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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-30941

AXCELIS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware		34-1818596
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

108 Cherry Hill Drive

Beverly, Massachusetts 01915

(Address of principal executive offices, including zip code)

(978) 787-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	ACLS	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of August 1, 2025, there were 31,418,860 shares of the registrant’s common stock outstanding.

Table of Contents

Table of Contents


PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024	3
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024	4
	Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	5
	Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Overview	21
	Critical Accounting Estimates	21
	Results of Operations	22
	Liquidity and Capital Resources	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II - OTHER INFORMATION		30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

Table of Contents

PART 1—FINANCIAL INFORMATION

Item 1. Financial Statements.

Axcelis Technologies, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)


	Three months ended				Six months ended
		June 30,			June 30,
	2025		2024		2025		2024
Revenue:
Product	$	183,402	$	245,380	$	366,226	$	488,798
Services		11,142		11,132		20,881		20,085
Total revenue		194,544		256,512		387,107		508,883
Cost of revenue:
Product		95,462		134,759		189,962		262,670
Services		11,739		9,344		21,034		17,753
Total cost of revenue		107,201		144,103		210,996		280,423
Gross profit		87,343		112,409		176,111		228,460
Operating expenses:
Research and development		27,064		25,786		54,192		51,448
Sales and marketing		15,003		17,230		30,127		34,675
General and administrative		16,311		16,583		33,668		32,988
Total operating expenses		58,378		59,599		117,987		119,111
Income from operations		28,965		52,810		58,124		109,349
Other income (expense):
Interest income		5,481		6,051		11,082		11,566
Interest expense		(1,355)		(1,339)		(2,722)		(2,684)
Other, net		1,906		(257)		1,597		(1,968)
Total other income		6,032		4,455		9,957		6,914
Income before income taxes		34,997		57,265		68,081		116,263
Income tax provision		3,621		6,399		8,126		13,803
Net income	$	31,376	$	50,866	$	59,955	$	102,460
Net income per share:
Basic	$	0.99	$	1.56	$	1.87	$	3.14
Diluted	$	0.98	$	1.55	$	1.87	$	3.12
Shares used in computing net income per share:
Basic weighted average shares of common stock		31,847		32,598		32,051		32,618
Diluted weighted average shares of common stock		31,882		32,771		32,103		32,848

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

Table of Contents

Axcelis Technologies, Inc.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2025		2024		2025		2024
Net income	$	31,376	$	50,866	$	59,955	$	102,460
Other comprehensive income (loss):
Foreign currency translation adjustments		5,066		(913)		5,712		(2,644)
Amortization of actuarial net gain and other adjustments from pension plan, net of tax		—		5		—		10
Unrealized (losses) gains on available-for-sale investments		(58)		—		23		—
Total other comprehensive income (loss)		5,008		(908)		5,735		(2,634)
Comprehensive income	$	36,384	$	49,958	$	65,690	$	99,826

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

Table of Contents

Axcelis Technologies, Inc.

Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)


	June 30,		December 31,
	2025		2024
ASSETS
Current assets:
Cash and cash equivalents	$	173,649	$	123,512
Short-term investments		376,193		447,831
Accounts receivable, net		138,841		203,149
Inventories, net		310,768		282,225
Prepaid income taxes		5,505		6,420
Prepaid expenses and other current assets		59,519		60,471
Total current assets		1,064,475		1,123,608
Property, plant and equipment, net		57,377		53,784
Operating lease assets		28,561		29,621
Finance lease assets, net		14,704		15,346
Long-term restricted cash		7,631		7,552
Deferred income taxes		72,432		68,277
Long-term investments		31,114		-
Other assets		47,192		50,593
Total assets	$	1,323,486	$	1,348,781
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	37,111	$	46,928
Accrued compensation		16,631		25,536
Warranty		10,903		13,022
Deferred revenue		89,827		94,673
Current portion of finance lease obligation		1,437		1,345
Other current liabilities		21,198		26,018
Total current liabilities		177,107		207,522
Long-term finance lease obligation		41,567		42,329
Long-term deferred revenue		39,915		43,501
Other long-term liabilities		42,514		42,639
Total liabilities		301,103		335,991
Commitments and contingencies (Note 17)
Stockholders’ equity:
Common stock, $0.001 par value, 75,000 shares authorized; 31,418 shares issued and outstanding at June 30, 2025; 32,365 shares issued and outstanding at December 31, 2024		31		32
Additional paid-in capital		535,667		548,654
Retained earnings		487,164		470,318
Accumulated other comprehensive loss		(479)		(6,214)
Total stockholders’ equity		1,022,383		1,012,790
Total liabilities and stockholders’ equity	$	1,323,486	$	1,348,781

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

Table of Contents

Axcelis Technologies, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Retained		Comprehensive		Stockholders’
	Shares	Amount		Capital		Earnings		(Loss)		Equity
Balance at December 31, 2023	32,685	$	33	$	547,189	$	319,506	$	(1,846)	$	864,882
Net income	—		—		—		51,595		—		51,595
Foreign currency translation adjustments	—		—		—		—		(1,731)		(1,731)
Change in pension obligation	—		—		—		—		5		5
Issuance of common stock on restricted stock units, net of shares withheld	42		—		(2,699)		—		—		(2,699)
Stock-based compensation expense	—		—		4,690		—		—		4,690
Repurchase of common stock	(122)		—		(2,201)		(12,798)		—		(14,999)
Balance at March 31, 2024	32,605	$	33	$	546,979	$	358,303	$	(3,572)	$	901,743

Net income	—		—		—		50,866		—		50,866
Foreign currency translation adjustments	—		—		—		—		(913)		(913)
Change in pension obligation	—		—		—		—		5		5
Issuance of stock under Employee Stock Purchase Plan	10		—		1,242		—		—		1,242
Issuance of common stock on restricted stock units, net of shares withheld	143		—		(8,468)		—		—		(8,468)
Stock-based compensation expense	—		—		5,469		—		—		5,469
Repurchase of common stock	(141)		—		(2,545)		(12,451)		—		(14,996)
Balance at June 30, 2024	32,617	$	33	$	542,677	$	396,718	$	(4,480)	$	934,948


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-in		Retained		Comprehensive		Stockholders’
	Shares	Amount		Capital		Earnings		(Loss)		Equity
Balance at December 31, 2024	32,365	$	32	$	548,654	$	470,318	$	(6,214)	$	1,012,790
Net income	—		—		—		28,579		—		28,579
Foreign currency translation adjustments	—		—		—		—		646		646
Unrealized gains on available-for-sale investments	—		—		—		—		81		81
Issuance of common stock on restricted stock units, net of shares withheld	38		—		(1,583)		—		—		(1,583)
Stock-based compensation expense	—		—		4,903		—		—		4,903
Repurchase of common stock	(274)		—		(4,954)		(13,224)		—		(18,178)
Balance at March 31, 2025	32,129	$	32	$	547,020	$	485,673	$	(5,487)	$	1,027,238

Net income	—		—		—		31,376		—		31,376
Foreign currency translation adjustments	—		—		—		—		5,066		5,066
Unrealized losses on available-for-sale investments	—		—		—		—		(58)		(58)
Issuance of stock under Employee Stock Purchase Plan	21		—		1,246		—		—		1,246
Issuance of common stock on restricted stock units, net of shares withheld	94		—		(2,569)		—		—		(2,569)
Stock-based compensation expense	—		—		5,421		—		—		5,421
Repurchase of common stock	(826)		(1)		(15,451)		(29,885)		—		(45,337)
Balance at June 30, 2025	31,418	$	31	$	535,667	$	487,164	$	(479)	$	1,022,383

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

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Axcelis Technologies, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six months ended
	June 30,
	2025		2024
Cash flows from operating activities
Net income	$	59,955	$	102,460
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,824		7,636
Deferred income taxes		(4,155)		(2,013)
Stock-based compensation expense		10,324		10,159
Provision for doubtful accounts		—		(459)
Provision for excess and obsolete inventory		1,742		2,846
Accretion of discounts and premiums on short-term and long-term investments		(2,254)		(6,623)
Unrealized currency (gain) loss on foreign denominated transactions		(6,807)		11,505
Mark-to-market adjustment on forward exchange contracts		457		—
Changes in operating assets and liabilities:
Accounts receivable		67,459		25,009
Inventories		(16,760)		12,951
Prepaid expenses and other current assets		1,175		(5,849)
Accounts payable and other current liabilities		(28,343)		(18,541)
Deferred revenue		(9,581)		(35,957)
Income taxes		1,966		(8,391)
Other assets and liabilities		(4,480)		(12,443)
Net cash provided by operating activities		79,522		82,290

Cash flows from investing activities
Expenditures for property, plant and equipment and capitalized software		(6,945)		(3,624)
Purchases of short-term and long-term investments		(345,174)		(249,015)
Maturities and sales of short-term investments		387,975		191,345
Net cash provided by (used in) investing activities		35,856		(61,294)

Cash flows from financing activities
Net settlement on restricted stock grants		(4,152)		(11,167)
Repurchase of common stock		(63,515)		(29,995)
Proceeds from Employee Stock Purchase Plan purchases		1,246		1,242
Principal payments on finance lease obligation		(676)		(736)
Net cash used in financing activities		(67,097)		(40,656)

Effect of exchange rate changes on cash and cash equivalents		1,935		(2,474)
Net increase (decrease) in cash, cash equivalents and restricted cash		50,216		(22,134)

Cash, cash equivalents and restricted cash at beginning of period		131,064		173,951
Cash, cash equivalents and restricted cash at end of period	$	181,280	$	151,817

See accompanying Notes to these Consolidated Financial Statements (Unaudited)

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Axcelis Technologies, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Nature of Business

Axcelis Technologies, Inc. (“Axcelis” or the “Company”) was incorporated in Delaware in 1995 and is a producer of ion implantation equipment used in the fabrication of semiconductor chips in the United States, Europe and Asia. In addition, we provide extensive worldwide aftermarket service and support, including spare parts, equipment upgrades, used equipment, and maintenance services to the semiconductor industry.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments which are of a normal recurring nature and considered necessary for a fair presentation of these financial statements have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for other interim periods or for the year as a whole.

The balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. As of June 30, 2025, there have been no material changes in the Company’s significant accounting policies, other than as described in Note 2 below. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

Note 2. Significant Accounting Policies

Cash, Cash Equivalents, Short-term Investments, and Long-term Investments

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of 90 days or less. Cash equivalents consist primarily of money market funds, U.S. government and agency securities and deposit accounts. Cash equivalents are carried on the balance sheet at fair market value. Short-term investments are highly liquid investments, primarily consisting of U.S. government and agency securities, with original maturities of greater than 90 days but less than one year from date of purchase. Long-term investments consist of U.S. government and agency securities with original maturities greater than one year from the date of purchase. Beginning as of March 31, 2025, both our short-term and long-term investments are classified as available-for-sale as a result of the below noted sale of securities. In prior periods, our short-term investments were classified as held-to-maturity. We classify our long-term investments as non-current based on the security’s contractual maturity. We evaluate if any declines in fair value below amortized cost are caused by expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs. Any unrealized gains and losses are included in accumulated other comprehensive loss in the Consolidated Statement of Stockholders’ Equity. Income related to these securities is recorded in interest income in the Consolidated Statements of Operations. As of June 30, 2025, the amortized cost and fair value of the available-for-sale short-term investments was $376.3 million and $376.2 million, respectively. As of June 30, 2025, the amortized cost and fair value of the long-term investments was $31.0 million and $31.1 million, respectively. As of June 30, 2025, we had no allowances for credit loss on our investments.

In February 2025, we sold securities classified as held-to-maturity with a total net carrying value of $199.5 million. The majority of the proceeds were reinvested back into short-term investments during the three months ended March 31, 2025. Due to this sale, the remaining held-to-maturity securities were reclassified as available-for-sale, resulting in a remeasurement increase in short-term investments for balance sheet presentation purposes with a corresponding adjustment to accumulated other comprehensive loss of $81.0 thousand as of March 31, 2025.

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Note 3. Stock-Based Compensation

We maintain the Axcelis Technologies, Inc. 2012 Equity Incentive Plan, as amended (the “2012 Equity Plan”), which became effective on May 2, 2012, and permits the issuance of options, restricted stock, restricted stock units (“RSUs”) and performance awards to selected employees, directors, and consultants of the Company.

The 2012 Equity Plan is more fully described in Note 13 to the consolidated financial statements in our 2024 Form 10-K.

We recognized stock-based compensation expense of $5.4 million and $5.5 million for the three-month periods ended June 30, 2025 and 2024, respectively. We recognized stock-based compensation expense of $10.3 million and $10.2 million for the six-month periods ended June 30, 2025 and 2024, respectively. These amounts include compensation expense related to RSUs and stock issued to participants under the 2020 Employee Stock Purchase Plan (the “2020 ESPP”).

In the three-month periods ended June 30, 2025 and 2024, we issued 0.1 million and 0.2 million shares of common stock, respectively, upon vesting of RSUs granted under the 2012 Equity Plan and purchases under the 2020 ESPP. In both the three-month periods ended June 30, 2025 and 2024, we received proceeds of $1.2 million in connection with purchases under the 2020 ESPP.

In each of the six-month periods ended June 30, 2025 and 2024, we issued 0.2 million shares of common stock, upon vesting of RSUs granted under the 2012 Equity Plan and purchases under the 2020 ESPP. In both the six-month periods ended June 30, 2025 and 2024, we received proceeds of $1.2 million in connection with purchases under the 2020 ESPP.

Note 4. Leases

We have operating leases for manufacturing, office space, warehouse space, computer and office equipment and vehicles used in our business operations. We have a finance lease in relation to the 2015 sale-leaseback of our corporate headquarters in Beverly, Massachusetts. We review all agreements to determine if the agreement contains a lease component. An agreement contains a lease component if it provides for the use of a specific physical space or a specific physical item.

We recognize operating lease obligations under Accounting Standards Codification Topic 842, Leases (“Topic 842”). The guidance in Topic 842 requires recognition of lease assets and related liabilities on a discounted basis using the explicit or implicit discount rate stated within the agreement. We recognize a corresponding right-of-use asset, which is initially determined based upon the net present value of the associated liability and is adjusted for deferred costs and possible impairment, if any. For those lease agreements that do not indicate the applicable discount rate, we use our incremental borrowing rate. We have made the following policy elections: (i) operating leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets; (ii) we recognize lease expense for operating leases on a straight-line basis over the lease term; and (iii) we account for lease components and non-lease components that are fixed payments as one component. Some of our operating leases include one or more options to renew, with renewal terms that can extend the respective lease term by one to three years. The exercise of lease renewal options is at our sole discretion. For lease extensions that are reasonably certain to occur, we have included the renewal periods in our calculation of the net present value of the lease obligation and related right-of-use asset. Certain leases also include options to purchase the leased property. The depreciable life of certain assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The amounts of operating and finance lease right-of-use assets and related lease obligations recorded within our consolidated balance sheets are as follows:

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		June 30,		December 31,
Leases	Classification	2025		2024

Assets		(in thousands)
Operating leases	Operating lease assets	$	28,561	$	29,621
Finance lease	Finance lease assets*		14,704		15,346
Total leased assets		$	43,265	$	44,967
Liabilities
Current
Operating	Other current liabilities	$	4,574	$	4,470
Finance	Current portion of finance lease obligation		1,437		1,345
Non-current
Operating	Other long-term liabilities		24,363		25,321
Finance	Finance lease obligation		41,567		42,329
Total lease liabilities		$	71,941	$	73,465

*Finance lease assets are recorded net of accumulated depreciation of $47.9 million and include $0.5 million of prepaid financing costs as of June 30, 2025. Finance lease assets are recorded net of accumulated depreciation of $47.4 million and include $0.5 million of prepaid financing costs as of December 31, 2024.

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Our operating lease office locations support local selling and servicing functions. Our Axcelis Asia Operations Center facility in South Korea is used to manufacture our products for Asia-based customers. We lease a logistics and flex manufacturing center in Beverly, Massachusetts to support our principal product manufacturing operations at our corporate headquarters. Operating lease expense and depreciation and interest expense relating to our finance lease obligation are recognized within our Consolidated Statement of Operations for the three and six months ended June 30, 2025 and 2024 as follows:


		Three months ended				Six months ended
		June 30,				June 30,
Lease cost	Classification	2025		2024		2025		2024

Operating lease cost		(in thousands)
Product / services*	Cost of revenue	$	1,606	$	1,694	$	3,280	$	3,522
Research and development	Operating expenses		149		203		368		326
Sales and marketing*	Operating expenses		450		451		894		902
General and administrative*	Operating expenses		212		337		538		532
Total operating lease cost		$	2,417	$	2,685	$	5,080	$	5,282
Finance lease cost
Depreciation of leased assets	Cost of revenue, Research and development, Sales and marketing and General and administrative	$	321	$	321	$	643	$	643
Interest on lease liabilities	Interest expense		1,148		1,187		2,304		2,384
Total finance lease cost		$	1,469	$	1,508	$	2,947	$	3,027

Total lease cost		$	3,886	$	4,193	$	8,027	$	8,309

* Product / services, sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $0.4 million and $1.0 million for the three and six months ended June 30, 2025, respectively, and includes short-term lease and variable lease costs of approximately $0.7 million and $1.3 million for the three and six months ended June 30, 2024, respectively.

The lease of our corporate headquarters, shown below under finance leases, had an original lease term of 22 years, beginning in January 2015 and expiring in January 2037, with renewal options. All other locations are treated as operating leases, with lease terms ranging from one to 16 years. The tables below reflect the minimum cash outflow regarding our current lease obligations as well as the weighted-average remaining lease term and weighted-average discount rates used in our calculation of our lease obligations and right-of-use assets as of June 30, 2025:


	Finance		Operating		Total
Maturity of Lease Liabilities	Leases		Leases		Leases

	(in thousands)
2025	$	2,950	$	3,243	$	6,193
2026		6,008		5,405		11,413
2027		6,128		3,597		9,725
2028		6,251		2,478		8,729
2029		6,376		2,278		8,654
Thereafter		48,960		22,384		71,344
Total lease payments	$	76,673	$	39,385	$	116,058
Less interest portion*		(33,669)		(10,448)		(44,117)
Finance lease and operating lease obligations	$	43,004	$	28,937	$	71,941

* Finance lease interest calculated using the implied interest rate; operating lease interest calculated using estimated corporate borrowing rate.

The table above does not include options to renew lease terms that are not reasonably certain of being exercised.

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	June 30,
Lease term and discount rate	2025
Weighted-average remaining lease term (years):
Operating leases		10.8
Finance leases		11.6
Weighted-average discount rate:
Operating leases		5.5%
Finance leases		10.5%

Our cash outflows from our operating leases include rent expense and other charges associated with these leases. These cash flows are included within the operating activities section of our statement of cash flows. Our cash flows from our finance lease include both an interest component and a principal component. The table below shows our cash outflows by lease type and related section of our statement of cash flows, as well as the non-cash amount capitalized on our balance sheet in relation to our operating lease right-of-use assets for the six months ended June 30, 2025 and 2024, respectively:



	Six months ended June 30,
Cash paid for amounts included in the measurement of lease liabilities	2025		2024

	(in thousands)
Operating cash outflows from operating leases	$	5,080	$	5,282
Operating cash outflows from finance leases		2,304		2,384
Financing cash outflows from finance leases		676		736
Operating lease assets obtained in exchange for operating lease liabilities		1,411		825
Finance lease assets obtained in exchange for new finance lease liabilities		—		—

Note 5. Revenue

To reflect the organization of our business operations, we divide revenue into two categories: revenue from sales of new systems and revenue arising from the sale of used systems, parts, and labor to customers who own systems, which we refer to as “Aftermarket.”

Revenue by categories used by management are as follows:


	Three months ended				Six months ended
	June 30,				June 30,
	2025		2024		2025		2024

	(in thousands)
Systems	$	133,288	$	198,645	$	270,897	$	394,076
Aftermarket		61,256		57,867		116,210		114,807
Total Revenue	$	194,544	$	256,512	$	387,107	$	508,883

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We also consider revenue by geography. Revenue is allocated to geographic markets based upon the location to which our products are shipped and in which our services are performed. Revenue in our principal geographic markets is as follows:


	Three months ended				Six months ended
	June 30,				June 30,
	2025		2024		2025		2024

	(in thousands)
North America	$	34,223	$	34,373	$	74,748	$	79,876
Asia Pacific		145,628		196,159		280,053		384,376
Europe		14,693		25,980		32,306		44,631
Total Revenue	$	194,544	$	256,512	$	387,107	$	508,883

Our system sales revenue transactions give rise to contract liabilities (in the case of pre-payments and the fair value of goods and services to be delivered after the system delivery, such as installation and certain warranty obligations).

Contract liabilities are as follows:


	June 30,		December 31,
	2025		2024

	(in thousands)
Contract liabilities	$	129,742	$	138,174

Contract liabilities are reflected as deferred revenue on the consolidated balance sheets and include payments received in advance of system sales as well as deferral of revenue from systems sales for installation and other future performance obligations. Contract liabilities are recognized as revenue upon the fulfillment of performance obligations.


	Three months ended				Six months ended
	June 30,				June 30,
	2025		2024		2025		2024

	(in thousands)
Balance, beginning of the period	$	139,324	$	208,418	$	138,174	$	210,885
Deferral of revenue		29,047		24,341		42,207		59,943
Other adjustments *		(2,273)		(4,716)		(2,272)		(4,716)
Recognition of deferred revenue		(36,356)		(54,032)		(48,367)		(92,101)
Balance, end of the period	$	129,742	$	174,011	$	129,742	$	174,011

* Adjustment to contracts with customers are assessed to determine if amounts paid by customers represent deferred revenue or liabilities payable to customers and will reclassify such amounts pursuant to our revenue recognition policy and ASC 606.

The majority of our system transactions have either (1) payment terms of 90% due upon shipment of the system and 10% due upon acceptance or (2) a pre-shipment deposit ranging from 20% to 60%, with the remainder due upon shipment, less 10% due at acceptance. Aftermarket transaction payment terms typically provide that payment is due either within 30 or 60 days after the service is provided or parts delivered.

Note 6. Receivables and Allowances for Credit Losses

All trade receivables are reported on the consolidated balance sheets at their amortized cost adjusted for any write-offs and net of allowances for credit losses.

We maintain an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of our receivables, considering current market conditions and estimates for supportable forecasts when appropriate. The estimate is a result of our ongoing assessments and evaluations of collectability, historical loss experience, and future expectations in estimating credit losses in our receivable portfolio. We use historical loss experience rates and apply them to a related aging analysis while also considering customer and/or economic risk where appropriate.

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Determination of the proper amount of allowances requires management to exercise judgment about the timing, frequency and severity of credit losses that could materially affect the provision for credit losses and, as a result, net earnings. The allowance takes into consideration numerous quantitative and qualitative factors that include receivable type, historical loss experience, loss migration, delinquency trends, collection experience, current economic conditions, trade restrictions, estimates for supportable forecasts, when appropriate, and credit risk characteristics.

We evaluate the credit risk of the customer when extending credit based on a combination of financial and qualitative factors that may affect our customers’ ability to pay. These factors may include the customer’s financial condition, past payment experience, and credit bureau report, as well as the value of the underlying collateral.

Management performs detailed reviews of our receivables on a quarterly basis to assess the adequacy of the allowances and to determine if any impairment has occurred. Amounts determined to be uncollectable are charged directly against the allowances, while amounts recovered on previously written-off accounts increase the allowances. Changes to the allowances for credit losses are maintained through adjustments to the provision for credit losses, which are charged to current period earnings. We did not have any allowance or incur any credit losses or recoveries for the three and six month periods ended June 30, 2025. We did not have any allowance or incur any credit losses or recoveries for the three month period ended June 30, 2024. We recorded $0.5 million of recovery of bad debt expense for the six month period ended June 30, 2024. As of both June 30, 2025 and June 30, 2024, we had no provision for credit losses.

Note 7. Computation of Net Earnings per Share

Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of shares of common stock outstanding (the denominator) for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased by the number of additional shares of common stock that would have been outstanding if the potentially dilutive shares of common stock issuable on vesting of RSUs had been issued, calculated using the treasury stock method.

The components of net earnings per share are as follows:


	Three months ended				Six months ended
	June 30,				June 30,
	2025		2024		2025		2024

	(in thousands, except per share amounts)
Net income available to common stockholders	$	31,376	$	50,866	$	59,955	$	102,460
Weighted average shares of common stock outstanding used in computing basic income per share		31,847		32,598		32,051		32,618
Incremental RSUs		35		173		52		230
Weighted average shares of common stock used in computing diluted net income per share		31,882		32,771		32,103		32,848
Net income per share
Basic	$	0.99	$	1.56	$	1.87	$	3.14
Diluted	$	0.98	$	1.55	$	1.87	$	3.12

Diluted weighted average shares of common stock outstanding does not include 509,998 and 22,983 common equivalent shares issuable with respect to outstanding equity awards for the three-month periods ended June 30, 2025 and 2024, respectively, or 411,238 and 20,639 common equivalent shares issuable with respect to outstanding equity awards for the six-month periods ended June 30, 2025 and 2024, respectively, as their effect would have been anti-dilutive.

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Note 8. Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss, net of tax, by component, for the six months ended June 30, 2025:


					Unrealized gains on
	Foreign		Defined benefit		available-for-sale
	currency		pension plan		investments		Total

	(in thousands)
Balance at December 31, 2024	$	(6,253)	$	39	$	—	$	(6,214)
Other comprehensive income and reclassifications		5,712		—		23		5,735
Balance at June 30, 2025	$	(541)	$	39	$	23	$	(479)

Note 9. Cash, cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the amounts shown in the statement of cash flows:


	June 30,		December 31,
	2025			2024

	(in thousands)
Cash and cash equivalents	$	173,649	$	123,512
Long-term restricted cash		7,631		7,552
Total cash, cash equivalents and restricted cash	$	181,280	$	131,064

As of June 30, 2025, we had $7.6 million in restricted cash representing the total of (i) a $5.9 million cash collateralized letter of credit serving as a security deposit for our headquarters lease in Beverly, Massachusetts, (ii) a $0.9 million letter of credit for customs purposes, (iii) a $0.7 million cash collateralized letter of credit relating to workers’ compensation insurance and (iv) a $0.1 million deposit relating to customs activity. See Note 13 for further discussion on the $5.9 million cash collateralized letter of credit.

Note 10. Inventories, net

The components of inventories are as follows:


	June 30,		December 31,
	2025		2024

	(in thousands)
Raw materials	$	243,484	$	227,141
Work in process		38,421		34,490
Finished goods (completed systems)		28,863		20,594
Inventories, net	$	310,768	$	282,225

When recorded, inventory reserves reduce the carrying value of inventories to their net realizable value. We establish inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for our products or market conditions. We regularly evaluate the ability to realize the value of inventories based on a combination of factors including the following: forecasted sales or usage, estimated product end of life dates, estimated current and future market value and new product introductions. Purchasing and usage alternatives are also explored to mitigate inventory exposure.

Note 11. Product Warranty

We generally offer a one-year warranty for all of our systems, the terms and conditions of which vary depending upon the product sold. For all systems sold, we accrue a liability for the estimated cost of standard warranty at the time of system shipment and, if applicable, defer the portion of systems revenue attributable to non-standard warranty. Costs for

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non-standard warranty are expensed as incurred. Factors that affect our warranty liability include the number of installed units, historical and anticipated product failure rates, material usage and service labor costs. We periodically assess the adequacy of our recorded liability and adjust the amount as necessary.

The changes in our standard product warranty liability are as follows:


	Six months ended
	June 30,
	2025		2024

	(in thousands)
Balance at January 1 (beginning of year)	$	15,183	$	16,757
Warranties issued during the period		4,334		5,755
Settlements made during the period		(6,865)		(5,653)
Changes in estimate of liability for pre-existing warranties during the period		(61)		(444)
Balance at June 30 (end of period)	$	12,591	$	16,415

Amount classified as current	$	10,903	$	14,502
Amount classified as long-term (within other long-term liabilities)		1,688		1,913
Total warranty liability	$	12,591	$	16,415

Note 12. Fair Value Measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

(a) Fair Value Hierarchy

The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

(b) Fair Value Measurements

Our money market funds and short-term investments with initial maturities of three months or less are included in cash and cash equivalents in the consolidated balance sheets. Other investments that have a maturity of greater than three months but less than one year are included within short-term investments in the consolidated balance sheets. Investments that have a maturity of greater than one year are included within long-term investments in the consolidated balance sheets.

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The following tables set forth our assets which are measured at fair value by level within the fair value hierarchy:


	June 30, 2025
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total

	(in thousands)
Assets
Cash equivalents and other short-term investments:
Cash equivalents (money market funds, U.S. Government Securities and Agency Investments)	$	141,363	$	—	$	—	$	141,363
Short-term investments (U.S. Government Securities and Agency Investments)		376,193		—		—		376,193
Mark-to-market adjustment on forward exchange contracts		—		(457)		—		(457)
Long-term investments (U.S. Government Securities and Agency Investments)		31,114		—		—		31,114
Total	$	548,670	$	(457)	$	—	$	548,213


	December 31, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total

	(in thousands)
Assets
Cash equivalents and other short-term investments:
Cash equivalents (money market funds, U.S. Government Securities and Agency Investments)	$	81,320	$	—	$	—	$	81,320
Short-term investments (U.S. Government Securities and Agency Investments)		448,296		—		—		448,296
Mark-to-market adjustment on forward exchange contracts		—		267		—		267
Total	$	529,616	$	267	$	—	$	529,883

The following table summarizes the contractual maturities of our cash equivalents and investments as of June 30, 2025:


	Amortized Cost		Fair Value

	(in thousands)
Due within one year	$	517,629	$	517,556
Due after one year through two years		31,018		31,114
Total	$	548,647	$	548,670

(c) Other Financial Instruments

The carrying amounts reflected in the consolidated balance sheets for accounts receivable, prepaid expenses, forward currency exchange contracts and other current assets and non-current assets, restricted cash, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

(d) Forward Currency Exchange Contracts

We enter into forward currency exchange contracts to minimize the impact of foreign currency fluctuations on our earnings and cash flows. These contracts have month-to-month settlement dates. Any gains or losses on these contracts are reported within Other, net in our Consolidated Statement of Operations. Any open contracts at period end that have settlement dates within one month after the reported period end are marked-to-market and the valuation adjustments related to these open contracts are recorded in the current asset or current liability account. Any unrealized gain or loss on the open contracts is recognized and recorded within Other, net in our Consolidated Statement of Operations. These contracts are measured at fair value using observable market inputs such as forward currency exchange rates and our counterparties’ credit risks. Based on these inputs, the derivative instruments are classified within Level 2 of the valuation hierarchy. At June 30, 2025, the recognized unrealized loss on these forward exchange contracts was approximately $0.5 million. Based

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on our continued ability to trade and enter into forward contracts, we consider the markets for our fair value instruments to be active. We evaluated the credit risk associated with the counterparties to these derivative instruments and determined that as of June 30, 2025, such credit risks have not had an adverse impact on the fair value of these instruments.

Note 13. Financing Arrangements

On January 30, 2015, we sold our corporate headquarters facility in Beverly, Massachusetts for $48.9 million. As part of the sale, we also entered into a 22-year lease agreement of our headquarters facility. This sale-leaseback is accounted for as a finance lease under generally accepted accounting principles and, as such, we have recorded a finance lease obligation of $43.0 million as of June 30, 2025. The associated lease payments include both an interest component and payment of principal, with the remaining liability being extinguished at the end of the original lease term. As of June 30, 2025, we had a security deposit of $5.9 million related to this lease in the form of a cash collateralized letter of credit, which is classified as long-term restricted cash on our balance sheet at June 30, 2025.

Note 14. Income Taxes

Income tax expense was $3.6 million for the three months ended June 30, 2025, compared to $6.4 million for the three months ended June 30, 2024. The $2.8 million decrease was primarily due to the decrease in pre-tax book income and an increased Foreign Derived Intangible Income deduction. The effective tax rate (“ETR”) for the six months ended June 30, 2025 was less than the U.S. statutory rate of 21% primarily attributable to Foreign Derived Intangible Income deduction and Federal research and development tax credits. The reported ETR for the three months ended June 30, 2025 was 10.3% compared to 11.2% for the three months ended June 30, 2024.

On July 4, 2025, U.S tax legislation known as the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. The OBBBA makes permanent many of the tax provisions enacted as part of the Tax Cuts and Jobs Act of 2017 that were originally set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, many of which are not in effect until 2026. The Company is currently evaluating the impact of this new legislation.

Note 15. Concentration of Risk

For the three months ended June 30, 2025, no individual customer accounted for greater than ten percent of total revenue. For the three months ended June 30, 2024, one customer accounted for 11.5% of total revenue.

For the six months ended June 30, 2025, two customers accounted for 11.6% and 11.2% of total revenue, respectively. For the six months ended June 30, 2024, no individual customer accounted for greater than ten percent of total revenue.

At June 30, 2025, no individual customer accounted for greater than ten precent of accounts receivable. At December 31, 2024, one customer accounted for 10.0% of accounts receivable.

Note 16. Share Repurchase

In March 2025, our Board of Directors approved an additional funding of $100 million for our stock repurchase program. This approval brings the current outstanding repurchase authorization to $215 million. During the six months ended June 30, 2025, we repurchased 1.1 million shares of common stock at an average cost of $57.20 per share. The timing and actual number of any additional shares to be repurchased under this program will depend on various factors including price, corporate and regulatory requirements, alternative investment opportunities and other market conditions.

Repurchased shares are accounted for when the transaction is settled and returned to the status of authorized but unissued shares. Accordingly, on our balance sheet, the repurchase price is deducted from common stock par value and from additional paid-in capital for the excess over par value. If additional paid-in capital has been exhausted, the excess over par value is deducted from retained earnings. Direct costs incurred to acquire the shares are included in the total cost of the shares.

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Note 17. Contingencies

(a) Litigation

We are from time to time a party to litigation that arises in the normal course of our business operations. We are not presently a party to any litigation that we believe might have a material adverse effect on our business operations.

(b) Indemnifications

Our system sales agreements typically include provisions under which we agree to take certain actions, provide certain remedies and defend our customers against third-party claims of intellectual property infringement under specified conditions and indemnify customers against any damage and costs awarded in connection with such claims. We have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in the accompanying consolidated financial statements.

Note 18. Business Segment

The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is our chief executive officer, who assesses financial performance for the Company and decides how to allocate resources based on consolidated net income. Segment asset information is provided to the CODM but it is not used to allocate resources.

The following table presents selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30, 2025 and 2024:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024

	(in thousands)
Revenue:	$	194,544	$	256,512	$	387,107	$	508,883
Less:
Cost of revenue		107,201		144,103		210,996		280,423
Research and development		27,064		25,786		54,192		51,448
Sales and marketing		15,003		17,230		30,127		34,675
General and administrative		16,311		16,583		33,668		32,988
Total other income		6,032		4,455		9,957		6,914
Income tax provision		3,621		6,399		8,126		13,803
Segment Net Income		31,376		50,866		59,955		102,460
Reconciliation of profit or loss Adjustments and reconciling items		-		-		-		-
Net income	$	31,376	$	50,866	$	59,955	$	102,460

The above table includes depreciation expense and amortization expense of $4.5 million and $8.8 million for the three and six month periods ended June 30, 2025, respectively, and $3.9 million and $7.6 million for the three and six month periods ended June 30, 2024, respectively.

Note 19. Recent Accounting Guidance

In December 2023 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. We are currently evaluating the impact of ASU 2023-09 on our future consolidated financial statements and related disclosures.

In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement

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Expenses (“ASU 2024-03”). ASU 2024-03 is intended to enhance the disclosures for expenses for all public entities in accordance with ASC Topic 220, Income Statement-Reporting Comprehensive Income. ASU 2024-03 addresses investor requests for more detailed information about expenses, specifically cost of sales and selling, general, and administrative expenses. ASU 2024-03 requires a public entity to disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption presented on the face of the income statement as well as a qualitative description of the amounts remaining in the relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 also requires a public entity to disclose the total amount of selling expenses and the entity’s definition of selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. A public entity should apply ASU 2024-03 either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2024-03 on its future consolidated financial statements and related disclosures.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Certain statements within "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. The forward-looking statements contained herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Factors that might cause such a difference include, among other things, those set forth under "Liquidity and Capital Resources" below and under “Risk Factors” in Part I, Item 1A to our 2024 Form 10-K, which discussion is incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

Overview

We are primarily a producer of ion implantation equipment used in the fabrication of semiconductor chips in the United States, Europe, and Asia. In addition, we provide extensive worldwide aftermarket service and support, including spare parts, equipment upgrades and maintenance services to the semiconductor industry. Our product development and manufacturing activities currently occur primarily in the United States and South Korea. Our equipment and service products are highly technical and are sold through a direct sales force in the United States, Europe, and Asia. Consolidation and partnering within the semiconductor manufacturing industry has resulted in a small number of customers representing a substantial portion of our business. Our ten largest customers accounted for 55.5% of total revenue for the six months ended June 30, 2025.

Sales of our systems in the first six months of 2025 were down compared to the same period in the prior year, as customers have moderated the pace of investments into mature process node technologies. The overall mature process segment represented 92% of our shipped systems revenue, with 8% of shipments to dynamic random-access memory (“DRAM”) applications. Of the mature process segment, power device shipments comprised 47% of total systems revenue with the general mature segment representing 45%, which includes image sensor applications starting with first quarter 2025 results.

For the six months ending June 30, 2025, the geopolitical environment surrounding trade and tariffs did not have a meaningful impact on our financial results. It is difficult to predict the exact timing and magnitude of the tariffs, the duration for which the tariffs will be in place, and the impact the tariffs will have on our customers and suppliers. We continue to develop plans to reduce the potential impact of these tariffs by leveraging our global supply chain and manufacturing footprint.

Critical Accounting Estimates

Management’s discussion and analysis of our financial condition and results of operations included herein and in our 2024 Form 10-K are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions. Management’s estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management has not identified any need to make any material change in, and has not changed, any of our critical accounting estimates and judgments as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Form 10-K.

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Results of Operations

The following table sets forth our results of operations as a percentage of total revenue:


	Three months ended				Six months ended
	June 30,				June 30,
	2025		2024		2025		2024
Revenue:
Product	94.3	%	95.7	%	94.6	%	96.1	%
Services	5.7		4.3		5.4		3.9
Total revenue	100.0		100.0		100.0		100.0
Cost of revenue:
Product	49.1		52.5		49.1		51.6
Services	6.0		3.6		5.4		3.5
Total cost of revenue	55.1		56.1		54.5		55.1
Gross profit	44.9		43.9		45.5		44.9
Operating expenses:
Research and development	13.9		10.1		14.0		10.1
Sales and marketing	7.7		6.7		7.8		6.8
General and administrative	8.4		6.5		8.7		6.5
Total operating expenses	30.0		23.3		30.5		23.4
Income from operations	14.9		20.6		15.0		21.5
Other income (expense):
Interest income	2.8		2.4		2.9		2.3
Interest expense	(0.7)		(0.5)		(0.7)		(0.5)
Other, net	1.0		(0.1)		0.4		(0.4)
Total other income	3.1		1.8		2.6		1.4
Income before income taxes	18.0		22.4		17.6		22.9
Income tax provision	1.9		2.5		2.1		2.7
Net income	16.1	%	19.9	%	15.5	%	20.2	%

Revenue

The following table sets forth our product and services revenue:


		Three months ended						Period-to-Period				Six months ended						Period-to-Period
		June 30,						Change				June 30,						Change
		2025			2024			$		%		2025			2024			$		%

	(dollars in thousands)
Revenue:
Product		$	183,402		$	245,380		$	(61,978)	(25.3)	%	$	366,226		$	488,798		$	(122,572)	(25.1)	%
Percentage of revenue			94.3	%		95.7	%						94.6	%		96.1	%
Services			11,142			11,132			10	0.1	%		20,881			20,085			796	4.0	%
Percentage of revenue			5.7	%		4.3	%						5.4	%		3.9	%
Total revenue		$	194,544		$	256,512		$	(61,968)	(24.2)	%	$	387,107		$	508,883		$	(121,776)	(23.9)	%

Three months ended June 30, 2025 Compared with Three months ended June 30, 2024

Product

Product revenue, which includes systems sales, sales of spare parts, product upgrades and used systems, was $183.4 million, or 94.3% of revenue, during the three months ended June 30, 2025, compared with $245.4 million, or 95.7% of revenue, for the three months ended June 30, 2024. The $62.0 million decrease in product revenue for the three-

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month period ended June 30, 2025, in comparison to the same period in 2024, was primarily driven by a decrease in system sales.

Deferred revenue includes payments received in advance of system sales as well as deferral of revenue from systems sales for installation and other future performance obligations. The total amount of deferred revenue at June 30, 2025 and December 31, 2024 was $129.7 million and $138.2 million, respectively.

Services

Services revenue, which includes the labor component of maintenance and service contracts and fees for service hours provided by on-site service personnel, was $11.1 million, or 5.7% of revenue, for the three months ended June 30, 2025, relatively flat compared with $11.1 million, or 4.3% of revenue, for the three months ended June 30, 2024. Although services revenue typically increases with the expansion of the installed base of systems, it can fluctuate from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the need for equipment service.

Six months ended June 30, 2025 Compared with Six months ended June 30, 2024

Product

Product revenue was $366.2 million, or 94.6% of revenue, during the six months ended June 30, 2025, compared with $488.8 million, or 96.1% of revenue, for the six months ended June 30, 2024. The $122.6 million decrease in product revenue for the six-month period ended June 30, 2025, in comparison to the same period in 2024, was primarily driven by a decrease in system sales.

Services

Services revenue was $20.9 million, or 5.4% of revenue, for the six months ended June 30, 2025, compared with $20.1 million, or 3.9% of revenue, for the six months ended June 30, 2024.

Revenue Categories used by Management

In addition to the line item revenue categories discussed above, management also regularly disaggregates revenue in the following categories, which it finds relevant and useful:

●

Systems and Aftermarket revenues, in which “Aftermarket” is:

The portion of Product revenue relating to spare parts, product upgrades and used equipment, combined with

Services revenue, which is the labor component of Aftermarket revenues;

(Aftermarket purchases reflect current fab utilization as opposed to Systems purchases which reflect capital investment decisions by our customers, which have differing economic drivers);

●

Revenue by geographic regions, since economic factors impacting customer purchasing decisions may vary by geographic region; and

●

Revenue by our customer market segments, since they can be subject to different economic drivers at different periods of time, impacting a customer’s likelihood of purchasing capital equipment during any particular period. Currently, management references three customer market segments: memory, mature process technology and advanced logic.

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Aftermarket and Systems Revenue

Three months ended June 30, 2025 Compared with Three months ended June 30, 2024

Included in total revenue of $194.5 million during the three months ended June 30, 2025 is revenue from our Aftermarket business of $61.3 million, compared with $57.9 million of Aftermarket revenue for the three months ended June 30, 2024. Aftermarket revenue fluctuates from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the sale of spare parts and demand for equipment service. Aftermarket revenue can also fluctuate from period to period based on the demand for system upgrades or used equipment. The remaining $133.2 million of revenue for the three months ended June 30, 2025 was systems revenue, compared with $198.6 million of systems revenue for the three months ended June 30, 2024. Systems revenue fluctuates from period to period based on our customers’ capital spending.

Six months ended June 30, 2025 Compared with Six months ended June 30, 2024

Included in total revenue of $387.1 million during the six months ended June 30, 2025 is revenue from our Aftermarket business of $116.2 million, compared with $114.8 million of Aftermarket revenue for the six months ended June 30, 2024. The remaining $270.9 million of revenue for the six months ended June 30, 2025 was systems revenue, compared with $394.1 million of systems revenue for the six months ended June 30, 2024.

Gross Profit / Gross Margin

The following table sets forth our gross profit / gross margin:


		Three months ended						Period-to-Period				Six months ended						Period-to-Period
		June 30,						Change				June 30,						Change
		2025			2024			$		%			2025			2024		$		%

	(dollars in thousands)
Gross Profit:
Product		$	87,940		$	110,621		$	(22,681)	(20.5)	%	$	176,264		$	226,128		$	(49,864)	(22.1)	%
Product gross margin			47.9	%		45.1	%						48.1	%		46.3	%

Services			(597)			1,788			(2,385)	(133.4)	%		(153)			2,332			(2,485)	(106.6)	%
Services gross margin			(5.4)	%		16.1	%						(0.7)	%		11.6	%
Total gross profit		$	87,343		$	112,409		$	(25,066)	(22.3)	%	$	176,111		$	228,460		$	(52,349)	(22.9)	%
Gross margin			44.9	%		43.9	%						45.5	%		44.9	%

Three months ended June 30, 2025 Compared with Three months ended June 30, 2024

Product

Gross margin from product revenue was 47.9% for the three months ended June 30, 2025, compared to 45.1% for the three months ended June 30, 2024. The increase in gross margin primarily resulted from improved margins on Purion systems and a favorable mix of parts and upgrades.

Services

Gross margin from services revenue was (5.3)% for the three months ended June 30, 2025, compared to 16.1% for the three months ended June 30, 2024. The decrease in gross margin is attributable to changes in the mix of service contracts.

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Six months ended June 30, 2025 Compared with Six months ended June 30, 2024

Product

Gross margin from product revenue was 48.1% for the six months ended June 30, 2025, compared to 46.3% for the six months ended June 30, 2024. The increase in gross margin primarily resulted from improved margins on Purion systems and a favorable mix of parts and upgrades.

Services

Gross margin from services revenue was (0.7)% for the six months ended June 30, 2025, compared to 11.6% for the six months ended June 30, 2024. The decrease in gross margin is attributable to changes in the mix of service contracts.

Operating Expenses

The following table sets forth our operating expenses:


		Three months ended						Period-to-Period				Six months ended						Period-to-Period
		June 30,						Change				June 30,						Change
		2025			2024			$		%		2025			2024			$		%

	(dollars in thousands)
Research and development		$	27,064		$	25,786		$	1,278	5.0	%	$	54,192		$	51,448		$	2,744	5.3	%
Percentage of revenue			13.9	%		10.1	%						14.0	%		10.1	%

AXCELIS TECHNOLOGIES INC 10-Q