Axcelis Technologies, Inc.

Second-quarter revenue was $215 million, including $132 million of system revenue and $83 million of CS&I revenue. EPS was $1.06, gross margin was 42.7%, operating margin was 14.7%, adjusted EBITDA was $36 million and adjusted EBITDA margin was 16.7%; bookings were $131 million and backlog was $452 million. Free cash flow was $15 million, including about $6 million of cash transaction expenses tied to the pending Veeco merger, and the company ended the quarter with $577 million of cash, cash equivalents and marketable securities. For Q3, Axcelis guided to revenue of approximately $230 million, gross margin of approximately 43%, operating expenses of approximately $62 million, adjusted EBITDA of approximately $41 million and EPS of approximately $1.11. For full-year 2026, management now expects revenue growth of approximately mid-single digits year over year, above its prior view of flat revenue, and said Q4 revenue should increase sequentially with gross margin improving slightly versus Q3.

Russell Low said the quarter reflected strong execution and favorable demand trends, with sequential improvement in systems revenue led by power and general mature, while memory was moderated by fab-space timing rather than demand weakness. He emphasized that customer investment plans in memory remain robust, CS&I is gaining traction as a deliberate multiyear growth focus, and book-to-bill near 1x suggests greater end-market stability. His tone was confident and constructive, with a clear expectation that current trends can carry into 2027.

David Ryzhik highlighted that Q2 revenue exceeded forecast, with both system and CS&I revenue above plan, while gross margin of 42.7% was slightly below the 43% outlook because of CS&I mix and higher services costs. Operating expenses were $60 million versus $59 million expected, adjusted EBITDA was $36 million, and the tax rate was 11% versus a 15% forecast due to an equity-compensation windfall benefit. He also noted $15 million of free cash flow, $577 million of cash and marketable securities on hand, and said the company has capacity to support higher revenue, with potential absorption benefits to gross margin as volume rises.

Analysts focused on whether memory could be sequentially stronger, what is driving the power rebound, how much of the CS&I strength is utilization versus installed-base upgrades, and whether NAND is becoming a meaningful growth driver. Management said memory will likely remain lumpy in 2026 until new cleanroom space comes online, but still expects significant year-over-year growth and another growth year in 2027, with DRAM leading and NAND still too early to call a trend. On power, they cited recovery after digestion, EVs as the main driver, and emerging data-center and industrial opportunities; on CS&I, they said rising utilization, more installed base and upgrades are boosting demand. They also said NAND should follow DRAM over time but is not yet showing a clear trend, and that memory remains somewhat lower-margin on systems but generates higher-margin aftermarket over the tool life.