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Introduction & Market Context
Axcelis Technologies Inc (NASDAQ:ACLS) released its first quarter 2025 earnings presentation on May 6, revealing a significant year-over-year revenue decline but sequential improvement in bookings. The semiconductor equipment manufacturer’s stock responded positively, trading up 5.87% in premarket activity to $55.15, suggesting investors found encouraging signals amid mixed results.
The company reported revenue of $193 million, down from $252.4 million in the same quarter last year, reflecting broader cyclical challenges in the semiconductor equipment market. However, management highlighted sequential bookings growth and strong performance in the Silicon Carbide (SiC) segment as bright spots in an otherwise challenging environment.
Quarterly Performance Highlights
Axcelis reported first quarter revenue of $193 million, with GAAP earnings per share of $0.88 and non-GAAP earnings per share of $1.04. While these figures represent a decline from the $252.4 million revenue and $1.57 GAAP EPS reported in Q1 2024, the company emphasized that results exceeded internal expectations.
As shown in the following financial highlights:
Bookings showed sequential improvement, rising 30% quarter-over-quarter to $110 million, though the book-to-bill ratio remained below parity at 0.8x. Systems revenue accounted for $137.6 million of total revenue, while the CS&I (Customer Service & Innovation) segment contributed $55 million.
The company maintained strong gross margins at 46.1%, slightly higher than the 46.0% reported in Q1 2024, demonstrating effective cost management despite lower revenue. Operating margin, however, declined to 15.1% from 22.4% a year ago, reflecting the impact of reduced sales volume.
Segment Performance Analysis
Axcelis’ revenue breakdown by segment reveals the growing importance of Silicon Carbide applications and the continued dominance of mature process technologies. The following chart illustrates the company’s shipped system revenue by segment:
Silicon Carbide applications now represent 37% of shipped system revenue, emerging as a critical growth driver for the company. General Mature technologies account for the largest share at 47%, while Memory contributes 14% and Silicon IGBT represents just 2% of system revenue.
The company noted that 86% of total system revenue comes from mature process technology nodes, with Power applications (including SiC) accounting for 39% of total system revenue. Management highlighted continued SiC investment in China and customers working on technology transitions, stating that the long-term demand profile for SiC remains intact despite broader market challenges.
In the Memory segment, which represented 14% of system revenue, Axcelis reported strong sequential growth in shipments to DRAM customers for capacity expansion. However, the company expects demand for ion implant solutions in this segment to remain muted for the balance of 2025.
Geographic Revenue Shift
One of the most notable developments in Axcelis’ Q1 results is the significant shift in geographic revenue distribution. The company has reduced its exposure to China while increasing its presence in the US and South Korean markets, as detailed in the following revenue breakdown:
China’s contribution to systems revenue decreased to 37% in Q1 2025, down from 59% in Q1 2024 and 49% in Q4 2024. Simultaneously, US revenue increased to 23% from 17% a year ago, while South Korea grew to 20% from just 4% in Q1 2024. This geographic diversification may help insulate the company from geopolitical risks and trade tensions affecting the semiconductor industry.
The detailed financial comparison between Q1 2025 and Q1 2024 provides further insight into the company’s performance:
Forward Guidance
Looking ahead, Axcelis provided guidance for the second quarter of 2025 and commentary on full-year expectations. The company projects Q2 2025 revenue of approximately $185 million, with non-GAAP gross margin of around 42% and non-GAAP earnings per share of approximately $0.73.
For the full year, management expects second-half 2025 revenue to be relatively consistent with first-half levels, suggesting limited growth prospects for the remainder of the year. The company also anticipates that gross margins will remain similar to Q2 levels, inclusive of the anticipated impact of tariffs.
Financial Position
Despite revenue challenges, Axcelis maintains a strong financial position with substantial cash reserves and positive free cash flow. The company reported $587.1 million in cash, cash equivalents, and short-term investments at the end of Q1 2025, up from $530.2 million a year ago.
Cash from operations totaled $39.8 million for the quarter, while free cash flow reached $34.8 million after $5 million in capital expenditures. The company continued its share repurchase program, buying back $18.2 million worth of shares during the quarter.
In conclusion, Axcelis’ Q1 2025 results present a mixed picture of year-over-year revenue decline but sequential improvement in bookings and continued strength in the Silicon Carbide segment. The company’s strategic shift away from China dependence and strong financial position provide some stability amid challenging market conditions. However, management’s cautious outlook for the remainder of 2025 suggests that a significant recovery may still be several quarters away.
Full presentation:
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