NVE Corp Reports Y/Y Declines in Earnings and Revenues in Q2

Core Insights - NVE Corporation is adapting to market changes by shifting focus towards research-driven growth, particularly in contract R&D, to diversify revenue sources amid declining product sales [1][2][3] Q2 Results - Earnings per diluted share decreased by 15% to 83 cents from 98 cents year-over-year, reflecting a challenging market environment [2] - Total quarterly revenues fell by 5% to $6.76 million from $7.13 million in the prior-year quarter, primarily due to a significant decline in product sales [2] Product Sales vs Contract R&D Growth - Product sales declined by 14% to $6.1 million in Q2 fiscal 2025 from $7.1 million in Q2 fiscal 2024, attributed to softened demand in target markets [3] - Contract R&D revenues surged by 3,950% from $16,154 to $654,257, indicating a strategic pivot towards innovation-driven partnerships [3] Profitability Metrics - Gross profit increased by 5% to $5.81 million, resulting in a gross margin of approximately 86%, up from 78% a year ago, driven by a decrease in the cost of sales [4] - Operating income declined by 5% year-over-year to $4.40 million, impacted by higher R&D and operational expenses [4] Net Income and Margins - Net income decreased by 15% to $4.03 million from $4.72 million, with a net margin of approximately 60%, down from 66% in the previous year [5] Cost Analysis - Cost of sales decreased by 41% to $0.95 million from $1.6 million, attributed to streamlined production processes [6] Operating Expenses - Operating expenses rose, with R&D expenses increasing by 24% to $0.85 million and selling, general, and administrative expenses growing by 31% to $0.57 million [7] Cash Position and Investments - Cash and cash equivalents decreased to $3.1 million from $10.3 million, while short-term marketable securities increased to $19.8 million from $11.9 million, indicating a shift towards higher-yielding investments [8] Dividend Declaration - The board declared a quarterly dividend of $1 per share, reflecting confidence in cash-generative capacity despite declining revenues [9]