AXT, Inc. Reports 14.7% Revenue Decline and Increased Net Loss in Q1 2025

AXT, Inc. reported a significant decline in financial performance for the first quarter of 2025, with total revenue decreasing by 14.7% to $19.4 million, down from $22.7 million in the same period last year. The company's substrate revenue fell sharply by 34.4% to $11.1 million, primarily due to reduced demand for gallium arsenide (GaAs) and indium phosphide (InP) wafer substrates. Conversely, revenue from raw materials increased by 43.0% to $8.3 million, driven by higher sales of refined gallium and pyrolytic boron nitride (pBN) crucibles.

The company's gross profit turned negative, resulting in a loss of $1.2 million compared to a profit of $6.1 million in the prior year. This decline was attributed to unfavorable yields in the gallium arsenide production lines and the impact of export restrictions on indium phosphide, which affected product mix and total substrate revenue. Selling, general, and administrative expenses decreased by 5.0% to $5.9 million, while research and development expenses saw a slight reduction of 3.0% to $3.1 million.

AXT's operational metrics reflected a challenging environment, with net loss attributable to the company reaching $8.8 million, compared to a loss of $2.1 million in the previous year. The company also reported a significant increase in net loss attributable to noncontrolling interests, which rose to $1.2 million from a nominal income in the prior year. The overall financial results indicate a need for strategic adjustments in response to market conditions and operational challenges.

In terms of liquidity, AXT's cash and cash equivalents increased to $31.6 million as of March 31, 2025, up from $22.8 million at the end of 2024. The increase was primarily due to net cash provided by financing activities, which totaled $6.9 million. The company continues to navigate a complex regulatory landscape, particularly concerning export controls and tariffs affecting its operations in China and the United States. AXT remains focused on its strategic initiatives, including the potential IPO of its subsidiary, Tongmei, on the Shanghai Stock Exchange, which is still under review by regulatory authorities.

Looking ahead, AXT's management expressed cautious optimism regarding future demand for its products, particularly in the context of emerging applications in artificial intelligence and data centers. However, the company acknowledged the ongoing uncertainties related to geopolitical tensions, trade restrictions, and market dynamics that could impact its performance in the coming quarters.