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AXT: 2014 revenue down but gross margins up

Company says it is well positioned to drive growth in 2015

AXT, a manufacturer of compound semiconductor substrates, today reported financial results for the fourth quarter and fiscal year ended December 31, 2014.

Revenue for Q4 was down slightly at $19.6 million compared with $23.1 million in the Q3 2014. For the year, revenue was $83.5 million, down marginally  from $85.3 million in fiscal year 2013. But for Q4 2104 and for the fiscal year, gross margins were up and net losses also showed improvement.

Gross margin was up at 25.4 percent of revenue for Q4, compared with 23.0 percent of revenue in Q3 2014. Gross margin for fiscal year 2014 was 20.6 percent of revenue, a significant improvement from 13.9 percent of revenue for fiscal year 2013. Net loss for fiscal year 2014 also improved to $1.4 million or $0.05 per share compared with net loss of $8.0 million or $0.25 per diluted share for fiscal year 2013. 

"While the fourth quarter demand weakness contributed to a modest decline in our annual revenue from the prior year, meaningful improvements in our cost structure early in the year, coupled with ongoing discipline in our spending throughout the year, and a positive shift in our revenue mix resulted in a significant improvement year-over-year to our bottom line," said Morris Young, chief executive officer. 

"Further, we grew our cash and investments by $1.3 million, ending the year with a balance of $48.9 million. As we enter 2015, we are well positioned to drive growth in our business and to continue executing on our strategic priorities."

Operating expenses were $5.6 million in the fourth quarter of 2014, up from $4.7 million in the third quarter of 2014. The increase was largely the result of professional fees associated with a recently completed internal investigation, initiated during the fourth quarter, of certain potential related-party transactions. 

Operating loss for the fourth quarter of 2014 was $592,000 compared with an operating profit of $653,000 in the third quarter of 2014. 

Net interest and other income for the fourth quarter of 2014 was $260,000. This was primarily attributable to $26,000 from equity earnings of the company's unconsolidated joint ventures, $637,000 from the sale of IntelliEpi stock, $618,000 from a loss on foreign exchange and $123,000 from interest income.

Net loss in the fourth quarter of 2014 was $311,000 or a loss of $0.01 per diluted share compared with a net income of $644,000 or a profit of $0.02 per diluted share in the third quarter of 2014.

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