0001680062-25-000017
SEC filingRevenue grew 6.4% YoY to $215.4M, driven by mainland China capacity expansion, with gross margin improving 70 bps to 48.5%.
For the three months ended June 30, 2025, ACM Research reported revenue of $215.4 million, a 6.4% increase from $202.5 million in the same period of 2024. The growth was primarily driven by higher sales across all product categories, with ECP (front-end and packaging), furnace and other technologies leading at +23.2% YoY, followed by advanced packaging (excluding ECP), services & spares at +20.4% YoY, and single wafer cleaning, Tahoe and semi-critical cleaning equipment at +1.1% YoY. Management attributed the increase to a longer-term commitment by mainland China-based customers to increase production capacity.
Gross margin improved to 48.5% from 47.8% in the prior-year period, a 70 bps increase, primarily due to favorable revenue mix between product categories. Cost of revenue increased 4.9% to $110.9 million, while gross profit rose 7.9% to $104.5 million.
Operating expenses increased 22.9% to $72.8 million, driven by a 30.2% increase in research and development expense to $33.8 million (15.7% of revenue) and a 29.0% increase in sales and marketing expense to $22.1 million (10.3% of revenue). General and administrative expense rose 4.7% to $16.8 million. The increase in R&D was primarily due to higher costs of components for tools built for product development purposes and personnel costs. Income from operations decreased 15.8% to $31.7 million, with operating margin contracting to 14.7% from 18.6%.
Net income attributable to ACM Research increased to $29.7 million (13.8% of revenue) from $24.3 million (12.0% of revenue) in Q2 2024, benefiting from lower income tax expense ($1.9 million vs. $9.3 million) and higher unrealized gains on short-term investments.
Revenue by product category for the three months ended June 30, 2025:
The cleaning equipment segment remains the largest revenue contributor, though growth moderated. The ECP and furnace segment showed the strongest momentum, reflecting increased adoption of these technologies. The advanced packaging and services segment also posted solid growth, supported by aftermarket demand.
Management expects gross margin to be between 42.0% and 48.0% for the foreseeable future, with variability driven by product mix and utilization levels. Operating expenses are expected to increase in dollars as the company expands its customer base in mainland China and other regions, and continues to invest in R&D to broaden its product portfolio. 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 formal revenue or earnings guidance was provided.
As of June 30, 2025, ACM Research held $442.1M in cash and cash equivalents, with an additional $31.0M in short-term time deposits and $21.1M in short-term investments (listed on Shanghai Stock Exchange). Total debt comprised $53.0M in short-term borrowings, $62.1M current portion of long-term debt, and $163.0M long-term borrowings, totaling $278.1M. Shareholders' equity (parent) was $986.5M. Inventory increased to $648.3M, driven by $61.5M growth in raw materials due to production plans and strategic purchases to mitigate supply chain risk. Finished goods at customer locations under acceptance obligations totaled $187.1M. Contract liabilities (advances from customers and deferred revenue) were $235.1M, down from $252.5M at year-end 2024.
The only explicit purchase commitment disclosed is $2.0M in open capital commitments to construction contracts. Additionally, ACM Lingang has covenants requiring minimum annual taxes of RMB 157.6M ($22.0M) within 6 years of obtaining land use right in July 2020, failing which liquidated damages may apply. No other material purchase commitments or off-balance-sheet arrangements were noted.
During the six months ended June 30, 2025, ACM repurchased $4.8M of ACM Shanghai shares from non-controlling interests. Dividends of $7.6M were paid to non-controlling interests (ACM Shanghai dividends). The company issued $89.5M in long-term debt and repaid $15.2M, resulting in a net increase in total debt. Capital expenditures for property and equipment were $31.5M, primarily for the Lingang development and production center. There were no share buybacks of parent stock or dividends on common stock.
ACM operates as a single reportable segment. However, revenue is disaggregated into three product categories: Single Wafer Cleaning, Tahoe and Semi-Critical Cleaning Equipment ($284.5M, 73.4% of total revenue); ECP (front-end and packaging), Furnace and Other Technologies ($75.6M, 19.5%); and Advanced Packaging (excluding ECP), Services & Spares ($27.5M, 7.1%). Substantially all revenue during the six months ended June 30, 2025 was derived from customers in the People's Republic of China. Long-lived assets are predominantly in Mainland China ($296.5M), with minor amounts in South Korea and the United States.
Operating cash flow (CFO) for the six months ended June 30, 2025 was negative $39.6 million, a sharp reversal from positive $51.9 million in the same period of 2024. Net income was $61.3 million, indicating a significant divergence between earnings and cash generation. The primary driver was a large working capital outflow, notably a $52.9 million increase in inventories and a $44.5 million increase in accounts receivable. These outflows were partially offset by non-cash charges such as stock-based compensation ($19.6 million) and depreciation ($6.4 million).
Capital expenditure (capex) on property and equipment was $31.5 million, down from $38.5 million in the prior year, reflecting moderate investment intensity. Free cash flow (not explicitly stated) would be deeply negative given the CFO deficit and capex. The company did not report a free cash flow figure.
Financing activities provided $111.0 million, primarily from $89.5 million in long-term borrowings and $45.1 million in short-term borrowings, partially offset by $25.2 million in repayments. The company also repurchased $7.0 million of ACM Shanghai's shares and paid $6.9 million in dividends to ACM Shanghai's non-controlling interest. The net increase in cash, cash equivalents, and restricted cash was $41.6 million, ending the period at $452.9 million.
Anomalies include a $23.4 million cash payment for income taxes (up from $9.1 million) and a $12.6 million decrease in income taxes payable, suggesting a one-time tax settlement or timing difference. The large working capital build may indicate rapid growth or supply chain challenges.