Everspin (MRAM) Q1 2026 Earnings Transcript

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Date

Wednesday, April 29, 2026 at 5 p.m. ET

Call participants

• President and Chief Executive Officer — Sanjeev Aggarwal
• Chief Financial Officer — Bill Cooper

Takeaways

• New $40 million U.S. prime contractor agreement -- Everspin Technologies announced a two-and-a-half-year, $40 million subcontract in defense, providing Toggle MRAM process technology and engineering services, expected to have a "significant positive impact" over the contract term.
• Total revenue -- $14.9 million, a 14% increase year over year, reaching the high end of the $14 million to $15 million guidance range.
• MRAM product sales -- $14.1 million, up 28% year over year and 5% sequentially from Q4 2025, attributed to strong demand across markets.
• Licensing, royalty, patent, and other revenue -- $0.8 million, down from $2.1 million in Q1 2025, reflecting fewer active projects.
• GAAP gross margin -- 52.7%, up from 51.4% year over year, driven by increased capacity utilization.
• GAAP operating expenses -- $10.6 million, increased from $8.7 million in Q1 2025, primarily due to litigation and rising compensation and professional fees.
• Other income -- $2.1 million recognized from strategic awards, relating to MRAM manufacturing upgrades in Chandler, Arizona.
• Non-GAAP net income -- $2.6 million, or $0.11 per diluted share, versus $0.4 million, or $0.02 per share, in Q1 2025; excludes stock-based compensation and litigation expenses.
• Cash and cash equivalents -- $40.5 million, down $4 million from the prior quarter, with the reduction attributed to litigation costs and higher working capital needs.
• Cash flow from operations -- $0.5 million, a decline from $2.6 million in Q4 2025, linked to litigation outflows and increased working capital.
• Q2 2026 guidance (excluding new defense agreement) -- Expected revenue of $15.5 million to $16.5 million; GAAP net loss of $0.12 to $0.07 per share; non-GAAP guidance between breakeven and $0.03 net income per share.
• Unisys MRAM product family introduction -- Unveiled as a new high-density, unified memory offering, with engineering samples anticipated in 2026 and target market expansion by $3 billion; aims for 5%-10% market share in initial years after launch.
• Microchip manufacturing agreement -- Ten-year pact to establish an MRAM production line in Oregon, enabling a second domestic source; first shipments expected in 2027.
• CapEx outlook -- Near-term spending will moderate before increasing as foundry services activity with Microchip ramps, but total annual capital expenditure is projected to remain within historical norms.
• High-reliability product pipeline -- Persist 64 megabit xSPI STT-MRAM devices are with customers; 128 megabit and 256 megabit parts are in qualification and expected to be available in high volume in the second half of the year.

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Risks

• Litigation expenses -- Litigation costs totaled $1.6 million in Q1 and are anticipated to continue at similar levels in subsequent quarters, as stated: "Unfortunately, litigation is expensive, and we are expecting it to continue in that range for at least the next couple of quarters."
• Wind-down of DoD contract revenue -- Management warned that $14.6 million Department of Defense contract revenue recognized below the line "begin to wind down over the coming quarters with estimated completion in 2027."
• Near-term GAAP losses projected -- Q2 GAAP guidance anticipates a net loss per share between $0.12 and $0.07.

Summary

Everspin Technologies (NASDAQ:MRAM) announced a $40 million defense subcontract, expected to deliver meaningful top-line and margin benefits over the next two and a half years, with more details forthcoming as milestones are defined. Product sales, especially MRAM devices, showed robust demand across industrial, transportation, and data center applications, resulting in double-digit year-over-year revenue and margin gains. Strategic manufacturing moves, including the Microchip agreement and introduction of the Unisys product family, are poised to expand production resilience and address new end markets in the years ahead.

• Management clarified that the new $40 million contract, the $14.6 million DoD manufacturing sustainment agreement, the Microchip foundry pact, and the government’s 300mm MRAM line RFI are independent initiatives.
• CEO Aggarwal detailed that the Unisys MRAM will not substantially contribute to the $100 million revenue target within three-to-five years because of extended product qualification cycles.
• Engineering samples for Unisys are expected in 2026, with volume production likely to follow after an 18 to 24 month qualification window.
• New manufacturing capacity with Microchip is expected to yield product shipments beginning in 2027, enhancing domestic supply chain resiliency for MRAM and TMR sensors.

Industry glossary

• MRAM (Magnetoresistive Random Access Memory): Non-volatile memory technology leveraging magnetic states for data storage, offering durability and high-speed access for industrial and mission-critical applications.
• Toggle MRAM: A type of MRAM using a toggle mechanism to flip magnetic orientation, primarily for legacy and aerospace/defense segments.
• STT-MRAM (Spin-Transfer Torque MRAM): Advanced MRAM tech employing spin-transfer torque for switching, enabling denser, scalable memory for broader applications.
• Persist MRAM: Everspin Technologies’ branded STT-MRAM product line designed for high reliability in industrial and embedded contexts.
• xSPI interface: An interface standard (expanded Serial Peripheral Interface) supporting higher bandwidth and multiple I/O modes, including octal data transfer up to 200 MHz, for next-gen memory devices.
• TMR sensor: Tunnel Magnetoresistance sensor, exploiting magnetoresistance effects for high-sensitivity magnetic field detection, often paired with MRAM fabrication.
• SIL 4 (Safety Integrity Level 4): The highest safety classification for risk reduction in safety-critical control systems, such as railway signaling devices.
• Non-GAAP net income: Net income figure that excludes expenses such as stock-based compensation and litigation costs, providing an alternative view of operational profitability.
• NRE (Non-Recurring Engineering): One-time engineering costs associated with the development, qualification, or transfer of new product or process technologies.

Full Conference Call Transcript

Sanjeev Aggarwal, 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 Technologies, Inc.'s future business, financial performance and goals, customer and industry adoption of MRAM technology, successfully bringing to market and manufacture products in Everspin Technologies, Inc.'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 Technologies, Inc. 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 Technologies, Inc. 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.

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 Technologies, Inc.'s website at www.everspin.com. And now I would like to turn the call over to Everspin Technologies, Inc.'s president and CEO, Sanjeev Aggarwal. Sanjeev, please go ahead.

Sanjeev Aggarwal: 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 U.S. prime contractor. Under the agreement, Everspin Technologies, Inc. will be a subcontractor on an existing prime contract and will provide Toggle MRAM process technology capabilities and engineering services for U.S. defense industrial base customers. In addition, Everspin Technologies, Inc. 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 non-GAAP EPS of $0.11 per 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 predictive maintenance. Additionally, MRAM enables more robust data storage, contributing to the high safety integrity levels, SIL 4, required for axle counter systems, ensuring accurate detection and reducing false alarms.

Another customer is a leading embedded computing company in Asia who chose Everspin Technologies, Inc.'s MRAM solutions for rail transit systems because they reliably preserve critical data during power loss and support unlimited erase 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, or RAID, reference design at the top five hyperscale operators.

With respect to below-the-line items, we recognized $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 2027. Turning to some of our product development efforts. During the quarter, we formally introduced our Unisys 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 while giving customers a practical way to start with Persist today and migrate to a code-and-data MRAM architecture as soon as it is available. Everspin Technologies, Inc. will initially offer the Unisys family in densities ranging from 128 megabits to 2 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 2026.

As a reminder, the Unisys family of products will serve the high-density, stand-alone NOR flash market, which will expand our addressable market by approximately $3 billion. Our goal is to capture 5% 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 xSPI STT-MRAM devices in hand and are engaged in design activity. Additionally, we remain on track to qualify our 128 megabit and 256 megabit 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 Microchip's 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 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: 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 million 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 Q1 2025 due to fewer currently active projects. Our GAAP gross margin increased to 52.7% from 51.4% in 2025 due to higher capacity utilization.

GAAP operating expenses were $10.6 million, up from $8.7 million in 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 first quarter non-GAAP net income of $2.6 million, or $0.11 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 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 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 support 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 per 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 breakeven and net income of $0.03 per fully diluted share.

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. We will now open the call for questions. Operator, you may now open the line for questions.

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

Neil Young: Hey, everyone. Thank you for letting me ask a question. So the $40 million contract that you just announced, could you give us a shape on how you are thinking that revenue layers in, or anything you can share on the milestone payments such as 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: Hey, Neil. Thanks for the question. We really are not giving any guidance related to that particular subcontract agreement just yet. But, of course, we do expect it 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, that was negotiated with the group involved and we are very confident in our ability to deliver on the milestones.

Neil Young: Okay. And then could you maybe speak to what drove the gross margin strength in the quarter? As the STT portfolio continues to evolve, are you starting to see higher ASPs come through? And then, also, should we expect to see gross margin hold in this range or revert back to similar levels of 4Q 2025? Thank you.

Bill Cooper: Good question. A strong quarter on the margins. As we have always noted, we target 50% plus in terms of gross margin. As we see lift in the top line and volume increase, we get the benefit of higher capacity utilization. The team is always looking at ways to reduce costs and improve yields, so all those things factor in.

Operator: Thank you.

Neil Young: Thank you.

Operator: Our next question comes from the line of Richard Shannon with Craig-Hallum Capital Group. Your line is open.

Richard Shannon: Hey, Sanjeev and Bill. Thanks for letting me ask some questions. I am going to follow up on this $40 million contract. A few questions here, and one to follow up from your response, Bill, about why you do not have any revenue thoughts you can give today. Is that because you are not allowed to, or because you do not know what the shape and structure and timing looks like? And then also, I want to get a sense of what kind of margin profile we should expect over the life of the contract.

Bill Cooper: Good questions. I will elaborate a little bit further. The contract itself, the ink on that is just drying, and it is going to have a significant impact on the financials. We are looking at all of the various impacts. As we run through Q2, get the results, get the kickoff of the contract and all the various pieces, we will give you better guidance as we go into the end of Q2. In terms of margin, I would expect it to have a beneficial impact to margin as well. We do target the 50% plus gross margin, and we have to sort through all the pillars of that significant contract.

Richard Shannon: I want to ask a follow-up on this contract in context of other activities you have or may have going on in the future. You have referenced today and in the past the $14.6 million contract for, I forget the word you used, continuity plan or something. And I think there is an RFQ out there from the U.S. government about maybe establishing 300 millimeter capacity. And then you have recently announced adding more capacity at Microchip. To what degree do all of these things interrelate? Can you tie these things together, or if they are not tied together, tell us? I would love some context.

Sanjeev Aggarwal: Hi, Richard. Good question. The RFI for the 300 millimeter MRAM line is independent of the three other items you mentioned, namely the $14.6 million contract that we got in 2024, the Microchip foundry services agreement, and the new contract that we just talked about today. As far as the $14.6 million contract that we got in 2024, that is the one where we 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 is being recognized below the line. There is a lot of CapEx and supply chain robustness involved in that discussion.

The Microchip Foundry Services Agreement was between Everspin Technologies, Inc. and Microchip to increase our capacity, independent of those two contracts, given the high demand we have been seeing over the last couple of quarters. This new agreement that we just signed is where we will provide technology information, a recipe, a compendium for MIL and aerospace Toggle MRAM to this U.S. prime contractor. In addition, they would have a right to second source the Everspin Technologies, Inc. Toggle MRAM for MIL-Aero applications in case Everspin Technologies, Inc. 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 recipes associated with it in case we do exit.

Under this agreement, they get access to the Microchip fab that we are bringing up to qualify their existing products on that line. There is NRE associated with getting that activity done. Finally, there is a new product that the U.S. government is 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.

Richard Shannon: That helps a lot. I appreciate that. If you do not mind, I am going to throw one more question before jumping back into the queue, and that is about the guidance. It sounds like we should expect most of the sequential growth in dollar terms to come from products. How do we think about it between the STT that is mostly going to IBM versus other products within that? And then can you give us a sense of what kind of litigation spend you are expecting in the second quarter? Thanks.

Bill Cooper: On the first point, we are seeing very strong product sales—up 28% year-on-year. Most of the growth from Q1 to Q2 is going to be in that product category. We are seeing solid product sales across all the various categories. On your second question, we did show the $1.6 million that we had to expend in Q1 on litigation costs. Unfortunately, litigation is expensive, and we are expecting it to continue in that range for at least the next couple of quarters, but we will see how that ultimately plays out.

Richard Shannon: Okay. Appreciate that detail. I will jump off the line. Thank you.

Sanjeev Aggarwal: Okay.

Operator: Thank you. Ladies and gentlemen, I am showing no further questions in the queue. We did have a follow-up question come through. One moment. We have a follow-up question from the line of Richard Shannon with Craig-Hallum. The line is open.

Richard Shannon: I noticed you have had a couple of quarters of above-trend CapEx numbers in the fourth quarter and now the first quarter. I could expect some of that coming from your Microchip agreement, or not, I am not sure. How should we look at that going forward?

Bill Cooper: We had a unique period of capital spend related to some of the improvements in the Chandler facility, primarily across a couple of different contracts. That flurry of activity will start to settle down until we get into the heart of the foundry services agreement.

Richard Shannon: This foundry services agreement—does that refer to Microchip specifically?

Bill Cooper: That is right.

Richard Shannon: When do we start to see that pick up? Any idea how to think about that sum total over the period of time? I assume it is at least a couple of years.

Bill Cooper: There will be some significant capital spend over the next two years. It will be spread out over time—some later this year as well as early next year. In terms of overall CapEx, not so significant that we cannot manage it. It is going to be in the range of what our historical spend has been annually.

Richard Shannon: Okay. Fair enough. My last question. If I took the notes right, regarding the Unisys product line, you talked about a $3 billion TAM and expecting 5% to 10% share early on. Five percent of that is $150 million in a year. Last quarter you talked about getting to a goal of $100 million within three to five years. A 5% to 10% share “early on” seems a little longer than what would fit here. Are we thinking it will take a while to get that share, or is there upside in timing to hit that $100 million total company-level goal?

Sanjeev Aggarwal: Good clarification question, Richard. We have talked about this in the past. I do not think that Unisys is going to strongly contribute to the $100 million target that we have in the next three to five years. It takes about 18 to 24 months for qualification of these products at our customers. If we have samples in 2026 and production in, say, January 2027, then you basically have another 18 months before it ramps to production. It will contribute some, but not significantly, to that $100 million target.

Richard Shannon: So “early on” would be after that qualification period that you said takes up to two years?

Sanjeev Aggarwal: That is correct.

Richard Shannon: That makes sense. Perfect. That is all for me. Thank you.

Operator: I will now turn the call back over to Sanjeev for closing remarks.

Sanjeev Aggarwal: I just want to say thank you everyone for joining the call today. We look forward to talking to you at the end of Q2. Thanks a lot for your time. Bye now.

Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

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