Axcelis Technologies (ACLS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $257 million, exceeding expectations, with diluted EPS of $1.55, driven by strong demand for silicon carbide in the Power segment and robust evaluation unit conversions.

• Net income for Q2 2024 was $50.9 million, down from $61.6 million in Q2 2023, while gross margin improved to 43.9% from 43.7% last year.

• Power segment, especially silicon carbide, remains the primary growth driver, with mature segment accounting for 98% of system revenue; demand for silicon IGBT was soft as expected.

• Advanced logic saw new evaluation and production orders, while memory segment had no system revenue but is expected to recover as DRAM demand for AI applications increases.

• Management anticipates continued momentum into H2 2024 and 2025, with possible moderation in general mature segment revenue depending on macroeconomic factors.

Financial highlights

• Q2 2024 revenue was $256.5 million, with system revenue at $199 million and CS&I at $58 million, surpassing the $245 million outlook.

• Gross margin was 43.8%–43.9%, slightly above outlook; operating profit was $52.8 million, with a 20.6% operating margin.

• Diluted EPS was $1.55, above guidance; free cash flow was $38 million; cash and equivalents totaled $548 million at quarter end.

• System bookings were $105 million, with a systems backlog of approximately $1 billion; China represented 55% of total system sales.

• Share repurchases totaled $15 million in Q2 2024.

Outlook and guidance

• Q3 2024 revenue expected to be flat with Q2 at ~$255 million; Q4 revenue anticipated to be slightly higher.

• Q3 gross margin projected at 43.5%, operating expenses at ~$60 million, and EPS at ~$1.43; tax rate expected at 15% for the remainder of the year.

• Full-year revenue expected to be slightly higher in H2 than H1, with momentum building into 2025; long-term model targets $1.6 billion revenue by 2027.

• DRAM customer capacity additions expected as 2024 ends and into 2025; NAND spending is expected to pick up in 2025.