Axcelis Technologies, Inc. (ACLS) Q2 2026 Earnings: Revenue $215M (+10.6%)
ACLS — Q2 2026 Financial Report Analysis
Q2 · Fiscal year 2026 · Published by Pham Hop
Axcelis grew Q2 2026 revenue 10.6% to $215.2M on a 35% jump in parts and service, but net income fell 26% to $23.3M as mix, selling costs and Veeco merger fees squeezed margins; Q3 guided to about $230M.
Revenue
$215M
+10.6% YoY
Net income
$23M
-25.8% YoY
Diluted EPS
$0.75
-23.5% YoY
Operating margin
9.4%
This period vs a year ago
Same period last year
This period
Revenue▲+10.6%
≈$195M
$215M
Net income▼-25.8%
≈$31M
$23M
Diluted EPS▼-23.5%
≈$0.98
$0.75
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Axcelis Technologies makes ion implanters — the machines chipmakers use to fire charged atoms into silicon wafers to change how the silicon conducts electricity, a step every chip goes through. In the second quarter of 2026 (April–June) its revenue rose 10.6% from a year earlier to $215.2 million and beat the company's own forecast of about $205 million, but net income fell 25.8% to $23.3 million. The growth came almost entirely from spare parts, upgrades and service on machines customers already own; sales of new machines were flat. Profit fell because gross margin slipped on a less favorable mix of machines shipped and because operating costs rose 21.5%, about two-fifths of that increase being fees tied to Axcelis's pending merger with Veeco Instruments.
At a glance
$82.8 million of aftermarket revenue, up 35.2%. Spare parts, upgrades, used tools and service now make up 38.5% of sales, up from 31.5% a year ago. This business tracks how busy customers' factories are, not whether they are buying new equipment.
9.4% operating margin, down from 14.9%. Operating margin is the share of revenue left after paying for production, R&D, sales and overhead, before interest and tax. Merger costs explain part of the drop, but not all of it (see below).
Q3 guidance of about $230 million revenue. That would be roughly 7% more than Q2. Management also changed its full-year view from "relatively flat" revenue (said in May) to year-over-year growth in 2026.
Results versus a year ago
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$215.2M
$194.5M
+10.6%
– Systems (new machines)
$132.4M
$133.3M
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−0.7%
– Aftermarket (parts, upgrades, service)
$82.8M
$61.3M
+35.2%
Gross margin
42.4%
44.9%
−2.5 pts
Operating income
$20.3M
$29.0M
−30.0%
Operating margin
9.4%
14.9%
−5.5 pts
Net income
$23.3M
$31.4M
−25.8%
Diluted EPS
$0.75
$0.98
−23.5%
Non-GAAP diluted EPS (company-adjusted)
$1.06
$1.13
−6.2%
Operating cash flow
$18.4M
$39.7M
−53.8%
For the first half of the year, revenue was $414.1 million (+7.0%) and net income was $32.5 million, down from $60.0 million. Compared with the first quarter, things improved clearly: revenue rose 8.1% from $199.0 million, and GAAP operating margin went from 4.0% to 9.4%.
Where the growth came from, and where it didn't
New-machine sales were flat. Systems revenue was $132.4 million, against $133.3 million a year earlier. The 10-Q breaks down first-half systems shipments by the type of chip customers make. The "mature process" market — older, cheaper chips used in cars, industrial equipment and power supplies — was 77% of shipments. Power devices, the chips that convert and control electricity, accounted for 38%, and other mature chips, including image sensors, for 39%. DRAM memory took 22% and advanced logic 1%. CEO Russell Low said memory demand "remains robust". He also said the power market has "positive momentum" and that general mature customers show "improving engagement and utilization trends". In May, by contrast, the company was still describing "a continued digestion of capacity" in power and general mature. Digestion means customers are using up equipment they already bought instead of ordering more.
Aftermarket did the heavy lifting. Axcelis calls this business CS&I (customer support and innovation). Its $21.5 million increase more than covered the entire $20.6 million rise in total revenue. The 10-Q says aftermarket revenue "fluctuates... primarily based on capacity utilization at customers' manufacturing facilities". So the higher figure fits the CEO's comment that installed machines are being run harder.
The regional mix changed sharply. North America revenue fell 60.8% to $13.4 million. Asia Pacific rose 22.1% to $177.9 million, now 82.7% of the total, and Europe rose 62.6% to $23.9 million. The 10-Q does not give a separate China figure for the quarter.
Customer concentration jumped. Two customers accounted for 21.6% and 15.9% of Q2 revenue, 37.5% together. In Q2 2025, no single customer was above 10%. When a few buyers make up this much of revenue, a single order being pushed back can move a whole quarter.
Why profit fell while revenue rose
Gross margin is the share of revenue left after the direct cost of building and servicing the machines. It dropped from 44.9% to 42.4%. On products it fell from 47.9% to 46.6%, which the 10-Q attributes to "a less favorable mix of system shipments". The service business also lost more money: its gross margin was −15.7%, against −5.4% a year earlier. The company says this is due to "changes in the mix of service contracts and fluctuations of service expenses". Service is small ($14.7 million of revenue), so this cost about $1.7 million of gross profit.
Operating expenses rose $12.5 million (+21.5%) to $70.9 million, while gross profit rose only $3.8 million. General and administrative costs rose $6.1 million, "due to an increase in professional fees related to the Merger". Sales and marketing rose $4.6 million (+30.3%) because of "higher personnel expenses and increases in freight expenses and evaluation tool costs". Evaluation tools are machines placed with customers for trials. R&D rose $1.9 million (+7.1%).
Less interest income. Interest earned on cash fell from $5.5 million to $4.6 million.
What the headline numbers hide
Merger costs explain only part of the profit drop. In Q2, Axcelis excluded $4.8 million of Veeco transaction and integration costs from its adjusted figures, and $15.2 million in the first half. Adding the Q2 costs back gives operating income of about $25.1 million, an 11.7% margin. That is still 13% below last year's $29.0 million (14.9% margin). The rest of the decline comes from the weaker gross margin and higher selling costs, not from one-off merger costs.
The GAAP vs adjusted gap is wide. GAAP means reported under standard accounting rules. GAAP EPS was $0.75; the company's adjusted ("non-GAAP") EPS was $1.06. The $0.31 difference is merger costs ($0.16) and stock-based pay to employees ($0.21), minus a $0.05 tax effect. Stock pay is a recurring cost of running the business, so the adjusted figure is flattering on that point.
Cash conversion was weaker in the quarter than over the half. Q2 operating cash flow was $18.4 million, 79% of net income. For the first half it was $36.5 million, 112% of net income. Both are well below last year's $39.7 million (Q2) and $79.5 million (H1). In Q2, $15.1 million went into working capital, meaning cash tied up in running the business. Accrued compensation fell by $14.2 million since December, and prepaid and other current assets rose by $13.6 million. Inventory rose 2.8% since December to $338.2 million. That is large next to one quarter's cost of revenue ($124.0 million), though it is growing more slowly than sales.
Receivables look fine. Money owed by customers fell from $168.5 million in December to $154.1 million, even as revenue grew. Deferred revenue — mostly customer prepayments for machines not yet delivered — rose from $108.9 million to $118.5 million, which points to more orders in hand.
Some EPS support did not come from operations. The effective tax rate fell to 8.1% from 10.3%. Buybacks made in 2025 cut the diluted share count by 2.3% to 31.1 million. That is why EPS fell less (−23.5%) than net income (−25.8%). Axcelis bought back no shares in the first half of 2026 ($45.3 million in Q2 2025), so this help will fade.
A one-off in the first half. Product revenue for the six months was reduced by a $4.9 million customer settlement, per the 10-Q.
Guidance went up. In May the company guided Q2 to about $205 million revenue and $0.57 GAAP EPS. It delivered $215.2 million and $0.75. The full-year view moved from flat to growth.
Takeaway: Axcelis is being carried by its parts-and-service business. Aftermarket revenue rose 35% while new-machine sales were flat, and even after adding back $4.8 million of merger costs, operating margin still fell from 14.9% to about 11.7% because of a weaker product mix and higher selling costs. The Q3 guide of about $230 million only makes 2026 a growth year if new-machine orders from power and mature-chip customers actually return.
The Veeco merger
On September 30, 2025, Axcelis agreed to buy Veeco Instruments in an all-stock deal: each Veeco share becomes 0.3575 new Axcelis shares. Axcelis shareholders approved issuing the shares on February 6, 2026. At the time of the 10-Q (filed August 6, 2026), the main open condition was approval from China's market regulator (SAMR), and both companies still expected to close in the second half of 2026. The agreement can be ended if the deal hasn't closed by September 30, 2026, but that date extends automatically, up to June 30, 2027, if only regulatory approvals are outstanding. Once the deal closes, Axcelis's results will include Veeco. Until then, merger fees keep weighing on GAAP profit: the Q3 guidance includes about $0.19 per share of transaction and integration costs.
Outlook
For Q3 2026, management expects revenue of about $230 million, GAAP EPS of about $0.76 and adjusted EPS of about $1.11. That would be a third straight quarter of sequential revenue growth. It would also give GAAP EPS roughly level with Q2 despite higher sales, because merger costs are expected to rise. Interim CFO David Ryzhik said he expects financial performance to "continue to improve over the balance of 2026". The balance sheet can absorb a slow patch: $577.0 million in cash and investments, and no borrowings apart from a $41.6 million lease obligation on the headquarters.
Our read: the recovery depends on two things. First, the aftermarket, which is already strong. Second, a turn in new-system orders from power and mature-chip customers, which management describes only as "encouraged" engagement so far. Things to watch in Q3: whether systems revenue grows again after two flat-to-down comparisons; whether product gross margin recovers toward the 48% of a year ago as the mix changes; and whether reliance on two customers above 15% each continues. With the Veeco deal likely closing soon, this may be one of the last quarters in which Axcelis's own figures can be judged on their own.