Contacts:

Gary Fischer

Chief Financial Officer

(510) 438-4700

Leslie Green

Green Communications Consulting, LLC

(650) 312-9060

AXT, Inc. Announces Second Quarter 2016 Financial Results

FREMONT, Calif., July 27, 2016 – AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor substrates, today reported financial results for the second quarter, ended June 30, 2016.

Second Quarter 2016 Results

Revenue for the second quarter of 2016 was $20.5 million, compared with $18.7 million in the first quarter of 2016.

Gross margin was 29.4 percent of revenue for the second quarter of 2016, compared with 28.1 percent of revenue in the first quarter of 2016.

Operating expenses were $5.1 million in the second quarter of 2016, compared with $4.8 million in the first quarter of 2016.  The increase in operating expenses was primarily the result of a onetime restructuring charge of $226,000 related to a reduction in force at one of the Company’s consolidated subsidiaries.

Operating profit for the second quarter of 2016 was $0.9 million compared with operating profit of $0.5 million in the first quarter of 2016. 

Net interest and other income for the second quarter of 2016 was $0.0 million, compared with a loss of $0.2 million in the first quarter of 2016.

Net profit in the second quarter of 2016 was $1.2 million, or $0.03 per diluted share, compared with a net profit of $42,000 or a gain of $0.00 per diluted share in the first quarter of 2016.

Management Qualitative Comments

“We continued to show meaningful progress in our business, achieving revenue at the high end of our guidance range, and exceeding our profitability expectations. In addition, we further expanded the gross margin to 29.4% through yield improvements, manufacturing efficiency, and higher production volume. We also generated positive cash flow.  Cash, cash equivalents and investments increased by $1.6 million. AXT remains focused on maximizing opportunities in strategic emerging areas, such as indium phosphide substrates, where we are solidly positioned with the expertise, technology and manufacturing capability to support further growth.”

Conference Call

The company will host a conference call to discuss these results today at 1:30 p.m. PT. The conference call can be accessed at (719) 325-2463 (passcode 2438457). The call will also be simulcast on the Internet at www.axt.com. Replays will be available at (719) 457-0820 (passcode 2438457) until August 2, 2016. Financial and statistical information to be discussed in the call will be available on the company's website immediately prior to commencement of the call. Additional investor information can be accessed at http://www.axt.com or by calling the company's Investor Relations Department at (510) 438-4700.

About AXT, Inc.

AXT designs, develops, manufactures and distributes high-performance compound and single element semiconductor substrates comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge) through its manufacturing facilities in Beijing, China.  In addition, AXT maintains its sales, administration and customer service functions at its headquarters in Fremont, California.  The company’s substrate products are used primarily in lighting display applications, wireless communications, fiber optic communications and solar cell applications. Its vertical gradient freeze (VGF) technique for manufacturing semiconductor substrates provides significant benefits over other methods and enabled AXT to become a leading manufacturer of such substrates. AXT has manufacturing facilities in China and invests in joint ventures in China producing raw materials. For more information, see AXT’s website at http://www.axt.com.

Safe Harbor Statement

The foregoing paragraphs contain forward-looking statements within the meaning of the Federal securities laws, including, for example, statements regarding the market demand for our products, our market opportunity, and our expectations with respect to our business prospects. These forward-looking statements are based upon assumptions that are subject to uncertainties and factors relating to the company’s operations and business environment, which could cause actual results to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. These uncertainties and factors include but are not limited to: overall conditions in the markets in which the company competes; global financial conditions and uncertainties; policies and regulations in China; market acceptance and demand for the company’s products; the impact of factory closures or other events causing delays by our customers on the timing of sales of our products; our ability to control costs, our ability to utilize our manufacturing capacity; product yields and their impact on gross margins; and other factors as set forth in the company’s annual report on Form 10-K, quarterly reports on Form 10-Q and other filings made with the Securities and Exchange Commission.  Each of these factors is difficult to predict and many are beyond the company’s control. The company does not undertake any obligation to update any forward-looking statement, as a result of new information, future events or otherwise.

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AXT, INC.

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