Axcelis Technologies Q2 Earnings Call Highlights
Key Points
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- Axcelis exceeded second-quarter expectations with $215 million in revenue and non-GAAP EPS of $1.06, prompting the company to raise its full-year outlook to mid-single-digit revenue growth.
- Growth in power and mature-node markets offset weaker memory revenue, while CS benefited from a larger installed base and stronger equipment utilization. China accounted for 46% of quarterly revenue, and backlog stood at $452 million.
- Axcelis expects third-quarter revenue of approximately $230 million and sees improving demand through 2027, particularly in memory, silicon carbide and mature-node applications. The pending Veeco merger remains on track to close in the second half of 2026, subject to regulatory approvals.
Axcelis Technologies (NASDAQ:ACLS) reported second-quarter 2026 revenue of $215 million and non-GAAP diluted earnings per share of $1.06, with both figures exceeding management’s expectations. The company raised its outlook for the full year, now expecting mid-single-digit revenue growth after previously forecasting revenue roughly flat with 2025.
President and CEO Russell Low said the quarter reflected “strong operational execution” amid favorable demand trends across several key markets. Systems revenue grew sequentially as improvement in power and general mature-node markets more than offset an expected moderation in memory revenue tied to the timing of available fab space.
Low also said the company’s customer service and support business, referred to as CS, remained an important contributor. Growth in that segment was supported by the expanding installed base, greater customer equipment utilization and broader aftermarket products and services offerings.
Second-Quarter Results and Financial Position
Senior Vice President and Interim CFO David Ryzhik said second-quarter revenue consisted of $132 million in systems revenue and $83 million in CS revenue. China accounted for 46% of total revenue, up from 40% in the prior quarter, while Korea represented 26%. Europe accounted for 11%, followed by the U.S. at 6%, Taiwan at 2%, Japan at 1%, and other regions at 8%.
Bookings totaled $131 million, slightly higher sequentially, and the company’s book-to-bill ratio was approximately 1.0. Axcelis ended the quarter with total backlog of $452 million.
- Gross margin was 42.7%, below the company’s approximately 43% outlook because of CS mix and higher-than-anticipated service costs.
- Operating expenses were $60 million, slightly above the $59 million forecast, primarily due to higher variable compensation and fringe costs.
- Operating margin was 14.7%.
- Adjusted EBITDA was $36 million, representing a 16.7% margin.
- Free cash flow was $15 million, including about $6 million in cash transaction expenses associated with the pending Veeco merger.
- The company ended the quarter with $577 million in cash equivalents and marketable securities, including $175 million in long-term securities.
Ryzhik said other income was $5 million, primarily reflecting foreign-exchange gains, while the tax rate was 11%, below the company’s 15% forecast because of a windfall benefit tied to equity compensation.
Power, Mature Nodes and Memory Trends
In power semiconductors, silicon carbide revenue declined sequentially as expected because of shipment timing, but bookings improved and exceeded average levels from the prior two years during the first half. Axcelis secured orders from two new customers in China during the quarter and won orders from multiple customers for high-energy channeling applications using advanced superjunction architectures.
Low said long-term silicon carbide demand remains supported by electric vehicles, AI data-center power infrastructure and industrial applications that require greater power efficiency. He said the company expects power market activity to be stronger in the second half than in the first half, with both silicon carbide and silicon power recovering from a period of customer capacity digestion.
Axcelis also completed an evaluation of its Purion XEmax system at a leading foundry for power-management IC production. The company said the system demonstrated its ability to address high-energy implant requirements, with energies up to 15 MeV.
General mature-node sales improved sequentially, although Low said the company has not yet seen a pickup in order rates. Customers in China continue to add capacity following a digestion period that began in 2024, while Axcelis is beginning to see signs of improving activity outside China. The company cited demand for AI-related data-center products built on 28-nanometer and above process technologies, including optical connectivity products, microcontrollers and analog integrated circuits.
Mature-node applications represented about 84% of system shipments during the quarter, with memory and advanced logic making up the balance.
In advanced logic, Axcelis shipped a system early in the second quarter for a materials-modification application supporting 2-nanometer production, followed by another shipment in the third quarter for the same application.
Memory revenue declined sequentially from a strong first quarter, but management said customer engagement remained robust. Low said revenue in the segment may remain uneven until new clean-room capacity becomes available, as customers currently focus on addressing bottlenecks in existing fabs. Still, Axcelis expects strong memory revenue growth in 2026 and further growth in 2027, driven primarily by DRAM and high-bandwidth memory investments.
The company said it received additional orders from a leading North American memory manufacturer following a successful system evaluation, and also received a recent order for multiple high-current systems from another memory customer. Management said NAND activity exists but has not yet become a meaningful trend, with available fab space largely being directed toward higher-value DRAM production.
Third-Quarter and Full-Year Outlook
For the third quarter, Axcelis expects revenue of approximately $230 million, supported by higher power and memory contributions and partly offset by lower general mature revenue. The company forecast gross margin of about 43%, operating expenses of approximately $62 million, adjusted EBITDA of about $41 million, a 15% tax rate and non-GAAP diluted earnings per share of approximately $1.11.
Management expects fourth-quarter revenue to increase sequentially, with gross margin improving slightly from third-quarter levels. Operating expenses are expected to rise modestly in the fourth quarter as the company continues investments in technology innovation and longer-term growth initiatives.
Low said Axcelis expects favorable demand trends to continue into 2027, including sustained memory investment, continued silicon carbide improvement and stronger conditions in general mature applications.
Regarding its pending merger with Veeco, Low said the companies continue to work through remaining requirements, including with China’s State Administration for Market Regulation. Axcelis continues to expect the transaction to close in the second half of 2026.
About Axcelis Technologies (NASDAQ:ACLS)
Axcelis Technologies, Inc is a leading developer and manufacturer of ion implantation and cleaning equipment used in the fabrication of semiconductor chips. The company specializes in high-current, medium-current and high-energy ion implantation systems, which are critical for introducing precisely controlled dopants into silicon wafers. Axcelis also offers plasma-based cleaning and dry strip tools that support advanced process nodes in logic, memory and power device manufacturing.
The company's product portfolio encompasses single-wafer and multi-wafer cluster tools designed to deliver high throughput, accuracy and uniformity for semiconductor process steps.
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