Applied Optoelectronics (AAOI) experienced a 7.32% plunge in after-hours trading on Thursday, despite reporting better-than-expected first-quarter results for 2025. The company's Q1 revenue came in at $99.9 million, slightly above the analyst consensus estimate of $99.4 million, representing a significant 145.52% increase compared to the same period last year.

The company's adjusted earnings per share (EPS) for Q1 was $(0.02), surpassing the analyst estimate of $(0.04) by 50%. This marks a substantial improvement from the $(0.31) loss per share reported in the same quarter of the previous year. Additionally, Applied Optoelectronics reported an adjusted gross margin of 30.7% for the quarter.

Despite these seemingly positive results, investors appeared concerned about the company's overall profitability. Applied Optoelectronics still reported a negative net income of $9.2 million for Q1, which may have contributed to the stock's decline. The market reaction suggests that investors might have had even higher expectations or are worried about other factors not immediately apparent in the earnings report. As the market digests this information, attention will likely focus on the company's future outlook and ability to translate revenue growth into consistent profitability.