AXCELIS TECHNOLOGIES INC

Results of Operations

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

Revenue

The following table sets forth our total revenue:

Total revenue was $237.8 million during the three months ended September 30, 2026, compared with $213.6 million, for the three months ended September 30, 2025. The $24.2 million increase in total revenue for the three-month period ended September 30, 2026, in comparison to the same period in 2025, was primarily driven by an increase in Aftermarket 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 September 30, 2026 and December 31, 2025 was $138.0 million and $108.9 million, respectively.

Total revenue was $651.9 million during the nine months ended September 30, 2026, compared with $600.7 million for the nine months ended September 30, 2025. The $51.2 million increase in total revenue for the nine-month period ended September 30, 2026, in comparison to the same period in 2025, was primarily driven by an increase in Aftermarket sales, partially offset by a customer settlement of $4.9 million.

Revenue Categories used by Management

Management regularly disaggregates revenue in the following categories, which it finds relevant and useful:

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

Aftermarket and Systems Revenue

Included in total revenue of $237.8 million during the three months ended September 30, 2026 is revenue from our Aftermarket business of $92.6 million, compared with $69.9 million of Aftermarket revenue for the three months ended September 30, 2025. Aftermarket revenue fluctuates from period to period primarily 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 $145.2 million of revenue for the three months ended September 30, 2026 was systems revenue, compared with $143.7 million of systems revenue for the three months ended September 30, 2025. Systems revenue fluctuates from period to period based on our customers’ capital spending.

Included in total revenue of $651.9 million during the nine months ended September 30, 2026 is revenue from our Aftermarket business of $248.1 million, compared with $186.2 million of Aftermarket revenue for the nine months ended September 30, 2025. The remaining $403.8 million of revenue for the nine months ended September 30, 2026 was systems revenue, compared with $414.5 million of systems revenue for the nine months ended September 30, 2025.

Gross Profit / Gross Margin

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

Gross margin was 41.0% for the three months ended September 30, 2026, compared to 41.6% for the three months ended September 30, 2025. The decrease in gross margin resulted from an exchange rate headwind from an increased strength in the South Korean Won as well as an increased mix of lower margin systems partially offset by an increased mix of higher margin CS&I revenue.

Gross margin was 41.3% for the nine months ended September 30, 2026, compared to 44.1% for the nine months ended September 30, 2025. The decrease in gross margin resulted from an exchange rate headwind from increased strength in the South Korean Won as well as an increased mix of lower margin systems partially offset by an increased mix of higher margin CS&I revenue.

Operating Expenses

The following table sets forth our operating expenses:

Our operating expenses consist primarily of personnel costs, including wages, commissions, incentive-based compensation, stock-based compensation and related benefits and taxes; project material costs related to the design and development of new products and enhancement of existing products; and professional fees, travel and depreciation expenses.

Personnel costs are our largest expense, representing $39.3 million, or 56.0%, of our total operating expenses for the three months ended September 30, 2026, compared to $32.5 million, or 50.9%, of our total operating expenses for the

three months ended September 30, 2025. Personnel costs were $114.2 million, or 53.5%, of our total operating expenses for the nine months ended September 30, 2026, compared to $103.8 million, or 57.1%, of our total operating expenses for the nine months ended September 30, 2025. The higher personnel costs for the three months ended September 30, 2026 are primarily due to increases in salary, variable compensation, and stock-based compensation expenses. The higher personnel costs for the nine months ended September 30, 2026 are primarily due to increases in salary, benefits, variable compensation, and stock-based compensation expenses.

Research and Development

Our ability to remain competitive depends largely on continuously developing innovative technology, with new and enhanced features and systems and introducing them at competitive prices on a timely basis. Accordingly, based on our strategic plan, we establish annual research and development budgets to fund programs that we expect will solve customers’ high value, high impact, ion implantation challenges.

Research and development expense was $30.2 million during the three months ended September 30, 2026, an increase of $5.5 million, or 22.5%, compared with $24.6 million during the three months ended September 30, 2025. The increase is primarily due to higher personnel costs.

Research and development expense was $87.7 million during the nine months ended September 30, 2026, an increase of $8.8 million, or 11.2%, compared with $78.8 million during the nine months ended September 30, 2025. The increase is primarily due to higher personnel costs and an increase in consulting and service expenses.

Sales and Marketing

Our sales and marketing expenses result primarily from the sale of our equipment and services through our direct sales force.

Sales and marketing expense was $16.8 million during the three months ended September 30, 2026, an increase of $1.0 million, or 6.3%, compared with $15.8 million during the three months ended September 30, 2025. The increase is primarily due to higher personnel expenses, partially offset by a decrease in freight expenses.

Sales and marketing expense was $53.7 million during the nine months ended September 30, 2026, an increase of $7.8 million, or 16.9%, compared with $46.0 million during the nine months ended September 30, 2025. The increase is primarily due to higher personnel expenses and evaluation tool costs.

General and Administrative

Our general and administrative expenses result primarily from the costs associated with our executive, finance, information technology, legal and human resource functions.

General and administrative expense was $23.1 million during the three months ended September 30, 2026, a decrease of $0.2 million, or (1.0)%, compared with $23.3 million during the three months ended September 30, 2025. The decrease is primarily due to lower professional fees related to the Merger, partially offset by higher personnel expenses.

General and administrative expense was $72.2 million during the nine months ended September 30, 2026, an increase of $15.2 million, or 26.7%, compared with $57.0 million during the nine months ended September 30, 2025. The increase is due to an increase in professional fees related to the Merger.

Other Income (Expense)

Other income (expense) consists of interest earned and accretion on our invested cash balances, interest expense relating to the finance lease obligation we incurred in connection with the 2015 sale of our headquarters facility and other financing obligations as well as foreign exchange gains and losses attributable to both fluctuations of the U.S. dollar against local currencies of the countries in which we operate and forward currency exchange contracts.

Other income was $8.7 million for the three months ended September 30, 2026, compared with other income of $5.1 million for the three months ended September 30, 2025. The $3.5 million increase in other income compared to the same prior year period was primarily due to an increase in net foreign exchange gains of $2.2 million and the reversal of $2.6 million of interest expense related to uncertain tax positions reflected in interest income, partially offset by a decrease in interest income from investments of $0.6 million and an increase in interest expense of $0.7 million. Net foreign exchange gains for the three months ended September 30, 2026 includes $10.3 million of foreign exchange gains, partially offset by foreign exchange losses related to forward currency exchange contracts of $7.1 million. Net foreign exchange gains for the three months ended September 30, 2025 includes foreign exchange gains related to forward currency exchange contracts of $2.6 million, partially offset by foreign exchange losses of $1.7 million.

Other income was $16.4 million for the nine months ended September 30, 2026, compared with other income of $15.1 million for the nine months ended September 30, 2025. The $1.3 million increase in other income compared to the same prior year period was primarily due to an increase in net foreign exchange gains of $2.3 million and the reversal of $2.6 million of interest expense related to uncertain tax positions reflected in interest income, partially offset by a decrease in interest income from investments of $2.7 million and an increase in interest expense of $0.5 million. Net foreign exchange gains for the nine months ended September 30, 2026 includes $8.4 million of foreign exchange gains, partially offset by foreign exchange losses related to forward currency exchange contracts of $3.9 million. Net foreign exchange gains for the nine months ended September 30, 2025 includes foreign exchange gains of $6.5 million, partially offset by foreign exchange losses related to forward currency exchange contracts of $4.4 million.

Income Tax (Benefit) Provision

Income tax benefit was $1.8 million for the three months ended September 30, 2026, compared to income tax expense of $4.2 million for the three months ended September 30, 2025. The $5.9 million decrease was primarily due to the reversal of uncertain tax positions resulting from an audit settled during the period. The reported effective tax rate for the three months ended September 30, 2026 was (4.9)% compared to 13.8% for the three months ended September 30, 2025. The effective tax rate for the nine months ended September 30, 2026 was less than the U.S. statutory rate of 21%, primarily attributable to the reversal of uncertain tax positions resulting from an audit settled during the period and the Foreign Derived Intangible Income deduction.