Axcelis Technologies: revenue returned to growth, but profit fell by a quarter on Veeco merger costs

On August 6, Axcelis Technologies reported second-quarter 2026 results. Revenue rose 10.6% year-on-year to $215.2 million, but adjusted EBITDA fell 26.3% to $24.7 million and net income dropped 25.8% to $23.3 million. The profit decline was driven by $4.8 million in one-off Veeco merger costs; excluding them, adjusted EBITDA would have been $36.0 million. The stock trades at an LTM EV/EBITDA of 27.0 versus its three-year average of 14.0, making the valuation stretched and the shares unattractive at current levels.

Key takeaways

— Revenue rose 10.6% year-on-year on strong system shipments and aftermarket growth

— Adjusted EBITDA fell 26.3% due to $4.8 million in one-off Veeco merger costs

— EBITDA margin declined to 11.5% from 17.2% a year earlier, but would have been 16.7% excluding one-off costs

— The company remains in a net cash position: net debt is negative at $73.6 million

— Operating cash flow for the quarter was $18.4 million, well below $39.7 million a year earlier

— Valuation at LTM EV/EBITDA of 27.0 is well above the three-year average of 14.0

— Third-quarter guidance implies revenue growth to $230 million and non-GAAP EPS of $1.11

Attractiveness

Key figures, USD bn

Revenue rose 10.6% year-on-year on strong system shipments and aftermarket growth

Second-quarter 2026 revenue came in at $215.2 million, up 10.6% year-on-year. This is the second consecutive quarter of positive annual growth after several quarters of decline: Q1 2026 saw 3.3% growth, while Q4 2025 revenue contracted 5.6%.

Product sales contributed the bulk at $200.5 million, up 9.3% year-on-year. Services revenue rose 31.8% to $14.7 million, reflecting growth in the installed base and demand for aftermarket support.

CEO Russell Low noted that memory market demand remains robust and the power segment is showing positive momentum. In mature segments, the company sees improving engagement and utilization trends as customers respond to growing end-demand in data center, industrial and automotive segments.

Adjusted EBITDA fell 26.3% due to $4.8 million in one-off Veeco merger costs

Second-quarter 2026 adjusted EBITDA was $24.7 million, down 26.3% year-on-year. However, this figure includes $4.8 million in one-off Veeco merger costs. Excluding them, adjusted EBITDA would have been $36.0 million, down only 7.5% from the prior-year level.

Net income also fell 25.8% to $23.3 million. The $4.8 million in one-off merger costs after tax reduced earnings by $0.16 per share. Adjusted net income was $33.0 million, or $1.06 per share, versus $1.13 a year earlier.

President and CEO Russell Low emphasized that the company exceeded its own forecasts for revenue and operating income, while Senior Vice President and Interim CFO David Ryzhik noted the attractive operating leverage in the business.

EBITDA margin declined to 11.5% from 17.2% a year earlier, but would have been 16.7% excluding one-off costs

Second-quarter 2026 EBITDA margin was 11.5% versus 17.2% a year earlier. The decline reflects one-off Veeco merger costs as well as higher operating expenses. Excluding these costs, adjusted EBITDA margin would have been 16.7%.

Gross margin fell to 42.4% from 44.9% a year earlier. The main pressure came from higher cost of services: services cost of revenue rose 44.7% to $17.0 million, outpacing services revenue growth. Product gross margin also declined due to a shift in product mix.

Operating expenses rose 21.5% to $70.9 million, including $4.8 million in merger costs. Excluding them, operating expenses would have been $66.1 million, up 13.2% year-on-year, mainly driven by a 37.2% increase in general and administrative expenses to $22.4 million.

The company remains in a net cash position: net debt is negative at $73.6 million

Net debt at the end of Q2 2026 was negative $73.6 million, meaning the company has a net cash position. This indicates that cash and short-term investments exceed debt obligations. The net debt to EBITDA ratio for the trailing twelve months is negative 0.56.

Cash and cash equivalents and short-term investments on the balance sheet were $155.0 million and $247.2 million, respectively. Debt is mainly represented by finance lease obligations of $41.6 million, including current and long-term portions.

The company does not disclose plans to change its debt policy, but maintaining a net cash position provides financial flexibility to complete the Veeco transaction and invest in growth.

Operating cash flow for the quarter was $18.4 million, well below $39.7 million a year earlier

Second-quarter 2026 operating cash flow was $18.4 million versus $39.7 million a year earlier. The decline reflects growth in accounts receivable and inventories, as well as a $15.1 million outflow from changes in other assets and liabilities.

Capital expenditures for the quarter were $3.6 million, slightly higher than a year earlier. Free cash flow was therefore about $14.8 million, significantly below the prior-year level.

For the first half of 2026, operating cash flow was $36.5 million versus $79.5 million a year earlier. The company attributes this to increased working capital related to business growth and preparation for expected shipment growth in the second half.

Valuation at LTM EV/EBITDA of 27.0 is well above the three-year average of 14.0

The current LTM EV/EBITDA multiple is 27.0, nearly double the three-year average of 14.0. This gap reflects the decline in LTM EBITDA to $132.2 million while market capitalization remains at $3.65 billion.

The LTM price-to-earnings ratio is 39.3. Return on equity is 8.8%. Market capitalization as of September 9, 2026, is $3.65 billion.

According to the portal's model, which compares EBITDA growth with a target multiple against market capitalization, the upside to fair value is negative 14%. This means the current price already discounts significant earnings growth that must materialize in the coming quarters.

Third-quarter guidance implies revenue growth to $230 million and non-GAAP EPS of $1.11

The company provided third-quarter 2026 guidance: revenue of approximately $230 million, up 7.7% from Q2 and up 7.7% from Q3 2025. GAAP diluted EPS guidance is $0.76, and non-GAAP diluted EPS guidance is $1.11.

The guidance implies continued growth driven by robust memory market demand and improvement in the power segment. The company also expects financial performance to improve in the second half of 2026.

The Veeco merger is expected to close in the second half of 2026. The company has already incurred $15.2 million in merger costs in the first half and expects additional costs in Q3 of $0.19 per share.

Valuation on the latest reported figures

Bottom line

The strong point of the report was the return to revenue growth – up 10.6% year-on-year, with improvement in memory and power segments. However, profit was hit by one-off Veeco merger costs: excluding them, adjusted EBITDA would have fallen only 7.5%, not 26.3%. The company maintains a net cash position of $73.6 million, but operating cash flow for the quarter more than halved. The key question for a holder is whether the company can justify its current EV/EBITDA multiple of 27.0, nearly double the three-year average, with sustained profit growth after the deal closes.