AXT, Inc. Announces First Quarter 2024 Financial Results

Revenue Grows 11% Quarter to Quarter; Indium Phosphide up 48%

FREMONT, Calif., May 02, 2024 (GLOBE NEWSWIRE) -- AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor wafer substrates, today reported financial results for the first quarter, ended March 31, 2024.

Management Qualitative Comments

“We are pleased with our first quarter results,” said Morris Young, chief executive officer. “We exceeded our Q1 revenue and profitability guidance, delivering 11 percent sequential growth in our revenues and 54 percent sequential improvement in our non-GAAP net income. Across our product lines, new catalysts, such as artificial intelligence, are providing exciting incremental opportunities for advanced compound semiconductor materials. We understand from our customers that our indium phosphide substrates are currently being utilized for high-speed optical components for artificial intelligence interconnects and we are working closely with a number of customers building next-generation lasers for use in data center transceivers. As we look ahead, we remain steadfastly focused on business efficiency and accelerating our return to profitability.”

First Quarter 2024 Results

• Revenue for the first quarter of 2024 was $22.7 million, compared with $20.4 million for the fourth quarter of 2023 and $19.4 million for the first quarter of 2023.
  
• GAAP gross margin was 26.9 percent of revenue for the first quarter of 2024, compared with 22.6 percent of revenue for the fourth quarter of 2023 and 26.3 percent for the first quarter of 2023.
  
• Non-GAAP gross margin, after excluding charges for stock-based compensation, was 27.3 percent of revenue for the first quarter of 2024, compared with 23.2 percent of revenue for the fourth quarter of 2023 and 26.9 percent for the first quarter of 2023.
  
• GAAP operating expenses were $9.4 million for the first quarter of 2024, compared with $8.2 million for the fourth quarter of 2023 and $9.5 million for the first quarter of 2023.
  
• Non-GAAP operating expenses were $8.7 million for the first quarter of 2024, compared with $7.5 million for the fourth quarter of 2023 and $8.7 million for the first quarter of 2023.
  
• GAAP operating loss for the first quarter of 2024 was an operating loss of ($3.3) million, compared with an operating loss of ($3.6) million for the fourth quarter of 2023 and an operating loss of ($4.4) million for the first quarter of 2023.
  
• Non-GAAP operating loss for the first quarter of 2024 was an operating loss of ($2.5) million, compared with an operating loss of ($2.7) million for the fourth quarter of 2023 and an operating loss of ($3.5) million for the first quarter of 2023.
  
• Non-operating income and expense, taxes and minority interest for the first quarter of 2024 was a net gain of $1.3 million, compared with a net loss of ($0.1) million in the fourth quarter of 2023 and a net gain of $1.1 million for the first quarter of 2023.
  
• GAAP net loss, after minority interests, for the first quarter of 2024 was a net loss of ($2.1) million, or ($0.05) per share, compared with a net loss of ($3.6) million or ($0.09) per share for the fourth quarter of 2023 and a net loss of ($3.3) million or ($0.08) per share for the first quarter of 2023.
  
• Non-GAAP net loss in the first quarter of 2024 was a net loss of ($1.3) million, or ($0.03) per share, compared with a net loss of ($2.8) million or ($0.07) per share in the fourth quarter of 2023 and a net loss of ($2.4) million or ($0.06) per share for the first 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 May 16, 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.

FINANCIAL TABLES TO FOLLOW

Contacts: Gary Fischer Chief Financial Officer (510) 438-4700 Leslie Green Green Communications Consulting, LLC (650) 312-9060