News Article

2018: A Mixed Year For AXT

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Growth in new GaAs applications suggests material is entering next period of expansion

AXT, a manufacturer of InP, GaAs and germanium substrates, has reported financial results for Q4 and fiscal year ended December 31, 2018. Revenue for Q4 2018 was $22.2 million, compared with $28.6 million in Q3 2018 and $26.3 million for Q4 2017. Revenue for fiscal year 2018 was $102.4 million, compared with $98.7 million in 2017.

“2018 was a mixed year for AXT,” said Morris Young, chief executive officer. “Global economic conditions were made more difficult by the uncertainty of trade tensions, and spending in certain end markets took a pause, impacting our expected growth and profitability for the year."

He added: "Despite these challenges, our InP revenue set another record in 2018, and we saw growth in a host of new GaAs applications that further suggest this material is entering its next period of expansion. In 2018, AXT achieved every major milestone established in the relocation of our GaAs and germanium product lines.

Q4 results

Revenue for Q4 2018 was $22.2 million, compared with $28.6 million in Q3 2018 and $26.3 million for Q4 2017. Gross margin was 26.3 percent of revenue for Q4 2018, compared with 37.1 percent of revenue in Q3 2018 and 37.2 percent for Q4 2017. Operating expenses were $6.5 million Q4 2018, compared with $6.3 million in Q3 2018 and $6.1 million for Q4 2017.

Operating loss was $0.6 million in Q4 compared with operating profit of $4.3 million in Q3 2018 and $3.7 million for Q4 2017. Net loss was $1.1 million, or $0.03 per share, compared with a net income of $3.9 million or $0.10 per diluted share in Q3 2018 and $3.1 million or $0.08 per diluted share for Q4f 2017.

Year 2018 Results

Revenue in 2018 was $102.4 million, compared with $98.7 million in 2017. Gross margin for 2018 was 36.2 percent of revenue, compared with 34.9 percent of revenue 2017. Operating expenses for 2018 were $24.9 million, compared with $21.8 million in2017. Net income in 2018 was $9.7 million, or $0.24 per diluted share, compared with $10.1 million, or $0.26 per diluted share, in 2017.

Outlook

"Although Q1 2019 is challenging, as we look ahead we are encouraged that the tone of customer comments includes an expectation for market recoveries later this year, " said Morris Young, chief executive officer. "We believe our competitive position remains strong, and that this will enable us to return to growth when the markets recover. In the meantime, we intend to continue the relocation, strengthen our business and drive greater efficiencies in our model.”


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