AXT posts non-GAAP earnings of $0.41 per share in third quarter
Key Facts
AXT reported third-quarter results on October 29, posting diluted non-GAAP earnings of $0.41 per share, compared with analysts’ estimate of $0.31, according to a Reuters report published via Investing.com. Revenue was $73.41 million, above the average forecast of $66 million. The announcement came after the close of the October 28 session, putting the results in direct contrast with the stock’s movement the following day. Company data showed non-GAAP net income of $26.8 million. The company had reported net income of $11.9 million in the second quarter, compared with a loss of $1.2 million in the third quarter of 2025.
The earnings improvement reflected wider margins compared with previous periods. Non-GAAP gross margin, excluding stock-based compensation expense, was 56.1% of revenue in the third quarter. It was 45.0% in the second quarter of 2026 and 22.4% in the year-earlier period, according to a company statement cited by Nasdaq. Non-GAAP net income also rose from $11.9 million in the second quarter to $26.8 million in the third quarter. In the third quarter of the previous year, the company had reported a non-GAAP net loss of $1.2 million. Diluted earnings per share in that prior quarter showed a loss of $0.03, according to the same statement.
Indium phosphide accounted for the largest share of revenue, generating $54.3 million, or 74% of the quarter’s total, according to the earnings-call transcript published via Investing.com. Gallium arsenide contributed $9.1 million, while raw materials companies added $9.7 million. The report linked the growing importance of indium phosphide to its data center applications. These figures underscore the activity’s substantial weight in AXT’s product mix in the third quarter. They also make the trajectory of demand for the company’s products and the expansion of its production capacity key areas to watch in its coming results.
Management said it had already surpassed its goal of doubling indium phosphide production capacity during 2026. The company expects production capacity to reach between 2.75 and 3 times its level at the end of 2025 by year-end, according to the earnings-call transcript. Management added that it has a plan to double capacity again in 2027. The production expansion sets a clear timeline for the increase the company is targeting in its indium phosphide business. The plan was announced as the business accounted for 74% of third-quarter revenue, amid its connection to data center applications.
The stock’s performance in the regular trading session did not match the strong results. AXT shares closed at $60.88 on October 29, down 5.44% from the previous close of $64.38, according to the report published via Investing.com. The stock fell to $57.959 in after-hours trading, down 4.8% from the regular-session close. The results report was released after the October 28 close, while the supplied data do not support using the trading range for that day included in the initial version. Before the results announcement, analysts’ average price target was $91.60, according to another Reuters report via Investing.com. The report estimated that this represented potential upside of 42% relative to a reference price of $64.38.