ACM Research, Inc.

Previous wording

ACM Research is not a mainland China operating company, and we do not conduct our operations in mainland China through the use of a variable interest entity, or VIE, or any other structure designed for the purpose of avoiding mainland China legal restrictions on direct foreign investments in mainland China-based companies. ACM Research has a direct ownership interest in ACM Shanghai as the result of its holding 73.6% of the outstanding shares of ACM Shanghai. Stockholders of ACM Research may never directly own equity interests in ACM Shanghai. We do not believe that our corporate structure or any other matters relating to our business operations require that we obtain any permissions or approvals from the China Securities Regulatory Commission, the Cyberspace Administration of China, or any other mainland China central government authority in order to continue to list shares of Class A common stock of ACM Research on the Nasdaq Global Select Market. This determination was based on the facts aforementioned and mainland China Company Law, mainland China Securities Law, cybersecurity regulations and other relevant laws, regulations and regulatory requirements in mainland China currently in effect. However, if this determination proves to be incorrect, then it could have a material adverse effect on ACM Research. See “Item IA. Risk Factors—Risks Related to International Aspects of Our Business—If any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless” in our 2025 Annual Report.

Current wording

ACM Research is not a mainland China operating company, and we do not conduct our operations in mainland China through the use of a variable interest entity, or VIE, or any other structure designed for the purpose of avoiding mainland China legal restrictions on direct foreign investments in mainland China-based companies. ACM Research has a direct ownership interest in ACM Shanghai as the result of its holding 73.2% of the outstanding shares of ACM Shanghai. Stockholders of ACM Research may never directly own equity interests in ACM Shanghai. We do not believe that our corporate structure or any other matters relating to our business operations require that we obtain any permissions or approvals from the China Securities Regulatory Commission, the Cyberspace Administration of China, or any other mainland China central government authority in order to continue to list shares of Class A common stock of ACM Research on the Nasdaq Global Select Market. This determination was based on the facts aforementioned and mainland China Company Law, mainland China Securities Law, cybersecurity regulations and other relevant laws, regulations and regulatory requirements in mainland China currently in effect. However, if this determination proves to be incorrect, then it could have a material adverse effect on ACM Research. See “Item IA. Risk Factors—Risks Related to International Aspects of Our Business—If any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless” in our 2025 Annual Report.

Previous wording

On February 6, 2026, ACM completed the sale of approximately 4.8 million shares of ACM Shanghai at a price of RMB160.00 per share (approximately $23.05 per share based on the exchange rate in effect on the date of the sale), generating approximately $110.2 million in gross proceeds and approximately $86 million net of taxes. Following the transaction, ACM’s ownership percentage in ACM Shanghai decreased from 74.6% to 73.6%.

Current wording

On February 6, 2026, ACM completed the sale of approximately 4.8 million shares of ACM Shanghai at a price of RMB160.00 per share (approximately $23.05 per share based on the exchange rate in effect on the date of the sale), generating approximately $110.2 million in gross proceeds and approximately $86 million net of taxes.

Previous wording

A detailed description of how cash is transferred through our organization is set forth under “Note 2 – Summary of Significant Accounting Policies – Cash and Cash Equivalents” to the Condensed Consolidated Financial Statements of this report.

Current wording

A detailed description of how cash is transferred through our organization is set forth under “Note 2 – Summary of Significant Accounting Policies – Cash and Cash Equivalents” tothe Condensed Consolidated Financial Statements of this report.

Previous wording

On November 15, 2024, the U.S. Department of the Treasury published a final rule implementing a framework for the regulation of outbound foreign investment from the United States. The new program, known as the Outbound Investment Security Program (“OISP”) was codified in the United States Code of Federal Regulations at 31 C.F.R. Part 850, effective as of January 2, 2025. The OISP was amended by the Comprehensive Outbound Investment National Security Act (“COINS Act”) which was signed into law on December 18, 2025, although the provisions of the COINS Act will not come into effect until the Department of the Treasury issues implementing regulations, which by law must occur by March 2027. The OISP marks a shift in U.S. economic policy, as historically the United States government declined to restrict outbound investment from the United States for national security reasons. Going forward, the investment activities of multinational companies, including ACM Research are subject to both CFIUS and OISP requirements, which together will limit cross-border investment opportunities, especially as they relate to China. The OISP regulations in effect today could be interpreted to restrict certain types of private investment in ACM Research in the United States, although these measures do not impact investment in ACM Research’s publicly traded securities. The COINS Act reverses the possible application of the OISP to certain U.S. companies, including ACM Research, and therefore it appears ACM Research will not be subject to the OISP’s private investment restrictions once the provisions of the COINS Act enter into force in 2026 or 2027. See “Item 1A. Risk Factors—Regulatory Risks—The U.S. Government has implemented an outbound investment review mechanism, which may prevent us from taking advantage of investment opportunities that could otherwise be advantageous to our stockholders” in our 2025 Annual Report for more information.

Current wording

On November 15, 2024, the U.S. Department of the Treasury published a final rule implementing a framework for the regulation of outbound foreign investment from the United States. The new program, known as the Outbound Investment Security Program (“OISP”) was codified in the United States Code of Federal Regulations at 31 C.F.R. Part 850, effective as of January 2, 2025. The OISP was amended by the Comprehensive Outbound Investment National Security Act (“COINS Act”) which was signed into law on December 18, 2025, although the provisions of the COINS Act will not come into effect until the Department of the Treasury issues implementing regulations, which by law must occur by March 2027. The OISP marks a shift in U.S. economic policy, as historically the United States government declined to restrict outbound investment from the United States for national security reasons. Going forward, the investment activities of multinational companies, including ACM Research are subject to both CFIUS and OISP requirements, which together will limit cross-border investment opportunities, especially as they relate to China. The OISP regulations in effect today could be interpreted to restrict certain types of private investment in ACM Research in the United States, although these measures do not impact investment in ACM Research’s publicly traded securities. The COINS Act reverses the possible application of the OISP to certain U.S. companies, including ACM Research, and therefore it appears ACM Research will not be subject to the OISP’s private investment restrictions once the provisions of the COINS Act enter into force in 2026 or 2027. See “Item 1A. Risk Factors—Regulatory Risks—The U.S. Government has implemented an outbound investment review mechanism, which may prevent us from taking advantage of investment opportunities hat could otherwise be advantageous to our stockholders” in our 2025 Annual Report for more information.

Previous wording

Since 2009 we have delivered more than 1,500 tools to our customers, more than 1,330 of which were repeat orders or acceptances upon contractual performance obligations having been met and thereby generated revenue to us. The balance of the delivered tools is subject to the customer's acceptance of the tool upon the tool's satisfaction of applicable contractual requirements or subject to the customer's subsequent discretionary commitment to purchase the tool. To date, substantially all of our sales of equipment for semiconductor-manufacturing have been to customers located in Asia, and we anticipate that a substantial majority of our revenue from these products will continue to come from customers located in this region for the foreseeable future. We have begun to add to our efforts to further address customers in North America, Western Europe and Southeast Asia, by expanding our direct sales teams and increasing our global marketing activities.

Current wording

Since 2009 we have delivered more than 1,590 tools to our customers, more than 1,430 of which were repeat orders or acceptances upon contractual performance obligations that have been met and thereby generated revenue to us. The balance of the delivered tools is subject to the customer's acceptance of the tool upon the tool's satisfaction of applicable contractual requirements or subject to the customer's subsequent discretionary commitment to purchase the tool. To date, substantially all of our sales of equipment for semiconductor-manufacturing have been to customers located in Asia, and we anticipate that a substantial majority of our revenue from these products will continue to come from customers located in this region for the foreseeable future. We have begun to add to our efforts to further address customers in North America, Western Europe and Southeast Asia, by expanding our direct sales teams and increasing our global marketing activities.

Previous wording

•Government grants are credited to research & development expense in the periods in which the specific projects are completed. For the three months ended March 31, 2026 and 2025, related government subsidies recognized as reductions of relevant expenses in the condensed consolidated statements of comprehensive income were $0.6 million and $0.3 million, respectively.

Current wording

•Government subsidies relating to current expenses are recorded as reductions of those expenses in the periods in which the current expenses are recorded. Such subsidies included in our condensed consolidated statements of comprehensive income were both $0.5 million, in each of the three months ended June 30, 2026 and 2025, respectively, and $1.1 million and $0.8 million in the six months ended June 30, 2026 and 2025, respectively.

Previous wording

•Government subsidies related to depreciable assets are credited to other income over the useful lives of the related assets for which the grant was received. Government subsidies related to VAT reduction are credited to other income in the period received. For the three months ended March 31, 2026 and 2025 related government subsidies recognized as other income in the condensed consolidated statements of comprehensive income were $0.2 million and $0.3 million, respectively.

Current wording

•Government subsidies related to depreciable assets are credited to income over the useful lives of the related assets for which the grant was received. Government subsidies related to VAT reduction are credited to income in the period received. Such subsidies included in our condensed consolidated statements of comprehensive income were $1.2 million and $0.4 million, in the three months ended June 30, 2026 and 2025, respectively, and $1.4 million and $0.7 million in the six months ended June 30, 2026 and 2025, respectively.

Previous wording

Net income attributable to non-controlling interests is attributable to the minority holders of shares of ACM Shanghai stock. As a result, we reflect the portion of our net income allocable to the minority holders of ACM Shanghai shares as net income attributable to non-controlling interests. As of March 31, 2026, ACM Research held 73.6% of ACM Shanghai’s outstanding shares.

Current wording

Net income attributable to non-controlling interests is attributable to the minority holders of shares of ACM Shanghai stock. As a result, we reflect the portion of our net income allocable to the minority holders of ACM Shanghai shares as net income attributable to non-controlling interests. As of June 30, 2026, ACM Research held 73.2% of ACM Shanghai’s outstanding shares.

Previous wording

The increase in revenue for three months ended March 31, 2026 as compared to the same period in 2025 reflects higher sales of ECP (front-end and packaging), furnace and other technologies, and Advanced packaging (excluding ECP), services and spares, partly offset by lower sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment. The increased demand is due in part to a longer term commitment by our mainland China-based customers to increase production capacity to achieve a greater share of the global semiconductor market.

Current wording

The increase in revenue for three months ended June 30, 2026 as compared to the same period in 2025 reflects higher sales of ECP (front-end and packaging), furnace and other technologies, and Advanced packaging (excluding ECP), services and spares, partially offset by lower sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment. We attribute the increase to a longer-term commitment by our mainland China-based customers to increase production capacity to achieve a greater share of the global semiconductor market together with the market share changes and product cycles.

Previous wording

Cost of revenue and gross profit increased in the three months ended March 31, 2026 as compared to the corresponding period in 2025 due to the increased sales volume together with a decrease in gross margin. The decrease in gross margin versus the prior-year period was primarily due to revenue mix between product categories. Gross margin may vary from period to period, primarily related to the level of utilization and the timing and mix of revenue. We expect gross margin to be between 42.0% and 48.0% for the foreseeable future.

Current wording

Cost of revenue and gross profit increased due to the increased sales volume together with a decrease in gross margin. The decrease in gross margin versus the prior-year period was primarily due to revenue mix between product categories. Gross margin may vary from period to period, primarily related to the level of utilization and the timing and mix of revenue. We expect gross margin to be between 42.0% and 48.0% for the foreseeable future.

Previous wording

Sales and marketing expense increaseddue to an increase of $2.0 million in personnel costs, $1.9 million for commissions, travel & entertainment, outside services and other expenses, and $1.1 million for promotional tools, partly offset by a $0.7 million decrease in stock-based compensation. We expect that, for the foreseeable future, sales and marketing expense will increase in absolute dollars, as we continue to invest in sales and marketing by hiring additional employees and expanding marketing programs in existing or new markets. We must invest in sales and marketing processes to develop and maintain close relationships with customers. We are making dollar-based investments to support the growth of our customer base in the United States and global markets.

Current wording

Sales and marketing expense increaseddue to a $1.5 million increase in commissions, professional services, and other expenses, and a $1.0 million increase in personnel costs, offset by a $0.8 million decrease in stock-based compensation. We expect that, for the foreseeable future, sales and marketing expense will increase inabsolute dollars, as wecontinue to invest in sales and marketing by hiring additional employees and expanding marketing programs in existing or new markets. We must invest in sales and marketing processes to develop and maintain close relationships with customers. We are making dollar-based investments to support the growth ofour customer base inthe United States and global markets.

Previous wording

Research and development expense increased due to an increase of $3.0 million related to personnel costs, $4.6 million related to costs of components for tools built for product development purposes, and a net increase of $2.3 million in depreciation, outside services and other R&D-related costs, offset by a decrease of $0.9 million in stock-based compensation. We expect that, for the foreseeable future, research and development expense will increase in absolute dollars as we continue to invest in research and development to advance our technologies. We intend to continue to invest in research and development to support and enhance our cleaning, plating, advanced packaging, furnace, track, PECVD and future product offerings to build and maintain our technology leadership position.

Current wording

Research and development expense increased due to an increase of $4.7 million in personnel, and travel and entertainment costs, a net increase of $2.7 million in depreciation, outside services and other research and development costs, an increase of $2.1 million in costs of components for tools built for product development purposes, and partially offset by a $1.0 million decrease in stock-based compensation. We expect that, for the foreseeable future, research and development expense will increase in absolute dollars as we continue to invest in research and development to advance our technologies. We intend to continue to invest in research and development to support and enhance our cleaning, plating, advanced packaging, furnace, track, PECVD and future product offerings to build and maintain our technology leadership position.

Previous wording

General and administrative expense increased due to an increase of $0.5 million net relating to personnel and professional services costs, $2.2 million relating to allowance for credit losses, and $0.7 million in other expenses, partially offset by a $2.4 million decrease in stock-based compensation. We expect that, for the foreseeable future, general and administrative expense will increase in absolute dollars, as we continue to invest in general and administrative by hiring additional employees and expanding our presence in existing or new markets.

Current wording

General and administrative expense increased primarily reflecting a $3.3 million net increase in personnel costs, professional services costs, and other costs related to general and administrative expenses, partially offset by a $1.2 million decrease in stock-based compensation. We expect that, for the foreseeable future, general and administrative expense will increase in absolute dollars, as we continue to invest in general and administrative by hiring additional employees and expanding in existing or new markets.

Previous wording

ACM Research owns 73.6% of ACM Shanghai’s (note 1) outstanding shares which is reflected in our condensed consolidated financial statements. We reflect the portion of net income allocable to the minority holders of ACM Shanghai shares as net income attributable to non-controlling interests.

Current wording

ACM Research owns 73.2% of ACM Shanghai’s (note 1) outstanding shares, which is reflected in our condensed consolidated financial statements. We reflect the portion of net income allocable to the minority holders of ACM Shanghai shares as net income attributable to non-controlling interests. The significant increase was due to the overall increase in net income.

Previous wording

We recorded a gain of foreign currency translation adjustment primarily due to the strengthening of RMB to U.S. dollar exchange rate fluctuations for the period on the converted value of ACM Shanghai’s RMB-denominated balances to U.S. dollar equivalents.

Current wording

We recorded a gain of foreign currency translation adjustment primarilydue to thestrengthening of RMB to U.S. dollar exchange rate fluctuations for the period on the converted value of ACM Shanghai’s RMB-denominated balances to U.S. dollar equivalents.

Previous wording

Comprehensive income attributable to non-controlling interests represents the portion of ACM Shanghai's operating results attributable to shares of ACM Shanghai stock held by unaffiliated shareholders.

Current wording

Comprehensive income attributable to non-controlling interests represents the portions of ACM Shanghai's operating results attributable to shares of ACM Shanghai stock held by unaffiliated shareholders.

Previous wording

Other expense, net primarily reflects (a) unrealized foreign exchange loss recognized from the impact of exchange rates between RMB and U.S. dollaron our working-capital which was $(9.5) million for the three months ended March 31, 2026 compared to $(0.6) millionfor the three months ended March 31, 2025, and (b) government subsidies, as described under “—Mainland China Government Research and Development Funding” above, and other factors.

Current wording

Other expense, net primarily reflects (a) loss recognized from the impact of exchange rates on our working-capital which was $20.4 million for the six months ended June 30, 2026 compared to $1.5 million for the six months ended June 30, 2025, and (b) government subsidies, as described under “Mainland China Government Research and Development Funding” above, and other factors.

Previous wording

The tax expense for the three months ended March 31, 2026 primarily resulted from the tax effect of a slight increase in our effective income tax rate applied to an increase in operating profit for the period and increase in certain discrete items.

Current wording

The tax expense for the six months ended June 30, 2026 primarily resulted from the tax effect of an increase in operating profit for the period and increase in certain discrete items.

Previous wording

During the first three months of 2026, we funded our technology development and operations principally through our beginning global cash balances, including the cash balances at ACM Shanghai, borrowings by ACM Shanghai from local financial inst itutions, and our loan from China CITIC Bank. Cash and cash equivalents, restricted cash and short-term time deposits were $1.25 billion at March 31, 2026, compared to $1.13 billion at December 31, 2025. The $119.8 million increase was primarily driven by $163.4 million net cash provided by financing activities,$4.1 million from the effect of exchange rate on cash, cash equivalents, restricted cash, and $4.7 million from the effects of foreign exchange translation rates on time deposits, partially offset by a $29.5 million of cash used in operations and $22.8 million of net cash used in investing activities, excluding the change in time deposits.

Current wording

During the firstsix months of 2026, we funded our technology development and operations principally through our beginning global cash balances, including the cash balances at ACM Shanghai, borrowings by ACM Shanghai from local financial insti tutions, proceeds from issuance of ACMR shares, and proceeds from the sales of our shares and shares of our subsidiary. The $223.1 million increase in cash and time deposits was primarily driven by $332.6 million in net cash provided by financing activities, and a $18.9 million increase from the effect of exchange rate on cash, cash equivalents, restricted cash and non-cash items, offset by $35.9 million of cash used in operations, and $92.5 million of net cash used in investing activities, excluding the change in net cash related to time deposits.

Previous wording

For the three months ended March 31, 2026 and 2025, with the exception of sales and services-related transfer-pricing payments in the ordinary course of business, no transfers or distributions have been made between ACM Research, and its subsidiaries, including ACM Shanghai, or to holders of ACM Research Class A common stock.

Current wording

For the six months ended June 30, 2026 and 2025, with the exception of sales and services-related transfer-pricing payments in the ordinary course of business, no transfers or distributions have been made between ACM Research, and its subsidiaries, including ACM Shanghai, or to holders of ACM Research Class A common stock.

Previous wording

Our cash and cash equivalents at March 31, 2026 were held for working capital purposes and other potential investments. ACM Shanghai, our only direct mainland China subsidiary, is, however, subject to mainland China restrictions on distributions to equity holders. The use of proceeds raisedby Private Offering and the STAR Market IPO without further approvals, are limited to specific usage. We currently intend for ACM Shanghai, with the exception of dividends paid to shareholders of ACM Shanghai, to retain all available funds from any future earnings for use in the operation of its business. Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities. Fluctuations vary depending on cash collections, client mix, and the timing of shipment and acceptance of our tools.

Current wording

The use of proceeds raisedby the sales of shares by ACM Shanghai, and the STAR Market IPO, without further approvals, are limited to specific usage. We currently intend for ACM Shanghai, with the exception of dividends paid to shareholders of ACM Shanghai, to retain all available funds from any future earnings for use in the operation of its business. Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities. Fluctuations vary depending on cash collections, client mix, and the timing of shipment and acceptance of our tools.

Previous wording

Significant changes in operating asset andliability accounts during thethree months March 31, 2026 included the following uses of cash: an increase in inve ntories of $29.5 million (note 5), an increase in accounts receivable of $8.3 million (note 4), a$14.3 million decrease in accounts payable, a decrease in customer advances of $20.6 million (note 3), and a decrease in deferred revenue of $6.4 million. The uses of cash are partially offset by the following significant sources of cash: an increase in other payables and accrued expenses of $5.1 million and an increase in income tax payable impacting income tax expense of $1.4 million.

Current wording

Significant changes in operating asset andliability accounts during the six months ended June 30, 2026 included the following uses of cash: an increase in inventories of $69.9 million (note 5), a decrease in customer advances of $25.9 million (note 3), a decrease in income tax payable impacting income tax expense of $19.8 million, an increase in prepaid expenses and other current assets of $14.3 million, a $10.7 million increase in accounts payable, an increase in accounts receivable of $4.4 million (note 4), and a decrease in deferred revenue of $1.5 million. The uses of cash were partially offset by a decrease in other payables and accrued expenses of $13.6 million.

Previous wording

Cash Flow Used in Investing Activities. Net cash used in investing activities, excluding the change in net cash related to time deposits, for the three months ended March 31, 2026, mainly consisting of $22.4 million for purchases of property, plant and equipment, and intangible assets.

Current wording

Cash Flow Used in Investing Activities. Net cash used in investing activities, excluding the change in net cash related to time deposits, for the six months ended June 30, 2026 was $92.5 million, primarily consisting of purchases of property, plant and equipment of $87.3 million and purchase of long-term investments of $4.7 million with the remaining use attributable to intangible assets.

Previous wording

Cash Flow Provided by Financing Activities. Net cash provided by financing activities for the three months ended March 31, 2026 was $163.4 million, primarily consisting of$110.2 million of gross proceeds from the sale of approximately 4.8 million shares of ACM Shanghai, $35.6 million in net proceeds from short-term and long-term borrowing, and $17.5 million of proceeds from the exercise of stock options.

Current wording

Cash Flow Provided by Financing Activities. Net cash provided by financing activities for the six months ended June 30, 2026 was $332.6 million, primarily consisting of $43.2 million in net proceeds and repayments of short-term and long-term borrowing (note 11), $148.4 million of proceeds from issuance of ACMR shares, $110.2 million of gross proceeds from sales of ACM Shanghai's shares, and $30.8 million of proceeds from the exercise of stock options.

Previous wording

(3)The loan from China Merchants Bank is secured by a pledge of the property of ACM Lingang and guaranteed by ACM Shanghai, as described below under “—Contractual Obligations.”

Current wording

(2)The loan from China Merchants Bank is secured by a pledge of the property of ACM Lingang and guaranteed by ACM Shanghai, as described above under “—Contractual Obligations.”

Previous wording

In February 2025, ACM Shanghai secured a long-term loan facility with the Bank of China (note 9) for ACM Shanghai’s project expenditures. The facility requires ACM Shanghai’s year-end outstanding interest-bearing debt not to exceed five times of its annual EBITDA, and to comply with other non-financial covenants, or Bank of China has the right to suspend the facility, or request ACM Shanghai to accelerate repayment or provide credit enhancement.

Current wording

In 2025, ACM Shanghai secured a long-term loan with the Bank of China (note 9) for ACM Shanghai’s project expenditures. The loan requires ACM Shanghai’s year-end outstanding interest-bearing debt not to exceed five times of its annual EBITDA, and to comply with other non-financial covenants, or Bank of China has the right to suspend the loan, or request ACM Shanghai to accelerate repayment or provide credit enhancement.

Previous wording

Effect of exchange rate changes on cash, cash equivalents and restricted cash. The impact of fluctuations of the RMB to U.S. dollar currency exchange rate in RMB-denominated accounts (note 2) contributed to a $4.1 million increase in the value of these items during the three months ended March 31, 2026.

Current wording

The impact of fluctuations of the RMB to U.S. dollar currency exchange rate in RMB-denominated accounts (note 2) contributed to a $7.4 million increase in the value of these items during the six months ended June 30, 2026.

Previous wording

Shipments in the three months ended March 31, 2026 totaled $240.7 million, as compared to $156.7 million for the same period in 2025. Repeat tool shipments in the three months ended March 31, 2026 totaled $96.9 million, as compared to $60.8 million for same period in 2025. First tool shipments in the three months ended March 31, 2026 totaled $143.8 million, as compared to $95.9 million for the same period in 2025.

Current wording

Shipments in the six months ended June 30, 2026 totaled $522.2 million, as compared to $363.1 million for the same period in 2025. Repeat tool shipments in the six months ended June 30, 2026 totaled $266.2 million, as compared to $167.9 million for same period in 2025. First tool shipments in the six months ended June 30, 2026 totaled $256.0 million, as compared to $195.1 million for the same period in 2025.

Previous wording

The reduction in free cash flow for the three months ended March 31, 2026 as compared to the same period in 2025 reflected the factors driving net cash used in operating activities, an increase of purchases of property and equipment, and long-term investment. Consistent with our methodology for calculating adjusted EBITDA, we do not adjust free cash flow for the effects of mainland China government subsidies, because we take those subsidies into account in incurring expenses and capital expenditures. We do not adjust free cash flow for the effects of time-deposits, which for our internal purposes are considered as largely similar to cash.

Current wording

The reduction in free cash flow for the six months ended June 30, 2026 as compared to the same period in 2025 reflected the factors driving net cash used in operating activities, an increase of purchases of property and equipment, and long-term investments. Consistent with our methodology for calculating adjusted EBITDA, we do not adjust free cash flow for the effects of mainland China government subsidies, because we take those subsidies into account in incurring expenses and capital expenditures. We do not adjust free cash flow for the effects of time-deposits, which for our internal purposes are considered as largely similar to cash.

Previous wording

Adjusted operating income excludes stock-based compensation from income from operations. Although stock-based compensation is an important aspect of the compensation of our employees and executives, determining the fair value of certain of the stock-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing stock-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. The use of non-GAAP financial measures excluding stock-based compensation has limitations. If we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary expense included in operating expenses would be higher and our cash holdings would be less. The following tables reflect the exclusion of stock-based compensation, or SBC, from line items comprising income from operations:

Current wording

Adjusted operating income excludes stock-based compensation from income from operations. Although stock-based compensation is an important aspect of the compensation of our employees and executives, determining the fair value of certain of the stock-based instruments we utilize involvesa high degree ofjudgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing stock-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. The use of non-GAAP financial measures excluding stock-based compensation has limitations. If we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary expense included in operating expenses would be higher and our cash holdings would be less. The following tables reflect the exclusion of stock-based compensation, or SBC, from line items comprising income from operations: