AXT(AXTI) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2024 was $27.9 million, up 23$22.7 million in Q1 2024, and up 50% from $18.6 million in Q2 2023 [5] - Non-GAAP gross margin was 27.6$800,000, or $0.02 per share, compared to a loss of$1.3 million, or $0.03 per share in Q1 2024 [8] Business Line Data and Key Metrics Changes - Indium phosphide revenue was$7.7 million, driven by demand from data center applications and AI [5] - Gallium arsenide revenue grew to $9.1 million, reflecting broad-based improvement across various applications [5] - Germanium substrates revenue was$2.9 million, showing renewed strength in demand for satellite solar cells [5] Market Data and Key Metrics Changes - Revenue from Asia Pacific accounted for 78%, Europe 17%, and North America 5% in Q2 2024 [6] - The top five customers generated approximately 31.8% of total revenue, with no single customer exceeding 10% [6] Company Strategy and Development Direction - The company is optimistic about growth in high-value applications, particularly in AI and optical connectivity [11] - Plans to list the subsidiary Tongmei on the STAR Market in Shanghai are progressing positively, with expectations for updates in the fall [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the recovery in various segments may be lumpy quarter-to-quarter, but overall growth is expected [11] - There is confidence in the growth potential of indium phosphide due to emerging applications in AI and high-speed data transmission [12][13] Other Important Information - Cash, cash equivalents, and investments increased by $2 million to$43.3 million as of June 30, 2024 [9] - The company is focused on reducing inventory levels, particularly in indium phosphide, while also benefiting from a successful recycling program [41] Q&A Session Summary Question: Insights on Q3 guidance and product category performance - Management indicated that indium phosphide and raw materials are expected to hold steady, while gallium arsenide may see moderation [21][22] Question: Changes in AI opportunities for indium phosphide - Management expressed confidence in indium phosphide's role in AI applications, although specific applications remain uncertain [24][26] Question: Market share and competition in indium phosphide - Management believes they maintain a competitive edge in quality over competitors, particularly Sumitomo [58][59] Question: Tongmei listing situation - Management remains optimistic about the listing process, noting that they have not received negative feedback from the Shanghai Stock Exchange [61][62]