ACM Research (Nasdaq: ACMR) reported second-quarter 2025 revenue of $215.4 million, up 6% year over year and up 25% sequentially, with total shipments of $206 million rebounding 31% from the prior quarter and gross margin of 48.7% exceeding the top of its 42%-48% target range. Net income attributable to ACM Research was $36.8 million ($0.54 diluted EPS), roughly flat year over year, as operating income fell 20% to $41.5 million and operating margin compressed to 19.3% on a 38.8% jump in operating expenses driven by stepped-up R&D (now planned at 14%-16% of sales) and sales-and-marketing investment. The headline of the quarter was a substantial raise to long-term targets: total long-term revenue to $4 billion (from $3 billion), split $2.5 billion mainland China and $1.5 billion rest of world, underpinned by a higher China WFE market assumption of $40 billion (from $30 billion) and raised China share targets of 60% for both cleaning and plating. ACM Shanghai also secured CSRC approval to raise up to about $620 million in a follow-on offering to accelerate R&D and capacity. Management emphasized ACM's differentiated, IP-protected technology - proprietary N2 bubbling wet-bench cleaning, high-temperature SPM, and a unique horizontal panel-level plating platform - as the basis for gaining share in China and expanding with global customers in Korea, the U.S. and Taiwan, supported by new Lingang capacity and a build-out of an Oregon R&D and production base to serve global customers and mitigate tariffs. ACM maintained its full-year 2025 revenue outlook of $850-$950 million (about 15% growth at the midpoint), while cautioning that quarterly revenue and shipments can be lumpy and that new-product lines (Track, PECVD, panel-level packaging) will contribute mainly in 2026 and beyond. The company ended the quarter with net cash of $205.8 million.
Yeah, good day, everyone. Thank you for joining us to discuss second quarter 2025 results, which we released before the U.S. market opened today. The release is available on our website as well as from our newswire services. There is also a supplemental slide deck posted in the Investors section of our website that we will reference during our prepared remarks today. On the call with me today are our CEO, David Wang, 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 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 of the financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation and unrealized gain and loss 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 to slide 13. Also, unless otherwise noted, the following figures refer to the second quarter of 2025, and comparisons are with the second quarter of 2024.
I will now turn the call over to David Wang. David?
Thanks, Steven. Hello, everyone, and welcome to ACM Research Second Quarter Earnings Conference Call. We delivered another quarter of good results with strong sequential growth in both revenue and achievement, reflecting continued progress across our expanding product portfolio. We saw momentum from our SPM, Tahoe, plating and furnace tool, which are helping expand our addressable market and gain market share. We also continue to make progress with new platforms, including Track, PECVD, and panel-level packaging tools, which represent important long-term growth drivers. We recently announced a major upgrade to our Ultra C wb wet bench cleaning tool. The technology integrates ACM's patent-pending nitrogen bubbling technology to generate a large-sized bubble with good bubble density uniformity and enhance the etching rate uniformity in a 3D structure across the wafer.
I'm happy to announce that we have received repeat orders for the new Ultra C wb wet bench tool with our proprietary N2 bubbling technology. We expect good achievements for this tool this year and the next. The technology is also adaptable to our Ultra C Tahoe platform, with significant application potential for manufacturing advanced 3D NAND, 3D DRAM, 3D logic devices. We believe this new technology is another example of ACM's leadership in cleaning tools that will be good for our customers and support our growth initiatives. Our nitrogen bubbling technology tool adds to early breakthrough for Tahoe and other recent product launches, such as our high temperature SPM tool and panel-level packaging tool for flux clean and bevel etcher. Together, these developments reinforce ACM's differentiated leadership in wafer cleaning and give us confidence that we will continue to gain share in a critical segment.
We remain committed to delivering innovative new products such as this to enable our customers to meet the next generation of semiconductor manufacturing challenges as demanded by the artificial intelligence transformation. Now, on to our business results. Please turn to slide three. For the second quarter of 2025, we delivered revenue of $215 million, up 25% sequential and 6% year-over-year. Achievement was $206 million, up 32% sequential, up 2% year-over-year. Gross margin was 48.7%, exceeding our target range of 42%-48%. We ended the quarter with a net cash of $206 million. 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 1% and represents 74.2% of total revenue. We believe our top-to-bottom cleaning portfolio puts us in a strong position. We continue to make technical improvements and customer progress with our SPM tool.
Our high-temperature SPM system features ACM's proprietary nozzle design, which prevents both liquid SPM and acid mist spat out of the chamber during the SPM process. This improves particle performance, reduces chamber preventative maintenance cleaning frequency, and enhances system uptime. We have achieved better particle control over average particle count, less than 10 at the 26-nanoparticle size. We also believe it will show better performance than competitors' offerings at particle sizes more than 17 and 15 nanometers. In Q2, we delivered SPM and Tahoe tools to several more customers as we continue to gain market share in the SPM space. Revenue from ECP, furnace, and other technologies grew 23% and represents 22% of total revenue. ACM recently delivered an ECP tool to a customer, which included the company's 1,500 electric plating chambers shipped.
We are seeing a strong momentum for our ECP tool in advanced packaging, driven by demand for both front and back-end plating systems. We are also seeing growth interest in our new Ultra ECP APP panel-level horizontal plating system, as the industry shifts from wafer to panel-level packaging. To support the next-generation AI chips, our unique horizontal plating approach, which delivers superior uniformity than vertical panel plating solutions, has attracted attention from the major players. Our furnace products are building momentum, supported by strong customer interest and an expanded pipeline of evaluation and engagement. We see good demand across multiple applications, including high-temperature neo, especially our 1,250-degree C-degree, high-temperature neo furnace, and also LPCVD oxidation and ALD. We believe ACM's differentiated design positions us to capture meaningful market share. Revenue from advanced packaging, which excludes ECP but includes service and spell, was up 20% and represents 6% of revenue.
We are making good progress with our new Track and PECVD platform. Our proprietary PECVD platform with three chunks per chamber gives us flexibility to support a wide range of processes with the same hardware. We feel good about our positioning, with a plan to deliver a more better tool to a handful of customers this year and look for revenue contribution in 2026 and beyond. For Track, we're in the final development phase of our 300-wafer-per-hour inline KrF tool, and we expect to deliver the beta tool to a key customer in the current quarter. To close on product, our roadmap, including incremental contributions from Tahoe SPM and furnace tool in 2025, with the panel-level packaging, Track, and PECVD tool, is expected to drive growth in 2026 and beyond. Please turn to slide six. Our first half results reflect solid execution across our product portfolio.
We remain confident in the year and our long-term opportunity in China. As a result, we have increased our long-term revenue target for Mainland China to $2.5 billion versus our previous target of $1.5 billion. The increase is based on two main factors. First, we're now assuming a long-term China WFE market size of $40 billion versus our prior assumption of $30 billion. This is based on updates by third-party global market forecasts and also on our view of the China semiconductor industry. Second, we have adjusted our market share targets for product group as follows. We have raised our market share target for both cleaning and plating to 60% versus 55% prior. This is a result of our current assessment of customer traction and increased confidence for share gain for new products. For furnace, PECVD, and Track, however, we're keeping our target at the 15%, 15%, and 10% level.
Of course, we aspire to achieve better results, but needed more time in the market before we were formally adjusted the target. Moving to the bottom of the chart, we maintain our revenue target for the rest of the world at $1.5 billion. We believe ACM Research's focus on differentiated, world-class products combines our global sales and service team, will deliver results with our global customers. As an example, we have a plan to deliver a server tool to the U.S. in the third quarter. We remain engaged with our major U.S. customers with active evaluation across a range of the cleaning process steps as we continue to work towards our goal for production orders. Bottom line, we have raised our long-term revenue target to $4 billion versus our prior target of $3 billion. Now, I will provide an update on ACM Shanghai's proposed capital raise in China.
ACM Shanghai recently received approval from the CSRC to proceed with its proposed follow-on offering on the stock market to raise up to $620 million by selling less than 10% of your total share. The capital raising leadership is intended to help accelerate our updated revenue target and add to the long-term foundation to support our effort to scale our product to major global customers. As the majority shareholder, we view the proposed transaction as an important step in strengthening our position in the China market, and it demonstrates the long-term value of our ownership stakes. Next, let me provide an update on our production facility. First is Lingang. Please turn to slide eight. As I discussed last quarter, our state-of-the-art Lingang production and R&D center is nearly completed. The site includes two production buildings, with the first now in production and the second available for future expansion.
Each of the two production buildings can support up to $1.5 billion of annual production capacity combined. We believe we can eventually support $3 billion of production at Lingang from the two manufacturing buildings. Next, our Oregon facility. Please turn to slide nine. Recall we purchased a 40,000 square feet facility last year. We made good progress during the second quarter, and we have begun an upgrade on our customer demo R&D lab. We believe this will help our effort with the customer in the region as we will let them test wafers locally on the ACM tool. We also are moving forward with a plan to add production capacity to the Oregon facility. We target the middle of 2026 with a demo lab and production to commercial operations.
Our investments in Lingang and Oregon are key enablers of our growth strategy, expanding our capacity, strengthening customer support, and preparing us to scale globally. Now I will provide our outlook for the full year 2025. Please turn to slide 10. We are maintaining our 2025 revenue outlook in the range of $850 million-$950 million. This implies 15% year-over-year growth at the middle point. Enclosed, our focus remains on delivering differentiated, enabling technology that solves our global customers' most critical process challenges. Now, let me turn the call over to our CFO, Mark, who will reveal the details of our second quarter results. Mark, please.
Yeah, thanks, David. Good day, everybody. Please turn to slide 11. Unless I note otherwise, I'll refer to non-GAAP financial measures, which exclude stock-based compensation and unrealized gain and loss on short-term investments. Reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. Also, unless otherwise noted, the following figures refer to the second quarter of 2025. Comparisons are with the second quarter of 2024. I'll now provide the financial highlights. Revenue was $215.4 million, up 6.4%. Total shipments were $206 million versus $202 million in Q2 of 2024 and $157 million in Q1 of 2025. Strong sequential rebound in Q2 shipments led to a return of positive year-over-year shipment growth for the quarter. Gross margin was 48.7% versus 48.2%. This exceeded our long-term business model target range of 42%-48%.
We 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 $63.4 million, up 38.8%. R&D was 14.5% of sales. Sales and marketing was 9.3% of sales, and G&A was 5.6% of sales. For 2025, we now plan for R&D in the 14%-16% range. This is an increase versus last quarter's plan due to ACM's continued focus on proprietary R&D programs. We plan for sales and marketing in the 8% range and G&A in the 5%-6% range. Operating income was $41.5 million, down 20.2%. Operating margin was 19.3% versus 25.6%. Income tax expense was $1.9 million versus $9.3 million. For 2025, we expect our effective tax rate in the 10% range. Net income attributable to ACM Research was $36.8 million versus $37.5 million.
Net income per diluted share was $0.54 versus $0.55. Our non-GAAP net income excluded $9.8 million in stock-based compensation expense for the second quarter. I will now review selected balance sheet and cash flow items. Cash, cash equivalents, restricted cash, and time deposits were $483.9 million at quarter end versus $498.4 million at the end of the first quarter. Net cash, which excludes short-term and long-term debt, was $205.8 million versus $271.0 million at the end of the first quarter. Total inventory net was $648.3 million versus $609.6 million at the end of the first quarter. Raw materials was $285.6 million, up $45.7 million quarter on quarter. We made strategic purchases to support production plans and to mitigate any potential supply chain risks. Work in progress was $60.7 million, down $10.2 million quarter on quarter. Finished goods inventory was $302 million, up $2.2 million quarter on quarter.
Finished goods inventory primarily consists of first tools under evaluation at our customer sites, along with finished goods located at ACM facilities. Cash flow used by operations for the first half of 2025 was $39.6 million versus $51.9 million cash flow provided by operations in the year-ago period. Capital expenditures were $32.2 million for the first half of 2025 versus $39.7 million in the year-ago period. For the full year of 2025, we expect to spend about $70 million in capital expenditures. That includes our prepared remarks. Now let's open the call for any questions that you may have. Operator, please go ahead.