0001628280-26-032842
SEC filingRevenue grew 34% YoY to $231M, but gross margin fell 150bps to 46.4% and net income margin dropped to 7.6%, impacted by significant foreign exchange losses.
Revenue for Q1 2026 reached $231.3 million, up 34.2% year-over-year from $172.3 million. The growth was driven by a surge in ECP/furnace and other technologies (up 204.9%) and advanced packaging (up 62.0%), partially offset by a 5.5% decline in single wafer cleaning equipment. Gross profit increased 29.9% to $107.2 million, but gross margin decreased 150 basis points to 46.4% due to product mix shift. Operating expenses rose 25.2% to $71.1 million, with sales and marketing up 26.6%, R&D up 32.9%, and G&A up 6.9%, partly due to higher personnel costs and allowances for credit losses. Income from operations increased 40.3% to $36.2 million, leading to an operating margin of 15.7% versus 14.9% a year ago. Net income attributable to ACM Research fell to $17.3 million (7.6% of revenue) from $20.4 million (11.8%) due to a sharp increase in other expense, primarily a $9.5 million unrealized foreign exchange loss.
Revenue by product category reveals a significant mix shift. Single wafer cleaning equipment revenue declined 5.5% to $122.5 million, indicating softening demand or competitive pressures in that core segment. In contrast, ECP/furnace and other technologies more than tripled to $84.2 million, driven by mainland China customers' capacity expansion. Advanced packaging (excluding ECP), services & spares grew 62.0% to $24.5 million. The revenue mix shift toward higher-growth segments contributed to gross margin compression.
Management expects gross margin to remain in the 42%-48% range for the foreseeable future, reflecting continued mix variability. Operating expenses are anticipated to increase in absolute dollars as the company invests in sales and marketing to expand in U.S. and global markets, and in R&D to advance cleaning, plating, packaging, furnace, track, and PECVD technologies. The company believes existing cash, cash flow from operations, and bank borrowings will be sufficient for near-term needs. No specific revenue guidance was provided.
As of March 31, 2026, ACM Research held $872.3 million in cash and cash equivalents, $358.2 million in short-term time deposits, and $34.7 million in short-term investments, for a total liquid asset base of approximately $1.27 billion. Restricted cash was $21.9 million. Total assets stood at $3.07 billion, up from $2.87 billion at year-end 2025. The increase was driven by a $114.9 million rise in cash and equivalents, a $35.4 million increase in inventories (net), and a $22.3 million increase in accounts receivable (net). On the liability side, total debt (short-term borrowings of $94.0 million, current portion of long-term borrowings of $13.3 million, and long-term borrowings of $220.9 million) was $328.1 million, up from $288.1 million at December 31, 2025. Stockholders' equity attributable to ACM Research was $1.58 billion, and total equity including non-controlling interests was $2.08 billion.
The Notes disclose $1.075 million in open capital commitments to construction contracts as of March 31, 2026. Additionally, ACM Lingang is subject to covenants in its land grant contract requiring minimum annual sales and tax payments, with a deadline extended to December 12, 2029. The company also has a warranty liability of $19.3 million. No other material purchase commitments or contractual obligations were detailed in the Notes.
ACM Research did not report any share buyback activity or dividend payments during the quarter. Capital expenditures were $22.2 million, primarily for property and equipment. The company raised $41.5 million in new long-term borrowings and repaid $24.7 million of long-term debt. A significant capital event was the sale of approximately 4.8 million shares of ACM Shanghai, generating $110.2 million in gross proceeds (approximately $86 million net of taxes), which reduced ACM's ownership in ACM Shanghai from 74.6% to 73.6%. Proceeds from stock option exercises added $17.5 million.
The company operates as a single reportable segment. However, the Notes provide disaggregated revenue by product category: Single Wafer Cleaning, Tahoe and Semi-Critical Cleaning Equipment ($122.5 million), ECP (front-end and packaging), Furnace and Other Technologies ($84.2 million), and Advanced Packaging (excluding ECP), Services & Spares ($24.5 million) for the three months ended March 31, 2026. Substantially all revenue was derived from customers in mainland China. Long-lived assets were concentrated in mainland China ($330.3 million), with smaller amounts in Korea ($7.7 million) and the United States ($9.9 million).
Net income for Q1 2026 was $26,235 thousand, yet cash from operations was a negative $29,538 thousand, a significant divergence. This was primarily driven by large working capital outflows: accounts receivable increased by $8,323 thousand, inventories grew by $29,545 thousand, and advances from customers decreased by $20,620 thousand. These swings overwhelmed positive non-cash adjustments such as depreciation ($5,466 thousand) and stock-based compensation ($5,621 thousand).
Capital expenditure intensity remained high, with $22,201 thousand spent on property and equipment, up from $16,726 thousand in the prior year. Free cash flow is not explicitly stated, but the combination of negative operating cash flow and elevated capex implies a substantial cash burn from core operations and investment activities.
Financing activities provided $163,396 thousand, largely from the sale of ACM Shanghai shares ($110,243 thousand) and new long-term borrowings ($41,538 thousand). This external funding offset the operating and investing cash deficits, resulting in a net increase in cash of $128,172 thousand. No share repurchases or dividends were disclosed.
Anomalies include a $1,630 thousand inflow from advances to related parties (reversal of prior outflows) and a $2,234 thousand provision for credit losses, contrasting with a $9 reversal in the prior year. Cash paid for income taxes dropped sharply to $2,062 thousand from $10,801 thousand, providing a temporary benefit.