Ultra Clean Holdings, Inc. (NASDAQ: UCTT) reported fourth‑quarter 2025 results on February 23, 2026. Total revenue reached $506.6 million, a 10.0% decline from the $563.3 million earned a year earlier. Products revenue was $442.4 million and services revenue $64.2 million. The decline was driven by a shift toward lower‑margin services and a modest drop in high‑margin product sales, while the company still beat consensus revenue estimates of $503.34 million.
Gross margin for the quarter fell to 15.2% on a GAAP basis, but the non‑GAAP figure was 16.1%. The compression reflects a mix shift toward higher‑volume, lower‑margin services and the impact of higher raw‑material costs. Management noted that the margin decline was largely due to the product‑mix shift.
GAAP net loss for the quarter was $3.3 million, or $0.07 per diluted share. However, non‑GAAP earnings per share were $0.22, a $0.01 beat of the $0.23 consensus estimate. The beat was driven by disciplined cost control and a modest improvement in operating leverage, offsetting the impact of the margin compression.
For the full year ended December 26, 2025, Ultra Clean generated $2.054 billion in revenue, down 1.8% from $2.097 billion in 2024. Products revenue was $1.799 billion and services revenue $254.7 million. GAAP net loss for the year was $181.2 million, or $4.00 per diluted share, largely attributable to a $151.1 million goodwill impairment charge recorded in 2025. Excluding the impairment, operating results were broadly flat compared with the prior year.
Management guided for first‑quarter 2026 revenue of $505 million to $545 million and GAAP diluted net income per share of $(0.13) to $0.03. The guidance reflects confidence in a step‑function increase in demand during the second half of 2026, driven by AI‑infrastructure spending, while maintaining a cautious outlook for the first quarter.
CFO Sheri Brumm said, 'Total gross margin for the fourth quarter was 16.1% compared to 17% last quarter.' CEO James Xiao emphasized the company’s UCT 3.0 initiative, stating, 'We’re entering a structural expansion of wafer fab equipment driven by AI infrastructure and physical AI demand.' He also highlighted ramp readiness as a top priority and the strategic advantage of extra capacity entering a technology inflection.
Investors reacted cautiously to the results, weighing the EPS miss and margin compression against the company’s guidance for a stronger second half of 2026 and its ongoing AI‑driven growth strategy.
Ultra Clean’s results underscore the challenges of operating in a high‑cost environment while pursuing aggressive capacity expansion. The company’s focus on ramp readiness, AI‑driven demand, and the UCT 3.0 transformation positions it to capture the projected growth in wafer‑fab equipment, but margin compression and the goodwill impairment highlight the need for continued operational discipline.
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