Company Performance - AXT reported a quarterly loss of $0.15 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.13, and compared to a loss of $0.02 per share a year ago, indicating a significant decline [1] - The company posted revenues of $17.97 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.53%, but down from $27.92 million year-over-year [2] - AXT has surpassed consensus revenue estimates three times over the last four quarters, but has only exceeded consensus EPS estimates once in the same period [2] Stock Outlook - AXT shares have underperformed the market, losing about 2.3% since the beginning of the year, while the S&P 500 has gained 8.2% [3] - The current consensus EPS estimate for the coming quarter is -$0.09 on revenues of $23.78 million, and -$0.45 on revenues of $91.11 million for the current fiscal year [7] - The estimate revisions trend for AXT was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Electronics - Semiconductors industry, to which AXT belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $18 million, down from $19.4 million in Q1 2025 and $27.9 million in Q2 2024 [5] - Non-GAAP gross margin improved to 8.2% in Q2 2025 from a negative 6.1% in Q1 2025 and 27.6% in Q2 2024 [6] - Non-GAAP operating loss for Q2 2025 was $6.1 million, an improvement from a loss of $9.6 million in Q1 2025 and a loss of $1.2 million in Q2 2024 [7][9] - Cash and cash equivalents decreased by $3.1 million to $35.1 million as of June 30, 2025 [10] Business Line Data and Key Metrics Changes - Revenue breakdown for Q2 2025: Indium phosphide at $3.6 million, gallium arsenide at $6.2 million, and germanium substrates at $1.5 million [5] - Revenue from consolidated raw material joint ventures was $6.7 million in Q2 2025, a decline of approximately $1.6 million compared to Q1 2025 [21] Market Data and Key Metrics Changes - Revenue from Asia Pacific accounted for 90% of total revenue, while Europe contributed 9% and North America only 1% [5] - The China data center optical interconnect market is estimated to be around one-third of the global market, with most optical devices sourced from outside China [17] Company Strategy and Development Direction - The company plans to list its subsidiary, Tongmei, on the STAR Market in Shanghai, keeping its IPO application current despite geopolitical challenges [11] - AXT is focusing on improving gross margins and driving recovery in Q3, with expectations of sequential revenue growth to between $19 million and $21 million [24] Management's Comments on Operating Environment and Future Outlook - Management noted that export permit delays for gallium arsenide and indium phosphide have impacted revenue, but they expect improvements in permit processing in July [12][15] - The company anticipates a 30% or more growth in total indium phosphide revenue in Q3 due to increased demand in AI-related applications and data center connectivity [18] Other Important Information - The company has a backlog of over $10 million in customer orders for gallium arsenide and indium phosphide substrates [21] - Management emphasized the importance of low EPD material in high-speed interconnect devices, which is driving demand for indium phosphide [22] Q&A Session Summary Question: Concerns about potential share loss due to permitting delays - Management acknowledged the delays but expressed confidence in their healthy backlog and the growing market demand, indicating that the business remains strong long-term [29][30] Question: Resolution of yield issues with germanium arsenide - Management confirmed that yield issues have been resolved and they are taking a conservative approach to business opportunities with that customer [34][35] Question: Insights on market growth and backlog - Management noted that demand for optical interconnectivity is growing rapidly, and they expect to see an increase in orders once permits are received [41][44] Question: Reasons for slowed gallium arsenide export licenses - Management indicated that the slowdown is industry-wide and not specific to AXT, but they have seen improvements in permit approvals recently [50][52] Question: Advanced order making and inventory building by customers - Management stated that while customers are eager to place larger orders, they are not yet at the stage of building significant inventory due to ongoing permit issues [54][55]

[Form 8-K Current Report Filing](index=1&type=section&id=Form_8K_Current_Report_Filing) This report details AXT, Inc.'s Form 8-K filing, covering registrant information, preliminary Q2 2025 revenue, and regulatory disclosures [Registrant and Filing Details](index=1&type=section&id=Registrant_Filing_Details) This section identifies AXT, Inc. as the registrant, specifies the Form 8-K filing date, and lists its common stock trading on NASDAQ - Registrant: **AXT, INC.**[2](index=2&type=chunk) - Date of Report (Date of earliest event reported): **July 9, 2025**[2](index=2&type=chunk) Common Stock Listing | Title of each class | Trading Symbol | Name of each exchange on which registered | | :--- | :--- | :--- | | Common Stock, $0.001 par value | AXTI | The NASDAQ Stock Market LLC | [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) AXT, Inc. announced unaudited preliminary revenue results for the second quarter ended June 30, 2025, via a press release furnished as Exhibit 99.1 - AXT, Inc. issued a press release announcing certain unaudited preliminary revenue results for the second quarter ended June 30, 2025[5](index=5&type=chunk) - The press release, dated July 9, 2025, is furnished as Exhibit 99.1 and incorporated herein by reference[5](index=5&type=chunk) [Item 7.01 Regulation FD Disclosure](index=2&type=section&id=Item%207.01%20Regulation%20FD%20Disclosure) This item incorporates by reference the information disclosed under Item 2.02, ensuring public dissemination of preliminary financial results in compliance with Regulation FD - The information in Item 2.02 of this report is incorporated by reference into this Item 7.01[6](index=6&type=chunk) [Disclaimer on Information Status](index=2&type=section&id=Disclaimer_on_Information_Status) Information in Items 2.02 and 7.01, including Exhibit 99.1, is furnished, not filed, limiting liabilities and preventing automatic incorporation by reference - The information in Items 2.02 and 7.01, including Exhibit 99.1, is being 'furnished' and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934[7](index=7&type=chunk) - It shall not be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference[7](index=7&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This item lists the exhibits accompanying the Form 8-K filing, specifically Exhibit 99.1, the press release, and Exhibit 104, the Cover Page Interactive Data File Exhibits | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press release, dated July 9, 2025 | | 104 | Cover Page Interactive Data File (formatted as inline XBRL) | [Signatures](index=3&type=section&id=Signatures) The report was signed on July 9, 2025, by Gary L. Fischer, Chief Financial Officer and Corporate Secretary of AXT, Inc., in compliance with regulatory requirements - The report was signed on behalf of **AXT, INC.** by **Gary L. Fischer**[12](index=12&type=chunk)[13](index=13&type=chunk) - **Gary L. Fischer** holds the titles of Chief Financial Officer and Corporate Secretary[13](index=13&type=chunk) - Date of signature: **July 9, 2025**[13](index=13&type=chunk)

Company Overview - AXT (AXTI) is expected to report a year-over-year decline in earnings due to lower revenues for the quarter ended June 2025, with a consensus estimate indicating a quarterly loss of $0.13 per share, representing a -550% change from the previous year [1][3] - Revenues are projected to be $19.96 million, down 28.5% from the same quarter last year [3] Earnings Expectations - The consensus EPS estimate has been revised 3.13% lower in the last 30 days, reflecting a reassessment by analysts [4] - AXT's Earnings ESP (Expected Surprise Prediction) is currently at 0%, indicating no recent differing analyst views from the consensus estimate [12] Historical Performance - In the last reported quarter, AXT was expected to post a loss of $0.13 per share but actually reported a loss of -$0.19, resulting in a surprise of -46.15% [13] - Over the last four quarters, AXT has beaten consensus EPS estimates two times [14] Industry Context - Another player in the semiconductor industry, Impinj (PI), is expected to report earnings of $0.71 per share for the same quarter, reflecting a year-over-year change of -14.5% [18] - Impinj's revenues are expected to be $93.97 million, down 8.3% from the previous year [18] - Impinj's consensus EPS estimate has been revised down 100% in the last 30 days, and it currently has an Earnings ESP of -0.94% combined with a Zacks Rank of 4 (Sell), making it difficult to predict an earnings beat [19]

Group 1 - AXT Inc (AXTI) has reached a key level of support, with its 50-day simple moving average crossing above its 200-day simple moving average, indicating a "golden cross" which is a bullish signal for potential breakout [1] - The golden cross consists of three stages: a downtrend that bottoms out, the shorter moving average crossing above the longer moving average, and the stock continuing to rise [2] - AXTI shares have increased by 24.7% over the past four weeks, and the company holds a 3 (Hold) rating on the Zacks Rank, suggesting a potential breakout [3] Group 2 - The positive earnings outlook for AXTI is supported by no earnings estimate cuts and one revision higher in the past 60 days, with the Zacks Consensus Estimate also increasing [3] - The combination of earnings estimate revisions and the technical level achieved makes AXTI a stock to watch for potential gains in the near future [4]

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Company Overview - AXT was founded in 1986 and had its IPO in 1998[4] - The company operates in three locations in China: Beijing, Kazuo, and Dingxing[4] Products and Markets - Indium Phosphide (InP) is a growth engine, with expanding applications and a long product life cycle[6] - Gallium Arsenide (GaAs) has a long product life cycle with new applications, and AXT supplied first 8-inch GaAs wafers in April 2021[14] - Germanium (Ge) is primarily used in satellite solar cells, and the satellite solar cell market is increasing[22, 25] Financial Performance - In 2023, AXT's revenue was $75.8 million[29] - In 2022, AXT's revenue was $141.1 million[29] - In 2023, the Non-GAAP Gross Margin was 18.1%[29] - In 2023, the Non-GAAP Net Profit/(Loss) was ($14.3) million[29] Tongmei STAR Market Listing - AXT currently owns approximately 85.5% of Tongmei[31] - If the IPO is approved, AXT would own approximately 77% of Tongmei, selling an additional 10%[31]

PART I. FINANCIAL INFORMATION [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Q1 2025 and 2024, including balance sheets, statements of operations, comprehensive loss, cash flows, and explanatory notes Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $149,531 | $158,272 | | **Total assets** | $333,477 | $339,314 | | **Total current liabilities** | $75,256 | $74,176 | | **Total liabilities** | $87,305 | $84,406 | | **Total stockholders' equity** | $208,047 | $216,331 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $19,356 | $22,688 | | Gross profit (loss) | $(1,241) | $6,094 | | Loss from operations | $(10,275) | $(3,347) | | Net loss | $(10,016) | $(2,048) | | Net loss attributable to AXT, Inc. | $(8,798) | $(2,083) | | Diluted net loss per share | $(0.20) | $(0.05) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,346) | $(8,806) | | Net cash used in investing activities | $(786) | $(3,912) | | Net cash provided by financing activities | $6,882 | $2,000 | | **Net increase (decrease) in cash** | **$4,373** | **$(10,514)** | [Notes To Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20To%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial items, including revenue breakdown, Tongmei STAR Market IPO risks, debt, stock-based compensation, and legal proceedings Revenue by Product Type (in thousands) | Product Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Substrates | $11,082 | $16,903 | | Raw Materials and Other | $8,274 | $5,785 | | **Total** | **$19,356** | **$22,688** | Revenue by Geographic Region (in thousands) | Geographical region | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | China | $13,426 | $11,517 | | Taiwan | $1,221 | $4,582 | | Europe | $2,101 | $3,725 | | North America | $1,109 | $1,076 | | Other | $1,499 | $1,788 | | **Total** | **$19,356** | **$22,688** | - Tongmei's STAR Market IPO application was approved by the Shanghai Stock Exchange and is under review by the CSRC[135](index=135&type=chunk)[136](index=136&type=chunk) - Investors hold a redemption right for their **~$49 million investment** if the IPO is not successfully completed[135](index=135&type=chunk)[136](index=136&type=chunk) - As of March 31, 2025, the company had **$52.5 million in short-term loans** and **$7.9 million in long-term loans** (net of current portion)[122](index=122&type=chunk) - The company is facing a putative shareholder class action and a related derivative lawsuit, which is currently on appeal after being dismissed[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The company believes the claims are meritless[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, financial condition, and outlook, highlighting Q1 2025 revenue decline, gross margin compression, US-China trade tensions, and the Tongmei STAR Market IPO initiative - AXT is a materials science company producing high-performance compound semiconductor substrates (InP, GaAs, Ge) and related raw materials, with all manufacturing operations located in the PRC[148](index=148&type=chunk)[149](index=149&type=chunk)[154](index=154&type=chunk) - The business is significantly impacted by escalating US-China trade tensions, with US tariffs on its products increasing to as high as **100%** and China imposing export permit requirements on all three of its substrate product lines (GaAs, Ge, and InP)[170](index=170&type=chunk)[202](index=202&type=chunk) - The strategic initiative to list its subsidiary Tongmei on the STAR Market is a key focus[162](index=162&type=chunk) - The process is lengthy and subject to CSRC approval[162](index=162&type=chunk) - Failure could trigger a **~$49 million redemption** by investors[237](index=237&type=chunk) [Results of Operations](index=70&type=section&id=Results%20of%20Operations) Q1 2025 revenue decreased 14.7% year-over-year to $19.4 million, driven by a substrate revenue decline, while gross margin collapsed to negative 6.4% due to production issues and export restrictions Revenue Change Q1 2024 to Q1 2025 (in thousands) | Product Type | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Substrates | $11,082 | $16,903 | $(5,821) | (34.4)% | | Raw materials and other | $8,274 | $5,785 | $2,489 | 43.0% | | **Total revenue** | **$19,356** | **$22,688** | **$(3,332)** | **(14.7)%** | - Gross profit decreased by **$7.3 million (120.4%)** to a loss of **$1.2 million** in Q1 2025[209](index=209&type=chunk) - The gross margin was **-6.4%** compared to **26.9%** in Q1 2024, attributed to significant unfavorable yields in gallium arsenide production and reduced sales of higher-margin indium phosphide due to export restrictions[209](index=209&type=chunk) - SG&A expenses decreased by **5.0%** to **$5.9 million**, while R&D expenses decreased by **3.0%** to **$3.1 million** compared to the prior-year period[210](index=210&type=chunk)[211](index=211&type=chunk) [Liquidity and Capital Resources](index=75&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company held $38.2 million in cash and restricted cash. During the quarter, cash increased by $4.4 million, primarily due to $6.9 million in net proceeds from financing activities (net debt issuance), which more than offset the $3.3 million cash used in operations. Management believes current liquidity is adequate for the next 12 months, but acknowledges the significant risk of a potential ~$49 million cash outflow if the Tongmei IPO fails and investors exercise their redemption rights - Principal source of liquidity as of March 31, 2025 was **$38.2 million**, consisting of **$31.6 million in cash** and **$6.6 million in restricted cash**[221](index=221&type=chunk) Q1 2025 Cash Flow Summary (in millions) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used in operating activities | $(3.3) | | Net cash used in investing activities | $(0.8) | | Net cash provided by financing activities | $6.9 | | **Net increase in cash** | **$4.4** | - A key risk to liquidity is the potential redemption of Tongmei shares by investors for approximately **$49 million** if the STAR Market IPO is not successfully completed[237](index=237&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=83&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are identified as foreign currency fluctuations, interest rate changes, and credit risk. Significant business is conducted in Chinese Renminbi and Japanese Yen, creating exposure to currency volatility, which is partially managed by a hedging program for the Yen. Interest rate risk is considered minimal. Credit risk is concentrated, with one customer accounting for over 10% of accounts receivable - The company has significant foreign currency risk exposure from operations in China (Renminbi) and sales to Japan (Yen)[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) - A hedging program is in place to mitigate risk from the Japanese Yen[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) - Interest rate risk is low; a **10% change in rates** would have an immaterial impact on interest income[254](index=254&type=chunk) - One customer accounted for more than **10% of the accounts receivable balance** as of March 31, 2025[255](index=255&type=chunk) [Controls and Procedures](index=85&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of the end of the quarter, the CEO and CFO concluded that the company's disclosure controls and procedures were effective. No material changes to internal control over financial reporting were identified during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025[257](index=257&type=chunk) - There were no changes in internal control over financial reporting during Q1 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[259](index=259&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=86&type=section&id=Item%201.%20Legal%20Proceedings) The company is currently defending against a putative shareholder class action lawsuit and a related derivative action. The class action, filed in May 2024, alleges violations of federal securities laws. The derivative suit was dismissed in March 2025, but the plaintiff has filed a notice of appeal. AXT believes the claims in both cases are meritless - A putative shareholder class action was filed on **May 6, 2024**, against the company, its CEO, and CFO, alleging violations of the Securities Exchange Act[263](index=263&type=chunk) - The case is pending[263](index=263&type=chunk) - A related derivative lawsuit was dismissed by the court on **March 17, 2025**, but the plaintiff filed a notice of appeal on **May 13, 2025**[264](index=264&type=chunk) [Risk Factors](index=86&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could adversely affect the company's business. Major risks include the severe impact of escalating US-China trade tariffs and export restrictions; operational and regulatory risks tied to its manufacturing base in China, such as potential government intervention and mandatory shutdowns; high volatility in financial results and gross margins; the potential failure of the Tongmei STAR Market IPO, which carries a ~$49 million redemption obligation; and intense competition and pricing pressure in the semiconductor materials market - Escalating and volatile trade tariffs from the U.S. and export restrictions from China on key materials (gallium, germanium, indium phosphide) pose a material threat to the business[338](index=338&type=chunk)[340](index=340&type=chunk) - The PRC central government may intervene in or influence PRC operations at any time, and regulations can change quickly[346](index=346&type=chunk)[348](index=348&type=chunk)[350](index=350&type=chunk) - This includes risks of mandatory factory shutdowns due to environmental policies[346](index=346&type=chunk)[348](index=348&type=chunk)[350](index=350&type=chunk) - The proposed IPO of subsidiary Tongmei on the STAR Market could fail, triggering a right for investors to redeem their shares for approximately **$49 million**[386](index=386&type=chunk) - Gross margins are highly volatile and can be negatively impacted by product mix, manufacturing yields, capacity utilization, and pricing pressure[276](index=276&type=chunk) - The gross margin was **negative (-6.4%)** in Q1 2025[276](index=276&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=138&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds from such sales during the reporting period - None [Defaults upon Senior Securities](index=138&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None [Mine Safety Disclosures](index=138&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable [Other Information](index=140&type=section&id=Item%205.%20Other%20Information) The company disclosed that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the last fiscal quarter - No director or officer, as defined in Rule 16a-1(f), adopted or terminated a Rule 10b5-1 trading arrangement during the last fiscal quarter[418](index=418&type=chunk) [Exhibits](index=140&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed concurrently with the Form 10-Q, which include the CEO and CFO certifications required under the Sarbanes-Oxley Act of 2002 (Sections 302 and 906) and the Inline XBRL data files for financial reporting - The filed exhibits include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL files (101 series)[420](index=420&type=chunk)

Company Performance - AXT reported a quarterly loss of $0.19 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.13, and compared to a loss of $0.03 per share a year ago, indicating an earnings surprise of -46.15% [1] - The company posted revenues of $19.36 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.50%, but down from $22.69 million in the same quarter last year [2] - AXT has surpassed consensus EPS estimates two times over the last four quarters and topped consensus revenue estimates three times during the same period [2] Stock Outlook - AXT shares have declined approximately 35.5% since the beginning of the year, while the S&P 500 has only declined by -5.3% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.08 on revenues of $24.15 million, and for the current fiscal year, it is -$0.26 on revenues of $102.01 million [7] - The estimate revisions trend for AXT is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Electronics - Semiconductors industry, to which AXT belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact AXT's stock performance [5]

AXT (AXTI) Q1 2025 Earnings Call May 01, 2025 04:30 PM ET Company Participants Leslie Green - Investor RelationsGary Fischer - CFO, VP & Corporate SecretaryMorris Young - Co-Founder, CEO & ChairmanRoss Cole - Equity Research AssociateTim Bettles - VP Business Development, Strategic Sales and MarketingMatthew Bryson - MD - Equity Research Conference Call Participants Richard Shannon - Senior Research AnalystDave Kang - Senior Analyst Operator Good afternoon, everyone, and welcome to AXT's First Quarter twent ...