Strategic Performance and Market Dynamics

• Revenue growth was driven by a recovery in Industrial Automation demand, particularly in Japan, as customer inventory levels normalized.

• The Transportation segment benefited from design wins transitioning to production, specifically in Asian railway applications where MRAM's vibration resistance and safety integrity (SIL4) provide a competitive edge.

• Data Center growth remains anchored by ongoing module work with IBM and RAID reference designs at a top-five hyperscale operator.

• Management announced a new $40 million, 2.5-year subcontract with a U.S. prime contractor to provide Toggle MRAM technology and engineering services for the defense industrial base.

• A strategic 10-year manufacturing agreement with Microchip will establish a second domestic production source in Oregon to enhance supply chain resiliency.

• The UNISYST product family was introduced to target the $3 billion high-density stand-alone NOR Flash market, aiming for 5% to 10% market share in its early years.

Outlook and Strategic Initiatives

• Q2 2026 revenue is projected between $15.5 million and $16.5 million, excluding any potential impact from the newly announced $40 million defense subcontract.

• Engineering samples for the UNISYST family are expected in Q4 2026, with a typical 18-to-24-month qualification cycle before significant production ramps.

• High-reliability 128-megabit and 256-megabit parts are on track for qualification and high-volume availability in the second half of 2026.

• The first product shipments from the new Microchip manufacturing line are anticipated in the second half of 2027.

• A $14.6 million DoD sustainment contract is expected to wind down over coming quarters with an estimated completion in the first half of 2027.

Risk Factors and Operational Context

• Litigation costs significantly impacted GAAP operating expenses, totaling $1.6 million in Q1, and are expected to remain at similar levels for at least the next two quarters.

• The company maintains a debt-free balance sheet with $40.5 million in cash, which management deems sufficient for upcoming capital requirements related to the Microchip agreement.

• Gross margins reached 52.7% due to higher capacity utilization and yield improvements, with a long-term target of maintaining 50% plus.

• The new $40 million defense contract includes provisions for technology transfer and second-source rights for the contractor in the event Everspin exits the business.

Q&A Highlights

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