Q3 2025 Axcelis Technologies Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the excellus Technologies. Call to discuss the company's result for the third quarter 2025
My name is Brittany Morgan and I will be your coordinator for today.
I will now like to turn the presentation over to your host for today's call.
David rizik, senior vice president of investor relations and corporate strategy.
Please proceed.
Thank you, operator. This is David rizik. Senior vice president of investor relations and corporate strategy. And with me today is Russell low, president and CEO and Jamie Coogan Executive, Vice President and CFO.
If you have not seen a copy of our press release issued earlier today, it is available on our website.
In addition, we have prepared, slides, accompanying today's call and you can find those on our website as well.
Playback service will also be available on our website at described at our press release.
Please note that comments made today about our expectations for future revenues, profits, and other results are forward-looking statements under the SEC's Safe Harbor provision.
these 4 looking statements are based on Management's, current current expectations, and our subject to the risks inherent in our business,
These risks are described in detail in our annual report on form, 10 K, and other SEC filings, which we urge you to review.
Our actual results may differ materially from our current expectations. We do not assume any obligations to update. These forward-looking statements.
Given the pending merger with VO, we will not be addressing questions related to the transaction.
Please note that today's call is neither an offering of Securities nor solicitation of a proxy vote in connection with our previously announced transaction with Vo.
We urge you to read The Joint, proxy statement relating to the transaction with Vico once it becomes available.
During this call, we will be discussing various non-gaap Financial measures. Please refer to our press release and accompanying materials for information regarding our non-gaap financial results and a Reconciliation to our gaap measures. Now, I'll turn the call over to president and CEO Russell low.
Good morning, and thank you for joining us. For our third quarter, 2025 earnings call
Speaking on 54, we generated Southern results in the third quarter, with revenue of 214 million and non-gaap earnings per diluted share of $1.21 both exceeding. Our Outlook, we delivered records, cs9 Revenue as well as slightly better than expected system revenues, which drove the better than expected profitability.
Bookings in the third quarter declined, on a sequential basis, primarily led by a softer power and general mature bookings, which were partially offset by an improvement in memory.
While booking fluctuate from quarter to quarter based on recent, encouraging quoting activity, and a conversation of customers on their bill plan, we anticipate bookings to improve sequentially in the fourth quarter.
Before I provide more detail on the trends, we're seeing by market segment, I'd like to touch on our recent transaction announcement on October the 1st, we announced an Excel and vaux had agreed to merge to create what we believe will be a leading semiconductor Equipment Company.
We have long admired, veikos history of innovation and his track record of delivering breakthrough products. And this merger is expected to position the combined company as a key beneficiary and critical enabler of secular Tailwinds, including Ai and electrification.
I want to take this opportunity to recap a few points that we made when we announced this deal and what is highly compelling opportunity for both companies.
Starting the cross to sell of synergy. We Believe each company can open doors for the other 1. Such example is with excellus implant and veikos Laser annealing Solutions, which are adjacent steps and resigned in the same, diffusion module, in the Fab. In addition, our combined technical debt is expected to enable us to optimize technology advancements.
An example of this that I plan to leverage our deep iron source and component expertise to enhance vehicle's iron beam deposition capabilities and vice versa.
Second from a market perspective, we are strong in silicon carbide. While vehicle is an exciting opportunity in mocd for gallon silicon.
We believe this combined presence will allow us to be a comprehensive solution provider to The Compound Semiconductor Market which is becoming increasingly relevant due to electrification including the growing need for greater power. Efficiency driven in part by the ryzen AI
In addition, We Believe, veikos mltv business has an opportunity in micro LED as well as an Indian phospho opportunity for optical communication products, which is an emerging data center application.
Moreover, we see opportunity stemming from aspirants in memory and mature Foundry logic, which we believe are complemented very well by Vico's strength in advanced Foundry logic and advanced packaging, stretching across and kneeling. I am being depositioned in wet processing and lithography solutions.
Is also worth noting that the combined company is expected to be better equipped to better serve our customers through access to an expanded, install base, supported by stronger aftermarket services.
Finally, the all stock nature of this transaction is expected to position the combined company to have a resilient operating profile and balance sheet post-closing, which we believe allows us to invest in our business, to drive organic growth, as well as return Capital to shareholders.
In short by bringing in a 2 companies together. We believe we are building a leading semiconductor equipment company with the capabilities resources and financial Foundation to drive sustainable growth and value creation for shareholders and drive meaningful benefits for all our stakeholders.
with that, let me now turn back to our Q3 results and the trends we're seeing by market category
Turning to 56 in the quarter sales to mature node. Applications comprised almost the entirety of of our citizenships in particular power and general mature.
Now on slide 7, let me review our Trends by End Market.
Within our power business, shipments to silicon carbide applications through nicely on our sequential basis.
Consistent with our commentary, heading into 2025 customers continue to digest the capacity as we've been put in place over the past few years.
However, in China, multiple customers continue to build out capacity, as they strive to address growing demand in the local market while customers outside of China are making selective investments into next Generation technology such as trench and super Junction.
Moreover, in the quarter, we shipped several tools to multiple customers that have only just begun to develop their silicon carbide capability.
This is yet another validation of the long-term secular growth opportunity in silicon carbide and customers recognized. The world's need for more efficient, power delivery will continue to accelerate
As the cost of silicon carbide continues to decline, we anticipate is adoption in an expanding array of applications will continue to grow. Ultimately requiring more investments in technology and capacity.
As of note in the past Excel is the market and Technology leader in high energy iron implantation which become which is becoming increasingly critical for next generation of silicon carbide devices.
In August, we announced a joint development program, with G Aerospace to pursue production, worthy, high voltage, silicon carbide devices, utilizing our Pure and xeax system which is our highest energy, implanter, delivering up to 1 5.
We are proud to partner with G Aerospace on this exciting initiative.
In September, we made multiple new product announcements, including our new purium Power Plus series at the annual ice cream conference, which was held in Korea.
The platform is designed to enable improved device performance and increased productivity for Next Generation power devices.
While the majority of the platform is targeted to the silicon carbide Market. There are also applications with silicon and gallium nitride.
Excesses are proven track record of collaborating with customers to develop innovative solutions. And this product announcement is no different
We also have received positive customer feedback about our new high energy channeling capability and music and multi-step implant chain capability, which reduces the overhead of weight for transfer time during the implant process. Enabling our customers to have increased output with less downtime between recipes recipes.
This capability Is On Tools. We've already placed in the field with our leading customers. And as I said, we're receiving positive feedback.
Additionally, excellus announced the
launch of the GST Ovation ES.
Are a high current multi-way for ION. Implanter targets. Specifically for engineered substrates.
Turning back to the near-term. Demand environment in silicon carbide, we continue to see select areas of capacity and Technology investment. And we expect revenue from silicon carbide, to fluctuate from quarter. To quarter with fourth quarter, expected to be down slightly on a sequential basis.
In a other power market, segments ship system. Revenue also grew on a sequential basis, primarily due to shipments to customers in Japan and Europe,
In general mature, Revenue declined on sequential basis, as customers continue to manage their capacity Investments, given the current demand in Auto industrial and consumer electronics.
Broadly speaking, we are seeing an improvement in utilization rates. However, this there is by customer and can even vary by Fab location within each customer.
In fact, we're seeing some signs of improvement in utilization rates with our Image Center customers as camera content on Autos continues to rise and smartphones continue to be a strong learned long-term demand driver.
image centers, require high energy unemployment and we are well, positioned to address this Market as our customers assume capacity to build out Investments
In the third quarter, we also shipped an XC Max evaluation unit for a 300 mm power management IC application.
This is noteworthy because our xeax was developed for the image sensor market. And yet we're seeing interest additional applications where this technology can be deployed. Namely power.
Turn to slide 8 in advanced logic. We continue to actively Target. Next Generation Iron. Implantation applications across multiple customers.
in the quarter, we generated revenue from a previously booked system with an existing customer
moving to memory Revenue, remain muted in the third quarter. However, we expect sequential increase in the revenue in the fourth quarter of customers expand capacity to address growing demand for AI related applications.
While it is too early for us to predict 2026. Given our conversations with customers on the capacity players, we anticipate our sales to memory Market to grow next year, led by increased dramm and hbm Investments.
last must remain focused on scaling to higher layer count which
Requires deposition extremer based upgrades but not incremental ion implant capacity. As a result, we continue to expect demand for Nan applications to remain muted in the near term. However, we are encouraged with some initial signs of improvement in the Nan bit demand and pricing, and we are ready to serve this Market. Once customers resume capacity additions.
On slide, 9. Let me wrap up my thoughts prior to handing the call over to Jamie.
We are navigating the current cyclical digestion period across our markets exceptionally. Well remaining a aggressive in our product development and customer engagement or staying disciplined on cost control.
as referenced earlier we're seeing interest in new applications for our highly Solutions but also executing on our strategy to drive greater adoption of our high current portfolio,
Meanwhile meanwhile.
A CSN live business continues to benefit from our focused, aftermarket stretchy, and growing install base. It remains a foundational part of our company's profitability and cash, flow profile, and in school to the value proposition, we offer our customers.
added all this up to spot a moderation, demand, and our markets in 2025,
We have a strong base of profitability and cash flow which we believe provides a solid platform for excellus to execute on our long-term growth opportunities.
With that, let me turn the call over to Jamie for a closer. Look at our results and Outlook Jamie
Thank you, Russell and good morning everyone. I'll first start with some additional detail on our third quarter before turning to our outlook for Q4.
Starting on slide 10, third quarter Revenue was 214 million with systems Revenue at 144 million and see us. And I Revenue at a record of 70 million, both above our expectations, for the quarter.
Our better than expected csni. Revenue was driven by strong demand for spares and consumables as well as an improvement in our service revenues. We are pleased with our execution in csni and our aftermarket offerings are resonating with the customers case in point through the first 9 months of 2025. Our csni revenue is up 9% on a year-over-year basis. Despite customers moderating their Capital Equipment Investments,
Moving to Consolidated sales from a geographic perspective, China decreased sequentially to 46% of total sales down from 55% in the prior quarter, consistent with our expectations, our customers, in China continued to digest, the robust Investments they've made and mature note capacity over the past few years. While quarterly Revenue by region can fluctuate. We anticipate revenue from China will decline sequentially in the fourth quarter.
Turning to other regions. We saw sales to the US at 14% while Korea declined to 10%.
As Russell mentioned, bookings declined on the sequential basis to 52 million and we exited the third quarter with a backlog of 484 million.
Turning to slide 11. I'd like to share some additional details on our gaap and non-gaap results.
Gaap gross margin was 41.6% in the quarter and on a non-gaap basis. Gross margin was 41.8% below our Outlook of 43% primarily due to mix.
Within systems Revenue. We recognized a number of low margin system installations in the third quarter that we had forecasted to occur in the fourth
within csni. As previously noted, we saw increased volumes of consumables and service contract Revenue which typically carry a lower margin. Nevertheless, we find this encouraging as this 10th, reflect increased, utilization rates with our customers.
Gaap operating, expenses totaled, 63.8 million, and on a non-gaap basis. Operating expenses were 50.4 million lower than our Outlook of 53 million. Primarily due to lower compensation related, expenses associated with the timing of annual Merit increases as well. As 1-time cost savings measures. We executed in the quarter,
Our non-gaap results, excluded transaction related expenses, associated with the pending vo merger.
Program. A recorded a portion of the expense associated with that in the period.
Given the nature of this program, we expect to record additional program related expenses in the fourth quarter.
As a result, our gaap operating margin was 11.7%. While our non-gaap operating margin was 18.2%.
Moreover, in the third quarter, we delivered adjusted, ibaa of 43, million reflecting, an adjusted, ibaa margin of 20.2%,
We generated approximately 5 million in other income with the sequential decrease, primarily due to foreign currency.
And our tax rate was approximately 14% in the third quarter, both on a GAAP and non-GAAP basis. For the fourth quarter, we estimate our non-GAAP tax rate will be approximately 15%.
Our weighted average diluted share count in the quarter was 31.5 million shares and this all translates into Gap, diluted earnings per share of 83 cents which was lower than our Outlook of 87 cents. However,
Non-gaap diluted earnings per share was 1.21 cents. Exceeding, our Outlook of $1.
The higher than expected, non-gaap diluted EPS was primarily due to better than expected Revenue along with lower operating expenses. Partially offset by product mix.
Moving to our cash flow and balance sheet data shown on slide 12, we generated 43 million of free cash flow in the third quarter as a result of better than expected profitability. And a slight Improvement in both Day sales, and days, payable outstanding.
Returning to share repurchases. In the third quarter, we were purchased approximately 32 million in shares and have 135 million remaining. Under the share repurchase program. Previously authorized by the excellus board of directors.
We exited the third quarter with a strong balance sheet, consisting of $593 million in cash, cash equivalents, and marketable securities on hand. This includes $143 million in long-term securities.
With that, let me discuss our fourth quarter outlook on, slide 13. All measures will be non-gaap with the exception of Revenue.
We expect Revenue in the fourth quarter of approximately 215 million and looking beyond the fourth quarter, our preliminary view on the first quarter of 2026 suggests revenues to be relatively similar to our anticipated levels in the fourth quarter of 2025
We expect non-gaap gross margins of approximately 43%. The sequential Improvement is primarily due to a more favorable mix.
And we expect non-gaap operating expenses of approximately 56 million as a result of 1-time. Cost-saving measures in the third quarter, not reoccurring
As and in addition to a full quarter of annual Merit increases kicking in for the period.
Adjusted ibadan. The fourth quarter is expected to be approximately 41 million and finally, we estimate non-gaap diluted earnings per share in the fourth quarter of approximately $1.12.
In summary, we are pleased with our financial execution, through the first 9 months of this year delivering robust, year-to-date, adjusted. Evida margins of 20% and strong free cash flow generation of 116 million dollars despite our Revenue being down
With a strong balance sheet, we are exiting 2025 in solid financial position. And we are specially excited about our pending combination with Bo and the opportunities ahead for the combined company.
With that, let me hand the call back to Russell for closing remarks Russell.
Thank you Jamie. We are pleased with our third quarter performance as a team continues to execute with focus and discipline a results. Reflect the strength of our business model, the quality of our technology, and the dedication of our Global team.
Look at ahead depending business combination with ziko represents an exciting transformational step for both companies.
We expect you to broaden our capabilities, expand our Market reach and position us to unlock even greater value for customers and shareholders. While creating exciting new opportunities for our employees,
I want to thank our customers employees partners, and shareholders that continue to support and Trust in excellus.
With that operator, we are ready to take your questions.
Thank, thank you.
At this time, we will conduct the question-and-answer session.
To ask the question, you will need to press star 1 1 1 on your telephone, and wait, for your name to be announced.
Question. Please. Press star 1 1 again.
We ask that all Q&A participants please limit yourself to one question and one follow-up.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of Jed dorsheimer with William, Blair, your line is now open.
Hey thanks guys. Um congrats on the quarter and uh thanks for taking my question. Um yeah I was wondering uh
If you might be able to describe the Dynamics a bit more in the other uh Power category um and in particular what customers are you know seeing in terms of um in Silicon and what I'm trying to get at and silicon carbides your differentiation with high energy is very clear and distinct and I'm curious what the Dynamics are that you're seeing in other power um and maybe also in general mature um that are driving that business and then I have a follow-up.
Hey, Chad, it's it's Russell. So, um, yeah, so so kind of broaden that slightly. So regarding power overall, we are seeing, you know, the second half of 25, has been slightly better than the first half of 25. We've talked about different customers. Um, you know, from different locations, kind of being in different phases. You know, we have kind of Chinese customers for silicon carbide, specifically adding, you know, capacity versus the non-chinese customers basically doing no transitions. When you look at, um,
Non-silicon carbide power. So basically, silicon power. So so that obviously is the largest tan regarding power in total, right for for us. And you know, I'd say it's kind of the ebbing and flowing. We, we, we do a nice job in out else. You know, for, for a number of customers with, um,
That power and and remember that some of those applications really are quite specific. So they might have a thin wafer application, which is, you know, you know, uh, silicon on glass or silicon on Silicon or some other application. So they're very specific and, you know, quite Advanced products and in some of those, they might even be a proton implant on the back side, right? So I'd say that they they they are still what I would consider highly differentiated products on the, on the, uh, the Silicon power.
In addition to we've had a very differentiated portfolio and continue to to push our portfolio with our latest, um, you know, power series, uh in silicon carbide.
Got it. That's uh uh helpful and then um, just uh, update on tariff impacts overall on the business and you know what you're seeing? Uh there would be helpful too. Thanks.
Yeah, so as for 2025, we continue to manage through the Tariff environment, as we, you know, think about the optimization of our Global manufacturing footprint to help support us in that effort. Um, you know, we are fortunate to have the the operations overseas but you know, we're not immune right at at all to to the the Tariff and tariff related costs as they do come in. Um, you know, the, you know, the the we as we looked at 2026 you know, could have a little bit more of an impact in 26, as we move ahead. Um as sort of the sum of those tariff costs, start to move out of inventory and into the, the p&l, but the team is working now down on the, on, on, on working to mitigate, uh, the potential impact of that. And as we pull our models together for that period, um, you know, we're going to, you know, we'll, we'll work to try to quantify that a little bit more materially for you guys. Um, I think, oh, overall we've done a nice job in 2025. But, you know, again these These are, um, you know, dynamic times for sure Jen. Um, you know, as the way things continue to sort of ebb and flow with the administration and and the decisions
That are made around tariffs.
I'll jump back in the queue but nice job, uh, you know, managing through uh, the difficult markets. Thanks.
Thank you so much.
Our next question comes from the line of Craig Ellis with B Riley Securities. Your line is now open.
Yeah, thanks for taking the question, and congratulations on the execution in the quarter, particularly the record CSNI revenues. That's really quite notable that you're now $71 million.
That excellus has a uniquely Broad and I think um, uniquely served customer base. Their, how should we think about the potential for, uh, China to be either a stable Market in 2026, a growing Market or 1 where uh, there would be just more digestion at play and and any color on uh, timing for which that might occur. I know revenues as a percent of total are now 46%. So, arguably it's happened here on your own quarter on quarter, but any color on, that would be helpful.
Craig, it's Russell. Thanks for the question. Um, so it's a little too early, uh, to say too much about 2026 and and, you know, clearly 2025 has been a year of digestion. Um, we yeah, we, we believe that. China demand in 2026 will depend upon the, you know, the end demand environments.
You know.
As well as how much progress they make on a chip self-sufficiency targets. And right now, we believe they're still below those targets. Uh, you know, clearly China for China and being able to supply domestic. Chips is is a really big Initiative for China. And I think they're uh that they have to continue to invest to achieve this capacity and I think, you know, the markets that we have the most visibility would be General mature and power and that's kind of where we're seeing this continued.
Ed, uh, kind of, you know, a desire to to grow 1 thing. I'd also say Craig is, you know, so, you know, geopolitics aside, you know, a Chinese customers are acting like, uh, any of our other customers. They really do want the best technology. They want the highest quality support. And, you know, they're actively engaging with us on our road map. So we are very engaged with our Chinese customers. We are aligning our road map so that we can support their their long-term growth. And, you know, we we see opportunities in in China
That's really helpful Russell. Thank you. And then the follow-up question is related to the tantalizing comments that uh that in 2026 uh we may be seeing indications for a better memory environment. I was hoping you could go into more detail in terms of what you're seeing uh in DM versus Nan to the extent that it's discernible. I know equipment complexed to either line or either type of line but just more color on on what you're hearing from memory customers. And in the past, you've
Had 50% share with Korean manufacturers. This had a real realistic expectation as uh as memory starts to re accelerate. Thanks team.
Okay. Um, so so
When we talk with our customers, uh, right now it's it's clear that the, the the the demand is coming from say dram and hbm, I think, when you kind of read the news, some of the suppliers of those products are basically sold out for 2026, you do see the high utilization, you do see the upgrade flow. I think, you know, the next stages are to bring on new new Greenfield capacity, right? So you're going to see that happening. Uh, so that that's kind of, 1 of the things we expect to see. Um, nand is really, we're still still nand is very quiet. I think nand's been quite for us for a long time, and obviously, we care about wafer starts for Nan's. Not whether you build taller and taller skyscrapers, which certainly, as I, as I mentioned, helps the depth and Edge people. Um, so I, I do think it's, it's
Exciting, that memory could actually be turning a cycle. Um, it's it's a bright spot for us, um, and I do think that we will continue to do well, when that happens.
Thank you, Russell.
It's Craig.
Thank you so much.
Our next question comes from the line of Christian Schwab with Craig Holland. Capital group, your line is now open.
Uh, great. Uh, thanks for taking my question, good quarter in guide, just to follow up on the memory. Could you remind us in a typical, you know, um, capacity cycle of, of adding wafer starts, you know, kind of a range of Revenue outcomes that, uh, historically you have have seen so we can get an idea of, you know, should we enter an upcycles? A range of Revenue outcomes that could benefit you in memory.
so the the capital intensity for um 100,000 wafer starts that kind of number you're looking for
Yeah, so if we, you know, if if there was Green Field facilities available for expansion you know obviously we all know how the pricing environment is um it would make sense for for dramm wafer starts uh to expand. Um you know, to does that add 50 potential million dollars of Revenue to you in the early basis 100 million. Could you just give us a wide range of potential outcomes?
Yeah so let me so uh Jamie's uh looking to to find the exact number and we'll give you that that that well the number we believe. You know. So
Then and DM has about the same intensity and obviously we we we're thinking you know, in terms of that they all need high energy, medium current and high currents. There's a mix of those tools for 100,000 way for starts.
Thought it was north of um, you know, it it's it's 45 to 55. Total implants that kind of number
Perfect. And then as uh as you guys are seeing to improve utilization but spotty um and and general mature are you guys optimistic that General mature will see a recovery in in um, in 2026? Or is that yet to be determined?
So I think, you know, um, General mature is going to be driven by the macro climate. So you're looking at consumer spending automotive and Industrial, I think, while we're kind of encouraged by memory, uh, we've kind of said, in the past we kind of bounced along the bottom and it it is too soon to say that the, the other markets, mainly consumer industrial and and Automotive have actually turned but by customer. You do see pockets of high utilization, but you also see some customers deal with lots of excess capacity.
Yeah, where, where my just like you guys were monitoring, our customers sort of public commentary on inventory levels and their performance, right? And I think it's, it's still continues to be a bit of a mixed bag.
Great. No other questions. Thanks guys.
Yep. Thanks. Thanks Christian.
Thank you so much.
Our next question comes from the line of Jack Egan with Charter equity research. Your line is now open.
Great. Thanks for taking the question. So, um, myself on the record CSI Revenue, um, for that were there any kind of unique or 1-time benefits in that? Um, number or I mean, do you think your current level is pretty sustainable for the near future?
Yeah, I mean, again, we saw a little bit uptick from some, you know, again, the we talked about seeing some improved, utilization rates, so we saw a little bit optic there, you know? We do always have some customers who do some buying, you know, as they sort of do some restock and other related activities. Um, you know, I think what we saw in the period, right? Relative to expectations was slightly higher consumables um in the period which, you know, sort of contributed to some extent to the the lower gross margin in the period. That's a that's a generally, a positive sign. It's 1 of those Trends. We talked about um, as as recovery, you know, come comes into play, um, you know, upgrades continue to remain strong primarily in the memory market for the period as well. Um, so again I think these are just we keep talking about these little bright spots that we see along the path and you know, again I think you can tell from our tone here, we're a little bit more comfortable on the memory side but we still remain a little bit cautious as we look at the remainder of the business. In terms of calling a broad-based recovery just yet. Uh, but you know, we, we do feel a little bit more encouraged occurring.
About where memory is going.
Got it. Okay, that's helpful. And then um, on the booking side you you mentioned that uh there are expected to grow next quarterly. There's probably a bit of a, a normalization after just the the lower level in the third quarter, but um, can you just kind of go over some of the assumptions for uh, growth in the fourth quarter there? Maybe like by End Market or geography?
Um, I think it we're expecting bookings across. I kind of cut across, uh, pretty much all of all of our customers, right? Not not specifically a, a, a given Market segment. Um, I think there's kind of been a little bit of built up pressure, and, uh, people people will be looking to place to place pose. I mean, obviously, if you focus in on memory specifically, we, we kind of, said, in the past that we typically build to forecasts, so you may get the booking and the shipment in the same quarter. So you're not likely kind of to see to see those necessary in in the backlog.
Thank you so much.
Our next question comes from the line of Mark Miller with the Benchmark company. Your line is not open.
Uh thank you for the question and congratulations on the quarter. Um you're talking about you're welcome you're talking about lower silicon carbide in the fourth quarter. Do you see a trend where EVS are going to be cons? You utilizing less salt and carbide next year.
So I think, you know, so what while the second half of 25 was slightly higher than the first half of 25 for second carbide, I think it's been, it's remained healthy and it's kind of, uh, you know, it the demand has remained, as you kind of talked about is there's kind of 2 camps. There's the camp moving to kind of more advanced nodes and bigger Wafers sizes more quickly. And then there's, there's there's, there's those that are adding capacity with, with the technology they have. I think, you know, 1 of the things is that as the prices come down significantly within EVs. And even hybrids, now we're seeing a lot more penetration of silicon carbide into those Drive systems. Then you're seeing more, so you're seeing more and more hydrogen electric vehicles. Anyway, then the penetration into those with silicon carbide is going up and then we're also actually hearing about applications going up. So for example, we're hearing that, you know, the compressor for the AC unit on a car is going to be using so it can
Carbide. So that's certainly a, a positive and then there's also the new applications whether it be data center or grid Technologies. So I think there's still a long way to go on this electrification and I think as you price coming down more and more and more uh you're going to see the applications open up. Yeah, and we we also think about design cycles for automobiles as well, right? I mean those are a little bit of a multi-year so you know, cars that are being designed over the last few years. Now actually have the ability, given the price points of silicon carbide to introduce it more meaningfully into the the bomb, right? As they're building out those automobiles, you know, reading some reports out there that, you know, again, we talked about penetration of silicon, carbide into full EVS being in sort of, that sort of mid single digit and that's maybe today in the sort of low low, teens or or something like that Mark. So there is still a lot of room to run in the, you know, sort of the, the automobile market for silicon carbide, on on penetration, into that space.
Okay. Just, uh, what What's your feeling for EVS? Next year? In China, in the United States? Are they going to grow in both areas?
Yeah, I think it's hard for us to, to know, I mean again, China continues to make some really meaningful progress, right? In the development of their electric vehicles. I think they're doing a nice job. Um, you know, in in pushing the technology forward. Um, you know, I think the
The, the support the government provides, uh, to the the, to the consumer there to encourage them. Right to to move to those Vehicles has has actually worked pretty well for them. Um, but you know, it's hard for us to know exactly where those, where those numbers come in. Yeah. And the other thing Mark but, you know, so so obviously the Chinese auto market is the is the largest. I think it's like 30 million out of the entire 90 million cars per year. I think the competition has been so, um, aggressive in China amongst the electric car manufacturers that they're now see seeking overseas markets in order to kind of like broaden their portfolio. And, you know, improve improve, their kind of ability to weather that. So I think you're going to see, you know, uh, more and more electric cars at better price points. Start to rate multiple different International markets. Yeah,
thank you.
Thank you so much.
Our next question comes from the line of Dennis paa.
I agree. Nino company LLC. Your line is not open.
Uh, great. Thank you.
Um for our first question. Could you please uh discuss orders a little bit? Um maybe which segments saw the dip in to 3 so you guys were down to around 55 million or so and what you're seeing into Q4. Perhaps also with regards to your full year, bookings expectations for full year 2524.
Sorry Dennis I missed the first part of that question. Can you just um maybe reiterate that real quick? I just want to make sure we're answering the right question here. I know it's around bookings I just want to make sure we answer it the right way for you.
Yeah, basically, could you just discuss which segments saw the dip in a in Q3 here and then what what you're seeing into, uh, into Q4? And then, you know, maybe full year expectations for 2025 versus 2024
General mature, continue to be a little bit softer, you know, relative to the bookings. I think, for the full year we do anticipate bookings to be, uh, lower than what we saw. Um, you know, sort of during the, you know, book The the high days of of the high booking rate. Um, although we do see encouraging signs as Russell noted in his prepared remarks. Um, you know that, you know, bookings will be higher, you know, in in Q4 relative to to what we see here in the in the third quarter time frame
Um and then you know beyond that you know we we don't typically provide commentary, you know, on bookings. You know, beyond that just uh given the the visibility and and sort of uh nature nature of that process for us.
Got it. And then my follow-up, maybe we could discuss a csni a little bit. So, with CSI, being up this much, maybe you can talk about what you're seeing for utilization or maybe service intensity by geography. But there are some reasons that are, you know, particularly strong or particularly weak.
Yeah, so we talked about seeing some good upgrade activity and and consumable activity, you know, in in the memory space that's primarily going to be tied to sort of our Korean memory customers. Um, and we think about that performance, I think we continue to see good good business in China, relative to, you know, Cs and I and and other related activities. Um, and then as it relates to the other geographies and the other markets, it really is sort of spot customer by customer based on their, you know, specific Fabs and and utilization rates that we're seeing there. What? And Marcus this is. Yeah. And what end markets and what, you know what end customers they have.
And so, you know, we talked about the sort of disparity, even within a certain customer for 1, Faber utilization than another and and and we do see that today and that translates into csni volumes as well. I think the important piece is though we continue to push more of our systems right into the field. And so, you know, on a, on a period by period basis, we're we're having more available systems for csni Revenue, uh, which creates that nice stable, you know, sort of floor of revenue for us, even in in lower utilization and lower system shipments, uh, regions. And then, you know, the the generally above average margins, we get from that, you know, price, a nice little stable profit base for us. Um, as we continue to look to invest in the business, going forward,
Got it. That was all from us. Thank you.
Thanks. Dennis, thanks.
Our next question comes from the line of Duke's son, James with Bank of America Securities. Your line is now open.
Hi. Thank you for taking the question and congrats on the quarter. Um, I wanted to go back to the bookings question and, um, I, I know you're not giving too much color Beyond specific on markets, but in Q3 you said power, in general mature, we're down which are 2 of your biggest and markets. Um, and even if Q4 increases
Unless it increases materially, I think your backlog coverage is now only down to three quarters. I'm curious what you're seeing in terms of visibility into 2026. I know Q4 and Q1 were guided flattish, but what happens after that? Thank you so much.
Okay, so, you know, so regarding regarding booking I kind of say yeah, bookings can fluctuate from quarter quarter and I think, you know, Q3 is is is no exception, uh, based on a conversations with our customers across all segments, you know, we we're expecting to see, you know increased activity regarding, um, you know, bookings regarding, uh, memory, which, uh, has always been a, a, a kind of almost like a turns business, where we, kind of seeing some kind of optimism, you know, we're booking we're building 2, a, a, a schedule, if you like. And so, we expect, we'll get the PO on the same time as we ship the tour. So that's kind of where we are right now. I think, when you look at that, we've got like, 4 to 5 quarters worth of of uh, backlog. You know, it's still at 485 million, that doesn't include any of our CSI base. So when you start putting the improving csni on top of that, you've got a really solid, uh, Financial base to which
Can also happen, you know, in other parts of the business is you know, customers needs and and requirements shift and change. You know, we want to make sure that we stand ready to be able to capture, you know, incremental opportunities, um, you know, for for that. So, you know, operationally, we can operate pretty efficiently with, you know, sort of the, the type of, uh, production visibility that we have today. Um, you know, we've been, uh, you know, making some investments in inventory, given the strength of our balance sheet, to be able to Pivot, pretty quickly to meet, you know, customer requirements that might come in in, in relatively short time frames. Um, you know, and, and, and, and in some instances, we, we can see customer needs book and shipment orders within a period, um, you know, not just within memory, but in other parts of the business, as a result of that,
Got it, thank you for the color. Um, and then for China specifically, you said, China, Q3 was down. You expect it to be down again, next quarter. Um, but then a lot of the strength, especially in power seems to be coming from China Auto.
So what would be the?
The total revenue drivers into Q4 and q1, um, is it mostly the memory customers or is it Western powered device customers. Thank you so much.
Yeah, so I I, you know, I don't we're not going to give specifics. I think I'm I'm markets just as of yet ducks and right to some extent, um, you know, as we look ahead and and see where that comes, we do expect to see some incremental memory opportunities, uh, supporting the businesses we go forward. Um, you know, I just want to remind you as we enter the Year. We, We anticipated China Revenue being down both for General mature and power. So what's our current here is not outside of our, you know, General expectations to the overall performance of the business, uh, given the digestion of capacity that we see there. Um, I think Russell and his prepared remarks noted that we are. We are still seeing new entrance into the power Market. I think their their customers today that see, inflection points. Um, you know, as they look at sort of the the long-term trajectory, you know, of power. Specifically, in silicon carbide, they they still see an opportunity for to enter the market and, and to be successful in that space. So, um, like I said, we are we're ready to support all those customers. Um, you know, as we move forward and we'll have more commentary on on, uh, on
on that as in on the future expected performance in, in our next call,
Got it. Thank you so much.
Thanks Dustin.
Thank you so much. Our final question comes from the line of David Dooley with steelhead Securities. Your line is now open.
You there, Dave? Hello David.
Can you hear me?
Yep. Good. Okay I finally figured out the technical difficulties. Congratulations on nice results. In a difficult environment. Um, I
Jamie, I think you were talking about gross margin or systems that were pulled into Q3 from Q4. The impacted gross margins. I was wondering if you could elaborate a little bit more on that and do you expect that to continue in Q4? And my second question is um basically adoption of silicon carbide, outside of electric vehicles. And if you could perhaps elaborate on which in markets, you think will start to contribute in a more significant way.
Yeah, so I'll start with the gross margin in the second question off the Russell there. Uh, but on the on the gross margin front day, so there's a couple of things so, you know, systems mix so shipped systems mixed within the period, you know, can impact margin. We did see a little bit of reshuffling of CIS shipped systems relative to expectations. So that's the sort of product mix. Um, the the specific items we were talking about related to the installation. So, you know, this is really around some deferred revenue that, you know, related to systems that had shipped in Prior periods or some install.
That were at lower margin. We had forecasted. Those getting signed off and completed in the fourth quarter time frame, you know, team team in the field work to to bring those in and get those closed off here in the third quarter, which led to some of the higher slightly higher Revenue uh that than what we had forecasted in that space. But unfortunately also carried some lower margin which put a little bit of pressure on gross margin for the period. Um you know, those are I think a unique event, um, you know that we, you know, each installation is its own unique event, by the way. Uh, so this is not something, you know, we will see this from time to time occur.
To see us and I are are the real drivers of gross margin for the period.
Well, I think your second question was about silicon carbide applications Beyond electric vehicles, right? So, just just start off, kind of, like, calibrate on, on electric vehicle. So, um, I think David mentioned it, but I think it's, it's kind of low single low double digits, like, the 10 to 12% of cars, having silicon carbide, in them. Um, outside of say, say Tesla's, uh, I think, you know, part of that is because the design cycle is so long, uh, for for most car cycles that if you want to design, slick and covered in you, it's going to take you through or 4 years where it comes into production. So I think we're going to see a large increase there. And like I mentioned, I also think you're going to see more and more cars, taking silicon carbide, including hybrids, and the meeting more and more so than carbide. So that's kind of what, what, what we're seeing and the huge competition and the lowering of costs. I think it's going to grow EVS quite significantly, but that aside, um, you know, we are, you know, we are hearing about, you know, the electric,
Grid. And, you know, having kind of a, you know, solid state devices in in in the electric period. We're also hearing about the data centers, but bear in mind we don't necessarily know what our customers are shipping. But if you listen to some of the kind of reports, um, some of our customers have products that are going after the data centers and there's multiple applications of the data centers, it comes in at the kilowatts jumps down all the way through.
Through until it hits a couple of volts or whatever actually on the board. So and those those data centers are using ridiculous amounts of power, right? Um, and I think the electrification is really going to support the penetration of AI going forward.
Thank you.
Yes, Dave.
Thank you so much for that.
That does conclude our question and answer session.
and,
Thank you for your participation in today's conference, and thank you and this stuff and conclude the presentation on Friday.
You may now disconnect good day.