Earnings call transcript: ACM Research Q1 2025 beats expectations with EPS rise

ACM Research (ACMR) reported its financial results for Q1 2025, exceeding analysts’ expectations with an EPS of $0.46 compared to the forecasted $0.3186. Revenue reached $172.3 million, surpassing the forecast of $170.25 million. The company’s stock responded positively, climbing 2.35% in premarket trading to $20.50. According to InvestingPro data, ACMR has demonstrated impressive momentum with a 32.65% year-to-date return, despite its historically volatile price movements. The stock currently trades at an attractive P/E ratio of 11.7x, suggesting potential value opportunity.

Key Takeaways

• ACMR’s Q1 2025 EPS outperformed expectations by 44.4%.
• Revenue grew by 13.2% year-over-year, driven by strong product sales.
• Gross margin improved to 48.2%, above the target range.
• The stock price increased by 2.35% in premarket trading.

Company Performance

ACM Research demonstrated robust performance in Q1 2025, with revenue growth of 13.2% year-over-year. The company continues to leverage its strong position in the semiconductor equipment market, particularly in China, where it holds an estimated 25% market share in wafer cleaning and plating. Despite a slight decline in net income from $34.6 million in Q1 2024 to $31.3 million, the company maintained a strong cash position with $498.4 million in cash and equivalents. InvestingPro analysis reveals the company’s excellent financial health with an overall score of 3.3 out of 5, highlighted by strong cash flows and solid balance sheet metrics. InvestingPro subscribers can access 8 additional key insights about ACMR’s financial strength.

Financial Highlights

• Revenue: $172.3 million, up 13.2% year-over-year
• Earnings per share: $0.46, down from $0.52 in Q1 2024
• Gross Margin: 48.2%, exceeding the target range of 42-48%
• Net Income: $31.3 million, compared to $34.6 million in the previous year

Earnings vs. Forecast

ACM Research’s actual EPS of $0.46 beat the forecast of $0.3186 by 44.4%, while revenue exceeded expectations by $2.1 million. This positive surprise reflects the company’s strong execution and market demand for its innovative products.

Market Reaction

Following the earnings announcement, ACMR’s stock price rose by 2.35% in premarket trading, reaching $20.50. This movement reflects investor confidence in the company’s performance and outlook, despite recent volatility in the broader semiconductor market.

Outlook & Guidance

For 2025, ACM Research projects revenue between $850 million and $950 million, aiming for 15% growth at the midpoint. The company is focusing on expanding its product lines and increasing its market share globally, targeting a long-term revenue goal of $3 billion. Based on InvestingPro’s Fair Value analysis, ACMR appears undervalued at current levels, with analyst targets ranging from $31 to $40 per share. The company’s impressive 5-year revenue CAGR of 49% and strong financial metrics are detailed in InvestingPro’s comprehensive Research Report, available to subscribers along with in-depth analysis of 1,400+ other US stocks.

Executive Commentary

CEO David Wong emphasized the company’s technological edge, stating, "This is a real technology game, or technology winning game, not only by pricing." CFO Mark McKechnie highlighted the importance of intellectual property, saying, "We have a really strong IP that we think is important to continue to drive our business in China, and then it’s gonna help open the doors globally."

Risks and Challenges

• Potential tariff impacts on international operations
• Competition and possible consolidation in the Chinese semiconductor sector
• Global semiconductor equipment market plateauing in 2025
• Rising operating expenses, which increased by 18.4% in Q1 2025

Q&A

Analysts inquired about shipment growth expectations for 2025 and potential impacts of tariffs on ACMR’s operations. The company addressed these concerns, emphasizing its strategic initiatives to mitigate risks and capitalize on market opportunities.

Full transcript - Acm Research Inc (ACMR) Q1 2025:

Conference Call Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research First Quarter twenty twenty five 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 will turn the call over to Mr. Steven Palaio, Managing Director of the Blue Shirt Group. Steven, please go ahead.

Steven Palaio, Managing Director, Blue Shirt Group, Blue Shirt Group: Good day, everyone. Thank you for joining us to discuss first quarter twenty twenty five results, which we released before The U. S. Market opened today. The release is available on our website as well as from Newswire services.

There’s 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 our CEO, David Wong our CFO, Mark McKechnie and Lisa Feng, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to Slide two. Let me remind you that 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 of the financial results that we provide on this call will be on a non GAAP basis, basis, which excludes stock compensation and an unrealized gain and loss on short term investments.

For our GAAP results and reconciliations between GAAP and non GAAP amounts, you should refer to our earnings release, which is posted on the IR section of our website and to Slide 13. Also, unless otherwise noted, the following figures refer to the first quarter of twenty twenty five and comparisons are with the first quarter of twenty twenty four. I will now turn the call over to David Wong. David?

David Wong, CEO, ACM Research: Thanks, Steven. Hello, everyone, and welcome to ACM Research first quarter earnings conference call. We’ve just completed another important quarter, not only in terms of our performance, but also in how we are advancing our position in this global semiconductor industry. Before I review the results, I would like to highlight a few recent developments and reflect the momentum we’re building and the direction we’re heading. We were pleased to see ACM Research recently appeared on the list of the top 20 global semiconductor equipment company for 2024, as published by a leading third party market research firm.

That recognition reflects the steady progress we have made over the year and the growing impact of our innovative products. In China, we estimate our market share in both wafer cleaning and plating reached more than 25%, which translates to more than 9% global for each product category. Let’s speak to their trust we have earned from leading customers and also strengthen our product portfolio. Our panel level packaging tool received the three d InSight Technology Enablement Award. As a reminder, panel level packaging is a next generation solution for high performance AI chip packaging.

This award is yet another great validation of ACM commitment to delivering innovative and enabling technology to our customer. At the same time, we are all aware that global trade environment is shifting. With new tariffs and evolving policies, we are operating in a more complex and a less predictable environment. In this new period, we think the strategy we set forth many years ago, develop world class tools, established R and D and production in key countries where major semiconductor customers are located. And the focused sales effort on the global market becomes even more important for our future success.

ACM is a U. S. Company with deep operational strength in Asia. We’re in a unique position. We have built a successful business in Asia by delivering world class tool.

As a multi product company, we’re expanding our tool offering to better support our customer in Asia. We are now taking important step to expanding our business into global market. In The US, we’re investing in Oregon facility, starting with a Class 100 clean room for wafer demo and R and D activities. And we are laying the groundwork for initial production capacity in our Oregon facility. We currently believe this is the best way to reduce tariff uncertainty for The U.

S. Customer. And it is also a good business to establish production close to a customer. We believe that ACM position as the only U. S.

Company with a full top to bottom cleaning product line, combined with technology lab and their commitment to production in Oregon, put us in a good position to take on the global market. Now on to our business results. Please turn to Slide three. For the first quarter of twenty twenty five, we delivered revenue of $172,000,000 up 13% over year. Shipments were $187,000,000 down 36%.

We know that shipment in Q1 of twenty twenty four was especially strong due to customer demand. So this was another this was a tough comparison. We anticipate a return to year over year shipment growth in the second quarter. Gross margin was 48.2%, exceeding our targeted range of 42 to 48%. We ended the quarter with a net cash of $271,000,000 upper from $259,000,000 at the year end 2024.

Now I will provide a detail on product. Please turn to Slide four. Revenue from single wafer cleaning, Tahoe and semi critical cleaning tools grew 18% and represented 75% of the total revenue. Growth was led by strong demand for our SAPS and TEBO platform as well as continued momentum for Ultra CB backside cleaning tool. In Q1, we qualified our high temperature SPM tool with a leading logic customer in China and achieved customer acceptance for our back end bevel etch tool from a US customer.

Looking ahead, in cleaning, we expect to see strong product cycle across high temperature SPM, Tahoe and other cleaning segments. We believe our top to bottom cleaning portfolio put us in a strong position to continue gaining share both in China and expanding the global market. Revenue for ECP, furnace and other technology grew 7% and represented 16% of total revenue. We saw strong momentum in ECP tool for advanced packaging, and we are excited about the initial response to our new Ultra ECP APP tool. As I mentioned before, ACM Ultra ECP APP panel level plating tool received the twenty twenty five three d InSight Technology Enablement Award in The United States.

We believe ACM is the first and only supplier to offer rotating horizontal plating approach for the panel level packaging. The industry is now aggressively migrating from wafer level packaging to panel level packaging as one of the leading solution for the next generation of AI chips. The reason is simple. You get a better utilization with a square panel versus a circular wafer. As a result, we now experience a lot of interest from several major player in the industry.

This product highlights ACM technology leadership in both front end processing and advanced packaging applications. We believe this will allow us to play a key role as global industry demand innovations to support even involving semiconductor requirements for AI. Our furnace product continued to gain traction. Our view is that market is increasingly demanding high temperature annealing solution, particularly for power semiconductor IGBT devices. Our UltraFN vertical furnace tool is a proprietary quartz based design that reach a temperature of up to twelve fifty degrees C without distorting the wafer surface.

We believe no other supplier currently achieves this temperature level in a vertical platform. And this is yet another good example of ACM technology leadership. We expect revenue contribution from our furnace product line, including LTCVD, oxidation and ARD to accelerate meaningfully in 2025, expanding from a relatively small base in 2024. Revenue from advanced packaging, which excludes ECP, but including service and the spell, was down 10.5 and representing 9% of revenue. We are making good progress with the new track and PECVD platforms.

Both of these products come with ACM innovative and differentiated platform designed that allow for process flexibility and high throughput. We had a solid list of ongoing demonstration and evaluation for both TRAC and PECVD. For TRAC, we plan to deliver our 300 WPH inline KRF beta tool in middle twenty twenty five. For our new platform, TRAC and PECVD, we expect some initial revenue contribution in 2025, with more in 2026 and beyond. To wrap up to the product, we have been on a strong growth path for the past five years with new products, including Tahoe SBM and Furnace in 2025, followed by our panel level packaging tools, TRAC and PCVD in 2026 and beyond.

We remain committed to a high growth model for the next five years. As a reminder, our $3,000,000,000 long term revenue target anticipates $1,500,000,000 from China and $1,500,000,000 from the global market. Next, let me provide an update on our production facility. First is Lingdao. Please turn to slide eight.

Our state of art Lingang production and R and D center is nearly completed. The site, including two production buildings, with the first now in production and the second available for future expansion. Each of the two production building can support up to 1,500,000,000 of their annual production capacity. Combined, we believe we can eventually support 3,000,000,000 of the production at Lingang. Next, our Oregon facility, please turn to Slide eight.

As I mentioned before, we are investing in our U. S. Footprint. Our Oregon facility is 40,000 square feet. We are building out a demo lab and a clean room and plan to add initial manufacturing to support our global customers.

Now I will provide our outlook for the full year 2025. Please turn to slide 10. We are maintaining our 2025 revenue outlook in a range of $850,000,000 to $950,000,000 This implies 15% year over year growth at the midpoint. In closing, our focus remains on delivering differentiated enabling technology that will solve our global customers’ most critical process challenges. Now let me turn the call over to their CFO, Mark, who will review detail of our first quarter results.

Mark, please.

Mark McKechnie, CFO, ACM Research: 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 gainloss on short term investments. Reconciliation of these non GAAP measures to comparable GAAP measures is included in our earnings release. Also, unless otherwise noted, following figures refer to the first quarter of twenty twenty five and comparisons are with the first quarter of twenty twenty four.

I will now provide financial highlights. Revenue was 172,300,000 up 13.2%. Total shipments were $157,000,000 versus $245,000,000 in Q1 of twenty twenty four and $264,000,000 in Q4 of twenty twenty four. David noted shipments in the first quarter of twenty twenty four were especially strong during customer demand, so this was a tough year on year compare. We also had some pull ins in the fourth quarter of last year, making for a tough quarter on quarter compare.

For reference, combined total shipments for the fourth quarter of twenty twenty four and the first quarter of twenty twenty five still increased by 8.9% versus the prior year periods. We do anticipate a return to year over year shipment growth in the second quarter. Gross margin was 48.2% versus 52.5%. This exceeded our long term business model target range of 42% to 48%. We do expect gross margin to vary from period to period due to a variety of factors including sales volume, product mix and currency impacts.

Operating expenses were $47,500,000 up 18.4%. For 2025, we plan for R and D in the 13% to 14% of revenue range, sales and marketing in the 7% range and G and A in the 5% to six percent range. Operating income was $35,600,000 down 10.6%. Operating margin was 20.7% versus 26.2%. Income tax expense was $2,200,000 versus $4,400,000 For 2025, we expect our effective tax rate in the 10% to 15% range.

Net income attributable to ASM Research was $31,300,000 versus $34,600,000 Net income per diluted share was $0.46 versus $0.52 Our non GAAP net income excluded $9,800,000 in stock based compensation expense for the first quarter. I’ll now review selected balance sheet and cash flow items. Cash, cash equivalents, restricted cash and time deposits were $498,400,000 at the end of the first quarter versus $441,900,000 at the end of last year. Net cash, which excludes short term and long term debt, was $271,000,000 up from $259,000,000 at the year end 2024. Total inventory was $609,600,000 versus $598,000,000 at year end 2024.

This included raw materials and work in process of $310,800,000 finished goods inventory of 298,800,000.0 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 from operations was a positive $5,300,000 versus a negative $9,000,000 in the year ago quarter. Capital expenditures were $17,100,000 versus $26,100,000 in the year ago quarter. For the full year 2025, we expect to spend about $70,000,000 in capital expenditures. That concludes our prepared remarks.

Let’s open the call for any questions that you may have. Operator, please go ahead.

Conference Call Operator: Thank you. At this time, we will conduct the question and answer session. To ask a question, you need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q and A roster.

Our first question is from Charles Shee with Needham and Company. Your line is now open.

Charles Shee, Analyst, Needham and Company: Evening. Maybe good morning, Mark, David. My first question, I do want to ask you guys about shipment figures. We understand, yes, this is a very lumpy metric. You can’t really look at it on a quarter to quarter basis.

But I think one quarter ago, management said for the full year shipment, you’re expecting shipment growth over last year’s level. Given the pulling effect from March into December, I found that it’s probably pretty a high bar for you to get the full year shipment growth, meaning you probably need to ship roughly speaking $270,000,000 per quarter for the next three quarters. I did hear in the prepared remarks, management has committed to Q2 shipment year on year growth, but any thoughts on the full year shipment, especially compared with the last year’s shipment? Thank you.

David Wong, CEO, ACM Research: Sure. Thanks, Charles. And actually, the last year’s shipment is really, I mean, extremely high, right? We increased Compared to 2023, we’re increasing more than 60%. And so that high number, that put a pressure this year.

But anyway, I answered your question directly, we’re still expecting this year’s shipment were over the last year shipment. And they’re probably, we’re not as high as the last year, right? So that’s the answer to your question.

Mark McKechnie, CFO, ACM Research: Charles, let me clarify that. So yeah, shipments we expect to grow in 2025, but the growth rate of shipments, we’re not necessarily saying the growth rate of shipments will be higher than the growth rate of revenue for this year.

Charles Shee, Analyst, Needham and Company: Got it. Got it. Got it. Okay. That’s helpful color.

Higher in shipment dollars compared with last year in terms of a growth percentage, feels like you’re saying it’s lower than last year, probably lower than this year’s revenue growth, but still positive direction.

Mark McKechnie, CFO, ACM Research: That’s right.

David Wong, CEO, ACM Research: Yeah. Still well.

Charles Shee, Analyst, Needham and Company: Thank you. Thank you. Maybe a question on the tariffs. I know you probably don’t have a lot of content imports from The US, but since China does put pretty high tariffs on The US imports, Wonder if there’s any impact on the profitability wise or anything that could cause some issues for you guys going forward.

David Wong, CEO, ACM Research: Okay. You mean it for ACM, right? That’s your point? Or for our

Mark McKechnie, CFO, ACM Research: ACM shunt. Yeah. Yeah. Yes. Yes.

Okay.

David Wong, CEO, ACM Research: Well, again, since this whatever is a para for plus or right, in our tool. And so now we’re located third parties, I mean, either third country, right, also including some made in China parts. And so we’re, you know, I think this import from US parts or tariffs to China, I mean, not impact us. Instead, you know, we’re going to spend more of our, I call it buy more of our parts locally and also buy third party countries product, right? And so I think the impact for us is pretty minimized.

Maybe you’re a customer, right? That’s different question.

Mark McKechnie, CFO, ACM Research: Yeah. Yeah.

Charles Shee, Analyst, Needham and Company: Yeah. Maybe maybe the last question I I have. In in terms of 2026, I know it’s way too early for you guys to really talk about ’26. Any initial thoughts there in terms of your growth, in terms of the overall market growth? And any color would be helpful.

Thank you. At this point, I know it’s early, but that’s our job. We want to push you to give us a bit more time.

David Wong, CEO, ACM Research: Sure, sure. And actually, we stayed there maybe a couple of quarters again before, China growth of the WFE market in the last five years is pretty good. And so we think 2025 getting to the plateau, this kind of plateau stage. And in this moment it’s too early to say 2026. Even some people say this year down maybe 20% or 10%, right?

However, we’re looking at our revenue, our customer talking to us, they continue expanding. And so in our revenue, look at I mean, our shipment look at their PO, we have filled through Q2, Q3 and still something we need to fill Q4. Also to see some shipment will come in the Q1 of next year. So our growth strategy is, even say China market is flattened or is a plateau, and we still continue to gain market share because of our cleaning, copper plating, and also new products like furnace. I just mentioned we have this ultra high temperature neo process come out.

A lot of potential ITBT application in China, they demand high temperature neo furnace, twelve fifty degree. It’s really a champion, I call it, temperature we can do also without distorting of the surface structure. So that can be the continued innovation product driving our growth. Further, I want to say our panel product, we mentioned today, is another bigger, I call, growing for international market. And also we see some domestic market too.

And plus, we have further other furnace development and there are PCVD and the track. Especially the track, we gather probably middle of this year, we’re shipping our beta tool, CAF line, 300 WPH, right, to the one with the customer. So I want to say our continued momentum to have a PCVD and track and first join our revenue stream. So we’re still very high confidence. We’re still growing in this market our market share in China.

So we still have a high confidence as we execution our business strategy, qualify our new products, and still looking at next five year high growth.

Charles Shee, Analyst, Needham and Company: Thanks, David. Maybe can I squeeze in one more since you mentioned about good number of tractions on the new products?

Mark McKechnie, CFO, ACM Research: Yes, please, Charlie. Charles, yeah.

David Wong, CEO, ACM Research: Yeah, yeah. So,

Charles Shee, Analyst, Needham and Company: you know, at Semicon China, there has been a lot more product announcements from your peers in China. And it appears to me the domestic Chinese semi cap companies are, looks like they’re coming after each other’s market. And there’s a kind of heightened domestic competition there. And we definitely are hearing rumors there seems to be a likely consolidation for the Chinese semi equipment sector coming up. So wonder if you have any thoughts there and where does ACM Shanghai stand in terms of domestic competition and potential consolidation with your peers?

Thank you.

David Wong, CEO, ACM Research: Okay. Well, let’s talk about competition first, right? I think at ACM today, we’ve got a full product, right? Cleaning tool and top to bottom. Basically, we can supply almost 90%, ninety five % of the process application.

It was for the memory or for the logic. So we have very strong precision cleaning, right? Plus, same thing, copper plating will cover almost all the copper plating product, right? Dimazine and TSV, the most packaging, you know, this I call three, five compound semiconductor, and also panel level packaging. So I have very strong position for those portions.

And more important I want to see that is ACM had real innovation technology, right? And the local Chinese customer, they really demand the advanced technology product. They’re not only, say, by pricing. Okay, so in other sense, we’re not too much worried about the local peer competing the price with us. As I said again, right, this is a real technology game, or technology winning game, not only by pricing.

And so, you know, we feel our innovation product, you know, our IP protection, and can avoid anybody copy our tool in China. And that’s really our strong position, because our tool never copy anybody’s tool. If we start copying anybody else, then they can copy us, right? We have nothing to say. But now, actually, in the last twenty years, we’re really innovation and IP protections.

Have very strong confidence. No one in peer in China can copy our tool. We have very strong footprint technology. So that’s how strong. The next thing you talk about is consolidation.

Yeah, I think it’s going to happen, right? This market happening in The US, in Japan, and probably Europe. As industry moving forward, a lot of small company probably have to be merged with the big guy. And so, I mean, we’re always seeing that happen, and we love to see that happen. And so ACM was still very strong in the market.

And this moment, I said we have a lot of organic growth with our new product. We can enrich the product we’re doing ourselves. So probably we’re not trying to combine or merge other company and grow business. This moment, most important, we’re focused on our technology development, our product portfolio has a lot of revenue for us to gain the market share. So that’s maybe our position.

Hey Mark, anything you want to add on that?

Mark McKechnie, CFO, ACM Research: Yeah, no, I think, brought up a good point and it’s something that we consider a lot. When you think about consolidation, big picture, we have pretty aggressive revenue targets obviously. We talked about a billion and a half in China and that’s assuming very low market share for some of our newer platforms. You kind of step back and think about, okay, there will be some consolidation. Say China is a 30,000,000,000 or $40,000,000,000 WFE.

The top 10 players are going to be 3,000,000,000 to $4,000,000,000 apiece. We feel pretty confident we can grow to those levels organically, think is the point that David and the team are really focused on doing. So it’s a we don’t disagree, we’re seeing some of the additional entrants and folks going after kind of trying to get in there with a couple of products. But we have a big services team, great footprint across all of our customer base, but at the end of the day, we have a really strong IP that we think is important to continue to drive our business in China, and then it’s gonna help open the doors globally. Yeah.

Charles Shee, Analyst, Needham and Company: Thank you, gentlemen. Appreciate the answers.

Mark McKechnie, CFO, ACM Research: Yep. Thanks, Charles. Yeah. Charles. Thank you.

Conference Call Operator: Our next question comes from Kieran Haldane with Surge Equity Research. Your line is now open. Hello, Kieran?

David Wong, CEO, ACM Research: We cannot hear your voice. Yeah. Did you email your speaker? No.

Conference Call Operator: Alright. Thank you. Seeing no more questions in the queue at this time, I will turn the call back to David Wang for closing remarks.

David Wong, CEO, ACM Research: Okay. Thank you, operator, and thank you all for participating to today’s call and for your support. Before we close, Steven is going to mention our upcoming investor relations event. Steve, please.

Steven Palaio, Managing Director, Blue Shirt Group, Blue Shirt Group: Thanks, David. Before we conclude, I just want to give everyone a quick reminder on our upcoming investor conferences. On June 25, we will present at the fifteenth Annual ROTH London Conference at the 4 Seasons Park Lane, London. Attendance at the conference is by invitation only. For interested investors, please contact your respective sales representative to register and schedule one on one meetings with the management team.

This concludes the call, and you may now disconnect. Take care.

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