This article first appeared on GuruFocus .
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Revenue:Increased 23% year-over-year for the third quarter of fiscal 2026.
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Product Sales:Increased 16% year-over-year.
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Contract R&D Revenue:Increased 335% year-over-year.
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Gross Margin:79% of revenue, down from 84% in the prior year quarter.
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Operating Expenses:Decreased 12% year-over-year.
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R&D Expense:Decreased 9% year-over-year.
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SG&A Expense:Decreased 19% year-over-year.
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Net Income:Increased 11% to $3.38 million or $0.70 per diluted share.
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Operating Margin:60%.
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Pretax Margin:68%.
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Net Margin:54%.
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Cash Flow from Operations:$12.2 million for the first nine months of fiscal 2026.
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Accounts Receivable:Decreased by $1.1 million.
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Inventories:Decreased by $177,000.
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Fixed Asset Purchases:$2.18 million for the first nine months, including $1.05 million in the December quarter.
Release Date: January 21, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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NVE Corp ( NASDAQ:NVEC ) reported a 23% increase in revenue and an 11% increase in earnings for the third quarter of fiscal 2026 compared to the prior year quarter.
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Product sales increased by 16% and contract R&D revenue surged by 335%, indicating strong growth across multiple revenue lines.
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Operating expenses decreased by 12% due to a reduction in R&D and SG&A expenses, contributing to improved profitability.
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The company completed installation and calibration of new equipment, enhancing capacity and capabilities for precise spintronic devices.
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NVE Corp ( NASDAQ:NVEC ) extended its supplier agreement with Abbott Laboratories for two years, indicating strong customer relationships and future revenue stability.
Negative Points
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Gross margin decreased from 84% to 79% due to a less profitable product mix and increased distributor sales, which typically have lower margins.
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Interest income decreased by 3% due to a reduction in the marketable securities portfolio, impacting overall income.
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The effective tax rate increased to 20% from 15% in the prior year quarter, primarily due to noncash impacts of tax law changes.
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Net income for the first nine months of fiscal 2026 decreased by 8% compared to the prior year, despite recent quarterly growth.
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The company faces uncertainties related to economic environments, future sales, tariffs, and trade barriers, which could impact future performance.
Q & A Highlights
Q: Can you discuss the potential of magnetic navigation (MagNav) in GPS-compromised areas and its relevance to NVE's sensors? A: Peter G. Eames, Vice President of Advanced Technology, explained that MagNav is a nascent technology aimed at replacing GPS in defense applications vulnerable to jamming. NVE's sensors are smaller and lower power than those typically used in MagNav systems. While the technology is still evolving, NVE is monitoring its development for future opportunities.
Q: Is the new equipment installation on schedule, and how will it impact product sales and profitability? A: Daniel Baker, CEO, confirmed that the equipment installation is on schedule and expected to be operational by March. Peter G. Eames added that the new equipment is expected to enhance product sales and profitability by enabling in-house packaging, reducing outsourcing costs, and supporting new product development.
Q: Are distributors building up inventory again, and how does this affect NVE's sales? A: Daniel Baker noted that distributor sales are increasing, indicating that previous inventory buildups have been depleted. This trend suggests rising end-user demand and a positive outlook for NVE's sales as the semiconductor industry inventory situation improves.
Q: How does NVE's intellectual property compare to competitors like Everspin, and are there plans to license it? A: Daniel Baker stated that NVE has valuable intellectual property, particularly in MRAM technology, which is used in defense and anti-tamper applications. While NVE primarily focuses on high-value markets, they are open to licensing opportunities to monetize their IP.
Q: Can you provide insights into the defense business and its volatility? A: Peter G. Eames mentioned that while the defense business has been weak in past quarters, there is optimism for a return to normal flow. Daniel Baker added that increased R&D investments aim to drive future non-defense business growth, particularly in medical and advanced technology markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
