Everspin Technologies, Inc. Q3 FY2025 earnings call

• Sanjeev Aggarwal noted revenue of $14.1 million with non-GAAP EPS of $0.06, driven by strength in LEO applications, Casino Gaming, Energy Management, and data center. Mentioned design wins with Astro Digital and Blue Origin for LEO satellites. PERSYST MRAM sales to Lucid Motors with expected volume increase as production ramps. Engineering samples of PERSYST EM064LX HR and EM128LX HR for LEO satellites on track for full production in Q4 2025. Licensing work with Purdue University advanced with material advancements. Foundry services for TMR sensor device ongoing. Other income of $1.2 million in Q3 and $8.5 million to date from DoD contract. Collaboration with Quintauris to strengthen RISC-V-based platforms for automotive, industrial, and edge applications.
• Bill Cooper discussed revenue of $14.1 million, up 16% YOY, with MRAM product sales at $12.7 million, up 22% YOY. GAAP gross margin improved to 51.3% from 49.2% YOY. Non-GAAP net income was $1.5 million or $0.06 per diluted share. Balance sheet strong with cash and cash equivalents of $45.3 million. Focus on maintaining financial discipline and scaling business.

Revenue for the third quarter was $14.1 million. MRAM product sales, which include Toggle and STT-MRAM, were $12.7 million in the third quarter, up 22% year-over-year. Licensing, royalty, patent and other revenue decreased to $1.4 million in the third quarter from $1.7 million in Q3 '24. MRAM product sales contributed approximately 90% of the total revenue ($12.7 million out of $14.1 million), while licensing, royalty, patent and other revenue contributed about 10% ($1.4 million out of $14.1 million).

• Q4 total revenue expected in the range of $14 million to $15 million.
• GAAP net income per fully diluted share anticipated between $0.02 and $0.07.
• Non-GAAP net income per fully diluted share expected to be between $0.08 and $0.13.

• Forward-looking statements involve risks and uncertainties due to new information, future events, etc. Need to review SEC filings for risk factors associated with investing in Everspin.

Q: First question, so three quarters in a row now of non-GAAP gross margin over 52%. Just curious, I guess, how sustainable you think this is going forward?

A: Yes. I think we saw some improvement this quarter, Neil, on the gross -- the product gross margin specifically as well based on some of our yield improvement initiatives and our factory utilization. But to answer your question directly, I think we'll see -- that's a good strong result for us. We do expect to kind of continue to be in that range overall.

Q: The sequential decline in licensing, royalty, patent and other, I know you talked about it a little bit, but I was just hoping you can maybe provide some more detail just on the sequential decline and then sort of, if possible, where you think that is going in 4Q?

A: Yes. There was -- these projects, right, and that kind of bucket of nonproduct revenue encompasses a lot of different things, including license revenue, any engineering service revenue, different foundry services that we provide as well. And so really on that particular piece of our revenue, that can be, I'll call it, somewhat lumpy as we go forward in time and even some of the initiatives that we have that -- where we do work for other groups that we've mentioned in the past, those projects tend to be anywhere between 1 year to 18 months type -- 2 years type projects typically. So they do wrap up, right? And then on the second part of your question, I think as we see sort of this level of product -- nonproduct revenue, we'll probably expect that to kind of continue to be around that range, right -- kind of in the -- again, we've been in that 10% to 15% range, probably more in the 10% range as we go forward.

Q: Just a question on OpEx. So it was flat again in the quarter on a non-GAAP basis, sorry, it was flat again in the quarter. So similar, should we sort of assume that it stays in that $7.5 million range going forward?

A: Yes, Neil, that's a safe assumption. We're going to -- we continue to sort of manage through on OpEx, and we've been pretty consistent throughout this year. Now again, we've sort of indicated that we are going to continue to sort of move toward product development type costs. But for Q4, you're going to see a lot of consistency.