ACM Research Inc (NASDAQ: ACMR) Q3 2025 Earnings Call dated Nov. 05, 2025
Corporate Participants:
Unidentified Speaker
David H. Wang — Chief Executive Officer
Mark McKechnie — Chief Financial Officer
Analysts:
Suji Desilva — Analyst
Charles Shi — Analyst
Mark Miller — Analyst
Presentation:
operator
Good day ladies and gentlemen. Thank you for standing by and welcome to the ACM Research third quarter 2025 earnings conference call. Currently, all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. As a reminder, we are recording today’s call. If you have any objections, you may disconnect at this time. Now I’d like to turn the call over to Stephen. Stephen, please go ahead.
Unidentified Speaker
Good day everyone. Thank you for joining US to discuss third quarter 2025 results which we released before the US market opened today. The release is available on our website as well as from Newswire services. There is also a supplemental slide deck posted to the Investors section of our website that we will reference during our prepared remarks on the call. With me today are CEO Dr. David Wong, our CFO Mark McKechnie and Lisa Fang, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to slide 2. Let me remind you that the remarks made during this call may include predictions, estimates or other information that might be considered forward looking.
These forward looking statements represent ACM’s current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under Risk Factors and elsewhere in ACM’s filings with the securities and Exchange Commission. Please do not place undue reliance on these forward looking statements which reflect ACM’s opinions only. As of the date of this call. ACM is not obliged to update you on any revisions to these forward looking statements. Certain financial results that we provide on this call will be on a non GAAP basis which excludes stock based compensation and unrealized gains and losses on short term investments.
For our GAAP results and reconciliation between GAAP and non GAAP amounts, you should refer to our earnings release which is posted on the IR section of our website and on slide 13. Also, unless otherwise noted, the following figures Refer to the third quarter of 2025 and comparisons are with the third quarter of 2024. With that, I will now turn the call over to David Wang. David?
David H. Wang — Chief Executive Officer
Thanks Steven. Hello everyone and welcome to ACM’s third quarter earnings conference call. I’m very pleased to report another strong quarter for ACM. Revenue grew 32% year over year to a new quarterly record reflecting broader demand. Across our innovation product portfolio. Across industry, AI and data center investment are accelerating semiconductor and wafer fabric equipment spending. AI is also demanding new innovations, many of which have yet to be developed. We believe these trends are Driving the market toward us ASEAM strategy remains a focus on building a multi product portfolio of world class tools that expand our service market and play a critical role in enabling the next generation of chip making. Our differentiated technology continue to raise the performance bar across both front end and advanced packaging applications. For example, in advanced packaging we are seeing strong global customer engagement in our proprietary horizontal plating technology for panel level packaging and we plan to ship our first system in the fourth quarter.
In cleaning, our high temperature SPM platform is reaching industrial leading performance as our proprietary nozzle design achieving performance at a 19 nanoparticle size down to single digit particle counts. We believe this will lead to higher product yield for our customers. Further, with no need to clean the outer chamber, the tool requires significant lower maintenance. This is a truly world class tool and our team has roadmaped to even lower particle size down to 70 nano, 50 nano and 30 nano to support. The next few generation technology nodes. In TRAC, we shipped our first KIF high throughput track platform this quarter further broaden our reach into lithography adjacent applications which demonstrate ACM’s ability to grow into new product categories together with innovations such as nitrogen bubbling cleaning and etchers and a high temperature furnace discussed last quarter. This advancement reflect ACM commitment to continuous innovation and the tangible performance improvement we are delivering to customer. In September, our ACM Shanghai subsidiary completed. Its second capital raising on stock market. Raising net proceed approximately 623 million. ACM has the technology, the customers, the capacity and global reach and now additional capital to pursue our mission to become a key supplier to major global semiconductor producers. This fund strengthen our balance sheet and will be used for additional investment in our Linganga Mini line and to expand. Our global production capacity. We also plan to accelerate our R and D investment. This will advance our existing cleaning and electroplating tool for next generation process. It will also speed up the development for our new product categories including furnace, pcvd, track and panel level packaging tools and we’re also investing in new products that we have not announced yet. ACM is committed to world class product for both China and global customer. Our tools enable next generation devices architecture and help solve our customer complex process challenging across front and back end applications. We have a world class technology and a strong IT position.
Customers around the world come to us for our technology rather for low price. We believe this is the right combination to grow our business and maintain our gross margin targets. We feel that ACM is now a inflection point in which innovation will win the game and drive a significant Shift in the market share. Now onto our business results. Please turn to slide 3. For the third quarter of 2025 we delivered revenue of 269 million upper 32% year over year. Shipments were 263 million up 1% year over year. Gross margin was 42.1%. This was at the low end of our target due in part to product mixing, inventory provision and other adjustment.
There’s no changes to our target model range of 42 to 48%. We ended the quarter with a net cash 811 million US dollar versus 206 million last quarter and 2059 million at the year end of 2024. Now I will provide detail on product. Please turn to slide 4. Revenue from single Wafer Cleaning, Tahoe and Semi critical cleaning tool grew 13% and. Represent 68% of total revenue. We believe our top bottom cleaning portfolio is world class and put us in a strong position to gain additional share both in China to expand it to global markets. The 13% year over year growth was mainly from our traditional cleaning product. The contribution from our newer cleaning line including single wafer, STM, Hao and supercritical CO2 is still fairly small. We expect this new platform, especially STM to contributing more revenue in 2026 and beyond. We estimate an incremental opportunity of more than $1 billion for those new cleaning products from the mainland China market alone. We remain confident in our target for 60% market share in China market and we expect higher growth rates for cleaning next year and beyond.
Revenue for ECP furnace and other technology grow 73% and represent 22% of total revenue. We had a record revenue quarter for ECP Front end tool which represent about 60% of the mix for this group. This group including our MAP, MAP plus ECP3D and ECP G3 production, all of which grew from last year. ECP backend tools were about 40% of the mix for the quarter. Revenue from furnace was small for the quarter and year to date. That said, we are making good technical progress across a range of customers and multiple product offerings. This including ultra high temperature Anneal furnace which operates at more than 1250 degrees C, our LPCVD Oxidation and ALD for both thermal and plasma.
We continue to focus on qualification at key customers and we anticipate incremental revenue contribution from furnace in 2026. And as I noted earlier, we are seeing very strong interest in our panel level plating tool for advanced packaging from both China and the global customers. We will ship our first panel level packaging tool in Q4 Revenue for advanced packaging which excludes ECP but including service and spell was upper 231% and represent 10% of revenue. About 2/3 of this group for this quarter is small tools for advanced packaging. This including coater developer, etcher, stripper and wafer level packaging tool that run around 500k to $1,000,000 each.
We had a good contribution this quarter from a handful of different customers. Although we include plating product for advanced packaging in the ECP group and combination is very powerful. It provides ACM valuable insight into the challenges of next Generation packaging as AI drives industry towards 2.5D and 3D integration, stacking diode with the through silicon via TSV and the integrated memory and logic in a single packaging. We also shipped advanced packaging tool in Q3 to two new customers in the US and we expect the installation and then tool acceptance in next couple of quarters. We are making good progress with our new Track and PCBD platforms.
I already mentioned the shipment of our first KR4 track tool. We believe our high throughput design position this platform to compete effectively with the incubator supplier. Our proprietary PCVD platform with three chucks per chamber gives the flexibility to support a wide range of processes with the same hardware. We feel good about our positioning as the team continues to work through the technical detail with a few tools in our Lingang Mini lab running wafer test and the EVA tools plan to ship in the near term to close on product. ACM’s culture of innovation continue to deliver industrial leading performance across the broader portfolio.
Customer engagement is deepening as chipmaker look for partner that can enable their next generation processes. Please turn to Slide 6. Global WFE demand continues to be fueled by investment in AI and the data center infrastructure particularly in advanced logic and memory. While China market in our view remains stable, last quarter we increased our long term revenue target to 4 billion supported by an estimate 2.5 billion US dollar contribute from China and 1.5 billion dollars from global markets. Next let me provide an update on our production facility. First is Lingang. Please turn to slide 8. Our new Lingam Production and R and D center is now fully up and running.
The site’s first building is already in volume production while the secondary providing additional room for future expansion. Together the two building can support up to 3 billion in annual output position ACM to meet growing customer demand and support our long term growth plans, we plan allocate part of the proceeds from ACM Shanghai’s secondary capital leasing to expand our MINI line at Lingon to strengthen our process development capability and enable on site customer evaluation under FAB like condition. This will accelerate product validation, shorten developer cycle and enhance collaboration with the key customer as we expanding our portfolio of next generation tools.
Turn to our Oregon site. Please turn to Slide 9. This facility will allow customers to test wafer locally on ACM tool and will. Serve as our initial base for production. And technology development in the United States. Our global customers are encouraging by our commitment which we believe will help them to choose ACM as a key supplier to scale production. Now I will provide our outlook for the full year 2025. Please turn to slide 10. We have narrowed our 2025 revenue outlook to a range of 875 million US dollar to 925 million dollars versus prior range of 850 million to 950 million. This implies 15% year over year growth. At the middle point. We made greater progress with several major product line this year including Single wafer, spm, Tahoe Panel level plating, Furnace Track, pcbd.
We believe this new product providing a solid foundation for multiple major new product cycle for the continued growth in the coming years. Now let me turn the call over to our CFO Mark who will review. Detail of our third quarter results. Mark please
Mark McKechnie — Chief Financial Officer
thank you David and good day everyone. Please turn to slide 11. Unless I note otherwise, I will refer to non GAAP financial measures which exclude stock based compensation, unrealized gain loss on short term investments. A reconciliation of these non GAAP measures to comparable GAAP measures is included in our earnings release unless otherwise noted. The following figures Refer to the third quarter of 2025 and comparisons are with the third quarter of 2024. I’ll now provide financial highlights. Revenue was $269.2 million up 32%. Total shipments are $263.1 million, up 28% sequentially and up 0.7% year over year. Gross margin was 42.1% versus 51.6%. This is the low end of our target model.
Adding color to David’s earlier remarks, we attribute this to two key factors. First, product mix. Our Q3 sales included a high number of smaller front end tools which had poor margins and that contributed about 200 basis points of the headwind to the gross margin. Second, we had a higher level of inventory provisions and other adjustments which hit our COGS for the quarter contributed about 300 basis points. Negative impact. I want to reiterate there’s no change to our target model of 42 to 48%. ACM is fully committed to developing world class tools that enable our customers to scale production of leading edge semiconductor devices.
We believe this creates a healthy pricing environment for our tools which when combined with an efficient cost structure results in good profitability. Operating expenses were 76.9 million up 56.3%. R&D was 14% of sales, sales and marketing was 7.7% of sales and GNA was 6.5% of sales for 2025. We continue to plan for R and D in the 14 to 16% range, sales and marketing in the 8% range and G&A in the 6% range. Operating income was $36.5 million down 34.9%. Operating margin was 13.6% versus 27.5%. Income tax expense was 2.9 million versus 4 million for 2025.
We now expect our effective tax range in the 7 to 8% range. Net income attributable to ACM Research was $24.8 million versus $42.4 million. Net income for diluted share was $0.36 versus $0.63. Our non GAAP net income excluded $7.6 million in stock based compensation expense for the third quarter and $18.7 million in unrealized gain on short term investments. I remind the analysts that as a result of the second capital raise of $632 million net by our subsidiary ACM, ACM’s ownership in ACM Shanghai is now 74.6% versus 81.1% at the end of last quarter. I will now review selected balance sheet and cash flow items.
Cash and cash equivalents restricted cash and time deposits were 1.1 billion at the end of third quarter versus 483.9 million at the end of the second quarter. Net cash which excludes the short term and long term debt was 811 million or about $12 per share versus 205.8 million at the end of the second quarter. Total inventory net was 676.4 million versus 648.3 million at the end of the second Quarter. Raw materials were 326.2 million up 40.6 million. Quarter over quarter we made additional strategic purchases to support production plans and to mitigate any potential supply chain risk.
Work in progress was 59.5 million down 1.2 million. Quarter on quarter finished goods inventory was 290.7 million down 11.3 million quarter over quarter. Finished goods inventory primarily consists of first tools under evaluation at our customer sites along with finished goods located at ACM’s facilities. Cash flow used by operations was 4.6 million for the third quarter and 44.4 million year to date. Capital expenditures were 43.2 million for the full year. We expect to spend about 60 to 70 million in capital expenditures. That concludes our prepared remarks. Let’s open the call for any questions that you may have.
Operator, please open up the call for questions.
Questions and Answers:
operator
Certainly. Ladies and gentlemen, if you have a question at this time, please press star 11 on your telephone. If your question has been answered and you’d like to remove yourself from the queue, simply press star 11 again. Our first question comes from the line of Suji da Silva from Roth Capital. Your question please.
Suji Desilva
Good morning, David. Mark, congrats on the progress here. Can you talk about the shipments and the growth there? Are there any factors puts and takes in terms of what we should expect in terms of your visibility the next four quarters?
David H. Wang
Yeah. We see there are some customer getting, asking for delay for maybe the Q1 next year. And also the certain parts were shortage. Right. We cannot fully complete the order as a manufacturer final testing. But those products probably were still, you know, getting to the Q1 shipment. And we’re still expecting, you know, next year’s, you know, shipments to continue grow.
Suji Desilva
These part shortages, David, how long do you expect that to persist? Is that a multi quarter effect or is that short term?
David H. Wang
It’s not really. I think there’s certain parts we’re using right now and we’re kind of, you know, replace some parts we’re kind of. And you’re looking for new supplier and those things has been qualified, you know, in their customer process. And so those parts qualifier finish. Then we can use more of their, I want to say domestically made in China pots. So that’s probably a portion of their fact there.
Mark McKechnie
Yeah. Hey Suji, one other thing. Yeah, one other thing I’d add to the shipments for the quarter and even for the year. We talked about this before but some of the newer products that we would be shipping that David talked about in his prepared remarks, some of those probably a little more fell into. It’s going to fall into next year versus this year.
Suji Desilva
Okay, helps Mark, Thanks. And then my final question is on the panel tools. Can you talk about the opportunity as you ramp maybe into the HBM memory or AI memory opportunity, how much that can grow as a percent of revenues and how quickly that can ramp. Thanks.
David H. Wang
Well, okay, so you have a panel packaging, right Suji?
Suji Desilva
Yes.
David H. Wang
Okay, well and the panel has been real hot, right. This year especially major customer in Taiwan. We are promoting the panel business we believe panel is a way to solving. The large area AI chip. Right. Packaging with HBM together. So all the wafer level is cut A lot of I call the area. So it was the efficiency of the use in the area. So panel packaging. The one key is plating technology. Right. I should say a lot of people in the copper plating for panel in the vertical style. We are probably the first one proposed. The horizontal and the copper plating for. The panel which is also we got the 3D Insider Award Innovation Technology Award from USA. We believe we really have a good solution and they can play their panel uniformly. And there will be a few requirements of all this. Either 310 by 310 or 515 by 510. By the way, we’re going to ship one of the panel operating tool in the fourth quarter. And also we’re engaging with multiple customer for the panel packaging business in Taiwan and US and also, you know, in China. Mainland China.
Suji Desilva
Okay, sounds very exciting. Thanks guys. I’ll pass it along.
Mark McKechnie
Yeah, thanks Suji.
operator
Thank you. And our next question comes from the line of Charles Shi from Needham and Company. Your question please.
Charles Shi
Good evening, David. Mark, a couple questions here. The first one, a follow up to Suji’s question on shipment. So sounds like it’s more of a customer pushout and partly due to parts shortage and sounds like the implied message seems like it’s not a reflection of the end market demand. But wonder can you kind of quantify a little bit what’s the expectation for Q4 shipment and maybe on a full year basis as well. Looks like a shipment probably is going to be down this year. This is probably the first time in many years your shipment is down on a full year basis.
Thank you.
Mark McKechnie
David. Do you want to take that or you want me to start on that?
David H. Wang
Go ahead, Mark. You go ahead, do it.
Mark McKechnie
Yeah. Hey Charles, so I think your read’s good. We’re not really making a call on the end markets here. It’s hard to say company specific versus end market. But yeah, in terms of our shipments, Q4, it’ll probably be down from Q3. So you could have the full year would be down year on year. And that is different than what we had expected. I think I would point out that shipments were pretty heavy last year as we know. And some of the reasons that we talked about for the deferments and shipments, we should start seeing those pick back up in the first half of next year.
I think David in his prepared remarks talked about an inflection point where we’re still shipping a lot of our current products and a lot of newer products. We expect to really start kicking in and contributing more next year. You know the spm the furnace and this panel level packaging product line.
David H. Wang
Yeah actually including we’re probably shipping a few PCV tool and we see that it will be you know definitely contributing revenue in the next year. So I think there it’s kind of we’re in the time of infection point. Right. And the new product come out and also we expecting some new Canadian tool come out too to contribute on their shipment and revenue. Especially as I mentioned this proprietary design SPM special nozzle and reach a very excellent result which is you know we think we’re going to gain a lot of market share for SPM process.
Charles Shi
Got it. I do have a question a little bit later around innovation. Some of the you made David around. I mean also proprietary design et cetera. Before that maybe a question on the 300bps impact from inventory write down Mark, it wasn’t clear to me what’s the reason for writing down if my math is right around 8 million ish of the COGS of the inventory and may I ask if the write down is related to inventory you have at your own facility or this is about some of the write down of the evaluation tools at your customer site and if the latter, what’s the reason for that? Thank you.
Mark McKechnie
Yeah, no thanks for the question Charles on that. So you know inventory, you always have a pretty thorough process internally to kind of value the inventory on your books. And so a big piece of it is related to the aging of some of our raw materials. And it’s interesting we think that. And so it’s just kind of a formula you apply to the age profile of your raw materials. And on the other side there were some finished goods that we took a write down on and these were I think these were mostly at our own internal.
These were tools that I’m pretty sure were that we had internally. And so we’re not really disclosing internal versus end customers.
Charles Shi
Great, thanks. So David, my last question I think you spoke we probably have discussed about this along the same line before but you talk a lot about innovation but develop better products than your global competitors win market share. But I think what I am hearing is the domestic customers are probably more looking for simply matching the global baseline like matching what the global tools they already have given restrictions, given self sufficiency or all kinds of reasons at this point of time like trying to do a lot of product innovation. Do you think you may be missing out some near term opportunities.
I understand you said that you’re going to win in the long term, but do you think that you’re going to. I mean because your tool, even though it’s performing better, maybe will perform differently from their global baseline, your customers. Global global baseline. Could you, could that cost you some business in the near term? Thank you.
David H. Wang
Yeah, actually. You know, we are winning a short time. In other words, I gave this example, this, you know, high temperature SPM process, right? And with our special proprietary design, we can really control their order. High temperature SPM splash out of the chamber and also the vapor, you know, into the, into that environment. So therefore we control the environment very well. That’s why I said there are 19 nanoparticle down to a single digit number, you know, basically less than, you know, five. So it’s really better than even top. Tier player, you know, today in SPM process. Also because of the control environment, we think about even 70 nano, 50 nano, even 30 nano we can control better. So answer your question is yeah, there’s a certain domestic player going there or there’s you know, other first tier, you know, I mean tool vendor still selling China. But I said we’re in the best performance. And also we think they’re, you know, either custom in China or outside China. They still desire, you know, best performance, right? As go to small geometry. Those 90 nano, semi nano particle will matter their yield loss.
So that’s why, you know, we think that we really gain our market help. Help us gain market share both in China also outside China, we still strongly believe our innovation product has been heavily bad patent in China also, you know, in global semiconductor country and area we have our confidence, you know, nobody will copy the technology or patent the technology. So that’s why we have confidence and maintain increase of market share, maintain our gross margin. And I still think AI driving a lot of innovation and the customer desire new technology. Those customers maybe prefer more technology other than low price.
Right. So that’s really I think a strong point. And also I want to say a. Lot of our existing products cannot meet customer future requirement. So that’s another reason we have confidence on our tool.
operator
Thank you once again ladies and gentlemen. If you have a question at this time, please press star 11 on your telephone. Our next question comes from the line of Mark Miller from the benchmark company. Your question please.
Mark Miller
Thank you for the question. I was just wondering if you can give us some color on what you expect for MOCVD next year and also give us an update on what’s going on with SK Hynix?
David H. Wang
Okay, well actually maybe neither. Mark, I want to make sure this is not. We’re not make mocvd, we’ll make a pcvd. Okay. So anyway, you know, PCVD has been. You know, bigger than a lot of, you know, market size with the Vetum. You know, this is a PCVD almost from five years ago. Right. And we’re choosing again innovation approach and. We’Re differentiated from major player in a minute pcbd, you know, two big players now. And for example like our chamber has a three chuck, other people have a four or either two. So we believe three truck in one. Chamber can do their almost all the process and therefore customer buy one platform. We can do the, you know, almost every PCVD process. Right. And then for other reasons we also have a lot of control and chamber power supply or other differentiation come here. So we believe our PCVD will be, we’re shipping, you know, you know, property. Two this quarter or conditioning more next quarter. And we’ll see that the PCVDs are getting into their market. And also respecting those PCVD will be generator revenue next year. And also we have a really high expectation and those PSVD are not only service in China. We’re expecting to go Korea and also go to global market.
Mark Miller
If you can comment please on Hynix and any developments there.
David H. Wang
Hynix is our customer, right? Is a long run customer and we’re. Engaged with the multi tool cleaning obviously. And also other products. You know, we’re still thinking Trinix is real innovator, you know, leading customer. And we’re continuing to engage with them. On multi product right now. And as I said again, a lot of our new stuff were developed right. Now and they are very interested. Right. And because they’re also leading all the HBM everything, right. Even the DRAM field. So they design more of advanced technology. Also we have a Korean team and Shanghai team together. So it’s working very well. And a lot of technology actually was invented and developed in Korea too. So that’s really feeding their requirement. Locally manufactured, locally R and D. So we still see a lot of potential we can providing good technology to our customer in Korea.
Mark Miller
So is your panel packaging tool, is that of interest to Hynix?
David H. Wang
Yeah, not only packaging, right. Also talk about front end too. Right? And you know, in all level of the engagement and including you know, we talk about our foreigners PCVD track and all other even you know, product.
Mark Miller
What about your cleaning tools? Have you been able to penetrate Hynix with the cleaning tools Tahoe and saps.
David H. Wang
Well we’re you know we have a SAPS tool has been sold many tool. Right in Hynix already and now obviously we have a new cleaning tool engaging with them and one is of a property, you know end toolboxing tool and we should really take care of probably more than a Finer layer of 3D. NAND and all this is one of. The major applications we think will be contributing to their customers in the future. 3D nanotechnology.
Mark Miller
Thank you.
David H. Wang
Thank you.
Mark McKechnie
Thanks Mark.
operator
Thank you. This does conclude the question and answer session of today’s program. I’d like to hand the program back to Stephen Pulayo for any further remarks.
Unidentified Speaker
Great. Thank you. Before we conclude, I just want to give everyone a quick reminder on our upcoming Investor conferences. On November 19th, we’ll present at the 14th Annual ROF Technology Conference in New York City. On December 3rd, we will present at the UBS Global Technology and AI Conference in Scottsdale, Arizona. On December 16th, we will present at the 14th Annual New York City Summit in New York City. And then on January 15th, we will join the 28th annual Needham Growth Conference virtually for our presentation and one on one meetings. Attendance at the conferences are by invitation only.
Foreign interested investors, please contact your respective sales representative to register and schedule one on one meetings with management. This concludes the call. You may now disconnect. Take care.
operator
Thank you ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.