Skip to content
    ACLS
    Earnings call· Mar 2026(Q1 FY26)

    AXCELIS TECHNOLOGIES Q1 FY26 earnings call ACLS

    May 7, 2026 Source

    Executive summary

    Axcelis Technologies Q1 FY26 — Strong Memory Demand and CS&I Growth

    Axcelis Technologies delivered Q1 FY26 results slightly above expectations, driven by robust performance in its CS&I business and a significant uptick in memory market shipments. While general mature and power markets continue to experience digestion, the company sees encouraging demand signals in silicon carbide and memory, setting the stage for a return to growth in 2027. The pending merger with Veeco is progressing, with regulatory approval in China remaining.

    Highlights

    5

    • Revenue of $199 million, slightly above expectations.

    • CS&I revenue grew more than 30% year-over-year.

    • System shipments to the memory market saw a strong sequential increase, reaching the highest level since Q4 2023.

    • Bookings showed a second consecutive quarter of year-over-year growth on a trailing 12-month basis, driven by memory and silicon carbide demand.

    • Maintained a strong balance sheet with $570 million in cash, cash equivalents, and marketable securities.

    Concerns

    5

    • A one-time customer settlement resulted in a $5 million headwind to system revenue, 70 bps to gross margin, and $0.09 per share to EPS.

    • CS&I revenue moderated on a sequential basis.

    • Bookings in the general mature market were softer.

    • Continued digestion of capacity in general mature and power markets is expected to offset memory strength in FY26.

    • Other income was lower sequentially due to lower interest income and foreign exchange-related losses.

    Guidance & targets

    9
    CategoryTargetConfidence
    Q2 FY26 Revenue
    approximately $205 million
    high materiality
    High
    Q2 FY26 Gross Margin
    approximately 43%
    medium materiality
    High
    Q2 FY26 Operating Expenses
    approximately $59 million
    medium materiality
    High
    Q2 FY26 Adjusted EBITDA
    approximately $34 million
    medium materiality
    High
    Q2 FY26 Net Earnings Per Diluted Share
    approximately $0.90
    high materiality
    High
    Full Year 2026 Revenue
    approximately flat
    high materiality
    Medium
    Full Year 2026 Gross Margins
    low- to mid-40% range
    medium materiality
    Medium
    Full Year 2026 Operating Expenses
    approximately $60 million per quarter
    medium materiality
    High
    Full Year 2026 Tax Rate
    approximately 15%
    low materiality
    High

    Segment performance

    11
    SegmentRevenueYoYQoQMargin
    Systems
    System revenue for Q1 FY26, impacted by a $5 million customer settlement.
    		$126 million———
    CS&I
    CS&I revenue exceeded expectations, driven by service, consumables, and system upgrades, despite sequential moderation.
    		$73 million>30%moderated sequentially—
    China
    Revenue share by geography, showing sequential increase.
    		40%—up from 32%—
    Korea
    Second largest revenue-generating region in Q1, driven by higher memory sales.
    		28%———
    Europe
    Revenue share by geography.
    		16%———
    United States
    Revenue share by geography.
    		12%———
    Taiwan
    Revenue share by geography.
    		1%———
    Japan
    Revenue share by geography.
    		1%———
    Rest of World
    Revenue share by geography.
    		2%———
    General Mature
    Customers continue to manage capacity, with stabilizing auto and recovering industrial volumes. Growing demand from AI data centers noted. Expected to be down in FY26 but with momentum into 2027.
    Spares and consumables: improvedTool utilization rates: higher
    		—down year-over-year (expected FY26)——
    Memory
    Revenue and bookings increased meaningfully in Q1, driven by strong demand in DRAM and HBM. Expected strong growth for full year 2026 with momentum into 2027.
    		increased meaningfullystrong growth (expected FY26)increased meaningfully—

    Operational metrics

    14
    Non-GAAP EPS
    $0.72
    Q1 FY26

    Earnings per diluted share, slightly above expectations, includes a $0.09 headwind from customer settlement.

    Non-GAAP Gross Margin
    40.7%slightly below 41% outlook
    Q1 FY26

    Came in slightly below outlook primarily due to a 70 bps impact from customer settlement.

    Non-GAAP Operating Margin
    11.7%
    Q1 FY26

    Calculated from Q1 operating income and revenue.

    Adjusted EBITDA
    $27.7 million
    Q1 FY26

    Reflecting an adjusted EBITDA margin of 13.9%.

    Adjusted EBITDA Margin
    13.9%
    Q1 FY26

    Calculated from Q1 adjusted EBITDA.

    Cash and Investments Balance
    $570 million
    end of Q1 FY26

    Consists of cash, cash equivalents, and marketable securities, including $203 million of long-term securities.

    Long-Term Securities
    $203 million
    end of Q1 FY26

    Portion of cash, cash equivalents, and marketable securities.

    Cash Transaction Expenses
    $12 million
    Q1 FY26

    Associated with the pending Veeco merger, impacting free cash flow.

    Tax Rate
    14%
    Q1 FY26

    Relatively in line with expectations.

    Other Income
    $2.7 millionlower on a sequential basis
    Q1 FY26

    Lower due to lower interest income and foreign exchange-related losses.

    System Revenue Headwind
    $5 million
    Q1 FY26

    One-time impact associated with a customer settlement.

    Gross Margin Headwind
    70 bps
    Q1 FY26

    One-time impact associated with a customer settlement.

    EPS Headwind
    $0.09
    Q1 FY26

    One-time impact associated with a customer settlement.

    Operating Expenses
    $57.7 millionslightly below $59 million outlook
    Q1 FY26

    Operating expenses for the quarter.

    Industry KPIs

    7
    MetricValueDetails
    Backlog order book$453 millionUSD
    Book to bill ratio~1.0
    Fab capacity utilizationrising
    Bookings net order intake$128 millionUSD
    Design wins socket pipeline1win
    Node platform ramp schedule2-nanometer production
    End market segment revenue mixChina: 40%, Korea: 28%, Europe: 16%, United States: 12%, Taiwan: 1%, Japan: 1%, Rest of World: 2%%

    Orderbook & backlog

    1
    Backlog$453 millionend of Q1 FY26

    Product announcements

    1
    ProductTypeDetails
    Purion H6launch

    Deals & partnerships

    1
    VeecoPending merger to combine the two companies.

    The only remaining approval is from the State Administration for Market Regulation in China.

    Risks & headwinds

    4
    Customer settlement impactQ1 FY26

    $5 million headwind to system revenue, 70 bps to gross margin, $0.09 per share to EPS in Q1 FY26

    Mitigation: Described as a one-time impact.

    Digestion in general mature and power marketsFY26

    Expected to offset memory strength, leading to approximately flat FY26 revenue year-over-year.

    Mitigation: Improving trends across multiple markets are setting the stage for a return to growth in 2027; encouraging demand signals in silicon carbide and rising utilization rates in general mature.

    Lower other incomeQ1 FY26

    $2.7 million in Q1 FY26, lower sequentially

    Mitigation: Primarily due to lower interest income and foreign exchange-related losses, implying market-driven factors.

    Regulatory approval for Veeco mergerExpected to close in H2 2026

    Awaiting approval from China's State Administration for Market Regulation.

    Mitigation: Working closely with the state administration to obtain regulatory approval.

    What to watch in Q2 FY26

    5

    Silicon carbide demand recovery

    H2 FY26
    CurrentModerated sequentially in Q1, but encouraging demand signals emerging.
    TargetImprovement in silicon carbide revenue in H2 FY26.

    Why it matters

    Recovery in silicon carbide is a key driver for full-year revenue and momentum into 2027.

    From a market segment perspective, our memory market is on track for strong growth in 2026, offset by a continued digestion of capacity in general mature and power, albeit with some encouraging signs in silicon carbide.

    Q&A highlights

    5

    Inquiring about implant opportunities in GaN and InP, especially for data center silicon photonics, and if these are primarily Veeco's product lines post-merger.

    Russell Low explained that while there are minor GaN implants, the main opportunity in silicon photonics for data centers is in modulation units for optical transmission, which require isolation implants. He confirmed that the MOCVD and thin film capabilities for optical components are primarily within Veeco's product line.

    “But to put the data to encode the laser with the data, that requires a modulation unit. And that modulation unit is a silicon unit, and that does require implantation.”

    asked by Jonathan Dorsheimer · answered by Russell Low

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Overview

    Axcelis reported Q1 FY26 revenue of $199 million and earnings per diluted share of $0.72, slightly exceeding expectations. These results include a one-time📎 $5 million customer settlement impact. CS&I revenue demonstrated strong year-over-year growth of over 30%, while system shipments to the memory market saw a significant sequential increase, reaching the highest level since Q4 2023.

    02

    Market Segment Trends and Demand Signals

    The company observed encouraging demand signals in silicon carbide, with increased customer engagement on capacity plans and technology roadmaps, particularly for 200mm wafers and AI data center applications. Memory market revenue and bookings increased meaningfully, driven by strong demand in DRAM and high-bandwidth memory. General mature and other power markets remained muted, though rising tool utilization rates were noted in general mature.

    03

    Product Innovation and Advanced Logic Progress

    Axcelis introduced its next-generation high current product, Purion H6, in Q1 and secured a high current win with a new customer in China. While no system revenue was generated in advanced logic in Q1, a system was shipped early in Q2 for a 2-nanometer production material modification application, indicating active engagement on next-generation technology roadmaps.

    04

    Financial Highlights and Balance Sheet Strength

    Gross margin for Q1 was 40.7%, impacted by the customer settlement. Operating expenses were $57.7 million, leading to an operating margin of 11.7% and adjusted EBITDA of $27.7 million (13.9% margin). The company maintains a strong balance sheet with $570 million in cash, cash equivalents, and marketable securities, including $203 million in long-term securities.

    05

    Veeco Merger Update

    The pending merger with Veeco is anticipated to close in the second half of 2026. The only remaining regulatory approval required is from China's State Administration for Market Regulation, with Axcelis working closely with the agency. Management expressed continued excitement about the opportunity to combine the two companies and drive long-term value creation.

    06

    Outlook for 2026 and 2027 Growth

    Axcelis expects full-year 2026 revenue to be approximately flat year-over-year, with improving trends across multiple markets, particularly memory and silicon carbide, setting the stage for a return to growth in 2027. Q2 revenue is guided to $205 million with an anticipated gross margin of 43%, reflecting a more favorable mix and the absence of Q1's nonrecurring items.

    AI-generated summary of the company’s earnings call. Not investment advice.