Image source: Applied Optoelectronics.

What happened

Shares of Applied Optoelectronics (AAOI 0.11%), a provider of fiber-optic networking products, surged on Thursday following the release of preliminary fourth-quarter results that easily topped the company's prior guidance. At 11 a.m. EST, the stock was up about 30%.

So what

Applied Optoelectronics now expects to produce fourth-quarter revenue between $84.5 million and $84.8 million, well above its previous guidance range of $75 million to $79 million. Higher-than-expected demand, as well as the company's ability to meet that demand with increased capacity, produced the extra revenue.

The bottom line also looked better than the company had previously predicted. Non-GAAP gross margin is expected to be in the range of 37.6% to 38%, a major improvement over the previous guidance range of 34% to 35.5%. Non-GAAP earnings per share will now come in between $0.70 and $0.75, substantially higher than the company's guidance range of $0.46 to $0.51.

Now what

Founder and CEO Dr. Thompson Lin filled in some details on the company's fourth-quarter results:

We delivered a strong fourth quarter with top and bottom-line results expected to exceed our guidance. Accelerated demand for our market-leading datacenter products and increased capacity fueled our results. Additionally, we continued to drive manufacturing efficiencies, which contributed to a record gross margin. We are excited by the good close to the year and look forward to sharing the additional details of our fourth quarter performance on our conference call in February.

Applied Optoelectronics will report its full fourth-quarter results after the market closes on Feb. 23, with a conference call to follow.