AXT, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the third quarter of 2026 reached a record $73.4 million, representing a 54% increase from the second quarter of 2026 ($47.6 million) and a 162% year-over-year increase from the third quarter of 2025 ($28.0 million).
• GAAP gross margin was 56.0% of revenue in Q3 2026, compared to 44.9% in Q2 2026 and 22.3% in Q3 2025.
• Non-GAAP gross margin was 56.1% of revenue in Q3 2026, compared to 45.0% in Q2 2026 and 22.4% in Q3 2025.
• GAAP net income attributable to AXT, Inc. was $25.7 million ($0.39 diluted EPS) for Q3 2026, compared to $11.1 million ($0.17 diluted EPS) in Q2 2026 and a net loss of $1.9 million ($0.04 diluted EPS) in Q3 2025.
• Non-GAAP net income was $26.8 million ($0.41 diluted EPS) for Q3 2026, compared to $11.9 million ($0.19 diluted EPS) in Q2 2026 and a net loss of $1.2 million ($0.03 diluted EPS) in Q3 2025.
• Cash and cash equivalents increased to $485.5 million as of September 30, 2026, from $120.3 million as of December 31, 2025.
• Total assets grew to $1.22 billion as of September 30, 2026, from $433.8 million as of December 31, 2025.
• Total liabilities were $235.1 million as of September 30, 2026, compared to $99.1 million as of December 31, 2025.
• Short-term loans increased to $72.5 million as of September 30, 2026, from $62.8 million as of December 31, 2025.
• Inventories increased to $103.7 million as of September 30, 2026, from $81.7 million as of December 31, 2025.

Business Segments and Product Lines:

• Revenue growth was driven by exceptionally strong customer demand for indium phosphide material.
• The company surpassed its 2026 goal to double indium phosphide capacity.
• Productivity gains and the expansion of capabilities for high-value, large diameter products have more than quadrupled the 2026 indium phosphide revenue opportunity.
• AXT manufactures compound and single element semiconductor wafer substrates including indium phosphide (InP), gallium arsenide (GaAs), and germanium (Ge).
• 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.

Management Commentary and Tone:

• CEO Morris Young described the period as "pivotal and exciting," citing record revenue and strong demand.
• Management stated they remain "laser-focused on execution" and believe the company is "well positioned for transformational growth" as the market continues on an "extraordinary trajectory."
• Management emphasized supporting customers as they scale.

Risks and Challenges:

• Forward-looking statements highlight risks related to the receipt of export permits for indium phosphide substrates.
• Risks include the withdrawal, cancellations, or requests for redemptions by private equity funds in China regarding investments in Tongmei.
• Administrative challenges in satisfying requirements of various government agencies in China regarding investments in Tongmei are noted.
• Geopolitical tensions between China and the United States are identified as a risk factor.
• Actual results may differ from projections due to known and unknown risks, uncertainties, and assumptions.

Other Key Points:

• The company reports financial results on both GAAP and non-GAAP bases, with non-GAAP measures excluding stock-based compensation expense.
• AXT maintains manufacturing facilities in three separate locations in China and partial ownership in more than ten companies in China producing raw materials and consumables.
• The company has Asia headquarters in Beijing, China, and worldwide headquarters in Fremont, California.
• A conference call was hosted on October 29, 2026, at 1:30 p.m. PT, with a webcast available on the company website.
• The reconciliation of GAAP to non-GAAP financial measures is provided in the financial tables included in the release.