ACLS Q4 2024 Guides Q1 $185M Revenue, 40% Gross Margin
- Recurring Revenue Potential: The executives emphasized strong performance in the CS&I segment—driven by upgrade activity and service contracts—which provides recurring, high‐margin revenue that can help cushion against cyclical declines in new systems revenue.
- Robust Backlog and Stable Bookings: Management noted a resilient and improving backlog and new bookings across global regions, with encouraging signs in the silicon carbide business despite short‐term challenges in China. This broad-based exposure supports a stable revenue outlook going into the second half.
- Investment in Innovation and Strategic Expansion: The call highlighted significant investments in technological upgrades—especially in silicon carbide and advanced logic—that position ACLS to capture secular trends. Additionally, expanding into markets like Japan offers future growth catalysts.
- Export Control Risk: New U.S. government restrictions on exports to China could depress revenue, as China is a critical market despite management moderating the estimate toward the low end of the previously guided $20–$50 million impact.
- Near-Term Revenue and Margin Pressure: Management guided Q1 revenue to around $185 million with expected gross margins of about 40%, reflecting concerns over lower systems revenue (especially from China) and a seasonal downturn in high-margin CS&I, which could weigh on near-term profitability.
- Reliance on Uncertain Recovery Dynamics: The outlook hinges on a turnaround in customer spending and a rebound after current price and delivery pushouts, yet extended backlog duration into early 2026 and mixed investment cycles create uncertainty about the timing and strength of the recovery.
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Long-Term Guidance
Q: How reach $1.6B revenue target?
A: Management stressed a strategy built on secular growth in silicon carbide, memory, and advanced logic that will drive revenue toward $1.6B over time, though timing remains uncertain. -
Market Outlook
Q: Why improve in the second half?
A: They noted better bookings, finalized customer budgets, and a pleasant uptick in orders, suggesting the second half could outperform the first. -
Export Impact
Q: Why is export control impact low?
A: New data has reduced concerns over China system shipments, so the export control impact is now closer to the $20M low end of the range. -
Silicon Carb Revenue
Q: What percentage is SiC revenue?
A: Silicon carbide made up 36% in Q4 and 41% for the full year, reflecting a 6% year-over-year increase. -
Memory Revenue
Q: Will NAND revenue pick up?
A: Management expects memory growth in 2025 to come mainly from DRAM, with NAND remaining muted due to capacity-related issues. -
Japan Expansion
Q: What are plans in Japan?
A: They see Japan as a significant growth opportunity, with current exposure below 5% of a $450M market, aiming for modest gains through power and advanced logic. -
Q1 Bottom Dynamics
Q: What signals a Q1 bottom?
A: They expect Q1 to be the low point, driven by seasonal declines and China digestion, with improvements driven by mix and recovering customer activity in later quarters. -
Tech Investments
Q: What tech upgrades are underway?
A: They are investing in product upgrade innovations and higher energy tools, ensuring their equipment remains competitive across mature and advanced applications. -
Cost Outlook
Q: How are SG&A and R&D trending?
A: Both SG&A and R&D are expected to be flat to slightly higher in Q1 as part of disciplined investments supporting future growth. -
Backlog Duration
Q: Is backlog duration extending?
A: Yes, some orders have been pushed out, extending a portion of the backlog into early 2026. -
Automotive Exposure
Q: Where does auto exposure come from?
A: For silicon carbide, the majority of automotive applications are driven by global customers, with Chinese players largely not yet qualified. -
End Market Exposure
Q: How split auto versus industrial?
A: They do not track discrete auto versus industrial splits, instead using general silicon IGBT and SiC utilization data without specific numbers. -
SiC Geography
Q: Will SiC improve outside China?
A: Yes, despite China’s digestion, management expects non-China markets to remain resilient, supporting overall SiC performance.
Research analysts covering AXCELIS TECHNOLOGIES.