What drove the magnitude of sequential strength in the CS&I business? Was it increased utilization or better attach rates on Purion tools?

The strength in CS&I is due to a combination of increased utilization rates in memory, silicon carbide, and silicon power, a growing installed base, and the sale of valuable upgrades that help customers ramp production within existing constraints. “So clearly, we are seeing a pickup in utilization rates. So we're seeing memory has really high utilization rates. We're seeing silicon carbide and silicon power picking up in utilization rates. And we're starting to see the embers of a recovery in general mature.”

Where is the power strength coming from, especially given the order rate exceeding average levels? Is it still automotive-driven, or is there more data center influence?

Both silicon carbide and silicon power are recovering, with the second half expected to be stronger. Electric vehicles remain the primary driver for silicon carbide, particularly 800-volt systems. AI data centers are a growing opportunity as they move to 800-volt architectures, and industrial applications like transformers, motors, and solar also contribute. The trend is global, not just China. “I mean it was in digestion and now it's coming out the other side. I think it's fair to say electric vehicles are still the #1 driver of silicon carbide.”

Can you quantify how much of the installed base or silicon carbide capacity is going into data center applications versus electric vehicles?

The company does not have visibility into how customers use their tools for specific products. However, press releases from power companies indicating a focus on data centers can provide an indication of market trends. “So we don't know necessarily what products our customers are creating with the tools. So we -- obviously, that is their business.”

ACLS

Axcelis Technologies (ACLS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 6, 2026

Source: earnings call transcript

Executive summary

Axcelis Technologies Q2 FY26 — Strong Execution and Upgraded Full-Year Outlook

Axcelis Technologies reported a strong Q2 FY26, surpassing revenue and EPS expectations, driven by robust operational execution and favorable demand trends across key markets. The company upgraded its full-year 2026 revenue growth outlook to mid-single digits and anticipates continued growth into 2027, fueled by memory investments and power market recovery. Progress continues on the pending merger with Veeco, expected to close in the second half of 2026.

Highlights

Q2 FY26 revenue of $215 million exceeded expectations.
Q2 FY26 earnings per diluted share of $1.06 exceeded expectations.
CS&I business delivered a strong quarter, driving overall performance.
Bookings grew slightly, and book-to-bill neared 1 over the past 3 quarters, indicating market stability.
Full-year 2026 revenue growth now expected to be mid-single digits year-over-year, upgraded from prior flat outlook.

Concerns

Q2 FY26 gross margin of 42.7% was slightly below the outlook of 43% due to mix and higher service costs.
Q2 FY26 operating expenses of $60 million were slightly above the outlook of $59 million due to higher variable compensation and fringe costs.

Guidance & targets

Category	Target	Timeline	Confidence
Q3 FY26 Revenue	~$230 million high materiality	Q3 · FY26	High
Q3 FY26 Gross Margin	~43% medium materiality	Q3 · FY26	High
Q3 FY26 Operating Expenses	~$62 million medium materiality	Q3 · FY26	High
Q3 FY26 Adjusted EBITDA	~$41 million high materiality	Q3 · FY26	High
Q3 FY26 Tax Rate	~15% medium materiality	Q3 · FY26	High
Q3 FY26 Net Earnings Per Diluted Share	~$1.11 high materiality	Q3 · FY26	High
Q4 FY26 Revenue	increase sequentially high materiality	Q4 · FY26	High
Q4 FY26 Gross Margin	improve slightly medium materiality	Q4 · FY26	High
Q4 FY26 Operating Expenses	slightly higher medium materiality	Q4 · FY26	High
FY26 Revenue Growth	mid-single digits year-over-year high materiality	FY26	High
FY27 Revenue Growth	another year of revenue growth high materiality	FY27	High
Veeco Merger Close	H2 2026 high materiality	H2 FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Systems Revenue Driven by improvement in power and general mature markets, partially offset by expected moderation in memory due to timing of available fab space.	$132 million	—	sequential growth	—
CS&I Revenue Supported by a growing installed base, increased customer utilization, and continued expansion of aftermarket products and service offerings.	$83 million	—	strong quarter	—
China Increased from 40% in the prior quarter, representing the largest revenue-generating region.	46%	—	increased sequentially	—
Korea Second largest revenue-generating region.	26%	—	—	—
Europe Revenue contribution from Europe.	11%	—	—	—
United States Revenue contribution from the United States.	6%	—	—	—
Taiwan Revenue contribution from Taiwan.	2%	—	—	—
Japan Revenue contribution from Japan.	1%	—	—	—
Rest of World Remaining revenue contribution from other regions.	8%	—	—	—
Mature Node Applications Accounted for approximately 84% of system shipments.	84%	—	—	—
Memory and Advanced Logic Made up the balance of system sales.	balance	—	—	—

ACLS operating KPIs by quarter

ACLS operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Bookings	$128M Bookings were roughly flat on a sequential basis at $128 million but marked our second consecutive quarter of firming order rates. Source: earnings call transcript	$131M Bookings were $131 million, slightly higher sequentially, continuing the trend of improving order activity with a book-to-bill ratio of approximately 1x. Source: earnings call transcript	+2.3%
Backlog	$453M We exited the first quarter with a backlog of $453 million. Source: earnings call transcript	$452M We exited the quarter with total backlog of $452 million. Source: earnings call transcript	-0.2%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Bookings $131 million Q2 FY26

slightly higher sequentially

Driven by general mature and power.

Total backlog $452 million Q2 FY26 end

Product announcements

Product	Type	Timeline	Details
Purion XEmax	milestone	Q2 FY26
Purion H6 High Current platform	update	—

Deals & partnerships

Veeco Pending merger to create a stronger company with enhanced capabilities, broader growth opportunities and meaningful long-term value creation potential.

Progress continues on remaining requirements, including with the State Administration for Market Regulation in China.

Risks & headwinds

Memory sales lumpiness Q2 FY26, potentially throughout FY26

sequential decline in Q2 FY26

Mitigation:Customers focused on solving bottleneck issues in existing fabs until new cleanroom space comes online; strong year-over-year growth still expected for FY26 and FY27.

Gross margin slightly below outlook Q2 FY26

42.7% vs. 43% outlook

Mitigation:Attributed to mix within CS&I and higher-than-anticipated services costs, which can fluctuate. Q4 FY26 gross margin expected to improve slightly.

Operating expenses slightly above outlook Q2 FY26

$60 million vs. $59 million outlook

Mitigation:Primarily due to higher variable compensation associated with stronger performance and higher fringe costs. Q4 FY26 operating expenses expected to be slightly higher due to continued investment.

China regulatory approval for Veeco merger H2 2026

Remaining requirement for merger close

Mitigation:Company continues to make progress on remaining requirements for the merger.

What to watch in Q3 FY26

Memory system sales growth

Q3 FY26

Current lumpy in Q2 FY26, sequential decline from Q1

Target sequential growth

Why it matters

Memory is a key growth driver, and its trajectory indicates broader market recovery and customer investment in AI-driven DRAM/HBM.

Craig, I wanted to start off with a question on memory, understanding how the tenor of interaction with your more established customers and your newer customers has changed over the last 3 months. And as we look at near-term dynamics, which I think were indicated with memory up in the third quarter, are we at a point where we should expect memory system sales to grow sequentially? Or are we still in a period where there can be 2 steps forward and 1 step back?

Find out whether ACLS delivers this. Inve re-checks your case every morning.

Q&A highlights

Is the memory market now in a phase of sequential growth, or will it remain lumpy, and how does the tenor of customer interaction compare between established and newer customers?

Memory sales will likely remain lumpy in 2026 due to fab space availability, but 2026 is a significant improvement over 2025 for DRAM revenue, with momentum expected to continue into 2027 as new cleanrooms come online. The second half for memory will probably look similar to the first half.

“So I think we're going to see memory being slightly lumpy this year. Again, until the new cleanroom space comes online, I think the customers are mostly focused on solving bottleneck issues in their existing fabs.”

asked by Craig Ellis · answered by Russell Low

2 min read 6 chapters

Detailed narrative

Q2 Performance and Operational Execution

Axcelis delivered Q2 FY26 revenue of $215 million and earnings per diluted share of $1.06, both exceeding expectations. This performance reflects strong operational execution, capitalizing on favorable demand trends. Sequential growth in systems revenue was driven by improvements in the power and general mature markets, partially offset by expected moderation in memory due to fab space timing.

CS&I Business as a Key Driver

The Customer Support and Services (CS&I) business delivered a strong quarter, continuing to be an important driver of overall performance. Revenue growth in CS&I was supported by a growing installed base, increased customer utilization, and an expansion of aftermarket products and service offerings. This segment has been a deliberate multi-year strategic focus to drive growth and stability through market cycles.

Power Market Recovery and Drivers

The power market is showing signs of recovery, with bookings improving sequentially and exceeding average levels over the past two years. Key drivers for silicon carbide include increasing penetration in electric vehicles (especially 800-volt systems), broader adoption in AI data center power infrastructure, and expanding use in commercial industrial applications. The company also secured orders from two new customers in China for this market.

General Mature and Advanced Logic Trends

General mature sales improved sequentially, with signs of improving activity outside of China, supporting higher tool utilization rates. Customers in this segment are benefiting from demand for AI-related data center applications manufactured on 28nm and above process technologies. In advanced logic, Axcelis shipped a system early in Q2 and a follow-on system in Q3 for materials-modification applications supporting 2-nanometer production.

Memory Market Outlook and Expansion

Despite a sequential decline in Q2, memory customer engagement remains robust. Axcelis anticipates strong year-over-year growth in memory for 2026, with momentum extending into 2027 as customers accelerate cleanroom investments for DRAM and high-bandwidth memory (HBM) applications driven by AI. The company is also expanding its memory customer portfolio, including additional orders from a leading North American memory manufacturer.

Veeco Merger Update

Axcelis continues to make progress on the remaining requirements for the pending merger with Veeco, including regulatory approvals with the State Administration for Market Regulation in China. The transaction is still expected to close in the second half of 2026, with management expressing excitement about the potential for a stronger combined company.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.