APPLIED OPTOELECTRONICS, INC.
For the period ended Mar 31, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
AAOI$50.13+6.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001437749-25-033627
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001437749-26-015620
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 87 previous paragraphs and 91 current paragraphs.
46 unchanged; 19 reworded; 26 added; 20 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
Recent developments in global trade policy, including the imposition of new and increased tariffs and export restrictions by the United States and certain foreign governments, have increased uncertainty in the global economic environment. In particular, ongoing trade tensions between the United States and China, as well as other key markets such as Taiwan, have resulted in higher tariffs and the potential for additional restrictions affecting the semiconductor industry.
Current report
These developments have increased our costs for materials, components, and finished goods and may continue to disrupt our supply chain and manufacturing operations. In addition, uncertainty related to trade policies and geopolitical conditions may adversely affect customer demand, including demand from hyperscale data center customers, and could result in delays or reductions in customer orders.
Current report
In February 2026, the U.S. Supreme Court held that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful, and the U.S. Customs and Border Protection subsequently announced IEEPA-based tariff provisions would be terminated effective February 24, 2026.
Current report
During the quarter ended March 31, 2026, the Company entered into a Grant Agreement (the “Grant Agreement”) with the State of Texas, acting through the Office of the Governor's Texas CHIPS Office, under the Texas Semiconductor Innovation Fund. Under the Grant Agreement, the Company is eligible to receive cost-reimbursement of up to approximately $20.9 million for equipment expenditures related to the expansion of its semiconductor manufacturing and research and development capabilities in Sugar Land, Texas. The Grant Agreement terminates on December 31, 2027, or upon the earlier completion of the grant project or depletion of grant funds. The project is anticipated to create approximately 500 new full-time jobs.
Current report
Receipt of funding under the Grant Agreement is subject to the Company’s compliance with specified program requirements and approval of qualifying expenditures by the Office of the Governor. As of March 31, 2026, no amounts have been recognized in the Company’s financial statements. The Company expects to recognize any funding received under the program as qualifying expenditures are incurred and the related conditions are satisfied.
Current report
We continue to monitor these developments and have implemented mitigation strategies, including pricing adjustments, supply chain diversification, and operational efficiencies. However, these efforts may not fully offset the impact of increased costs or supply disruptions. Accordingly, these conditions could materially and adversely affect our business, results of operations, and financial condition.
Current report
Revenues for the three months ended March 31, 2026 increased by $51.3 million, or 51.4%, compared to the three months ended March 31, 2025. The increase was primarily attributable to:
Current report
Management believes the volume increase was primarily attributable to stronger customer demand and increase purchases from large data center customers to support ongoing capacity expansion and network infrastructure upgrades. Based on current market conditions, management expects these demand trends to continue for the foreseeable future, subject to customer deployment timing, supply chain conditions and other factors related to our industry.
Current report
Cost of goods sold increased by $37.9 million, or 54.7%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily attributable to:
Current report
Gross margin decreased to 29.1% for thethree months ended March 31, 2026, compared to 30.6% in the three months ended March 31, 2025. Despite the decrease in gross margin percentage, gross profit increased by $13.4 million or 43.8%, driven by higher revenues. The decrease in gross margin is primarily attributable to:
Current report
The increase in gross profit was primarily attributable to:
Current report
Management expects gross margin to increase in future periods as a result of product mix, cost optimization initiatives, and production efficiencies.
Current report
Sales and marketing expense increased by $1.0 million, or 18.5%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increases were primarily attributable to:
Current report
Management continues to monitor tariff developments and their potential impact on its cost structure and pricing strategy. Based on current conditions, management expects shipping costs and tariff-related impacts to continue in 2026, likely at a reduced level compared to 2025 due to the Supreme Court’s decision overturning the IEPPA-related tariffs. Management cannot currently assess whether this tariff trend will continue given the Administration’s current stated goal to replace the IEPPA tariffs with tariffs under other sections of federal law (e.g. Section 301 tariffs, reciprocal tariffs, etc.).
Current report
Other income (expenses) decreased by $1.6 million, or 334.7%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was mainly due to thenegative foreign exchange impact.
Current report
On March 12, 2026, the Company entered into Amendment No. 1 to the Agreement with the Sales Agents, to increase the aggregate offering price from $250 million to $500 million. On April 2, 2026, the Company completed the ATM Offering and sold approximately 4.8 million shares at a weighted average price of $103.51 per share, providing proceeds of approximately $490 million, net of expenses and underwriting discounts and commissions.
Current report
The changes in working capital were primarily attributable to:
Current report
Management believes these changes are consistent with ongoing production ramp and customer demand dynamics, which may result in variability in operating cash flows from period to period.
Current report
Customer Concentration
Current report
As of March 31, 2026, Digicomm represented approximately 74.5% of total accounts receivable. This concentration is primarily attributable to customer purchasing patterns, shipment timing, and billing concentration. Management has extended longer than typical payment terms to Digicomm in order to ensure Digicomm has adequate inventory on hand to quickly provide products to customers when needed for their network builds. The Company has a multi-year history with Digicomm and over this period the Company’s collection experience has been good. Digicomm’s payment history has generally been relatively consistent over time. In addition, to the extent customers in the Company’s data center business continue to grow relative to Digicomm, Management expects Accounts Receivable concentration with Digicomm to decline.
Current report
The Company continues to monitor credit exposure and collection trends related to significant customers and does not believe this concentration will create a material credit‑risk.
Current report
For the three months ended March 31, 2026, revenues from Digicomm were approximately $66.7 million, representing approximately 44.1% of consolidated revenues. These revenues were primarily attributable to the CATV product category.
Current report
Net cash used in investing activities was $68.1 million during the three months ended March 31, 2026 compared with $36.3 million in the three months ended March 31, 2025. The increase was primarily driven by capital expenditures of $58.2 million, which included $26.6 million capital expenditures in the US, $9.9 million in Taiwan, and $21.7 million in China. The increase in capital expenditures was primarily attributable to facility expansion and equipment purchases to support increased production capacity for the Company’s internet data center and broadband product lines, including investments related to Quantum Bandwidth products and the continued expansion of manufacturing operations for 400G, 800G, and 1.6T transceiver products. Based on current demand trends, Management expects that 2026 CapEx will be materially higher than 2025 CapEx.
Current report
Management expects to continue to make investments in capacity expansion through at least the end of 2027 and believes that this expansion will provide adequate production capacity to meet expected demand for data center transceiver, semiconductor lasers, and Quantum Bandwidth broadband products, subject to demand variability, customer ramp timing, supply chain, and other factors. The Company expects to expand manufacturing operations in the U.S. and Taiwan during 2026 and 2027 primarily to support laser diode production and production of 800G and 1.6T transceivers.
Current report
Inflation in the United States has moderated in recent periods. However, certain cost components, including labor, materials, logistics and tariffs, remain elevated relative to historical levels. These cost pressures were partially offset by improved supply chain conditions and continued cost optimization initiatives.
Current report
During the three months ended March 31, 2026, we experienced continued inflationary pressures in certain areas of our operations. However, these pressures did not have a material impact on our business, financial condition, or results of operations. Compared to other global markets, China has experienced relatively stable inflationary conditions. While we have implemented pricing actions and operational efficiencies to mitigate the effects of inflation, there can be no assurance that these measures will fully offset future cost increases. Continued inflationary pressures, particularly related to labor, tariffs and raw materials, could adversely affect our cost structure, gross margins and operating results in future periods.
Removed paragraphs (20)
Previous report
In early 2025, the U.S. Presidential administration implemented significant new tariffs on foreign imports impacting multiple countries, commodities and industries, and these new tariffs and export restrictions also prompted retaliatory tariffs and export restrictions from certain countries. As of November, 2025, significant tariffs and trade sanctions between the United States and China remain in place. In mid-May, 2025, the U.S. administration issued an executive order suspending certain previously announced tariff increases on China and temporarily reinstating a lower baseline tariff, which continues to remain in effect. In early August, the U.S. imposed a 20% reciprocal tariff on most imports from Taiwan. The U.S. remains in active tariff negotiations with key trading partners, including China and Taiwan, though the final outcomes of these negotiations remain uncertain. Although we have not been significantly impacted by the increased tariffs imposed on China to date, newly imposed or future tariffs, trade restrictions and retaliatory measures could result in revenue reduction, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, operational results and cash flows.
Previous report
Consistent with our strategy, we are optimizing operations and facilities and taking measures to contain costs to reduce the impact from tariffs. We are actively monitoring the tariff developments and analyzing the potential impacts on our business, cost structure, supply chain and broader economic environment. We are also working closely with our strategic suppliers to manage the potential impacts. While these developments have not had a material impact on our financial condition or results of operations to date, due to their evolving nature, we cannot predict with certainty the ultimate impacts they may have on our business and results in the future but those impacts could be material.
Previous report
The changes in revenue during both the three months and the nine months ended September 30, 2025 and 2024 were primarily due to increased demand from customers.
Previous report
We continue to see increased orders for our 100G and 400G data center products from several large customers. Based on forecasts from our customers, we expect increased demand for these products through the end of 2025. We entered into a supply agreement with Microsoft to design certain data center goods and to build a supply chain to manufacture, assemble, sell and ship the goods to them or an authorized purchasing entity. The initial term of the agreement is five years with automatic renewal unless terminated earlier. We continue to expect revenue from this contract to increase in 2025 compared to 2024.
Previous report
In addition to our existing data center customers, we have also begun to receive orders from a hyperscale data center customer from which we have not received significant orders in several years. While the new customer interaction is not material within the quarter, we believe that both this new customer interaction and much of the growth in our existing data center business is related to efforts by these customers to increase processing capacity within their data centers, largely to accommodate applications enabled by generative artificial intelligence ("AI").
Previous report
For the third quarter of 2025, CATV revenue increased $49.7 million, or 237.1%, compared to the third quarter of 2024. For the nine months ended September 30, 2025 and 2024, CATV increased $155.6 million, or 438.4%. The increases were due to the recovery in market demand for our products, which is being driven by the beginning of a major network upgrade project by a major North American MSO customer.
Previous report
Cost of goods sold increased by $36.1 million, or 73.4%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Cost of goods sold increased by $110.4 million, or 95.2%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in cost of goods sold was mainly due to increased revenue.
Previous report
Gross profit increased by $17.3 million, or 109.0%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Gross profit increased by $61.9 million, or 187.2%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase is primarily due to higher sales on our high gross margin products and ongoing efforts to reduce production costs.
Previous report
Sales and marketing expense increased by $5.1 million, or 105.8%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Sales and marketing expense increased by $8.9 million, or 61.1%, for thenine months ended September 30, 2025 compared to thenine months ended September 30, 2024. The increases were primarilydue to the increased business development effort in our CATV and data center businesses along with higher shipping costs.
Previous report
Other income (expenses) increased by $0.4 million, or 108.9%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Other income (expenses) increased by $6.6 million, or 338.8%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was mainly due to the increased government subsidy income and positive foreign exchange impact.
Previous report
On February 28, 2025, the Company entered into an Equity Distribution Agreement (the "Agreement") with Raymond James & Associates ("Raymond James") pursuant to which the Company could issue and sell shares of the Company's common stock, having an aggregate offering price of up to $100 million (the "First ATM Offering"), from time to time through Raymond James acting as sales agent. On April 8, 2025, the Company completed the First ATM Offering and sold approximately 5.7 million shares at a weighted average price of $17.71 per share, providing proceeds of approximately $98 million, net of expenses and underwriting discounts and commissions.
Previous report
On June 18, 2025, the Company completed the Second ATM Offering and sold approximately 5.7 million shares at a weighted average price of $17.46 per share, providing proceeds of approximately $98 million, net of expenses and underwriting discounts and commissions.
Previous report
On September 22, 2025, the Company completed the Third ATM Offering and sold approximately 5.7 million shares at a weighted average price of $26.41 per share, providing proceeds of approximately $147 million, net of expenses and underwriting discounts and commissions.
Previous report
On December 5, 2023, the Company issued $80.2 million of 5.25% convertible senior notes due 2026 (the "2026 Notes"), bearing interest at a rate of 5.25% per year maturing on December 5, 2026, unless earlier repurchased, redeemed or converted in accordance with their terms. The sale of the 2026 Notes generated net proceeds of $76.2 million, after expenses.
Previous report
On July 30, 2025, the Company retired the final $3.5 million principal and accrued and unpaid interest on the 2026 Notes by exchanging such outstanding principal for 239,404 shares of the Company’s common stock and by paying the accrued and outstanding interest in cash.
Previous report
For the nine months ended September 30, 2025, net cash used in investing activities was $125.7 million, mainly for the purchase of additional property, plant, and equipment.
Previous report
China factory construction
Previous report
On February 8, 2018, we entered into a construction contract with Zhejiang Xinyu Construction Group Co., Ltd. for the construction of a new factory and other facilities at our Ningbo, China location. Construction costs for these facilities under this contract are estimated to total approximately $27.5 million. As of September 30, 2025, construction of the building shell is complete, and approximately $27.4 million of this total cost has been paid and the remaining portion will be paid in yearly installments for three years after final inspection. We anticipate additional expenses for building improvements to the factory and we are in the process of evaluating the timing of these expenditures and obtaining bids for any such work. Based on forecasts, we believe the factory will be placed in full service in the year 2025 after the construction is completed for the building interior work. Property has been transferred from construction in progress to building and improvement in 2024.
Previous report
The annual inflation rate in the US came down to 2.9% in 2024, compared to 3.4% in 2023. Even though inflation has slowed from the peak, it remained well above the Federal Reserve's objective of 2%. The annual inflation rate in Taiwan came down to 2.1% in 2024 from 2.7% in 2023. The cost of inflation was reflected in increases in shipping costs, labor rates, and in costs of some raw materials. We believe these decreases are related to the supply chain pressure easing and decreasing commodity prices, however the labor market is still tight, and the wage pressure is still high. Compared to other major economies in the world, China has a stable level of inflation, which has not had a significant impact on our sales or operating results. We do not believe that inflation had a material impact on our business, financial condition, or results of operations during the nine months ended September 30, 2025. However, there is no guarantee that we may increase selling prices or reduce costs to fully mitigate the effect of inflation on our costs, which may adversely impact our sales margins and profitability.
Previous report
Critical Accounting Policies and Estimates
Reworded paragraphs (19)
Previous wording
We are a leading, vertically integrated provider of fiber-optic networking products. We target four networking end-markets: internet data centers, cable television ("CATV"), telecommunications ("telecom"), and fiber-to-the-home ("FTTH"). We design and manufacture a range of optical communications products at varying levels of integration, from components, subassemblies and modules to complete turn-key equipment. In designing products for our customers, we typically begin with the fundamental building blocks of lasers and laser components. From these foundational products, we design and manufacture a wide range of products to meet our customers’ needs and specifications, and such products differ from each other by their end market, intended use and level of integration. We are primarily focused on the higher-performance segments within the internet data center, CATV, telecom and FTTH markets which increasingly demand faster connectivity and innovation.
Current wording
We are a leading, vertically integrated provider of fiber-optic networking products. We target four networking end-markets: internet data centers, CATV, telecom, and FTTH. We design and manufacture a range of optical communications products at varying levels of integration, from components, subassemblies and modules to complete turn-key equipment. In designing products for our customers, we typically begin with the fundamental building blocks of lasers and laser components. From these foundational products, we design and manufacture a wide range of products to meet our customers’ needs and specifications, and such products differ from each other by their end market, intended use and level of integration. We are primarily focused on the higher-performance segments within the internet data center, CATV, telecom and FTTH markets which increasingly demand faster connectivity and innovation.
Previous wording
We generate revenue through the sale of our products to equipment providers and network operators for the internet data center, CATV, telecom, FTTH and other markets. We derive a significant portion of our revenue from our top ten customers, and we anticipate that we will continue to do so for the foreseeable future. The following charts provide the revenue contribution from each of the markets we served for the three and nine months ended September 30, 2025 and 2024 (in thousands, except percentages):
Current wording
We generate revenue through the sale of our products to equipment providers and network operators for the internet data center, CATV, telecom, FTTH and other markets. We derive a significant portion of our revenue from our top ten customers, and we anticipate that we will continue to do so for the foreseeable future. The following charts provide the revenue contribution from each of the markets we served for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):
Previous wording
For the three months ended September 30, 2025 and 2024, our top ten customers represented 98% and 96% of our revenue, respectively. For the nines months ended September 30, 2025 and 2024, our top ten customers represented 97% and 94% of our revenue, respectively. We believe that diversifying our customer base is critical for our future success, since reliance on a small number of key customers makes our ability to forecast future results dependent upon the accuracy of the forecasts we receive from those key customers. We continue to prioritize new customer acquisition and growth of diverse revenue streams.
Current wording
For the three months ended March 31, 2026 and 2025, our top ten customers represented 98% and 97% of our revenue, respectively. We believe that diversifying our customer base is critical for our future success, since reliance on a small number of key customers makes our ability to forecast future results dependent upon the accuracy of the forecasts we receive from those key customers. We continue to prioritize new customer acquisition and growth of diverse revenue streams.
Previous wording
Research and development expense increased by $7.8 million, or 58.4%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Research and development expense increased by $21.5 million, or 56.2%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increases were primarily due to increased personnel-related expense and increased R&D related project costs. The increases in R&D expenses were driven by customer demand for new products as well as acceleration of previously-planned project expenditures which were necessary to accommodate accelerated demand projections for these products from certain customers.
Current wording
Research and development expense increased by $7.8 million, or 44.1%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increases were primarily due to increased personnel-related expense and increased R&D related project costs. The increases in R&D expenses were driven by customer demand for new products as well as acceleration of previously-planned project expenditures which were necessary to accommodate accelerated demand projections for these products from certain customers.
Previous wording
General and administrative expense increased by $6.1 million, or 42.7%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. General and administrative expense increased by $10.2 million, or 22.9%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increases were primarily due to increased personnel-related expense.
Current wording
General and administrative expense increased by $8.6 million, or 52.7%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increases were primarily due to increased personnel-related expenseand expanded corporate infrastructure to support company growth.
Previous wording
Interest income increased by $0.3 million, or 189.1%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Interest income increased by $0.5 million, or 88.8%, for thenine months ended September 30, 2025 compared to thenine months ended September 30, 2024. The increase was due to higher saving balances in the third quarter of 2025.
Current wording
Interest income increased by $1.5 million, or 675.4%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was due to higher saving balances in the first quarter of 2026.
Previous wording
Interest expense decreased by $0.8 million, or 47.0%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Interest expense decreased by $2.4 million, or 47.7%, for thenine months ended September 30, 2025 compared to thenine months ended September 30, 2024. The decrease was due tothe lower effective interest rate for our 2030 Notes.
Current wording
Interest expense decreased by$0.1 million, or 7.6%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease was due tothe lower effective interest rate for our 2030 Notes.
Previous wording
The Company’s effective tax rate for the three months ended September 30, 2025 and 2024 was 0%. The effective tax rate varied from the federal statutory rate of 21% primarily due to the change of the valuation allowance on federal, state, Taiwan, and China deferred tax assets ("DTA").
Current wording
The Company’s effective tax rates for the three months ended March 31, 2026 and 2025 were (7.9)% and 0%, respectively. The effective tax rate varied from the federal statutory rate of 21% primarily due to the change of the valuation allowance on federal, state, and Taiwan deferred tax assets ("DTA"), and the R&D super deduction in China.
Previous wording
On August 9, 2022, the Creating Helpful Incentives to Produce Semiconductors Act ("CHIPS Act") was enacted. Among its provisions, the bill provides various federal grants, tax credits, and incentives for investment in the United States. On August 16, 2022, the Inflation Reduction Act ("IRA") was also signed into law. Among other provisions, the IRA imposes a 15% corporate alternative minimum tax ("Corporate AMT") for tax years beginning after December 31, 2022, imposes a 1% excise tax on corporate stock repurchases after December 31, 2022, and provides tax incentives to promote various energy efficient initiatives. To the extent that we make investments in expanding manufacturing in our semiconductor fabrication facility in Texas, we believe that the CHIPS Act would provide a refundable tax credit for certain equipment and facilities upgrades. We made significant investments in the nine months ended September 30, 2025 which we believe should qualify for these credits, but we intend to continue to evaluate these and future investments for applicability to the tax credit provisions of the CHIPS Act.
Current wording
On August 9, 2022, the Creating Helpful Incentives to Produce Semiconductors Act ("CHIPS Act") was enacted. Among its provisions, the bill provides various federal grants, tax credits, and incentives for investment in the United States. To the extent that we make investments in expanding manufacturing in our semiconductor fabrication facility in Texas, we believe that the CHIPS Act would provide a refundable tax credit for certain equipment and facilities upgrades. We made significant investments in the three months ended March 31, 2026 which we believe should qualify for these credits, but we intend to continue to evaluate these and future investments for applicability to the tax credit provisions of the CHIPS Act.
Previous wording
Comprehensive loss increased by $2.5 million, or 15.9%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Comprehensive loss decreased by $34.7 million, or 51.6%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.
Current wording
Comprehensive loss increased by $4.5 million, or 47.9%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.
Previous wording
As of September 30, 2025, we had $43.8 millionof unused borrowing capacity from all of our loan agreements. As of September 30, 2025, our cash, cash equivalents and restricted cash totaled $150.7 million. Cash and cash equivalents are held for working capital purposes and are invested primarily in money market or time deposit funds. We do not enter into investments for trading or speculative purposes.
Current wording
As of March 31, 2026, we had $61.7 millionof unused borrowing capacity from all of our loan agreements. As of March 31, 2026, our cash, cash equivalents and restricted cash totaled $449.4 million. Cash and cash equivalents are held for working capital purposes and are invested primarily in money market or time deposit funds. We do not enter into investments for trading or speculative purposes.
Previous wording
On May 28, 2025, the Company entered into an Equity Distribution Agreement (the "Agreement") with Raymond James & Associates and Needham & Company, LLC (collectively, the "Sales Agents" and each, a "Sales Agent") pursuant to which the Company could issue and sell shares of the Company’s common stock, par value $0.001 per share (the "Shares") having an aggregate offering price of up to $100 million (the "Second ATM Offering"), from time to time through the Sales Agents.
Current wording
On February 26, 2026, the Company entered into an Equity Distribution Agreement (the "Agreement") with Raymond James & Associates and Needham & Company, LLC (collectively, the "Sales Agents" and each, a "Sales Agent") pursuant to which the Company could issue and sell shares of the Company’s common stock, par value $0.001 per share (the "Shares") having an aggregate offering price of up to $250 million (the "ATM Offering"), from time to time through the Sales Agents.
Previous wording
The details of the shares of common stock sold through the First ATM Offering, the Second ATM Offering and the Third ATM Offering as of the end of September 30, 2025 are as follows (in thousands, except shares and weighted average per share price):
Current wording
The details of the shares of common stock sold through the ATM Offering as of the end of March 31, 2026 are as follows (in thousands, except shares and weighted average per share price):
Previous wording
On December 23, 2024, the Company issued approximately $125.0 million aggregate principal amount of 2.750% convertible senior notes due 2030 (the "2030 Notes"), and on the same day consummated various separate, privately negotiated exchange agreements with certain holders of its 2026 Notes to exchange approximately $76.6 million principal amount of the 2026 Notes for aggregate consideration consisting of (i) $125.0 million aggregate principal amount of the 2030 Notes, (ii) 1,487,874 shares of the Company's common stock, par value $0.001 per share and (iii) approximately $0.9 million of cash in aggregate. Also, refer to Note 12 "Convertible Senior Notes" to the consolidated financial statements for further discussion of the 2030 Notes.
Current wording
On December 23, 2024, the Company issued approximately $125.0 million aggregate principal amount of 2.75% convertible senior notes due 2030 (the "2030 Notes"), and on the same day consummated various separate, privately negotiated exchange agreements with certain holders of its 2026 Notes to exchange approximately $76.6 million principal amount of the 2026 Notes for aggregate consideration consisting of (i) $125.0 million aggregate principal amount of the 2030 Notes, (ii) 1,487,874 shares of the Company's common stock, par value $0.001 per share and (iii) approximately $0.9 million of cash in aggregate. Also, refer to Note 12 "Convertible Senior Notes" to the consolidated financial statements for further discussion of the 2030 Notes.
Previous wording
For the nine months ended September 30, 2025, net cash used in operating activities was $144.9 million. Net cash used in operating activities consisted of our net loss of $36.2 million after exclusion of non-cash items of $33.6 million. Cash decreased due to an increase in accounts receivable of $107.2 million and an increase in inventory of $84.6 million, partially offset by an increase in accounts payable of $45.2 million.
Current wording
Net cash used in operating activities was $85.4 million during the three months ended March 31, 2026 as compared to $50.9 million during the three months ended March 31, 2025, an increase of 67.6%. Net cash used in operating activities consisted of our net loss of $14.3 million, adjusted for non-cash items of $19.0 million, and a net use of cash from changes in working capital of $90.1 million.
Previous wording
For the nine months ended September 30, 2025, net cash provided by financing activities was $348.2 million. This increase was due to the net proceeds of $343.0 million from the ATM Offering and proceed of bank acceptance payable of $14.4 million, partially offset by tax payments related share-based compensation of $9.2 million.
Current wording
Net cash provided by financing activities was $389.3 million during the three months ended March 31, 2026 compared with $70.0 million in the three months ended March 31, 2025. The increase was primarily attributable to the net proceeds of $382.4 million from the ATM Offering, the net proceeds from line of credit borrowings of $6.8 million, and net proceeds from bank acceptance payable of $1.8 million, partially offset by tax payments related to share-based compensation of $1.7 million.
Previous wording
As of September 30, 2025, we have lending arrangements with on US bank and four financial institutions in China. As of September 30, 2025, we were in compliance with the covenants in the lending arrangements. As of September 30, 2025, we had $43.8 million ofunused borrowing capacity.
Current wording
As of March 31, 2026, we have lending arrangements with one U.S. bank, two financial institution in Taiwan, and four financial institutions in China. As of March 31, 2026, we were in compliance with the covenants in the lending arrangements. As of March 31, 2026, we had $61.7 million ofunused borrowing capacity.
Previous wording
We had cash, cash equivalents and restricted cash of $150.7 million as of September 30, 2025, an increase of approximately $71.6 million compared to December 31, 2024. Our future capital requirements will depend on many factors including our growth rate, the timing and extent of spending to support our research and development efforts, the expansion of our sales and marketing activities, the introduction of new and enhanced products, the building improvement of a new factory in Taiwan or U.S., changes in our manufacturing capacity and the continuing market acceptance of our products.
Current wording
We had cash, cash equivalents and restricted cash of $449.4 million as of March 31, 2026, an increase of approximately $233.4 million compared to December 31, 2025. Our future capital requirements will depend on many factors including our growth rate, the timing and extent of spending to support our research and development efforts, the expansion of our sales and marketing activities, the introduction of new and enhanced products, the building improvement of a new factory in Taiwan or U.S., changes in our manufacturing capacity and the continuing market acceptance of our products.
Previous wording
As of September 30, 2025, wehad a total loan balance (excluding convertible notes) of $28.0 million from various lenders in China and had $43.8 million available borrowing capacity on existing credit lines. Should additional liquidity be needed, our Board may authorize issuance of additional common stock under an at-the-market offering in the future (see the discussion of "Liquidity and Capital Resources" in Item 2).
Current wording
As of March 31, 2026, wehad a total loan balance (excluding convertible notes) of $41.2 million from various lenders and had $61.7 million available borrowing capacity on existing credit lines. Should additional liquidity be needed, our Board may authorize issuance of additional common stock under an at-the-market offering in the future (see the discussion of "Liquidity and Capital Resources" in Item 2).
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On August 27, 2025, the Company entered into an Equity Distribution Agreement (the "Agreement") with Raymond James & Associates and Needham & Company, LLC (collectively, the "Sales Agents" and each, a "Sales Agent") pursuant to which the Company could issue and sell shares of the Company’s common stock, par value $0.001 per share (the "Shares") having an aggregate offering price of up to $150 million (the "Third ATM Offering"), from time to time through the Sales Agents.
Previous report — wording carried elsewhere
Also, refer to Note 12 "Convertible Senior Notes" to the consolidated financial statements for further discussion of the 2026 Notes.