AXT, Inc. Reports 31.1% Revenue Growth to $99.4 Million for Fiscal Year 2024

AXT, Inc. reported a significant increase in its financial performance for the fiscal year ending December 31, 2024, with total revenue reaching $99.4 million, a 31.1% increase from $75.8 million in 2023. The growth was primarily driven by a $20.3 million rise in wafer substrate sales, attributed to heightened demand for indium phosphide (InP) substrates used in 5G applications and data center upgrades, as well as increased sales of gallium arsenide (GaAs) substrates for LED products. The raw materials segment also saw an increase, contributing $31.6 million, up 11.6% from the previous year. In contrast, the company experienced a substantial revenue decline of 46.3% in 2023 compared to 2022, largely due to decreased demand for its products.

The company’s gross profit improved to $23.8 million in 2024, with a gross margin of 24.0%, up from 17.6% in 2023. This increase was attributed to higher revenue and a favorable product mix, which allowed fixed costs to be spread over a larger sales volume. However, AXT's gross profit had previously decreased by $38.8 million in 2023 compared to 2022, reflecting lower sales volumes and an unfavorable product mix. Selling, general, and administrative expenses rose to $24.1 million, primarily due to increased legal and professional service costs.

AXT has made strategic moves to enhance its market position, including the ongoing process to list its subsidiary, Beijing Tongmei Xtal Technology Co., Ltd. (Tongmei), on the Shanghai Stock Exchange’s STAR Market. This initiative aims to access capital markets in China, with a total investment of approximately $49 million from private equity investors. The IPO application has been accepted for review, but remains subject to regulatory approvals. The company also continues to focus on expanding its manufacturing capabilities, including the development of larger diameter substrates, which are increasingly in demand.

Operationally, AXT reported a total employee count of 1,075 as of December 31, 2024, with the majority based in China. The company’s supply chain strategy, which includes partial ownership of raw material companies, is designed to ensure reliable supply and pricing advantages. However, AXT faces challenges from geopolitical tensions, particularly between the U.S. and China, which have led to increased tariffs and export controls affecting its operations. The company has noted that approximately 92% of its revenue comes from international sales, underscoring its reliance on global markets.

Looking ahead, AXT anticipates continued demand for its InP substrates driven by advancements in AI and telecommunications. However, the company remains cautious about potential impacts from trade restrictions and market fluctuations. AXT believes it has sufficient cash reserves to meet its operational needs over the next year, but acknowledges that any significant downturn in sales could necessitate additional capital raising efforts. The company’s ability to navigate these challenges will be critical to its future growth and profitability.