A maker of ion implantation equipment, the machines that fire charged particles into silicon wafers to build the chips inside phones, cars, and power electronics. Its flagship Purion line of implanters serves chipmakers worldwide, with a specialized Purion Power Series for silicon-carbide power devices. The company traces its roots to 1978, when founders launched Nova Associates in a shed that had once been a chicken hatchery; after joining Eaton Corporation, the business was spun off and rebranded as Axcelis in 2000.
Axcelis Q2 revenue rose 11% to $215.2M, but operating margin stayed at 9.4% as merger costs and a negative services margin persisted.
returned to growth for the first time since 2023. Revenue rose 10.6% to $215.2 million, driven by a 33.7% increase in aftermarket sales, but remained compressed at 9.4% as merger-related costs and a deeply negative services margin offset the volume gain. The Veeco deal is the story now — it is reshaping the cost structure before it has even closed.
Key takeaways
rose 10.6% to $215.2 million, the first year-over-year increase since Q4 2023, as aftermarket (CS&I) revenue climbed 33.7% to $82.8 million while systems revenue fell 4.5% to $132.4 million.
contracted 2.5 points to 42.4%, as product margin fell to 45.2% on a less favorable system shipment mix and services margin remained deeply negative at negative 15.6%, driven by contract mix and higher service costs.
fell 30.0% to $20.3 million as operating expenses rose 21.7% to $70.9 million, with G&A up 45.9% to $22.3 million primarily from professional fees tied to the pending Veeco merger.
Section summaries
Management's Discussion and Analysis
Revenue rose 7% in H1 FY2026 driven by Aftermarket, but gross margin fell to 41.4% on mix and merger costs pushed operating expenses up 21.7%.
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Total for the six months ended June 30, 2026 grew 7.0% to $414.1 million, driven by a 33.7% surge in Aftermarket revenue to $155.4 million, while systems revenue declined 4.5% to $258.7 million.
fell 25.8% to $23.3 million, and fell 23.5% to $0.75, though the decline was cushioned by a lower of 12.4% compared to 10.3% a year ago.
fell 60.7% to $14.8 million, and the company ended the quarter with $155.0 million in cash and equivalents and $422.0 million in short- and long-term investments with no bank debt.
The Veeco merger is expected to close in the second half of 2026, pending final regulatory approval from China's State Administration for Market Regulation.
What changed
The Q4 2025 sequential increase to $238.3 million did not mark the start of a sustained upturn: Q1 2026 revenue retreated to $199.0 million, and Q2 2026's $215.2 million, while up 8.2% sequentially, remains below the Q4 2025 level.
The services , flagged as a key watch item after turning negative 5.1% in FY2025, deteriorated further to negative 15.6% in Q2 2026, confirming a structural shift in service contract economics rather than a temporary mix effect.
Merger-related costs, which were $16.3 million for all of FY2025, are now a material and recurring drag: G&A expenses rose 45.9% in Q2 2026 alone, compressing to 9.4%.
No memory orders appeared in system shipments in Q2 2026, prolonging the near-total dependence on mature-process customers that has defined the mix since 2023.
What to watch
Whether Q3 2026 can hold or build on the $215.2 million level, and whether the aftermarket growth that drove Q2's increase is sustainable or a one-quarter effect.
The Q3 2026 services , to determine whether the negative 15.6% recorded in Q2 represents a new floor or whether contract mix can lift it back toward breakeven.
The closing timeline and final regulatory approval from China's State Administration for Market Regulation for the Veeco merger, given that merger-related costs are now a material and recurring drag on .
Whether any memory orders appear in system shipments before the Veeco deal closes, or whether the recovery timeline shifts further into 2027, leaving the company dependent on mature-process customers.
Overall contracted to 41.4% from 45.5%, as product margin fell to 45.2% on a less favorable system shipment mix and services margin turned deeply negative at (15.6)% due to contract mix and higher service costs.
Total operating expenses jumped 21.7% to $143.5 million, with general and administrative costs up 45.9% to $49.1 million primarily from professional fees tied to the pending Veeco merger.
dropped to 6.7% of from 15.0%, and fell to 7.8% from 15.5%, reflecting the and expense growth.
was $36.5 million, down from $79.5 million a year earlier; the company held $155.0 million in unrestricted cash and $422.0 million in short- and long-term investments at quarter-end.
The Veeco merger is expected to close in the second half of 2026, pending final regulatory approval from China's State Administration for Market Regulation.
Quantitative and Qualitative Disclosures About Market Risk
As of June 30, 2026, there have been no material changes to the quantitative information about market risk disclosed in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” included in our 2025 Form 10-K.
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As of June 30, 2026, there have been no material changes to the quantitative information about market risk disclosed in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” included in our 2025 Form 10-K.
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.
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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.
As of June 30, 2026, there have been no material changes to the risk factors described in Item 1A, “Risk Factors” included in our 2025 Form 10-K. 31 Table of Contents
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As of June 30, 2026, there have been no material changes to the risk factors described in Item 1A, “Risk Factors” included in our 2025 Form 10-K.
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