NVE(US:NVEC)2026-01-21 23:00Financial Data and Key Metrics Changes - Revenue for Q3 2026 increased by 23% year-over-year, driven by a 16% increase in product sales and a 335% increase in contract R&D revenue [3][4] - Gross margin decreased to 79% from 84% in the prior year due to a less profitable product mix and increased distributor sales [4] - Net income increased by 11% to $3.38 million or $0.70 per diluted share, up from $3.05 million or $0.63 per share [6] - Operating margin was 60%, pre-tax margin was 68%, and net margin was 54% [6] Business Line Data and Key Metrics Changes - Product sales increased by 16%, while contract R&D revenue saw a significant increase of 335% [4] - Total operating expenses decreased by 12%, attributed to a 9% decrease in R&D expenses and a 19% decrease in SG&A [4][5] Market Data and Key Metrics Changes - For the first nine months of fiscal 2026, total revenue increased by 0.4% to $18.7 million, with a 0.8% increase in product sales offset by an 8% decrease in contract R&D [7] - Accounts receivable decreased by $1.1 million, indicating improved customer payment timing [7] Company Strategy and Development Direction - The company aims to develop advanced electronics for high-value markets, including medical devices and autonomous vehicles, focusing on miniaturization and low power consumption [11] - New equipment has been installed to enhance production capabilities, allowing for more precise manufacturing of spintronic devices [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to a more normal flow in the defense business, which had been relatively weak [29] - The company anticipates that investments in R&D and new products will pay off in future sales, particularly in the medical device sector [30] Other Important Information - The company has extended its supplier agreement with Abbott Laboratories for two years, which includes price increases for 2026 and 2027 [12] - The company is actively participating in trade shows to promote its products and generate leads [13] Q&A Session Summary Question: Discussion on magnetic navigation in GPS-compromised areas - Management acknowledged interest in MagNav technology for defense applications but noted it is still in a nascent stage [15][17] Question: Status of new equipment and its impact on sales - Management confirmed that new equipment is on schedule and expected to enhance product sales and profitability [18][19] Question: Inventory levels among distributors - Management reported that distributor sales are increasing, indicating a recovery from previous inventory build-up [20][21] Question: Comparison of intellectual property with competitors - Management stated that while they operate in a different market than Everspin, their intellectual property remains valuable and applicable to MRAM [22][23] Question: Marketing strategies and effectiveness - Management highlighted increased marketing efforts, particularly through trade shows and digital content, which have shown positive results [24][25] Question: Concerns about rare earth magnets and design wins - Management confirmed ongoing interest in rare earth-free ferrite magnets and noted some sales have been generated from this initiative [26][27] Question: Insights on the defense business volatility - Management expressed optimism about returning to a more stable flow in the defense sector [28][29] Question: Recurring customer orders and revenue expectations - Management emphasized the goal of increasing sales to existing customers and adding new products to drive consistent revenue growth [33][34]