Ultra Clean Q2 Earnings Beat Estimates, Revenues Increase Y/Y

UCTT Products Revenues Drive Top-Line Growth

Products revenues climbed 25.9% year over year to $572.7 million and rose 23% sequentially from $465.7 million. The division accounted for nearly 89% of total quarterly revenues, underscoring its central role in the company’s growth. Growth reflects stronger demand from Ultra Clean’s semiconductor equipment customer base.

Management said customers are sharing longer-range forecasts as system complexity and manufacturing requirements increase. UCTT sees opportunities to capture more outsourced subsystem work as customers prioritize final integration and testing capacity.

Ultra Clean's Services Post Steady Growth

Services revenues advanced 13% year over year to $72.2 million and increased 6.2% from the prior quarter. The business provides chamber-parts cleaning, coating and micro-contamination analytical services to semiconductor customers.

Management expects Services to sustain double-digit growth through 2026 and 2027. A stronger acceleration is anticipated as advanced fabs ramp in the United States, Korea and Taiwan, although service demand typically follows equipment installation with a lag.

UCTT Customer & End-Market Mix Broadens

Foundry and logic wafer fabrication equipment represented 51% of second-quarter revenues, while memory wafer fabrication equipment contributed 34%. Services accounted for 11% and non-semiconductor markets generated the remaining 4%.

Lam Research represented 40% of revenues and Applied Materials accounted for 22%. Other original equipment manufacturers contributed 23%. Management noted that the combined contribution of the top two customers has declined, reflecting continued diversification across equipment categories and customers.

UCTT Margins Expand on Higher Volumes

Non-GAAP gross margin expanded 40 basis points year over year and 20 basis points sequentially to 16.7%. Management attributed the sequential improvement primarily to higher volumes that generated better factory efficiencies. Products gross margin was 15.1%, while Services gross margin came in at 28.9%.

Non-GAAP operating expenses increased to $62.5 million from $51.1 million sequentially. However, operating expenses declined as a percentage of revenues to 9.7% from 11.4%. 

Non-GAAP operating margin improved to 7.0% from 5.5% a year earlier and 5.1% in the first quarter. Products’ non-GAAP operating margin improved to 6.5% from 4.2%, supported by higher production volumes and increased factory utilization. Services' non-GAAP operating margin declined slightly to 11.2% from 11.5%.

UCTT Expands Manufacturing Capacity

UCTT added 26,000 square feet of clean-room space in Malaysia and plans additional capacity within existing facilities in Singapore and the Czech Republic. These investments are intended to improve readiness as customer volumes and product complexity rise.

The company expects capacity for a $3.5 billion annualized revenue run rate by year-end 2026 and approximately $4 billion during the first half of 2027. Management is evaluating greenfield expansion in Southeast Asia to support a $5 billion run rate in the second half of 2028.

UCTT’s Balance Sheet & Cash Flow

As of June 26, 2026, UCTT held $255.9 million in cash and cash equivalents, down from $323.5 million as of March 27, 2026. Long-term debt stood at $599.4 million.

Cash used in operating activities was $41.1 million in the second quarter compared with $33.3 million used in the prior quarter. The outflow reflected continued working-capital investments, particularly higher inventory to support anticipated customer demand.

UCTT Provides Strong Guidance for Q3 

For the third quarter of  2026, UCTT expects revenues between $700 million and $750 million. The midpoint of $725 million implies sequential growth of 12.4%. Non-GAAP earnings are projected to be between 83 cents and $1.03 per share.

Management expects gross margin to move toward 17% through the rest of the year as utilization improves, while retaining its longer-term objective of more than 20% gross margin and more than 10% operating margin at a $4 billion revenue scale.

UCTT’s Zacks Rank & Other Stocks to Consider

Ultra Clean currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the broader Zacks Computer and Technology sector include Kimball Electronics KE, NVIDIA NVDA and Onto Innovation ONTO. Each stock currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Kimball Electronics have lost 7.6% in the year-to-date period. KE is set to report the fourth quarter of fiscal 2026 results on Aug. 12.

Shares of NVIDIA have gained 10.8% in the year-to-date period. NVDA is slated to report second-quarter 2026 results on Aug. 26.

Onto Innovation shares have gained 70.1% in the year-to-date period. ONTO is set to report first-quarter fiscal 2027 results on Aug. 6.

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