Nve Corporation’s 2026 Earnings Call: Equipment Deployment Timing and Mram Strategy Shifts Clash

Date of Call: Jan 21, 2026

Financials Results

• Revenue: Increased 23% YOY, driven by 16% increase in product sales and 335% increase in contract R&D revenue
• EPS: $0.70 per diluted share, up 11% YOY from $0.63
• Gross Margin: 79% of revenue, down from 84% in the prior year quarter
• Operating Margin: 60%

Business Commentary:

Revenue and Earnings Growth:

• NVE Corporation reported a 23% increase in revenue and an 11% increase in earnings for Q3 fiscal 2026 compared to the prior year quarter.
• The growth was driven by broad-based increases across defense and non-defense sales, as well as distributor and direct channels.

Gross Margin and Operating Expenses:

• Gross margin for Q3 fiscal 2026 was 79% of revenue, down from 84% in the prior year quarter.
• The decrease was due to a less profitable product mix and increased distributor sales. Operating expenses decreased 12% due to decreases in R&D and SG&A.

Contract R&D Revenue Surge:

• Contract R&D revenue increased 335% year-over-year.
• This significant increase contributed to the overall revenue growth, despite a decrease in contract R&D for the first 9 months of fiscal 2026.

New Equipment and Capacity Expansion:

• NVE has completed installation and calibration of new equipment, enhancing its capacity and capabilities.
• The new equipment allows precise control of spintronic materials deposition, supporting the development of new products and expanding existing product capacity.

Customer Agreements and Market Engagement:

• NVE extended its supplier agreement with Abbott Laboratories for two years, providing for price increases.
• The company is actively engaging in trade shows and marketing activities to promote its products in the medical devices market.

Sentiment Analysis:

Overall Tone: Positive

• Management reported 'strong increases in revenue and earnings driven by broad-based growth' and expressed optimism for future sales from new products and R&D investments. They noted distributor sales are picking up, indicating 'the wind at our backs' and that 'the future appears to have ubiquitous sensors' as a historic opportunity.

Q&A:

• Question from Jeffrey Bernstein (Cowen Inc.): Can you talk about magnetometer sensors for magnetic navigation in GPS compromised areas and any contact with the BOW?
  Response: MagNav is a new, nascent technology for defense; NVE sensors are smaller and lower power but current maps are too imprecise for maturity, though it's an interesting future opportunity.

• Question from Unknown Analyst (Pete Prevett, Florida): Is the new equipment on schedule and will it help with new product sales and profitability?
  Response: Equipment is on schedule and up and running, with optimism for new products and sales, as samples are being sold.

• Question from Unknown Analyst: Are distributors building up inventory again?
  Response: Yes, distributor sales are picking up positively as semiconductor inventory has depleted and end-user demand is increasing.

• Question from Unknown Analyst: How does NVE's IP compare to Everspin's, and have you discussed licensing?
  Response: NVE has excellent, valuable IP applicable to MRAM, with discussions and a past license agreement; they aim to monetize through licensing or other means, focusing on defense/anti-tamper applications.

• Question from Unknown Analyst: Is MRAM a replacement for Flash memory?
  Response: MRAM is nonvolatile memory used in embedded systems; its value makes NVE's IP significant, especially for applications requiring data retention without power.

• Question from Unknown Analyst: What are marketing plans and promotion strategies?
  Response: Marketing spend is increasing, focusing on trade shows, demonstrations, and newsletters which have high response rates; social media like Twitter is more for engagement than major sales.

• Question from Jeffrey Bernstein (Cowen Inc.): What is the traction for rare earth magnet replacement applications and any revenue?
  Response: NVE's rare earth-free ferrite magnet sensors are positioned well due to supply chain concerns; they have seen some sales and interest, though exact quantification is difficult.

• Question from Unknown Shareholder (Christopher Chevski): Any comments on the current quarter, especially defense business volatility?
  Response: Defense business has been weak but management is optimistic for a return to a more normal flow.

• Question from Unknown Shareholder: Does the rise in NRE revenue indicate more future nondefense business?
  Response: Yes, R&D investments in areas like medical miniaturization are aimed at driving future sales and growth.

• Question from Unknown Shareholder: Does the 2-year agreement with Abbott bring market gains or new devices?
  Response: Cannot disclose specific devices due to confidentiality, but Abbott is a long-term partner expanding product usage, and NVE is meeting more medical prospects.

• Question from Unknown Analyst (Pete): Can you discuss potential for recurring orders and revenue consistency?
  Response: Strategy focuses on increasing sales to existing customers with existing and new products, aiming to grow faster than customers and add new ones to drive sustained growth.

• Question from Jeffrey Bernstein (Cowen Inc.): What are the medical applications for other customers besides cardiac and neuromodulator, like medical robots?
  Response: Covers life support, non-life support devices, and medical instruments; medical robots benefit from NVE's high-sensitivity sensors for precise delicate operations.

• Question from Unknown Analyst (Ittai Abraham, Principal Global): Is MRAM an IP opportunity only, or can added capacity help sell MRAM?
  Response: Strategy is to license IP for larger MRAMs rather than build large-scale fabs, focusing on high-value-added memories for specialized applications like anti-tamper devices.

• Question from Unknown Analyst: How might new capacity change end market mix?
  Response: Targeted at IoT and AIoT for industrial automation, representing a historic opportunity for ubiquitous sensors in smart, self-optimizing factories.

Contradiction Point 1

Timeline for New Equipment Deployment

It involves a change in the timeline for when new equipment becomes operational, which is key to production capacity and revenue forecasts.

Is the new equipment on schedule to be operational by March, nearly two years after the 2024 shareholder meeting? - Unknown Analyst (Pete Prevett, Florida)

2026Q3: The equipment is expected to be placed into service (accounting-wise) in the current quarter (March 2026). - Daniel Baker(CFO)

Is the growth from new equipment reflected in revenue increases or just capability improvements? - Unknown Analyst

2026Q2: The goal is to use the new equipment to develop advanced products and fuel future growth. Both increasing capabilities and developing new products are part of the strategy. - Daniel Baker(CFO)

Contradiction Point 2

Market Strategy for MRAM Technology

It represents a shift in strategy between focusing on direct product sales versus licensing IP, which significantly affects revenue potential and business model.

Is MRAM primarily an IP opportunity, or can added capacity help sell to those customers? - Unknown Analyst (Ittai Abraham, Principal Global)

2026Q3: NVE's strategy is to specialize in high-value, specialized memories (like for anti-tamper devices) rather than mass-producing large-scale MRAM... The company sees its IP as applicable to broader MRAM markets and would participate through licensing its developed technology. - Daniel Baker(CFO)

How applicable are you in data center applications with 800-volt DC and silicon carbide ICs, and how do you plan to enter the market? - Jeffrey Bernstein (Cowen Inc.)

2026Q2: MRAM is a nonvolatile memory technology that retains data without power. It is already used in some embedded computing systems and is seen as a powerful technology for applications requiring nonvolatility and performance. This reinforces the belief in the value of NVE's IP. - Peter Eames(CTO)

Contradiction Point 3

Magnetic Navigation (MagNav) Technology Maturity

It concerns the readiness of a key defense application, impacting potential revenue streams and strategic focus.

Did you discuss the suitability of your magnetometer sensors for magnetic navigation in GPS-compromised areas during the quarter, and have you made contact with the BOW regarding this? - Jeffrey Bernstein (Cowen Inc.)

2026Q3: NVE has looked at MagNav... However, MagNav is still a nascent technology with imprecise maps, so it's not mature enough for pursuit currently. - Peter Eames(CFO)

Can you provide more details on the PUF business weakness and distribution recovery this quarter, and what are the expected trends and seasonality for PUF over the next few quarters? - Jeffrey Milton K. Bernstein (Silverberg Bernstein Capital Management LLC)

2026Q1: The PUF business... is not seasonal but lumpy due to the timing of large defense procurement contracts. - Daniel A. Baker(CEO)

Contradiction Point 4

Defense Business Normalization Timeline

It involves differing expectations for when defense orders will stabilize, which is crucial for financial planning and investor outlook.

Can you comment on the current quarter's performance, particularly regarding the volatility in your defense business? - Unknown Shareholder (Christopher Chevski)

2026Q3: Defense business has been relatively weak in the past. The outlook is more optimistic, and the company expects to return to a more normal flow going forward. - Peter Eames(CFO)

Considering military order volatility, would you exclude military revenue to highlight underlying growth? - Unidentified Analyst (Christopher Trosky, private investor)

2026Q1: The challenge is the audit and infrastructure requirements... The current expectation is that military orders will sequentially increase in the next couple of quarters. - Daniel A. Baker(CEO)

Contradiction Point 5

Maturity and Readiness of New Equipment and Products

It reflects conflicting statements on whether new capacity and products are now operational or still in development, affecting production forecasts and investor confidence.

Is the new equipment's March launch, nearly two years after the 2024 shareholder meeting, on schedule as expected? - Unknown Analyst (Pete Prevett, Florida)

2026Q3: The expanded production area is now equipped, and the equipment is expected to be placed into service (accounting-wise) in the current quarter (March 2026). - Daniel Baker(CEO)

What gives you confidence in earning a return on the 2026 CapEx investment? - Jeff Bernstein (Silverberg Bernstein Capital)

2025Q4: Confidence is based on prototype and sample devices receiving excellent customer feedback. The company is optimistic... that this investment will open significant new markets. - Daniel Baker(CEO)