NVE Corporation Quarterly Report (Form 10-Q)
NVE Corporation Quarterly Report (Form 10-Q)
NVE Corporation, a Minnesota-based company, filed its quarterly report on Form 10-Q for the period ended September 30, 2025. The company reported net sales of $23.1 million, a 12% increase from the same period last year. Gross profit increased 15% to $10.3 million, while operating income rose 21% to $4.5 million. Net income was $3.2 million, a 25% increase from the same period last year. The company’s cash and cash equivalents decreased by $1.4 million to $14.1 million, while total assets increased by $2.3 million to $43.4 million. The company’s common stock outstanding as of September 30, 2025, was 4,837,166 shares. The report also includes the company’s balance sheets, statements of income, comprehensive income, shareholders’ equity, and cash flows for the quarter and six months ended September 30, 2025, as well as notes to the financial statements and management’s discussion and analysis of financial condition and results of operations.
Summary and Analysis of NVE Corporation’s Financial Report
Overview
NVE Corporation is a technology company that develops and sells devices using spintronics, a nanotechnology that relies on electron spin to acquire, store, and transmit information. The company manufactures high-performance spintronic products including sensors and couplers used in various industries.
Financial Performance
For the quarter ended September 30, 2025 (Q2 FY2026):
- Total revenue decreased 6% compared to the same quarter in the prior year, due to a 68% decrease in contract research and development revenue, partially offset by a 1% increase in product sales.
- Gross margin decreased from 86% to 78% due to a less profitable product mix and increased distributor sales.
- Operating expenses decreased 7%, with a 3% increase in R&D and a 23% decrease in selling, general, and administrative expenses.
- Net income decreased 16.3% primarily due to the revenue decline, lower gross margin, and a higher effective tax rate.
For the six months ended September 30, 2025 (H1 FY2026):
- Total revenue decreased 8%, with a 5% decline in product sales and a 51% drop in contract research and development revenue.
- Gross margin decreased from 86% to 79% due to a less profitable product mix and more distributor sales.
- Operating expenses decreased 14%, with an 8% drop in R&D and a 23% decrease in selling, general, and administrative expenses.
- Net income decreased 14.5% due to the revenue decline, lower gross margin, and a higher effective tax rate.
Strengths and Weaknesses
Strengths:
- Strong cash position, with $5.1 million in cash and cash equivalents as of September 30, 2025.
- Ability to generate positive cash flow from operating activities.
- Decreasing operating expenses, indicating cost management efforts.
Weaknesses:
- Reliance on a few large customers for a significant portion of revenue.
- Variability in defense industry sales due to procurement cycles.
- Declining gross margins due to product mix and increased distributor sales.
Outlook
- The company expects a full-year tax rate of 16-17% in fiscal 2026 due to advanced manufacturing investment tax credits.
- NVE plans to fund future dividends through cash from operations and marketable securities maturities, but dividends may be modified or discontinued.
- The company anticipates an additional $1-1.5 million in fixed asset purchases in the last six months of fiscal 2026 to complete a production expansion.
Overall, NVE Corporation’s financial performance in the first half of fiscal 2026 was weaker compared to the prior year, with declines in revenue, gross margin, and net income. The company’s strengths include its strong cash position and ability to manage costs, but it faces challenges from customer concentration, variable defense industry sales, and declining profitability. The outlook suggests the company is taking steps to address these issues, but the future financial performance remains uncertain.