NVE Corporation (NVEC) Earnings

Management highlights

### New Equipment and R&D - Completed significant expansion in past quarter, new equipment increased capacity and capabilities, allowing smaller and more precise wafer-level chip-scale package parts in-house, with ability for extremely precise control of spintronic materials deposition. - R&D strategy is to transition best technology into best products for high-value markets like medical devices, electric and autonomous vehicles, advanced humanoid robotics, and AIoT factories. - In past quarter, announced new wafer-level chip-scale sensor for medical and industrial applications, 0.65 millimeters on the side, one-third area of conventionally packaged version. - Past fiscal year invested in advanced R&D initiatives including next-generation MRAM for anti-tamper, next-generation sensors for hearing aids and medical devices, and extremely sensitive TMR sensors. ### Sales and Marketing - Last week announced new distributor for isolator products, Semitech Incorporated, which specializes in supporting electronics contract manufacturers. - Exhibited at Medical Design and Manufacturing West in Anaheim, California, highlighting products for medical devices. - Exhibiting at Sensors Converge in Silicon Valley focused on robotics and AIoT. - Next month to exhibit at SensorPlus test in Germany, highlighting power conversion products for cars and charging stations. - Distributor partners will be at trade shows for spring trade show season.

Guidance

### - Expect defense sales to increase significantly in fiscal year ending March 31, 2027. ### - Expect contract R&D to increase in fiscal year ending March 31, 2027. ### - Expect fixed asset purchases to decrease significantly in fiscal 2027 with completion of expansion. ### - Global semiconductor market is improving, with ample inventories and exciting new products, seeing bright future.

Segment performance

Fourth quarter total revenue increased 5% year over year to $7.65 million. The increase was due to a 6% increase in product sales, partially offset by a 19% decrease in contract R&D revenue. Product sales increase was due to 34% increase in non-defense product sales, partially offset by 79% year-over-year decrease in defense sales. Total revenue for fiscal year increased 2% to $26.3 million from $25.9 million. Increase in product sales was due to 21% increase in non-defense product sales, partially offset by 67% decrease in defense sales. Gross margin for fourth quarter was 78% of revenue compared to 79% prior year quarter. Total operating expenses decreased 19% in fourth quarter of fiscal 2026 compared to fourth quarter of fiscal 2025 due to 26% decrease in R&D expense and 5% decrease in SG&A. Net income for quarter increased 27% to $4.9 million, of $1.02 per diluted share. For fiscal year, net income increased to $3.14 per diluted share. Cash flow from operations was $16.7 million in fiscal year, an increase of 16% from prior year. Inventories decreased by 5% due to increased product sales. Fixed asset purchases were $2.19 million for fiscal year, with expectation of significant decrease in fiscal 2027.

Risks & headwinds

### - Reliance on several large customers for significant percentage of revenue. ### - Uncertainties related to economic environments and industries served. ### - Uncertainties related to future sales and revenue. ### - Risk factors listed in filings with SEC, including just-filed annual report on Form 10-K. ### - Actual results could differ materially from forward-looking statements.

Analyst Q&A

• Q: Hey, Dan. It's Jeff Bernstein from Silverberg Bernstein Capital. Nice to see the revenue growth this quarter. Congratulations on that. I had a couple questions. First, the call quality at first wasn't great. And I just want to make sure I got the numbers right on the increase in non-defense sales and the decrease in defense sales in the quarter. Daniel, do you have those?

  A: Yeah, the decrease in defense sales was 67%. Okay. And what was then? This is Daniel Nelson. So, yeah, the decrease in defense sales was 67% as per our prepared remarks. And the increase in product sales was 21%.

• Q: Dan, I had a question. You talked about getting some new distribution in isolators. And I was wondering, your isolators, you know, work very differently than the photonic isolators that other people use. And I would assume that they have a better mean time between failure but also use less power and dissipate less heat, which are becoming very important in data centers. How applicable are they for the, you know, kind of power regimes that they're moving into in the new AI data centers? And what do you think the power and heat dissipation savings would be from using your isolators?

  A: Hi, Jeff. This is PD. Great to hear from you again. I can try to answer this question for you. Typically, our power conversion products operate at higher frequency than our competitors, and this higher frequency produces an improved efficiency. As you hinted, overall efficiency is very important, but it tends to be of small percentage, maybe a few percent. But again, this adds up to be a very important benefit. Data centers use a lot of power and the small efficiency improvements can make a big difference.

• Q: And then you guys put out some marketing materials during the quarter, which talked about some end of licensing of parts by Texas Instruments and ADI. I just want to understand what that was all about.

  A: Well, unlike conventional semiconductor manufacturers, we're committed to long-term support of our customers and our products. So for us, it isn't just a financial decision where we would call a product if it doesn't have enough volume. We believe that if our customers design our parts in, that they have an expectation that we're going to be in it with them for the long haul. So when some of the conventional semiconductor manufacturers discontinue parts, In many cases, we can offer alternatives. So that was, you're probably referring to one of our customer newsletters where we referred to some of those parts, some of those packages that were being discontinued by conventional semiconductor manufacturers where we could offer a better part, better stability, and better supply.

• Q: Can you hear me yes hi this is from principal uh congrats on the quarter i'm curious if We should be expecting next year, given the capacity effectively doubled as of the end of this quarter, whether we should be expecting revenue to more or less double as well.

  A: Yeah, good question, Atai. Our goal is to grow. We don't give, as you know, we don't give specific guidance, but we're optimistic. The global semiconductor market is improving. We have ample inventories. We have exciting new products. And as you mentioned, we have quite a bit more capacity. So we see a bright future.

• Q: And if I heard it correctly, the data center opportunity, we'll call it zero today, is somewhat Can you describe or put any numbers to what you see the opportunity as a percent of the business or, you know, when or how you see it shaping up over time? That would be helpful.

  A: Yeah, I can jump in on this one, Atai. It's difficult to quantify something like this. So we don't sell directly to data centers. we sell to sub-assembly manufacturers who build the systems in data centers. So it's difficult to directly connect data center growth to isolated volumes.

• Q: And then maybe if you can discuss any anecdotal wins or examples of maybe pipeline or backlog specifically in robotics and how that's trended, that would also be great.

  A: Well, we have a number of customers that are in robotics and other emerging markets or high growth markets such as energy conversion. So, some of the places where our sensors get used in robotics is on the, what's called the end effectors, which are the hands or fingers of the robot, if you will, because we offer the smaller sensors available and much more precision. So, for delicate operations, the sorts of things where our sensors shine, those would be delicate operations for end effectors and also things like surgical medical robots that typically work on much smaller scales than other types of robots.