NVE Corporation (NVEC) Earnings

Management highlights

### Leadership Transition and Governance - Current CEO Dan Baker will retire at the August 2026 annual shareholder meeting, and Peter Eames, current Vice President of Advanced Technology, will succeed him as CEO, subject to shareholder approval. - Dan Baker will remain on the board as chairman, current chairman Terry Glarner will retain his board seat, a new independent director Carolyn Valentine will be nominated, and the board will expand from 5 to 7 seats to strengthen corporate governance. - NVE already holds the highest possible ISS governance score. ### R&D and New Product Developments - NVE's R&D strategy focuses on translating cutting-edge spintronics technology into high-value products for fast-growing end markets including humanoid robotics, data centers, and AIoT-enabled automated factories. - This quarter, NVE launched two new wafer-level chip scale magnetic sensors designed specifically for implantable medical devices. The new sensors are 1/3 the size of existing conventionally packaged models, and feature unique MRI-safe stability in magnetic fields over 9 Tesla, higher than the strongest clinical MRI machines. - NVE is actively developing additional new products, including higher-precision sensors for robotics and more power-efficient isolators for power conversion applications. ### Sales and Marketing - NVE exhibited at two major industry trade shows this quarter: Sensors Converge in Silicon Valley (focused on robotics and AIoT, highlighting NVE's small, high-precision sensors and edge AI compatibility) and Sensor Plus Test in Germany (additionally highlighting NVE's power conversion product line). - Trade show participation generated strong new sales leads, and management expects this marketing investment to deliver future revenue growth.

Guidance

- The company does not provide specific numerical forward guidance per its long-standing policy. - Fixed asset purchases for the full current fiscal year are expected to be significantly lower than the prior fiscal year, as the multi-year capacity expansion project has been fully completed. - Management is highly optimistic that the strong Q1 growth validates NVE's long-term strategy of targeting high-growth end markets, and expects the new production capacity and differentiated new product portfolio to support continued profitable growth going forward. - Management notes that broad improvement in the global semiconductor market is supporting current business momentum, which adds to broader optimism for future performance.

Segment performance

Total Q1 revenue increased 81% year-over-year to $11 million, up from $6.1 million in the prior year quarter. Product revenue, which accounts for the vast majority of total revenue, increased 82% year-over-year, while contract R&D revenue increased 53% year-over-year. Product sales growth was seen across both defense and non-defense product lines, as well as across both distributor and direct sales channels. Gross margin expanded to 81.3% of revenue, up from 80.6% in the prior year quarter, driven by higher sales volumes. Total operating expenses increased 49% year-over-year, with R&D expense rising 31% (due to increased staffing and new product development work) and SG&A expense rising 81% (driven by higher performance-based compensation). As expense growth lagged revenue growth, total expenses as a percentage of revenue fell from 19% to 15% year-over-year. Net income increased 79% year-over-year to $6.39 million, or $1.32 per diluted share, up from $3.58 million, or $0.74 per diluted share, in the prior year quarter.

Risks & headwinds

- Forward-looking statements are subject to material risks that could cause actual results to differ materially from expectations, including: significant reliance on a small number of large customers for a large share of total revenue; uncertainties related to global economic conditions and the end markets NVE serves; uncertainty around future sales and revenue trends; and additional risks detailed in NVE's regular SEC filings, including the 2026 Annual Report on Form 10-K.

Analyst Q&A

• Q: The analyst asks how much of Q1 revenue growth comes from the recently completed capacity expansion versus stronger market demand, and whether expanded capacity will eventually be used for volume production or remain dedicated to R&D. /

  A: Management states both factors contributed to the strong quarter. The expanded capacity is currently used primarily for R&D, but also supports low-volume production of new products already. Capacity will gradually transition to support volume production as new product lines ramp up, and management expects the long-term capital investment to deliver sustained growth.

• Q: A long-term shareholder asks if the current $11 million quarterly revenue run rate represents a new, permanently higher plateau for NVE, after years of quarterly revenue averaging $6-7 million with periodic temporary spikes, and whether momentum has continued into the current September quarter. /

  A: Management declines to provide specific forward numerical guidance, but confirms the strong Q1 results validate the company's long-term strategy of targeting fast-growing high-value markets. Management notes broad semiconductor industry improvement is supporting ongoing momentum, and remains very bullish on NVE's future growth prospects.

• Q: The analyst asks for color on which end markets are seeing the strongest incremental growth momentum, ranking major markets like robotics, industrial automation, data centers, and medical. /

  A: Management identifies robotics and advanced industrial automation as the strongest growth area currently. NVE's new wafer-level chip scale sensors offer unique advantages of high precision and low power consumption that are particularly well-suited to fast-growing robotics end markets, making this the most promising segment for NVE.

• Q: An agricultural technology industry analyst asks if NVE is exploring opportunities for its drift-free TMR sensors in AI-enabled agricultural monitoring for the crop insurance industry, and how to submit additional ideas to the company. /

  A: Management confirms NVE's low-power remote sensors are well-suited for unattended agricultural monitoring use cases, making this an interesting potential market opportunity, and invites the questioner to submit additional ideas via the sensor applications email on NVE's official website.