NVE (NVEC) Q3 2026 earnings summary

Executive summary

• Revenue for the third quarter of fiscal 2026 increased 23% year-over-year to $6.22 million, driven by a 16% rise in product sales and a 335% surge in contract R&D revenue across defense and non-defense sectors.

• Net income for the quarter rose 11% year-over-year to $3.38 million ($0.70 per diluted share), while nine-month net income declined 8% to $10.3 million ($2.12 per diluted share) on revenue of $18.7 million.

• Growth was supported by broad-based gains across product lines, channels, and a significant increase in contract R&D revenue.

• The company extended a key supplier agreement with Abbott Laboratories through December 31, 2027, including price increases for 2026 and 2027.

• New equipment installation was completed, enhancing capacity and precision for advanced spintronic devices, with deployment expected by March 31st.

Financial highlights

• Quarterly gross margin declined to 79% from 84% year-over-year due to a less profitable product mix and higher distributor sales.

• Operating expenses fell 12%, with R&D down 9% and SG&A down 19%, attributed to project completions and resource reallocation.

• Operating income for the quarter was $3.74 million, up from $2.96 million a year ago.

• Cash and cash equivalents at quarter-end were $3.41 million, down from $8.04 million at March 31, 2025.

• Cash flow from operations was $12.2 million for the first nine months; inventories and accounts receivable both decreased.

Outlook and guidance

• Full-year effective tax rate expected at 16%-17%, aided by advanced manufacturing investment tax credits.

• Anticipates accelerated deductions of previously unamortized R&D expenses to reduce cash taxes by approximately $1.1 million for fiscal 2026.

• Optimism for a return to more normal flow in defense business and continued growth in non-defense and medical markets.

• Dividends to be funded through operating cash flow and maturing securities; future dividends subject to board approval and business conditions.

• Management expressed optimism about continued broad-based growth across revenue lines.