in China to be able to produce more of those advanced products in country for them will also be important to that business as well.

因此，擁有一種能力——在中國擴大能力，以便能夠在國內為他們生產更多的先進產品，對該企業也很重要。

So we think both the telecom and datacenter business can benefit from that expanded presence in China.

因此，我們認為電信和數據中心業務都可以從中國業務的擴大中受益。

And this will conclude our question-and-answer session.

這將結束我們的問答環節。

I would like to turn the conference back over to Thompson Lin for any closing remarks.

我想將會議轉回給 Thompson Lin 作閉幕詞。

Okay.

好的。

And thank you for joining us today.

感謝您今天加入我們。

As always, we thank our investors, customers and employees for your continued support, and we look forward to seeing you in our upcoming conference.

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，我們期待在即將舉行的會議上見到您。

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.

您現在可以斷開連接。