Key Highlights

  • Third quarter Revenue was a record $73.4 million, up 162% from $28.0 million a year earlier.
  • Revenue rose 54% from $47.6 million in the second quarter of 2026.
  • GAAP gross Margin was 56.0%, compared with 22.3% in the third quarter of 2025.
  • GAAP Net Income was $25.7 million, or $0.39 per diluted share, versus a net loss of $1.9 million.
  • Non-GAAP net income was $26.8 million, or $0.41 per share.

Record revenue driven by indium phosphide demand

AXT (NASDAQ:AXTI), a Fremont, California materials science company, develops and manufactures compound and single element semiconductor wafer substrates made from indium phosphide, gallium arsenide and germanium. The substrates are used where a typical silicon wafer substrate cannot meet the performance needs of a semiconductor or optoelectronic device.

The company reported third quarter 2026 results on October 29, 2026. Revenue reached a record $73.4 million, compared with $47.6 million in the second quarter of 2026 and $28.0 million in the third quarter of 2025.

CEO Morris Young called it a pivotal and exciting period, saying revenue was up 54% from the prior quarter and 162% year over year on exceptionally strong customer Demand for indium phosphide material.

Gross margin climbs to 56.0%

GAAP gross margin was 56.0% of revenue, compared with 44.9% in the second quarter and 22.3% in the same quarter a year ago. Non-GAAP gross margin, which excludes stock-based compensation, was 56.1%, versus 45.0% and 22.4%.

That is an improvement of roughly 33.7 percentage points year over year on a calculated GAAP basis. On revenue of $73.4 million, a gross margin of 56.0% implies Gross Profit of about $41.1 million on a calculated basis, compared with about $6.2 million a year earlier.

The company reports on both GAAP and non-GAAP bases, and non-GAAP results exclude stock-based compensation expense. Reconciliation tables appear in the financial statements in the release.

Net income reaches $25.7 million

GAAP net income after minority interests was $25.7 million, or $0.39 per diluted share. That compares with net income of $11.1 million, or $0.17 per share, in the second quarter of 2026 and a net loss of $1.9 million, or $0.04 per share, in the third quarter of 2025.

Non-GAAP net income was $26.8 million, or $0.41 per share, versus $11.9 million, or $0.19, in the second quarter and a non-GAAP net loss of $1.2 million, or $0.03, a year earlier.

On a sequential basis, GAAP net income grew by roughly $14.6 million, or about 131%, on a calculated basis, as revenue rose 54% and gross margin widened.

Calculated growth and share count

Revenue rose $25.8 million from the second quarter and $45.4 million from a year earlier on a calculated basis. GAAP net income of $25.7 million at $0.39 per diluted share implies about 66 million diluted shares, and non-GAAP net income exceeded GAAP by $1.1 million.

Non-GAAP figures exclude only stock-based compensation, so the near identical GAAP and non-GAAP gross margins of 56.0% and 56.1% show how small that charge is relative to revenue.

Capacity expansion and what follows

Mr. Young said the company entered 2026 with a commitment to double its indium phosphide capacity. The quarter's results show demand running ahead of the capacity the company had in place a year earlier.

The company hosted a conference call at 1:30 p.m. Pacific Time on October 29, 2026, and said the webcast would stay available until October 29, 2027.

Readers tracking the name will likely follow how capacity additions translate into shipments, whether gross margin holds near the 56.0% level, and how the sequential growth rate compares with the 54% reported here.