Company Overview - AXT was founded in 1986 and had its IPO in 1998[4] - The company operates in three locations in China: Beijing, Kazuo, and Dingxing[4] Products and Markets - Indium Phosphide (InP) is a growth engine, with expanding applications and a long product life cycle[6] - Gallium Arsenide (GaAs) has a long product life cycle with new applications, and AXT supplied first 8-inch GaAs wafers in April 2021[14] - Germanium (Ge) is primarily used in satellite solar cells, and the satellite solar cell market is increasing[22, 25] Financial Performance - In 2023, AXT's revenue was $75.8 million[29] - In 2022, AXT's revenue was $141.1 million[29] - In 2023, the Non-GAAP Gross Margin was 18.1%[29] - In 2023, the Non-GAAP Net Profit/(Loss) was ($14.3) million[29] Tongmei STAR Market Listing - AXT currently owns approximately 85.5% of Tongmei[31] - If the IPO is approved, AXT would own approximately 77% of Tongmei, selling an additional 10%[31]

AXT (AXTI) Q1 2025 Earnings Call May 01, 2025 04:30 PM ET Company Participants Leslie Green - Investor RelationsGary Fischer - CFO, VP & Corporate SecretaryMorris Young - Co-Founder, CEO & ChairmanRoss Cole - Equity Research AssociateTim Bettles - VP Business Development, Strategic Sales and MarketingMatthew Bryson - MD - Equity Research Conference Call Participants Richard Shannon - Senior Research AnalystDave Kang - Senior Analyst Operator Good afternoon, everyone, and welcome to AXT's First Quarter twent ...

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $19.4 million, down from $25.1 million in Q4 2024 and $20.2 million in Q1 2024 [5][6] - Non-GAAP gross margin was negative 6.1% in Q1 2025, compared to 17.9% in Q4 2024 and 27.3% in Q1 2024 [6][9] - Non-GAAP net loss for Q1 2025 was $8.2 million or $0.19 per share, compared to a loss of $4.3 million or $0.10 per share in Q4 2024 [9][10] Business Line Data and Key Metrics Changes - Revenue from indium phosphide was $3.8 million, gallium arsenide was $6.7 million, and germanium substrates were $600,000 in Q1 2025 [5] - Revenue from consolidated raw material joint ventures was $8.3 million, indicating healthy demand [5] Market Data and Key Metrics Changes - Revenue distribution: Asia Pacific region accounted for 83%, Europe 11%, and North America 6% in Q1 2025 [5] - The Chinese data center optical interconnect market is estimated to be one-third of the global market, with increasing sales of indium phosphide within China [16] Company Strategy and Development Direction - The company is focusing on optimizing growth opportunities in China, particularly in high-speed data center connectivity and sensors for autonomous driving [25] - Plans to improve gross margins through a more measured approach to production and addressing yield issues [21][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by geopolitical factors and trade restrictions but expressed optimism about future growth opportunities in the Chinese market [15][25] - Expected healthy double-digit growth for revenue from data center applications in China in Q2 2025 [17] Other Important Information - The company is preparing for an IPO of its subsidiary in China, Tongmei, on the STAR Market [11] - Cash and cash equivalents increased to $38.2 million as of March 31, 2025, from $33.8 million at the end of 2024 [10] Q&A Session Summary Question: Yield issues for semi-insulating gallium arsenide - Management acknowledged yield problems due to aggressive market penetration but believes solutions are in place for recovery [30][32] Question: Timeline for resolving yield issues - Management indicated that while the product is established, changes in customer specifications require careful recalibration, which may take time [36][38] Question: Indium phosphide permitting process - Management expressed confidence in obtaining permits by mid-June, allowing for backlog shipments [41][46] Question: Risk of losing customers due to shipping delays - Management believes they hold a significant market share and that customers are willing to wait for shipments [55][60] Question: Impact of tariffs on gross margin - Management noted that tariffs are a concern but not a significant factor affecting gross margins at this time [72][78]