Axcelis Technologies Q4 Earnings Call Highlights

Key Points

• Q4 beat expectations: Axcelis reported revenue of $238 million and non-GAAP EPS of $1.49, with record CS&I aftermarket revenue of $82 million driving strong gross margins (GAAP 47%, non-GAAP 47.3%).
• Bookings and China mix shift: Bookings improved to $128 million and backlog ended at $457 million, while China’s revenue share dropped to 32% from 46% as customers digested prior mature-node investments.
• Near-term step-down but flat 2026 view: Q1 revenue is guided to about $195 million with non-GAAP gross margin near 41% and EPS ~$0.71; management expects 2026 revenue to be roughly flat and second-half weighted, and shareholders have approved the pending Veeco merger pending final China approval for an expected H2 2026 close.

Axcelis Technologies NASDAQ: ACLS reported fourth-quarter and full-year 2025 results that topped its own outlook, citing stronger-than-expected aftermarket performance and an improving bookings trend. Management also provided initial thoughts for 2026, with a view that total revenue will be roughly flat versus 2025 as strength in memory offsets softer demand in power and general mature markets.

Fourth-quarter results beat outlook on stronger aftermarket mix

For the fourth quarter, Axcelis posted revenue of $238 million and non-GAAP earnings per diluted share of $1.49, both above the company’s expectations. CEO Russell Low said the outperformance was “primarily driven by stronger CS&I aftermarket revenue,” which also benefited gross margin due to mix.

CFO Jamie Coogan added that fourth-quarter systems revenue was $156 million, while Customer Support & International (CS&I) revenue reached a quarterly record of $82 million. The company attributed the CS&I strength to demand for upgrades as customers seek to optimize technology “within the same footprint,” along with some pull-in activity tied to improving utilization rates.

Axcelis reported GAAP gross margin of 47% and non-GAAP gross margin of 47.3%, above its outlook, driven by a higher mix of CS&I and a favorable mix of upgrades. Non-GAAP operating expenses were $62 million, above outlook due largely to higher variable compensation associated with better-than-expected performance. GAAP EPS was $1.10 and non-GAAP EPS was $1.49.

Bookings and backlog improve; China mix declined sequentially

Low said bookings improved significantly sequentially in the fourth quarter, led by power, general mature, and memory (specifically DRAM). Coogan quantified bookings at $128 million and said the company ended the quarter with a backlog of $457 million.

Geographically, China represented 32% of fourth-quarter revenue, down from 46% in the prior quarter, which management said was expected as customers digested heavy prior investments in mature-node capacity. Other fourth-quarter regional contributions were Europe (15%), U.S. (14%), Korea (13%), Japan (9%), Taiwan (3%), and rest of world (13%). For full-year 2025, China accounted for 42% of revenue.

End-market commentary: memory improving, SiC near-term muted, NAND still soft

In power, Low said shipments to silicon carbide moderated slightly sequentially as customers maintained a disciplined approach to capacity investment following a major buildout. He highlighted a driver of fourth-quarter CS&I strength: upgrades that converted tools from 150mm to 200mm at a customer site using the Purion Power Series Plus platform, while staying in the same footprint. On the installed base, Low said “only a very small part” has transitioned to 200mm, suggesting further upgrade opportunity remains.

Axcelis continues to see select silicon carbide expansion in China, while customers elsewhere focus on next-generation technologies such as Trench and Super Junction. Low said the company is seeing growing interest in newly developed high-energy channeling capabilities needed for Super Junction development. While near-term ion implant demand for silicon carbide is expected to remain muted as customers absorb capacity, management reiterated confidence in long-term demand driven by electrification trends and broader adoption of silicon carbide beyond automotive.

In general mature, revenue improved sequentially as customers made select investments, particularly in high-current tools. Low said customers are still managing capacity investments amid stabilizing auto and industrial demand, but Axcelis saw improved implant tool utilization across multiple customers in the fourth quarter. Management said it is encouraged by utilization trends but is not yet calling a recovery in capital spending.

Memory demand improved sequentially for DRAM and HBM, and management expects momentum to extend into 2026 as customers expand capacity for AI-related demand. Low also disclosed an order for a high-current system from a “leading North American memory manufacturer,” which he described as an important customer win that broadens the company’s presence beyond Korea. He noted the order arrived before completion of an existing evaluation, which the company views as a technology endorsement.

By contrast, management said NAND remains muted because higher layer counts do not drive incremental ion implantation demand, though recent improvements in NAND bit demand and pricing were described as encouraging.

Product, profitability, and cash flow highlights

Low said Axcelis introduced the Purion H6, a next-generation high-current ion implanter, citing technology advancements across multiple subsystems and “industry-leading dose repeatability,” aimed at tighter implant control, lower contamination, higher uptime, and lower cost of ownership. He also said the company delivered its strongest quarter of high-current shipments in two years.

For full-year 2025, Coogan reported GAAP gross margin of 44.9% and non-GAAP gross margin of 45.2%, up 30 basis points year over year despite lower revenue, driven by favorable mix and cost control. Adjusted EBITDA for the year was $177 million (21.1% margin), and GAAP EPS was $3.80 with non-GAAP EPS of $4.88.

Free cash flow was -$9 million in the fourth quarter due to December-weighted shipments that increased DSOs and about $5 million of cash transaction expenses related to the pending Veeco merger. For the full year, free cash flow was $107 million. Axcelis repurchased $25 million of shares in the quarter and $121 million for the year, ending with $110 million remaining under its authorization and $557 million in cash, equivalents, and marketable securities (including $182 million of long-term securities).

Outlook: Q1 step-down, 2026 revenue seen flat and second-half weighted

For the first quarter, Axcelis guided to revenue of approximately $195 million, with declines expected in both systems and CS&I. Coogan cited systems pushouts tied to cleanroom readiness, typical CS&I seasonality after a strong fourth quarter, the absence of a large customer upgrade that benefited Q4, and some CS&I activity pulled forward into Q4.

The company guided to non-GAAP gross margin of about 41% for Q1, reflecting less favorable mix, lower volume, a higher mix of memory systems (typically lower margin), lower CS&I revenue with fewer upgrades, and a modest tariff impact as higher-cost inventory cycles through. Non-GAAP operating expenses are expected to be about $59 million, with adjusted EBITDA around $26 million and non-GAAP EPS of approximately $0.71.

Looking to 2026, management reiterated expectations for total revenue to be relatively flat versus 2025 and second-half weighted, with memory growth (led by DRAM) offsetting declines in power and general mature. Coogan said the company estimates full-year 2026 non-GAAP gross margin in the low-to-mid 40% range, with less than 100 basis points of tariff impact expected for the year, and a tax rate of about 15%.

On the pending Veeco merger, management said both companies’ shareholders approved the transaction on Feb. 6 and that regulatory clearances have been received in several jurisdictions, with China cited as the final approval needed. The company said it continues to expect closing in the second half of 2026 and noted it would not address transaction-related questions on the call.

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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