MRAM earnings call analysis

NASDAQ:MRAM Q1 2026 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Good afternoon, and welcome to Everspen Technologies' first quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. At the conclusion of management's prepared remarks, instructions will be provided for the question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Amy Grant, investor relations for Everspen.

You may begin. Amy Grant | Investor Relations

Thank you, operator, and good afternoon, everyone. Everspin released results for the first quarter, 2026, ended March 31st, 2026, this afternoon after market closed. I'm Amy Grant, Investor Relations for Everspin, and with me on today's call are Sanjeev Agarwal, President and Chief Executive Officer, and Bill Cooper, Chief Financial Officer. Before we begin the call, I would like to remind you that today's discussion may contain forward-looking statements regarding future events, including but not limited to the company's expectations for Everspin's future business, financial performance and goals, customer and industry adoption of MRAM technology, successfully bringing to market and manufacturing products in Everspin's design pipeline, and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends, and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We would encourage you to review the company's SEC filings, including the annual report on Form 10-K and other SEC filings made from time to time in which the company may discuss risk factors associated with investing in Everspin. All forward-looking statements are made as of the date of this call and, except as required by law, The company undertakes no obligation to update or alter any forward-looking statement made on this call, whether as a result of new information, future events, or otherwise. The financial results discussed today reflect the company's preliminary estimates, are based on the information available as of the date hereof, and are subject to further review by Everspin and its external auditors. The company's actual results may differ materially from these estimates as a result of the completion of financial closing procedures, final adjustments, and other developments arising between now and the time that the financial results for the period are finalized. Additionally, the company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Including in the company's press release are definitions and reconciliations of GAAP net income, to non-GAAP net income, which provide additional details. A copy of the press release is posted on the investor relations section of Everspin's website at www.everspin.com. And now I'd like to turn the call over to Everspin's president and CEO, Sanjeev Agarwal. Sanjeev, please go ahead.

Sanjeev Agarwal | President and Chief Executive Officer

Thank you, Amy, and thanks, everyone, for joining us on the call today. Before I discuss our first quarter results, I would like to share some exciting news. Today after market close, we announced a new two and a half year, 40 million agreement with a US prime contractor. Under the agreement, Everspin will be a subcontractor on an existing prime contract and will provide process technology capabilities and engineering services for US defense industrial based customers. In addition, Everspin will provide engineering and foundry services for U.S. Department of War, or DOW, products through its recently announced Foundry Services Agreement with Microchip. This agreement builds on our long history of supporting military and aerospace applications where performance, reliability, longevity, and domestic production are critical. Now turning to our first quarter results. We are pleased to report results at the high end of our guidance range with revenue of 14.9 million and long gap EPS of 11 cents for diluted share. Our performance this quarter was driven by strength in industrial automation, transportation, and data center applications. Industrial automation growth was driven by a recovery in customer demand, including Japan, as inventory levels have been worked down. In the transportation segment, growth was driven by the transition of design wins to production at several customers, including two rail applications. One such customer is a railroad operator in Asia, who is utilizing our MRAM technology for critical railway signal applications, such as train axle counters. Axle counters, and by extension, their components must operate in harsh, vibratory conditions, which MRAM can withstand better than other memory technologies. Modern axle counters use MRAM for storing large amounts of diagnostic and maintenance data, allowing for real-time monitoring, such as wheel detection and prevent predictive maintenance. Additionally, MRAM enables more robust data storage, contributing to the high safety integrity levels, SIL4, required for axle counter systems, ensuring accurate detection and reducing false alarms. Another customer is a leading embedded computing company in Asia who chose EverSpring's MRAM solutions for rail transit systems because they reliably preserve critical data during power loss and support unlimited arrays and write cycles. In data center, growth continues to be driven by our ongoing work with IBM on the FCM4 and FCM5 modules and the redundant array of independent disks all rate reference design at the top five hyperscale operators. With respect to below the line items, we recognize 2.1 million in other income in the first quarter and 12.8 million to date from the 14.6 million contract we have with the DOD contractor to develop a sustainment plan for our MRAM manufacturing facilities to provide continuous onshore MRAM capabilities to their aerospace and defense customers. We expect this business to begin to wind down over the coming quarters with estimated completion in the first half of 2027. Turning to some of our product development efforts. During the quarter, we formally introduced our Unix's MRAM family at Embedded World in early March. This product family represents a new generation of unified memory solutions designed to fundamentally change how embedded systems store and access code and data. Unisys delivers high bandwidth read and write speeds in a non-volatile memory device, enabling fast boot, rapid updates, and predictable performance without the trade-offs of traditional flash-based designs. Unisys will extend our MRAM roadmap to higher densities by giving customers a practical way to start with Persyst today and migrate to a code and data MRAM architecture as soon as it is available. Everspin will initially offer the Unisys family in densities ranging from 128 megabits to two gigabits using a standard XSPI interface operating up to octal SPI at 200 megahertz. Target use cases include AI at the edge, military and aerospace, automotive, industrial, and casino gaming. Engineering samples of Unisys are expected to be available in the fourth quarter of 2026. As a reminder, the Unisys family of products will serve the high-density, stand-alone North Flash market, which will expand our addressable market by approximately three billion dollars. Our goal is to capture five to 10% of this market in the early years and then grow further. With respect to the high reliability parts that we announced last quarter, customers have our persist 64 megabit X SPI STTM RAM devices in hand and are engaged in design activity. Additionally, we remain on track to qualify our 128 megabits and 256 megabits high reliability parts and continue to expect them to be available in high volume in the second half of this year. Customers have engineering samples of these parts on hand as they evaluate them in their designs. Building on our existing relationship with Microchip, we recently announced a strategic manufacturing agreement with the company to expand our onshore production capacity and strengthen our long-term supply chain resiliency by creating a second domestic source of supply for our customers. Under the 10-year agreement, we will establish an MRAM line at Microchips Fab in Oregon to manufacture MRAM and TMR sensor products currently produced at our line in Chandler. We expect to ship the first products from the new line in the second half of 2027. I will now turn it over to our CFO, Bill Cooper, who will walk you through our first quarter financials and second quarter 2026 guidance. Bill?

Bill Cooper | Chief Financial Officer

Thank you, Sanjeev. Our results reflect the consistency of our execution. During the first quarter, we delivered revenue of $14.9 million, up 14% year over year, and toward the high end of our guidance range of $14 to $15 million, driven by higher product sales. MRAM product sales which include both toggle and STT MRAM revenue, were $14.1 million, an increase of 28% over the first quarter of the prior year and up 5% sequentially. Licensing, royalty, patent, and other revenue decreased to $0.8 million from $2.1 million in Q125 due to fewer currently active projects. Our GAAP gross margin increased to 52.7% from 51.4% in the first quarter of 2025 due to higher capacity utilization. GAAP operating expenses were $10.6 million up from $8.7 million in the first quarter of 2025 due primarily to litigation costs as well as higher compensation costs for new and existing employees and professional fees. Other income of 2.1 million was related to the strategic award we won in mid-2024 to upgrade manufacturing equipment in our existing manufacturing facility located in Chandler, Arizona. We recorded fourth quarter non-GAAP net income of 2.6 million, or 11 cents per diluted share, based on 23.1 million weighted average diluted shares outstanding. This was at the high end of our guidance range of non-GAAP net income of $0.07 to $0.12 per share and compares to non-GAAP net income of $0.4 million or $0.02 per share in the first quarter of 2025. Our reported non-GAAP results exclude the impact of stock-based compensation as well as litigation expenses. Our balance sheet remains strong and debt-free. We ended the quarter with cash and cash equivalents of $40.5 million, down $4 million from the $44.5 $5 million at the end of the prior quarter. Cash flow generated from operations decreased to $0.5 million for the first quarter, from $2.6 million in the fourth quarter due to the litigation costs I mentioned earlier, as well as increased working capital needs. We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements to execute upon our Foundry Services Agreement with Microchip and continue to invest in product development to support our future roadmap and enable the company to drive growth. Turning to guidance. Excluding any impact from the new subcontractor agreement that Sanjeev mentioned, we expect Q2 total revenue to be in the range of $15.5 million to $16.5 million. And GAAP results for fully diluted share to be between a net loss of $0.12 to a loss of $0.07. On a non-GAAP basis, we anticipate results to be between break-even and net income of $0.03 per fully diluted chair. These non-GAAP figures exclude the impact of patent litigation costs in addition to stock-based compensation expense. In summary, we are pleased with our solid performance this quarter and remain committed to maintaining financial discipline while focusing on scaling our business and converting additional design wins to revenue. Operator, you may now open the line for questions.

Operator | Conference Operator

Thank you. Ladies and gentlemen, to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Neil Young with Needham & Company.

Your line is open. Neil Young | Analyst, Needham & Company

Hey, everyone. Thank you for letting me ask a question. So the 40 million contract that you just announced, could you give us, you know, like the shape on how you're thinking that revenue layers in or, you know, anything you can share on the milestone payments, such as, you know, how achievable you think the milestones are, what are the biggest risks to the milestones? And then lastly, will that revenue live in the licensing royalty patent bucket? And I have a follow up.

Thank you. Bill Cooper | Chief Financial Officer

Yeah. Hey, Neil, this is Bill. Thanks for the question. Yes, so we really aren't giving any guidance related to that particular subcontract agreement just yet, but of course we do expect to have a significant positive impact over the next two and a half years to the financials. In terms of meeting and achieving the milestones, yes, that was negotiated with the group involved and Neil Young | Analyst, Needham & Company: we're very confident in our ability to deliver on the milestones okay thanks um and then could you maybe speak to what grow what drove the gross margin strength in the quarter uh you know as the sdp portfolio uh continues to evolve you know are you maybe starting to see higher asps come through here and then also you know should we sort of expect to see this gross margin the gross margin hold in this range or revert back to similar levels of 4Q25?

Thank you. Bill Cooper | Chief Financial Officer

Yeah, good question. I think a couple of things, right? So the first is strong quarter on the margins, you know, again, as we've sort of always noted, we do target 50% plus in terms of gross margin. You know, I think as we sort of see that list in the top line and that volume increase, right, you kind of get into that beneficial arena of, you know, higher capacity utilization. And obviously, right, you guys are always looking at ways to reduce costs and improve our yields. So all those things factor in.

Sanjeev Agarwal | President and Chief Executive Officer

Thank you.

Operator | Conference Operator

Thank you. Our next question comes from the line of Richard Shannon with Craig Halland Capital Group. Your line is open.

Okay. Richard Shannon | Analyst, Craig-Hallam Capital Group

Thanks for letting me ask some questions here. I'm going to follow up on this $40 million contract here. I guess a few questions here for me and one to follow up from your response, Bill, here about why you don't have any revenue thoughts here you can give today. Is that because you're not allowed to or because you don't know what the shape and structure and timing looks like? I want to get a sense of what kind of margin profile we should expect over the life of the contract.

Okay. Bill Cooper | Chief Financial Officer

Yeah, good questions. So, you know, I'll try and elaborate a little bit further. You know, the contract itself, right, the ink on that is just drying, and obviously it's going to have a significant impact on the financials. And so, you know, we're looking at all of the various impacts of that. And as we – you know, run through Q2 and get the results and get the kickoff of the contract and all the various pieces, right, we'll give you guys better guidance as we go into the end of this Q2. And then in terms of margin, yes, I would expect that, you know, that is also going to have a bit of a beneficial impact margin as well. But, you know, again, that sort of have to be a little careful there. We're going to, again, reiterate, we do target the 50% plus margin or gross margins. And, again, we have to sort through all the colors of that significant contract.

Richard Shannon | Analyst, Craig-Hallam Capital Group

Okay. I want to ask a follow-up about this contract in context of other activities you have or may have going on in the future here. So you've referenced today and in the past year this, I think it's a $14.6 million contract for I forget the word you use here, continuity plan or something. And I think there's an RFQ out there from the U.S. government about, you know, maybe establishing 300 millimeter capacity here. And then you've obviously recently, as you announced, I can't remember, last month or whatever, adding some more capacity at microchip. To what degree do all of these things interrelate here? Can you kind of tie these things together or if they're not tied together, tell us? I'd just love to get a Kind of some context here, please.

Sanjeev Agarwal | President and Chief Executive Officer

Hi, Richard. This is Sanjeev. Good question, and I think maybe I can help, and then maybe there's a follow-on to further clarify. But the bottom line is the RFI for the 300-millimeter MRAM line is independent of the three other items you mentioned, namely the 14.6 contract that we got in 2024, the microchip foundry services agreement, and the new contract that we just talked about today. So as far as the $14.6 million contract that we got in 2024, that is the one where we basically got some support from the U.S. government to improve the supply chain for MRAM or toggle MRAM for the U.S. government. And that revenue, as you know, is actually being recognized below the line. So that was not above the line. There's a lot of capex and supply chain robustness involved in that discussion. The microchip boundary services agreement was simply between Everspin and microchip where we basically went out to increase our capacity. So that was independent of these two contracts in that sense. So we went out to increase our capacity given the high demand that we've been seeing over the last couple of quarters. Now this new agreement that we just signed is basically we are going to provide a technology information, a recipe compendium, if you will, for mil and arrow space toggle MRAM to this contractor, to this US Prime contractor. And in addition, they would have a right to second source the Everspin toggle MRAM for mil arrow applications again in case Everspin decides to exit the business. Obviously, we have no intention of doing that. but we do give them the rights and all the technology and all the recipes, et cetera, associated with it in case we do exit, right? And then also under this agreement, they actually get access to this microchip fab that we're bringing up to qualify their existing products on that line. So there's NRE associated with getting that activity done. And then finally, there is a new product that the U.S. government is actually planning to tape out. So the R&D for that product and the production support for that product would also be part of this contract that we just talked about.

Hopefully that helps. Richard Shannon | Analyst, Craig-Hallam Capital Group

That does help a lot. I appreciate that. If you don't mind, I'm going to throw one more question before jumping back into the queue, and that's really about the guidance here. So, I mean, it sounds like we should expect most of the sequential growth in dollar terms here to come from products here. How do we think about it between the kind of the FCT that's mostly going to IBM versus other products here within that? And then any idea or can you just give us a sense of what kind of litigation spend you're expecting in the second quarter?

Bill Cooper | Chief Financial Officer

Thanks. Yes. So on the first point, what I would say is, you know, definitely seeing very strong product sales. We're up year on year 28%. I think, you know, most of that growth from Q1 to Q2 is going to be in that product sales category. Again, we are seeing, you know, I would say just good solid product sales across all the various categories. And then on your second question, we do show the $1.6 million that we had to expend in Q1 on litigation costs. And what I would say is, You know, unfortunately, litigation is expensive, and I think we're kind of expecting it to continue in that range for at least, you know, the next couple of quarters. But, again, we'll see how that ultimately pans out.

Richard Shannon | Analyst, Craig-Hallam Capital Group

Okay. Appreciate that detail. I will jump out of line, guys.

Thank you. Bill Cooper | Chief Financial Officer

Okay.

Operator | Conference Operator

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. We did have a follow-up question to come through.

One moment. Bill Cooper | Chief Financial Officer

Okay.

Operator | Conference Operator

We have a follow-up question from the line of Richard Shannon with Craig Hallam.

The line is open. Richard Shannon | Analyst, Craig-Hallam Capital Group

Well, I guess I didn't have to jump out of line, but let's hear maybe a couple more from you guys here. I noticed you've had a couple quarters of some above-trend CapEx numbers in the fourth quarter, now the first year. And, well, I could certainly expect some of that coming from maybe your microchip agreement or not. I'm not sure. But how do we look at that going forward here?

Bill Cooper | Chief Financial Officer

Yes, we did. We had a – I call it a unique period of capital spend. And that, again, was related to some of the improvements that we saw in the Chandler facility primarily across a couple of different contracts. So that – flurry of activity, I think, will start to settle down until we get into the real part of this Foundry Services Agreement.

Richard Shannon | Analyst, Craig-Hallam Capital Group

This Foundry Services Agreement, is that referring to microchips specifically?

Bill Cooper | Chief Financial Officer

That's right.

That's right. Richard Shannon | Analyst, Craig-Hallam Capital Group

That's right. When do we start to see that pick up? Any idea how to think about that sum total over – I don't even know what period of time they expect to do that. I assume it's at least a couple of years. But what do we think about there?

Okay. Bill Cooper | Chief Financial Officer

Yeah, so there will be some significant capital spend over the next two years. Again, it's going to be spread out over time a little bit, probably some later this year as well as early next year. And then in terms of the overall CapEx, not so significant that we can't manage it. I think, again, it's going to be in the range, you know, of kind of what our historical spend has been annually.

Richard Shannon | Analyst, Craig-Hallam Capital Group

Yeah. Okay. Fair enough. My last question, I will jump out of line. If I took the notes here and it seemed to recall them being consistent with what I've heard in the past in regard to the new product line here, you talked about this being a a $3 million TAM, and Sanjeev, I caught your comments right here, expecting kind of a 5% to 10% share early on here. You know, 5% share, that number is $150 million in a year. Last quarter you talked about getting to a goal of $100 million within three to five years. So I look at that 5% to 10% share early on, quote, unquote, early on, seems to be a little bit longer timeframe than what would fit in here. So are we either thinking it's going to take a while to get that kind of share, or is there some meaningful upside in terms of timing to hit that $100 million total corporate level goal?

Sanjeev Agarwal | President and Chief Executive Officer

Yeah, that's a good question for clarification, Richard. So I think we've talked about this in the past. I don't think that Unisys is going to strongly contribute to the $100 million target that we have in the next three to five years. And the reason being that it takes about 18 to 24 months for the qualification of these products at our customers. So let's say we have the product available samples in Q4 of 26, production, let's say, Q1 or Q2 of 27, and you basically have another 18 months before it's going to ramp to production. So I don't think it's going to contribute significantly, but it will contribute some.

Richard Shannon | Analyst, Craig-Hallam Capital Group

Okay. So early on would be after that qualification period that you said takes up to two years then.

Okay. Sanjeev Agarwal | President and Chief Executive Officer

That is correct.

Richard Shannon | Analyst, Craig-Hallam Capital Group

That makes sense. Okay. Perfect. That's all from me, guys.

Thank you. Thank you. Operator | Conference Operator

Thank you. I will now turn the call back over to Sanjeev for closing remarks.

Sanjeev Agarwal | President and Chief Executive Officer

I just want to say thank you, everyone, for joining the call today, and we look forward to talking to you at the end of Q2. Thanks a lot for your time.

Bye now. Operator | Conference Operator

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. jsPDF 3.0.3 D:20260606090247-00'00'

NASDAQ:MRAM Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Call Operator: Good afternoon and welcome to Everspend Technologies' fourth quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode. After the conclusion of management's prepared remarks, instructions will be provided for the question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Monica Gould, investor relations for Everspend.

You may begin. Monica Gould | Investor Relations, Everspin Technologies

Thank you, Operator, and good afternoon, everyone. Everspin released results for the fourth quarter and full year 2025 ended December 31, 2025, this afternoon after market close. I'm Monica Gould, Investor Relations for Everspin, and with me on today's call are Sanjeev Agarwal, President and Chief Executive Officer, and Bill Cooper, Chief Financial Officer. Before we begin the call, I would like to remind you that today's discussion may contain forward-looking statements regarding future events, including, but not limited to, the company's expectations for Everspin's future business, financial performance, and goals, customer and industry adoption of MRAM technology, successfully bringing to market and manufacturing products in Everspin's design pipeline, and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends, and market conditions and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We would encourage you to review the company's SEC filings, including the annual report on Form 10-K and other SEC filings made from time to time in which the company may discuss risk factors associated with investing in Everspin. All forward-looking statements are made as of the date of this call, and except as required by law, the company undertakes no obligation to update or alter any forward-looking statement made on this call, whether as a result of new information, future events, or otherwise. The financial results discussed today reflect the company's preliminary estimates, are based on information available as of the date hereof, and are subject to further review by Everspin and its external auditors. The company's actual results may differ materially from these estimates as a result of the completion of financial closing procedures, final adjustments, and other developments arising between now and the time that the financial results for this period are finalized. Additionally, the company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP net income to non-GAAP net income, which provide additional details. A copy of the press release is posted on the Investor Relations section of Everspin's website at www.everspin.com. And now, I'd like to turn the call over to Everspin's President and CEO, Sanjeev Agarwal. Sanjeev, please go ahead.

Sanjeev Agarwal | President and Chief Executive Officer, Everspin Technologies

Thank you, Monica, and thanks, everyone, for joining us on the call today. We are pleased to report fourth quarter results with revenue of $14.8 million and non-GAAP EPS of $0.11 per diluted share with revenue towards the high end of our guidance range and EPS in line with our expectations. Our performance this quarter was driven by strength in data center, energy management, and industrial automation applications. Growth in data center was driven by our ongoing work with IBM on the FCM4 module as well as its recently introduced FCM5 and the redundant array of independent disks or RAID reference design at the top five hyperscale operators. Within energy management and industrial automation, we saw demand return to normal levels after a period of inventory consumption that dampened demand in the prior year. With respect to below the line items, we recognize $2 million in other income in the fourth quarter and $10.5 million to date from the $14.6 million contract we have with a DOD contractor to develop a sustainment plan for our MRAM manufacturing facilities to provide continuous onshore MRAM capabilities to their aerospace and defense customers. We expect this business to progress on schedule with estimated completion in the first half of 2027. On the product side, we had a total of 238 design wins in 2025, up from 178 in the prior year. Our pipeline of new design wins for our RamRam products speaks to the continuing technical innovation from the Everspin team introducing new products to meet customer demand. These design wins support new customers and existing customers with new programs in industrial automation, casino gaming, energy management, and military and aerospace applications. Turning to some of our product development efforts. We continue to expand our XPI STTM RAM portfolio in response to demand from our customers. We are pleased to announce that during the fourth quarter, we ramped our Persyst 64 megabit XPI STTM RAM high reliability product to full production and saw strong demand driven by new customer interest and design wins, specifically in the low earth orbital or LEO satellite market. These devices are AEC Q100 grade one qualified, and ideally suited for use in harsh conditions such as 125 C Celsius operating temperature with a minimum 10 years of data retention. These capabilities are demanded by our customers to secure critical data in a variety of systems from aerospace and defense to industrial applications including automotive. We are taking orders to support high volume production from our customers and began shipping in the current quarter. In addition, we are in the process of qualifying high density, high reliability parts of 128 megabit and 256 megabit that will be available in high volume in the second half of this year. We are on track to tape out a monolithic 256 megabit XPI STDM RAM device on a 16 nanometer FinFET node at TSMC in the second half of this year. This part will be our first product in the Unisys family, unifying code storage and data memory in a high density, non-volatile architecture for edge AI, industrial, and mission critical designs. It is designed to deliver high bandwidth read and write speeds in a non-volatile memory device, enabling fast boot, rapid updates, and predictable performance without the trade-offs of traditional flash-based designs. By combining high-speed access with persistent storage, this family of parts will support software design systems that require frequent reconfiguration while maintaining data integrity across power cycles. As part of our efforts to build onto our partner network, we recently qualified our persist 64 megabit XPI STTM RAM for microchips PIC64-HPSC series of 64-bit microprocessors, or MPUs, and are supporting the ecosystem for components being qualified by microchip. This ecosystem includes several industry partners that jointly offer solutions tailored for the harsh environmental conditions in space. The high-density, high-reliability X-Py STD MRAM parts I discussed earlier would be an ideal solution for this application. MRAM is achieving significant success as a leading embedded non-volatile memory in IoT, automotive, and AI edge devices. Yet, the densities and performance options of embedded MRAM macros have been limited. At the same time, the semiconductor industry is moving towards chiplets to overcome rising costs, manufacturing complexity, and yield limitations of traditional large monolithic chips. especially when combining leading-edge logic with volatile or non-volatile memory. Chiplets enable mix and match process nodes, greater customization, and reuse of building blocks, providing new freedom of degrees in the form of heterogeneous packaging solutions. With organizations such as the Open Compute Project embracing chiplets from the hyperscale data center to the edge, it is foreseeable that chiplets will be ubiquitous. This trend increasingly favors Everspin given our focus on marketing chip solutions, including chiplets, and licensing our technology to embedded MRAM partners. In 2025, we further advance our efforts in this area through several initiatives. We engage with the Fraunhofer Chiplet Center of Excellence to analyze next-generation automotive compute platforms and corresponding MRAM use cases. We subsequently progress to engage on system level simulations into which we plan to provide MRAM simulation models to allow an assessment as well as quantification of the benefits that MRAM can provide in various use cases. Everspin is also participating in an effort to bring MRAM chiplets to the IMEC ecosystem that is aligned with the framework of the Open Compute Project chiplet work streams. IMEC launched the Automotive Chiplet Forum in 2024 to bring together members from the automotive industry to enable an open chiplet ecosystem essential for accelerating innovation, reducing costs, and reinforcing the supply chain. More recently, we joined the newly formed Physical AI Chiplet Ecosystem, or PACE, to help enable MRAM-based solutions for physical AI. As part of this effort to co-develop interoperable and reusable chiplets to reduce development costs and speed time to market for system and ASIC companies, Everspin will provide a robust, high-performance, non-volatile memory to assist securing PACE chiplets for boot, wait and code storage, as well as lifecycle management solutions. We expect to see chiplets addressing various applications over the next few years. As a reminder, the chiplet is part of our Unisys unified code and data memory solutions, which are currently in the design phase. To further enhance the position in the auto industry, we are working with Quinteros, a joint venture of leading semiconductor companies on a next generation RISC-V based automotive reference design platform. RISC-V is an open standard instruction set architecture, or ISA, based on reduced instruction set computer, or RISC, principles allowing anyone to design, manufacture, and sell chips without paying a license fee for the ISA. Its modular architecture allows designers to create purpose-built accelerators using RISC-V core technology as well as extensions. This also includes new instructions that uniquely integrate and leverage MRAM as a persistent working memory. Given its rapid adoption, it offers a greenfield opportunity to create new MRAM-based architectures that fully utilize all the features and benefits that MRAM has to offer. Before I close, I would like to discuss our long-term strategy, which entails reaching $100 million in annual revenue over the next three to five years. We believe this growth will be driven by the ramp of new products, most notably our new X5 parts in our persist product portfolio, such as the 64 megabit part I described earlier, and continued solid growth in our toggle MRAM and licensing business. Our new Persyst XPY parts are getting solid traction. They're offered in densities from 4 megabit to 256 megabit and include the power optimized SC families and the high reliability or HR families with quad and octal SPY interfaces. For example, in industrial automation, energy management, electric vehicle, and casino gaming markets, reliable high density memory is required for next generation systems. In aerospace and defense markets, such as LEO satellites, flight control systems require reliable, fast, and read and write speeds, and fast boot for configuration. And in the FPGA and the MPU markets for AGI, low standby power, instant on, and high density memory is needed for larger bit streams. We expect our first enhanced serial norm, like Unisys product family, to be in production in 2027 and anticipate these products to contribute to our 100 million revenue target. Before I turn the call over to Bill to walk through our financials and guidance, I would like to briefly touch on the industry environment. As has been widely publicized, the industry is expecting experiencing memory shortages. Memory suppliers, who have for decades been pushed into commoditization, have seen a shift based on unprecedented memory shortages driven by the demands of AI. As a result, they have gone into allocation mode and are moving their capacity up the food chain. Companies that can make Norflash, NAND, and DRAM are shifting those capacities to where they can get more margin out of their fixed capacity. NOR suppliers, for example, are converting their lines to support DRAM to maximize their margins and generate more revenue. This has created a gap in the supply for NOR flash and driving customers to look for alternatives. We are in conversations with customers to evaluate our X5 STDM RAM to replace NOR flash. We have the capacity to support such demand, and our parts are compatible with NOR flash. While these market dynamics are speeding up such conversations, revenue is contingent upon the qualification cycles of our potential customers. I will now turn it over to our CFO, Bill Cooper, who will walk you through our fourth quarter financials and first quarter 2026 guidance. Bill?

Bill Cooper | Chief Financial Officer, Everspin Technologies

Thank you, Sanjeev. Our results reflect the consistency of our execution. During the fourth quarter, we delivered revenue of $14.8 million up 12% year over year, and toward the high end of our guidance range of 14 to 15 million, driven by higher product sales. MRAM product sales in the fourth quarter, which include both toggle and STT MRAM revenue, were 13.5 million, up 22% over the fourth quarter of the prior year. Licensing, royalty, patent, and other revenue in the fourth quarter decreased to 1.3 million, from $2.2 million in Q4-24 due to the completion of projects which were active in Q4-24. Turning to gross margin, our GAAP gross margin decreased to 50.8% for the fourth quarter, down slightly from the 51.3% in the fourth quarter of 2024 due to lower licensing and other revenue. GAAP operating expenses for the fourth quarter of 2025 were $8.6 million, down sequentially and up slightly from $8.4 million in the fourth quarter of 2024. Other income of $2 million was related to the strategic award we won in mid-2024 to upgrade manufacturing equipment in our existing facility located in Chandler, Arizona. We recorded fourth quarter non-GAAP net income of $2.6 million or 11 cents per diluted share based on 23.8 million weighted average diluted shares outstanding. This was in line with our guidance range of non-GAAP net income of 8 cents to 13 cents per share and compares to non-GAAP net income of 2.8 million or 13 cents per share in the fourth quarter of 2024. As a reminder, reported non-GAAP results exclude the impact of stock-based compensation. We are pleased that our balance sheet remains strong and debt-free. We ended the quarter with cash and cash equivalents of $44.5 million down $0.8 million from $45.3 million at the end of the prior quarter. Cash flow generated from operations increased to $2.8 million for the fourth quarter from $0.9 million in the third quarter. We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements. Our capital requirements depend on many factors, including, among other things, our growth rate, the timing and extent of our spending to support our current and future manufacturing requirements, research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products. We did not experience any material tariff-related impact on our results in the fourth quarter and do not expect any material tariff-related impact in the coming quarters. Turning to guidance, we expect Q1 total revenue to be consistent with Q4-25 and in the range of $14 to $15 million, and GAAP net loss per fully diluted share to be between 3 cents and net income of 2 cents. On a non-GAAP basis, we anticipate net income per fully diluted share to be between 7 cents and 12 cents. Going forward, we expect to exclude the impact of patent defense costs in addition to stock-based compensation from non-GAAP results. We expect a sequential decline in non-product revenue due to a project completion in Q4-25, which will result in a gross margin headwind. However, we are still targeting gross margin to be in the 50 percent range. In summary, we are pleased with our solid performance this quarter and remain committed to maintaining financial discipline while focusing on scaling our business and converting additional design wins to revenue. Operator, you may now open the line for questions.

Operator | Conference Call Operator

Thank you. Ladies and gentlemen, to ask the question, please press star 11 on your telephone. Then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Neil Young with Needham & Company.

Your line is open. Neil Young | Analyst, Needham & Company

Hey, thanks for letting me ask a question. Great to hear about the Norflash opportunity. I'm curious, you know, sort of, you know, you're talking about that you're in conversations. I guess sort of how fast or how quickly do you think you could see upside from that? And sort of, you know, if you could in any way size the upside, that would be really helpful of possible upside in revenue.

Thanks. Sanjeev Agarwal | President and Chief Executive Officer, Everspin Technologies

Thank you for the question. So like I said in the prepared remarks, I think it really depends on the qualification cycle for our potential customers. I can say that we are now getting listed as an alternate for Norflash at various distributors worldwide because of the tight supply chain issues that we are seeing with Norflash. So we do expect some upside, but it's very difficult to quantify today as to what that upside can be. But we obviously, you know, available to meet the demand if the requests come in. And it just depends on the call cycle of the customers.

Neil Young | Analyst, Needham & Company

Great. Thanks. That's helpful. Just one more question for me. You talked about the inventory levels and energy management and industrial automation. You know, they're starting to look pretty healthy or, you know, they think that you think they do look healthy at this point. I guess what gives you confidence that that shouldn't be, you know, it shouldn't be an issue next quarter and going forward?

Thanks. Sanjeev Agarwal | President and Chief Executive Officer, Everspin Technologies

Yeah, so based on the backlog that we are seeing at our distributors and the forecast that we are seeing at our customers, we do feel that they have burned through the inventory that they had overbuilt over the last year or so. So we are pretty confident that going forward, we would not run into that same issue at least in 2026.

Neil Young | Analyst, Needham & Company

Thank you.

Sanjeev Agarwal | President and Chief Executive Officer, Everspin Technologies

Sure.

Operator | Conference Call Operator

Please stand by for our next question. Our next question comes from the line of Richard Shannon with Craig Hallam.

Your line is open. Richard Shannon | Analyst, Craig Hallam & Co.

Well, hey, guys. Thanks for taking my question. The last one kind of in the context of this year here. I want to ask about two different contributors here. First of all, on the strategic Rad Hard project you've been working with, your partner in this has talked about a much better year and wondering if that's something similar that you're expecting as well. And then also this quarter and a couple of past ones, you've been talking about some increasing contributions from the LEO satellite market. Great to get a sense of what's kind of the sense of scale of that today, and you see that increasing over this year and over the next couple of years.

Sanjeev Agarwal | President and Chief Executive Officer, Everspin Technologies

Thanks for the question, Richard, and thanks for joining. Clearly, you seem to be a little bit under the weather, but thank you for joining. Yeah. As far as the LEO satellite market is concerned, I'll let Bill address it. On the QuickLogic project, I think the award that QuickLogic talked about does not relate to the project that we've been working on jointly. And, in fact, I think that's the project that Bill was talking about in his prepared remarks that it's not going to renew in the near future, and we're going to see some decline in that non-product revenue in Q1 of 2020. Q1 of this year. That is still waiting for, you know, some milestones to be met by the other partners in the program, and we expect that to be, you know, kicking in again towards the second half of this year, but not in the first half. Bill, on the LEO satellites.

Bill Cooper | Chief Financial Officer, Everspin Technologies

Yeah, thanks, Sanjeev. Thanks, Richard, for the question. Yeah, I would say that, you know, the LEO satellite market is still that burgeoning market, and, you know, that's what we see, both in terms of you know, our orders and our backlog, and, you know, we feel confident about our products and our position there, and, you know, we expect to, again, kind of move up with that increased demand, especially as we've introduced our high-rel, high-reliability products as well. That sort of fits perfectly in that particular marketplace as well.

Richard Shannon | Analyst, Craig Hallam & Co.

Okay, great. Thanks for that. Second question, just on your... giving you Norflash replacement products and maybe taking a different angle than one of the last questions here and also your very interesting comments. But obviously you've been targeting Norflash replacement in certain markets. And if I caught your comments right, Sanjeev, you're talking about, I think, a win with, I think it was Microchip on an MCU. Love to get a sense of when you see that becoming a material contributor here. And then also maybe I think in the past you talked about some other engagements, particularly in the FPGA space, where you were excited about some progress there. Maybe give us an update there as well, please.

Sanjeev Agarwal | President and Chief Executive Officer, Everspin Technologies

Yeah, good question, Richard. I think there are two partner programs that we're really excited about in particular. One is the one with Lattice, and the other one is this Microchip. And I think we are seeing steady progress with both those partners trying to get our product qualified and integrated into their standard offering. And I think that's where this PIC64 at Microchip comes into play. The markets that they're targeting align very well with Everspan in the aerospace and defense market. And then I think we can then expect to take it into the commercial market as well. But right now, the PIC64 is targeted towards the aerospace and defense as well.

Richard Shannon | Analyst, Craig Hallam & Co.

Okay, thanks for that. My last question, I'll jump out of line here. Sanjeev, you talked about a goal of driving towards or driving to $100 million of revenues within, I think you said, three to five years. Let me get a sense anyway you quantify or at least rank order of the contributors of that revenue. I think of the big picture here that I think of is the toggle, the, excuse me, the STT products, and licensing, I guess, if there's any other way you'd categorize the contributors, that that'd be very helpful.

Sanjeev Agarwal | President and Chief Executive Officer, Everspin Technologies

Thank you. So the way I look at it is, you know, the major contributor is going to be the Persyst products, followed by perhaps equal contributions from our licensing and Unisys in, you know, three to five years down the road to hit the $100 million. In the Persyst, I'm including the toggle and RAM markets. products, as well as the XPI STD products that we are shipping today, as well as the STDDR products that we're shipping to IBM. So I think those three would form the portion of the HR, form the portion of the process products that are going to contribute. And this high reliability product family that we have just introduced is going to actually give us a nice boost over there. And then in 2027, we expect Unisys to kick in some volume, and so I think between that, Unisys, and our licensing is what's going to get us to the $100 million mark down the road.

Richard Shannon | Analyst, Craig Hallam & Co.

Okay. I will jump out of line. Thank you for that, Sanjeev.

Sanjeev Agarwal | President and Chief Executive Officer, Everspin Technologies

Thank you, Richard. Hope you feel better soon.

Richard Shannon | Analyst, Craig Hallam & Co.

Thank you.

Operator | Conference Call Operator

Thank you. Ladies and gentlemen, I'm sure no further questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect. jsPDF 3.0.3 D:20260606090248-00'00'

NASDAQ:MRAM Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Good afternoon and welcome to Everspin Technologies' third quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode. At the conclusion of management's prepared remarks, instructions will be provided for the question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Monica Gould, Investor Relations of Everspin.

Monica Gould | Investor Relations

Thank you, Operator, and good afternoon, everyone. Everspen released results for the third quarter 2025, ended September 30, 2025, this afternoon after market closed. I'm Monica Gould, Investor Relations for Everspen, and with me on today's call are Sanjeev Agarwal, President and Chief Executive Officer, and Bill Cooper, Chief Financial Officer. Before we begin the call, I would like to remind you that today's discussion may contain forward-looking statements. regarding future events including, but not limited to, the company's expectations for Everspin's future business, financial performance and goals, customer and industry adoption of MRAM technology, successfully bringing to market manufacturing products in Everspin's design pipeline, and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends, and market conditions and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We would encourage you to review the company's SEC filings, including the annual report on Form 10-K and other SEC filings made from time to time in which the company may discuss risk factors associated with investing in Everspen. All forward-looking statements are made as of the date of this call and, except as required by law, the company undertakes no obligation to update or alter any forward-looking statement made on this call, whether as a result of new information, future events, or otherwise. The financial results discussed today reflect the company's preliminary estimates, are based on information available as of the date hereof, and are subject to further review by Everspin and its external auditors. The company's actual results may differ materially from these estimates, as a result of the completion of financial closing procedures, final adjustments, and other developments arising between now and the time that the financial results for this period are finalized. Additionally, the company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP net income to non-GAAP net income. which provide additional details. A copy of the press release is posted on the investor relations section of Everspins website at www.everspins.com. And now I'd like to turn the call over to Everspins president and CEO Sanjeev Agarwal. Sanjeev, please go ahead.

Sanjeev Agarwal | President and Chief Executive Officer

Thank you, Monica. And thanks everyone for joining us on the call today. We are pleased to report third quarter results with revenue of $14.1 million and non-GAAP EPS of $0.06 per diluted share with revenue in line with our guidance range and EPS towards the high end of our expectations. Our performance this quarter was driven by strength across all products, specifically in Low Earth Orbital, or LEO, applications, casino gaming, and energy management. In addition, our data center business remains strong with continued demand for our toggle MRAM products for redundant array of independent disks or RAID from a broad selection of data center customers, including Dell, Supermicro, and others. The LEO satellite market is expected to grow rapidly in the coming years. Everspin MRAM, with its reliability at extreme temperatures and harsh ambient, is ideally suited for these deployments. As mentioned in our last call, we are seeing good traction in this market with announced design wins with AstroDigital and Blue Origin. It is our understanding that LEO satellites have a short lifespan of three to five years, primarily due to atmospheric drag impacting the orbit. Design wins in this market with multiple Everspin MRAM parts per satellite is expected to translate into meaningful revenue for Everspin as this market grows. As anticipated, revenue from the sale of our persist 1-gigabit SCTM RAM into IBM's Flash Core Module 4, or SCM4, for data center applications remained consistent with the prior quarter, and we continue to anticipate revenue from this project to remain at this level for the remainder of the year. We continue to ship and recognize revenue for our Persyst MRAM solution from Lucid Motors for their Gravity SUV and expect volumes to increase as the automaker ramps production. In Q3, we continue to ship engineering samples of the Persyst EM064LXHR and EM128LXHR to several LEO satellite customers and remain on track to ramp to full production in the fourth quarter 2025. Turning to our licensing, royalty, patent, and other revenue. We continue to successfully execute on our deliverables for our contract with Purdue University to provide our state-of-the-art STTM RAM technology for energy-efficient AI solutions. During the first half of the year, we characterized a process to establish a baseline for percent MR, magneto resistance, and switching reliability. More recently, we developed materials with higher percent MR and characterized devices using these new materials and processes. These advancements position us favorably for the next phase of the project. Lastly, we continue to recognize revenue from our ongoing project with the leading provider of sensor devices to provide services for their latest generation DMR sensor device on our MRAM line in our Chandler facility. With respect to below the line items, we recognize 1.2 million in other income in the third quarter and 8.5 million to date from the 14.6 million contract we have with the DOD contractor to develop a sustainment plan for our MRAM manufacturing facilities to provide continuous onshore MRAM capabilities to their aerospace and defense customers. We continue to expect this business to pick up meaningfully in the fourth quarter. As we announced last month, we entered into a strategic collaboration with Quinteros to strengthen the reliability and safety of RISC-V-based platforms with our MRAM offerings. This partnership is focused on automotive, industrial, and edge applications where data persistence, integrity, low latency, and security are critical. The goal is to jointly build reference design that would lay the foundation for scalable, reliable platforms for these applications. I will now turn it over to our CFO, Bill Cooper, who will walk you through our third quarter financials and fourth quarter 2025 guidance.

Bill Cooper | Chief Financial Officer

Bill? Thank you, Sanjeev. Our results reflect the consistency of our execution. During the third quarter, we delivered revenue of $14.1 million up 16% year over year, and in line with our guidance range of 13.5 million to 14.5 million, driven by higher product sales. MRAM product sales in the third quarter, which include both toggle and STT MRAM revenue, was 12.7 million, up 22% over the third quarter of last year. Licensing, royalty, patent, and other revenue in the third quarter decreased to $1.4 million from $1.7 million in Q3-24 due to the completion of projects in Q4-24 and Q1-25, which were active in Q3-24. Turning to gross margin, our GAF gross margin improved 51.3% for the third quarter, up just over 200 basis points from 49.2% in the third quarter of 2024. Despite the slight decrease in licensing and other revenue year over year, we were able to maintain gross margins consistent with Q2 levels due to improving yields on our STT products, driven by process improvements developed in collaboration with our foundry partner. GAAP operating expenses for the third quarter of 2025 were $8.8 million, up slightly sequentially, an increase from $8.1 million in the third quarter of 2024. Other income of 1.2 million was related to the strategic award we won in August of last year to develop a long-term plan to provide manufacturing services for aerospace and defense segments. We recorded third quarter non-GAAP net income of 1.5 million, or six cents per diluted share, based on 23.1 million weighted average diluted shares outstanding. This was toward the high end of our guidance range of non-GAAP net income of 2 cents to 7 cents per share and compares to non-GAAP net income of 3.8 million or 17 cents per share in the third quarter of 2024. The decrease versus the year-ago period was driven by lower other income stemming from lumpiness inherent in our DoD MRAM contract services as Q3 24 required higher levels of activity upon initiation of the contract in that quarter. As a reminder, non-GAAP results exclude the impact of stock-based compensation. We are pleased that our balance sheet remains strong and debt-free. We ended the quarter with cash and cash equivalents of 45.3 million, up 0.3 million from 45 million at the end of the prior quarter. Cash flow generated from operations decreased to 0.9 million for the third quarter, from 5 million in the second quarter which was driven by higher collections on receivables on a change in distributors. We did not experience any tariff-related impact on our results in the third quarter and do not expect any tariff-related impact in the coming quarter. We expect Q4 total revenue in the range of $14 million to $15 million and GAAP net income per fully diluted share to be between 2 cents and 7 cents. On a non-GAAP basis, we anticipate net income per fully diluted share to be between 8 cents and 13 cents. In summary, we're pleased with our solid results this quarter and remain committed to maintaining financial discipline while focusing on scaling our business and converting additional design wins to revenue. Operator, you may now open the line for questions.

Operator | Conference Operator

Thank you. To ask a question at this time, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for our first question. Our first question comes from the line of Neil Young with Needham and Company. Your line is open.

Please go ahead. Neil Young | Analyst at Needham & Company

Hey, everyone. Thanks for letting me ask a question. 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?

Bill Cooper | Chief Financial Officer

Yeah, I think we saw some improvement this quarter, Neil, on 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, you know, that's a good, strong result for us. We do expect to kind of continue to be in that range overall.

Neil Young | Analyst at Needham & Company

Okay, great. Thanks. And then, so the sequential decline in licensing, royalty, patent, and other, I know you talked about it a little bit, but I was just hoping you could maybe provide some more detail just on the sequential decline and then sort of, if possible, where you think that is going in 4Q.

Bill Cooper | Chief Financial Officer

Yeah, there was, you know, these projects, right, and that kind of bucket of non-product revenue encompasses a lot of different things. including any license revenue, any engineering service revenue, you know, 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 where we do work for other groups that we've mentioned in the past, you know, those projects tend to be, you know, anywhere between, you know, one year to 18 months type, two years type projects typically. So they do wrap up, right? And then on the second part of your question, you know, I think as we see sort of this level of product, non-product 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.

Operator | Conference Operator

we go forward okay perfect thank you thank you and as a reminder to ask a question please press star one one i'm showing no further questions at this time so oh hold on we have a follow-up question okay we do have a follow-up question from mill young with needham and company please go ahead Neil Young | Analyst at Needham & Company: Hey, thanks. Sorry, again. 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? And that's all I have.

Thanks. Bill Cooper | Chief Financial Officer

Yeah, Neil, that's a safe assumption. 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.

Neil Young | Analyst at Needham & Company

Thank you.

Operator | Conference Operator

Thank you. And now I'm showing no further questions at this time. Ladies and gentlemen, this will conclude today's question and answer session. This will also conclude today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day. jsPDF 3.0.3 D:20260606090249-00'00'