NVE Corporation Q3 FY2026 earnings call

• Financial results: Revenue growth in Q3 2026, gross margin decrease, operating expenses reduction, and net income increase. - New equipment: Completed installation and calibration of a new equipment cluster, with plans to put it into service this quarter, enabling more precise spintronic materials deposition. - New products: Announced a new wafer-level chip scale sensor, 0.65 millimeter square with unmatched miniaturization and special sensitivity. - Partnership with Abbott: Extended supplier partnering agreement with Abbott through December 31, 2027, with price increases for 2026 and 2027. - Trade shows: Exhibited at Medical Design & Manufacturing Trade Show, and will exhibit at Medical Device & Manufacturing West in early February 2026.

For the third quarter of fiscal 2026, revenue increased 23% year-over-year. Product sales increased 16% and contract R&D revenue surged 335%. Gross margin was 79% of revenue compared to 84% in the prior year quarter. Total operating expenses decreased 12% due to a 9% decrease in R&D expense and 19% decrease in SG&A. Net income increased 11% to $3.38 million or $0.70 per diluted share. For the first 9 months of fiscal 2026, total revenue increased 0.4% to $18.7 million, while net income decreased 8% to $10.3 million.

• Expect full year tax rate in fiscal 2026 to be 16% to 17% due to advanced manufacturing investment tax credits offsetting other tax law changes. - Plan to deploy new equipment into service by March 31, 2026.

• Uncertainties related to the economic environments in the industries served. - Risks and uncertainties related to future sales and revenue. - Risks and uncertainties related to tariffs, customs duties and other trade barriers as well as risk factors listed in SEC filings.

Q: Jeff Bernstein inquired about the application of magnetic navigation in GPS compromised areas and whether NVE has appropriate parts for that; A: Pete Eames said MagNav is new and relatively nascent, with imprecise maps currently, so no appropriate part yet but has future opportunities.

Q: Unknown analyst asked if new equipment will help with new product sales and profitability; A: Pete Eames said there is optimism, with samples of new products being sold and looking forward to continued sales.

Q: Unknown analyst asked if distributors are building up inventory; A: Dan Baker said distributor sales are picking up as inventories from the semiconductor slowdown have been depleted and end user demand is increasing.

Q: Unknown analyst asked about comparison of NVE's IP with Everspin's and IP licensing; A: Dan Baker said had IP licensing discussions, NVE IP used for anti-tamper and HUF, different market from Everspin, and continuing to develop MRAM IP.

Q: Unknown shareholder asked about current quarter's defense business; A: Pete Eames said future有望回归正常流量.

Q: Ittai Abraham from Principal Global inquired about MRAM being an IP opportunity or helping sell into MRAM customers; A: Dan Baker said strategy is to participate in MRAM market through licensing IP, focusing on high-value-added memory applications.

Q: Ittai Abraham asked about impact of new capacity on end market mix; A: Dan Baker said new capacity targets IoT and AIoT applications, representing a historic opportunity.