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AXCELIS TECHNOLOGIES INC (ACLS)·Q2 2025 Earnings Summary

Executive Summary

  • Solid beat on revenue, margins, and EPS: Q2 revenue $194.5M vs prior guidance ~$185M and S&P consensus $185.1M*, non-GAAP EPS $1.13 vs S&P consensus $0.71*; gross margin (non-GAAP) 45.2% vs outlook 42% from prior quarter commentary, driven by CS&I strength, mix and lower warranty/installation costs .
  • Bookings softness and China concentration: Q2 bookings $96M (book-to-bill 0.8x) and backlog $582M; China represented 65% of shipped systems and 55% of total revenue, with H2 China revenue expected to be similar to H1 .
  • Outlook: Q3 revenue ~ $200M, non-GAAP gross margin ~43%, non-GAAP EPS ~ $1.00; initial view for Q4 similar to Q3; non-GAAP tax rate ~15% for balance of year .
  • Capital returns and liquidity: $45M buyback in Q2 with $168M remaining authorization; cash, cash equivalents and marketable securities $581M (includes $31M long-term) and $38M free cash flow, reinforcing balance-sheet strength .

What Went Well and What Went Wrong

  • What Went Well

    • Beat across P&L: Revenue $194.5M, non-GAAP gross margin 45.2%, non-GAAP EPS $1.13, all above outlook/consensus; adjusted EBITDA margin ~20% as CS&I mix, lower warranty/installation and cost actions helped margins .
    • Resilient CS&I: CS&I revenue was $61M with “higher CS&I revenue” and upgrades the main driver, providing “materially higher than corporate average” gross margins and underpinning profitability through the cycle .
    • Strategic positioning in SiC/high energy: Management emphasized leadership in high energy implanters enabling trench/superjunction SiC architectures; forward-looking collaborations and wins (e.g., high-energy tool for 200mm superjunction, broader R&D engagements) support long-term opportunity .
    • Management quote: “Through 2025, our CS&I revenue made up approximately 30% of total revenue…a reflection of the strength of our installed base” .

  • What Went Wrong

    • Orders still soft: Bookings $96M, down slightly q/q; book-to-bill 0.8x; memory spend “muted” with shipments down sequentially; NAND demand subdued through the year .
    • Margin moderation ahead: Q3 guide implies non-GAAP gross margin ~43% vs 45.2% in Q2 due to systems/CS&I mix; management also flagged mix pressure into H2’25 .
    • Concentration and macro risks: China comprised 65% of shipped systems (55% of total revenue), with H2 China revenue expected similar to H1 as customers digest robust mature-node capacity; tariff environment included in outlook with “modest” estimated impact .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$256.5 $192.6 $194.5
GAAP Diluted EPS ($)$1.55 $0.88 $0.98
Non-GAAP Diluted EPS ($)$1.73 $1.04 $1.13
GAAP Gross Margin %43.8% 46.1% 44.9%
Non-GAAP Gross Margin %44.3% 46.4% 45.2%
GAAP Operating Margin %20.6% 15.1% 14.9%
Non-GAAP Operating Margin %23.3% 18.3% 17.7%
Adjusted EBITDA ($USD Millions)$63.6 $39.5 $38.9
Adjusted EBITDA Margin %24.8% 20.5% 20.0%

Estimates vs. Actuals (S&P Global consensus)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions) – Estimate*$244.95$184.86$185.15
Revenue ($USD Millions) – Actual$252.42 $192.56 $194.54
Surprise ($) / (%)+$7.47 / +3.0%*+$7.71 / +4.2%*+$9.40 / +5.1%*
Primary EPS – Estimate ($)*$1.25$0.383$0.71
Primary EPS – Actual ($)$1.54 $1.04 $1.13
Surprise ($) / (%)+$0.29 / +23%*+$0.66 / +173%*+$0.42 / +59%*

Note: *Values retrieved from S&P Global.

Segment/Mix (Q2 2025)

MetricQ2 2025
Systems Revenue ($USD Millions)$134
CS&I Revenue ($USD Millions)$61
Shipped System Sales – China Mix65%
Total Revenue – China / U.S. / Korea55% / 18% / 13%

KPIs (Q2 2025)

KPIQ2 2025
Bookings ($USD Millions)$96
Book-to-Bill (x)0.8x
Backlog ($USD Millions)$582
Free Cash Flow ($USD Millions)$38
Share Repurchases ($USD Millions)$45; $168 remaining authorization
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$581 incl. $31 long-term
Weighted Avg. Diluted Shares (M)31.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025—~ $200M New
Non-GAAP Gross Margin %Q3 2025—~43% New
Non-GAAP Opex ($M)Q3 2025—~ $53 New
Adjusted EBITDA ($M)Q3 2025—~ $39 New
Non-GAAP EPS ($)Q3 2025—~ $1.00 New
Non-GAAP Tax Rate %Balance of FY25—~15% New
Revenue (China)H2 2025—Similar to H1 New
Overall Revenue LevelQ4 2025—“Relatively similar” to Q3 New
Prior Q2 Guide (for context)Q2 2025~$185M rev; ~$0.73 non-GAAP EPS Actual: $194.5M; $1.13 non-GAAP EPS Beat vs guide

Earnings Call Themes & Trends

TopicQ4 2024 (prior-2)Q1 2025 (prior-1)Q2 2025 (current)Trend
Power/SiC adoptionAnticipated 2025 digestion; positioning for LT growth Macro/trade uncertainty; continued investment in innovation SiC digestion but pockets of demand; bifurcation: China planar 150/200mm vs ex-China trench/superjunction; Axcelis enabling with high energy tools Improving LT pipeline; NT muted
Advanced Logic penetrationNot emphasized Not emphasized Received forward order; targeting N+1/2/3 nodes; backside power distribution opportunities Improving
Memory (DRAM/NAND)Not emphasized Not emphasized Muted; DRAM opportunistic, NAND focused on etch/deposition upgrades (not implant) Muted
Geographic/ChinaFlagged China digestion ahead in 2025 Agile global footprint China 65% shipped systems; H2 China similar to H1 Stable elevated exposure
Tariffs/MacroNot highlighted Macro/trade uncertainty Modest tariff impact embedded in Q3 outlook; risk mitigation via global ops Manageable
CS&I/Installed baseNot highlighted Strong margins/cash flow CS&I ~30% of revenue YTD; upgrades driving mix and margins Strong
R&D/AI, high-voltage SiCNot highlighted Not highlighted Post-Q2 JDP with GE Aerospace on 6.5–10kV superjunction; aligns with AI/datacenter HV power needs Building optionality

Management Commentary

  • Strategy and positioning: “Despite the cyclical digestion…we’re executing very well…relentless focus on innovation, deep engagement with customers…CS&I…is foundational…provides a resilient revenue stream through the cycles.”
  • Market/mix: “Sales to mature node applications comprised almost the entirety of our system shipments…power and general mature.”
  • SiC outlook: “Customers…outside of China…drive quickly to 200mm…from planar to trench…superjunction…high energy is required…we’re the market and technology leader in high energy ion implantation.”
  • Margins: “Non-GAAP gross margins were 45.2%…drivers were higher CS&I revenue, better warranty/installation, favorable systems mix.”
  • Capital allocation: “Repurchased approximately $45M in shares…$168M remaining authorization.”
  • Outlook: “We expect revenue in Q3 of approximately $200M…non-GAAP gross margins of approximately 43%…non-GAAP diluted EPS of approximately $1.”

Q&A Highlights

  • SiC R&D purchases and future inflection: Customers acquiring tools for R&D/technology transitions implies potential volume ramp later; Axcelis confirmed bifurcation—China planar vs ex-China trench/superjunction needing high energy .
  • Margin sustainability: Structural gains from warranty/installation and global operations; margin still mix-driven and expected to step down modestly in H2’25 .
  • CS&I strength drivers: Q2 upside driven primarily by upgrades and utilization improvements rather than tariff pull-ins; aligns with typical pre-capacity-add cycle .
  • China competition: Local competitors largely confined to restricted accounts; still “very immature” vs Axcelis’ requirements for throughput, beam uniformity/angles/purity, particles .
  • Backlog and timing: Backlog is systems-only and carries into 2026, offering runway pending booking inflection; inventory positioned to respond to upturn .

Estimates Context

  • Q2 2025 vs S&P consensus: Revenue $194.5M vs $185.1M* (+5.1%); non-GAAP EPS $1.13 vs $0.71* (+59%). Both represent significant beats, driven by CS&I and favorable mix/warranty/installation .
  • Prior quarters: Q1 2025 revenue $192.6M vs $184.9M*; EPS $1.04 vs $0.38*; Q4 2024 revenue $252.4M vs $245.0M*; EPS $1.54 vs $1.25* (consistent pattern of beats) .

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Beat quality strong, but mix-sensitive: Upside came from CS&I and favorable systems mix; guidance embeds margin normalization with lower CS&I mix—expect GM to ~43% in Q3 .
  • Bookings/backlog suggest patience: Bookings $96M (0.8x b2b) and backlog $582M point to a troughy order environment; management signals “bouncing along the bottom” before capacity additions resume .
  • China exposure is high: 65% of shipped systems and 55% of total revenue; H2 China similar to H1—watch tariff policy changes and local competitive dynamics .
  • Structural profitability actions: Warranty/installation cost reductions and global ops efficiencies support margins; still, mix dominates near-term margin trajectory .
  • Silicon Carbide optionality: Leadership in high energy, trench/superjunction R&D engagement, and JDP with GE Aerospace on high-voltage devices align with secular power and AI/datacenter drivers .
  • Capital returns supportive: $45M repurchases in Q2 with ample authorization and cash; balanced against continued R&D/inventory investments for upturn readiness .
  • Near-term trading lens: Strong execution and continuing beats vs consensus are positives; watch for signs of booking inflection, CS&I mix durability, and any shifts in China demand/tariffs as catalysts .