AXT Inc ((AXTI)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
AXT Inc. Earnings Call Reflects Cautious Optimism for 2024
In the recent earnings call, AXT Inc. showcased a sentiment of cautious optimism. The company reported significant growth for fiscal 2024, with substantial revenue increases and improved margins. However, the fourth quarter posed challenges, including declining gross margins, increased operating expenses, and potential revenue delays due to export restrictions in China. The sentiment balanced substantial annual progress with notable quarterly setbacks.
Significant Revenue Growth in Fiscal Year 2024
AXT Inc. reported a remarkable 31% increase in revenue for fiscal year 2024, reaching $99.4 million, up from $75.8 million in the previous year. This growth was driven by expansion across all product categories, signifying robust demand and successful market penetration.
Improved Gross Margin and Net Loss
The company achieved an improved non-GAAP gross margin of 24.3%, up from 18.1% in the previous fiscal year. GAAP gross margin also rose to 24% from 17.6%. AXT Inc. managed to reduce its non-GAAP net loss to $8.5 million from $14.3 million, indicating better cost management and operational efficiency.
Expansion in Data Center and Wireless Markets
AXT Inc. experienced strong performance in the data center infrastructure and wireless handset markets, particularly in China. The company made notable advancements in low EPD gallium arsenide and 8-inch gallium arsenide and 6-inch indium phosphide substrates, contributing significantly to revenue growth.
Growth in Raw Material Joint Ventures
The company’s revenue from consolidated raw material joint venture companies reached $32 million in 2024, marking a 12% increase from the previous year. This growth was fueled by increased demand for materials such as gallium, arsenic, and indium.
Q4 2024 Gross Margin Decline
Despite overall annual growth, AXT Inc. faced challenges in Q4 2024, with a non-GAAP gross margin decline to 17.9% from 24.3% in Q3 2024 and 23.2% in Q4 2023. This was primarily due to reduced benefits from the recycling program and lower ingot starts.
Higher Operating Expenses
In Q4 2024, AXT Inc. saw an increase in non-GAAP operating expenses to $9.9 million, compared to $9.0 million in Q3 2024 and $7.5 million in Q4 2023. This rise was mainly attributed to increased legal and R&D expenses.
Impact of China Export Controls
Trade restrictions on indium phosphide are expected to delay $4 million to $5 million in sales for Q1 2025, impacting revenue from China and necessitating an export permit process. This has created potential challenges for the company’s sales and revenue streams.
Decrease in Cash and Investments
AXT Inc. reported a decrease in cash, cash equivalents, and investments by $5 million, totaling $33.8 million as of December 31. This reduction was primarily due to reductions in loan balances and non-cash expenses.
Forward-Looking Guidance
For Q1 2025, AXT Inc. anticipates revenue to range between $18.0 million and $20.0 million, with a non-GAAP net loss projected between $0.13 and $0.15 per share. The company expects indium phosphide export restrictions to impact sales, highlighting the challenges it faces in maintaining its growth trajectory.
In summary, AXT Inc.’s earnings call reflected a year of substantial growth tempered by quarterly challenges and future uncertainties. While the company has made significant strides in revenue and market expansion, it faces hurdles in the form of declining margins and export issues. Investors and stakeholders will be keenly watching how AXT navigates these challenges in the upcoming quarters.
