Revenue up 23 percent sequentially and up 50
percent from Q2 2023
AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound
semiconductor wafer substrates, today reported financial results
for the second quarter, ended June 30, 2024.
Management Qualitative Comments
“Q2 was another solid quarter of growth, with our revenues up 23
percent sequentially and more than 50 percent year over year,” said
Morris Young, chief executive officer. “We are encouraged by the
signs of adoption in new applications, such as AI where we expect
that indium phosphide will be required in optical transceivers for
high-speed data transmission. These applications span longer
distances, such as from rack to rack, rack to aggregation point and
between cloud and edge data centers. Across the rest of our
portfolio of products, the signs of market recovery are tangible,
and though we expect some lumpiness quarter to quarter as our end
markets come back to normalized seasonality, we are executing well
on behalf of our customers and have laid important groundwork for
growth within this highly dynamic technology landscape.”
Second Quarter 2024 Results
- Revenue for the second quarter of 2024 was $27.9 million,
compared with $22.7 million for the first quarter of 2024 and $18.6
million for the second quarter of 2023.
- GAAP gross margin was 27.4 percent of revenue for the second
quarter of 2024, compared with 26.9 percent of revenue for the
first quarter of 2024 and 9.2 percent for the second quarter of
2023.
- Non-GAAP gross margin, after excluding charges for stock-based
compensation, was 27.6 percent of revenue for the second quarter of
2024, compared with 27.3 percent of revenue for the first quarter
of 2024 and 9.8 percent for the second quarter of 2023.
- GAAP operating expenses were $9.5 million for the second
quarter of 2024, compared with $9.4 million for the first quarter
of 2024 and $8.6 million for the second quarter of 2023.
- Non-GAAP operating expenses were $8.9 million for the second
quarter of 2024, compared with $8.7 million for the first quarter
of 2024 and $7.8 million for the second quarter of 2023.
- GAAP operating loss for the second quarter of 2024 was an
operating loss of ($1.9) million, compared with an operating loss
of ($3.3) million for the first quarter of 2024 and an operating
loss of ($6.8) million for the second quarter of 2023.
- Non-GAAP operating loss for the second quarter of 2024 was an
operating loss of ($1.2) million, compared with an operating loss
of ($2.5) million for the first quarter of 2024 and an operating
loss of ($5.9) million for the second quarter of 2023.
- Non-operating income and expense, taxes and minority interest
for the second quarter of 2024 was a net gain of $0.4 million,
compared with a net gain of $1.3 million in the first quarter of
2024 and a net gain of $1.8 million for the second quarter of
2023.
- GAAP net loss, after minority interests, for the second quarter
of 2024 was a net loss of ($1.5) million, or ($0.04) per share,
compared with a net loss of ($2.1) million, or ($0.05) per share,
for the first quarter of 2024 and a net loss of ($5.1) million, or
($0.12) per share, for the second quarter of 2023.
- Non-GAAP net loss for the second quarter of 2024 was a net loss
of ($0.8) million, or ($0.02) per share, compared with a net loss
of ($1.3) million, or ($0.03) per share, for the first quarter of
2024 and a net loss of ($4.2) million, or ($0.10) per share, for
the second quarter of 2023.
STAR Market Listing Update
On January 10, 2022, AXT announced that Beijing Tongmei Xtal
Technology Co., Ltd. (“Tongmei”), its subsidiary in Beijing, China,
submitted to the Shanghai Stock Exchange (the “SSE”) its
application to list its shares in an initial public offering (the
“IPO”) on the SSE’s Sci-Tech innovAtion boaRd (the “STAR Market”)
and the application was accepted for review. Subsequently, Tongmei
responded to several rounds of questions received from the SSE. On
July 12, 2022, the SSE approved the listing of Tongmei’s shares in
an IPO on the STAR Market. On August 1, 2022, the China Securities
Regulatory Commission (the “CSRC”) accepted for review Tongmei’s
IPO application. The STAR Market IPO remains subject to review and
approval by the CSRC and other authorities. The process of going
public on the STAR Market includes several periods of review and,
therefore, is a lengthy process. Subject to review and approval by
the CSRC and other authorities, Tongmei hopes to accomplish this
goal in the coming months. AXT has posted a brief summary of the
plan and the process on its website at http://www.axt.com.
Conference Call
The company will host a conference call to discuss these results
today at 1:30 p.m. PT. The conference call can be accessed at (800)
715-9871 (passcode 4378083). The call will also be simulcast at
www.axt.com. Replays will be available at (800) 770-2030 (passcode
4378083) until August 15, 2024. Financial and statistical
information to be discussed in the call will be available on the
company’s website immediately prior to commencement of the call.
Additional investor information can be accessed at
http://www.axt.com or by calling the company’s Investor Relations
Department at (510) 438-4700.
About AXT, Inc.
AXT is a material science company that develops and manufactures
high-performance compound and single element semiconductor
substrate wafers comprising indium phosphide (InP), gallium
arsenide (GaAs) and germanium (Ge). The company’s wafer substrates
are used when a typical silicon wafer substrate cannot meet the
performance requirements of a semiconductor or optoelectronic
device. End markets include 5G infrastructure, data center
connectivity (silicon photonics), passive optical networks, LED
lighting, lasers, sensors, power amplifiers for wireless devices
and satellite solar cells. AXT’s worldwide headquarters are in
Fremont, California where the company maintains sales,
administration and customer service functions. AXT has its Asia
headquarters in Beijing, China and manufacturing facilities in
three separate locations in China. In addition, as part of its
supply chain strategy, the company has partial ownership in more
than ten companies in China producing raw materials and consumables
for its manufacturing process. For more information, see AXT’s
website at http://www.axt.com.
Safe Harbor Statement
The foregoing paragraphs contain forward-looking statements
within the meaning of the Federal securities laws, including, for
example, statements regarding the timing and completion of the
proposed listing of shares of Tongmei on the STAR Market.
Additional examples of forward-looking statements include
statements regarding the market demand for our products, our
product mix, our growth prospects and opportunities for continued
business expansion, including technology trends, new applications
and the ramping of Tier-1 customers, our market opportunity, our
ability to lead our industry, our relocation, our expectations with
respect to our business prospects and financial results, including
our gross margin performance, and our development of larger
diameter substrates that we believe will enable the next generation
of technology innovation across a number of end-markets. These
forward-looking statements are based upon assumptions that are
subject to uncertainties and factors relating to the company’s
operations and business environment, which could cause actual
results to differ materially from those expressed or implied in the
forward-looking statements contained in the foregoing discussion.
These uncertainties and factors include but are not limited to: the
requests for redemptions by private equity funds in China of
investments in Tongmei, the administrative challenges in satisfying
the requirements of various government agencies in China in
connection with the listing of shares of Tongmei on the STAR
Market, continued open access to companies to list shares on the
STAR Market, investor enthusiasm for new listings of shares on the
STAR Market and geopolitical tensions between China and the United
States. Additional uncertainties and factors include, but are not
limited to: the timing and receipt of significant orders; the
cancellation of orders and return of product; emerging applications
using chips or devices fabricated on our substrates; end-user
acceptance of products containing chips or devices fabricated on
our substrates; our ability to bring new products to market;
product announcements by our competitors; the ability to control
costs and improve efficiency; the ability to utilize our
manufacturing capacity; product yields and their impact on gross
margins; the relocation of manufacturing lines and ramping of
production; possible factory shutdowns as a result of air pollution
in China or COVID-19; COVID-19 or other outbreaks of a contagious
disease; tariffs and other trade war issues; the financial
performance of our partially owned supply chain companies; policies
and regulations in China; and other factors as set forth in the
company’s Annual Report on Form 10-K, quarterly reports on Form
10-Q and other filings made with the Securities and Exchange
Commission. Each of these factors is difficult to predict and many
are beyond the company’s control. The company does not undertake
any obligation to update any forward-looking statement, as a result
of new information, future events or otherwise.
AXT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited, in thousands,
except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Revenue
$
27,923
$
18,595
$
50,611
$
38,000
Cost of revenue
20,271
16,880
36,865
31,175
Gross profit
7,652
1,715
13,746
6,825
Operating expenses:
Selling, general and administrative
5,779
5,820
12,006
11,772
Research and development
3,758
2,740
6,972
6,335
Total operating expenses
9,537
8,560
18,978
18,107
Loss from operations
(1,885
)
(6,845
)
(5,232
)
(11,282
)
Interest expense, net
(282
)
(365
)
(631
)
(762
)
Equity in income of unconsolidated joint
ventures
598
941
1,488
1,975
Other income, net
491
777
1,523
1,059
Loss before provision (benefit) for income
taxes
(1,078
)
(5,492
)
(2,852
)
(9,010
)
Provision (benefit ) for income taxes
121
(139
)
395
9
Net loss
(1,199
)
(5,353
)
(3,247
)
(9,019
)
Less: Net (income) loss attributable to
noncontrolling interests and redeemable noncontrolling
interests
(317
)
264
(352
)
582
Net loss attributable to AXT, Inc.
$
(1,516
)
$
(5,089
)
$
(3,599
)
$
(8,437
)
Net loss attributable to AXT, Inc. per
common share:
Basic
$
(0.04
)
$
(0.12
)
$
(0.09
)
$
(0.20
)
Diluted
$
(0.04
)
$
(0.12
)
$
(0.09
)
$
(0.20
)
Weighted-average number of common shares
outstanding:
Basic
43,092
42,586
43,039
42,542
Diluted
43,092
42,586
43,039
42,542
AXT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in
thousands)
June 30,
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
27,808
$
37,752
Restricted cash
13,789
12,362
Short-term investments
1,675
2,140
Accounts receivable, net
27,163
19,256
Inventories
85,774
86,503
Prepaid expenses and other current
assets
11,187
12,643
Total current assets
167,396
170,656
Property, plant and equipment, net
161,332
166,348
Operating lease right-of-use assets
2,531
2,799
Other assets
18,154
18,898
Total assets
$
349,413
$
358,701
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
11,655
$
9,617
Accrued liabilities
12,268
19,019
Short-term loans
50,724
52,921
Total current liabilities
74,647
81,557
Noncurrent operating lease liabilities
2,083
2,351
Other long-term liabilities
9,570
5,647
Total liabilities
86,300
89,555
Redeemable noncontrolling interests
39,761
41,663
Stockholders’ equity:
Preferred stock
3,532
3,532
Common stock
44
44
Additional paid-in capital
239,962
238,452
Accumulated deficit
(35,639
)
(32,040
)
Accumulated other comprehensive loss
(8,227
)
(5,999
)
Total AXT, Inc. stockholders’ equity
199,672
203,989
Noncontrolling interests
23,680
23,494
Total stockholders’ equity
223,352
227,483
Total liabilities, redeemable
noncontrolling interests and stockholders’ equity
$
349,413
$
358,701
AXT, INC.
Reconciliation of Statements
of Operations Under GAAP and Non-GAAP
(Unaudited, in
thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
GAAP gross profit
$
7,652
$
1,715
$
13,746
$
6,825
Stock-based compensation expense
68
103
173
208
Non-GAAP gross profit
$
7,720
$
1,818
$
13,919
$
7,033
GAAP operating expenses
$
9,537
$
8,560
$
18,978
$
18,107
Stock-based compensation expense
647
809
1,351
1,619
Non-GAAP operating expenses
$
8,890
$
7,751
$
17,627
$
16,488
GAAP loss from operations
$
(1,885
)
$
(6,845
)
$
(5,232
)
$
(11,282
)
Stock-based compensation expense
715
912
1,524
1,827
Non-GAAP loss from operations
$
(1,170
)
$
(5,933
)
$
(3,708
)
$
(9,455
)
GAAP net loss
$
(1,516
)
$
(5,089
)
$
(3,599
)
$
(8,437
)
Stock-based compensation expense
715
912
1,524
1,827
Non-GAAP net loss
$
(801
)
$
(4,177
)
$
(2,075
)
$
(6,610
)
GAAP net loss per diluted share
$
(0.04
)
$
(0.12
)
$
(0.09
)
$
(0.20
)
Stock-based compensation expense per
diluted share
$
0.02
$
0.02
$
0.04
$
0.04
Non-GAAP net loss per diluted share
$
(0.02
)
$
(0.10
)
$
(0.05
)
$
(0.16
)
Shares used to compute diluted net income
per share
43,092
42,586
43,039
42,542
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801051530/en/
Gary Fischer Chief Financial Officer (510) 438-4700
Leslie Green Green Communications Consulting, LLC (650)
312-9060
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