0001628280-25-050152
SEC filingRevenue grew 32% YoY to $269.2M, but gross margin contracted 940 bps to 42.0% due to product mix and inventory provisions.
For the three months ended September 30, 2025, ACM Research reported revenue of $269.2 million, a 32.0% increase from $204.0 million in the same period last year. The growth was broad-based across all product categories, with the strongest contribution from advanced packaging (excluding ECP), services & spares, which surged 230.6% to $27.7 million. ECP (front-end and packaging), furnace and other technologies rose 73.0% to $59.9 million, while single wafer cleaning, Tahoe and semi-critical cleaning equipment grew 12.8% to $181.6 million. Management attributed the increase to a longer-term commitment by mainland China-based customers to increase production capacity.
Gross profit increased 7.9% to $113.1 million, but gross margin contracted sharply by 940 basis points to 42.0% from 51.4% a year ago. The decline was primarily due to revenue mix between product categories and a higher provision for inventory. Management expects gross margin to remain between 42.0% and 48.0% for the foreseeable future.
Operating expenses rose 38.9% to $84.2 million, outpacing revenue growth. Sales and marketing expense increased 41.6% to $22.3 million, research and development expense rose 42.4% to $39.7 million, and general and administrative expense grew 30.6% to $22.3 million. The increases were driven by higher personnel costs, commissions, professional services, and R&D component costs, partially offset by lower stock-based compensation. As a result, operating income fell 34.6% to $28.9 million, and operating margin declined to 10.7% from 21.7%.
Net income attributable to ACM Research was $35.9 million (13.3% of revenue), compared to $31.0 million (15.2%) in the prior-year quarter. The improvement in net income was aided by a $18.7 million unrealized gain on short-term investments and higher income from equity method investments.
All three product segments posted year-over-year revenue growth in Q3 2025. The single wafer cleaning, Tahoe and semi-critical cleaning equipment segment, the largest at $181.6 million, grew 12.8% but saw its share of total revenue decline from 78.9% to 67.5% as other segments grew faster. The ECP, furnace and other technologies segment expanded 73.0% to $59.9 million, increasing its revenue share from 17.0% to 22.2%. The advanced packaging (excluding ECP), services & spares segment more than tripled to $27.7 million, representing 10.3% of total revenue versus 4.1% a year ago. This mix shift toward lower-margin product categories contributed to the gross margin compression.
Management expects gross margin to be between 42.0% and 48.0% for the foreseeable future, reflecting ongoing mix and inventory dynamics. Operating expenses are expected to increase in dollars as the company expands its customer base in mainland China and other regions, grows its product portfolio, and invests in R&D. The company believes its existing cash, cash equivalents, time deposits, operating cash flow, and bank borrowings will be sufficient to meet anticipated cash needs for at least the next 12 months. No specific revenue or earnings guidance was provided.
As of September 30, 2025, ACM Research held $1.06 billion in cash and cash equivalents, a significant increase from $407 million at year-end 2024, primarily due to a $623 million private offering of ACM Shanghai shares in September 2025. Short-term investments totaled $40 million, and time deposits added $31 million. Total debt stood at $287 million (short-term borrowings of $45 million and long-term borrowings of $242 million), up from $183 million at year-end 2024, reflecting net borrowings of $102 million during the nine months. Shareholders' equity nearly doubled to $1.89 billion, driven by the equity raise and retained earnings. Inventory increased to $676 million, including $174 million of finished goods at customer sites under contractual obligation. Deferred revenue was $15.6 million, while advances from customers were $204 million.
Purchase commitments are minimal: $2.1 million in open capital commitments to construction contracts. The note discloses no material long-term supply or capacity purchase agreements. ACM Lingang has a contractual obligation to generate minimum annual sales and taxes on its granted land, but no specific liability is recorded.
ACM Research did not repurchase its own common stock during the period. A subsidiary, ACM Shanghai, repurchased $7.0 million of its own shares from non-controlling interests. ACM Shanghai paid $7.6 million in dividends to non-controlling shareholders. Capital expenditures totaled $43.3 million (6.6% of revenue), primarily for property, plant, and equipment. Debt issuance of $179 million (net $102 million) was for working capital and project expenditures.
The company operates as a single reportable segment. Revenue by product category is disclosed: Single Wafer Cleaning, Tahoe and Semi-Critical Cleaning Equipment contributed $466 million (71%); ECP, Furnace and Other Technologies $135 million (21%); and Advanced Packaging, Services & Spares $55 million (8%) for the nine months ended September 30, 2025. Substantially all revenue is derived from customers in mainland China.
Net income for the nine months ended September 30, 2025 was $107,681 thousand, yet cash from operations was negative $(44,244) thousand, a significant divergence. The primary driver was a large working capital build: accounts receivable increased by $91,349 thousand, inventories by $80,689 thousand, and advances from customers decreased by $43,254 thousand. These outflows more than offset non-cash add-backs such as stock-based compensation ($27,149 thousand) and depreciation/amortization ($10,460 thousand).
Capital expenditures (property and equipment) were $42,473 thousand, down from $71,047 thousand in the prior period, indicating reduced capex intensity. Free cash flow is not explicitly stated but would be deeply negative given the operating cash flow deficit.
Financing activities provided $738,115 thousand, overwhelmingly from ACM Shanghai's private offering of shares ($622,964 thousand). The company also raised net proceeds from long-term borrowings ($89,780 thousand) and short-term borrowings ($11,802 thousand). Dividends paid to ACM Shanghai's non-controlling interest were $7,578 thousand. No share repurchases were disclosed.
Overall, the company's cash position increased by $656,029 thousand, ending at $1,067,339 thousand. The negative operating cash flow and heavy working capital consumption are notable risks, partially mitigated by the large equity infusion.