MRAM — Everspin Technologies, Inc.

Everspin Technologies (MRAM) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $14.9 million, up 14% year-over-year, at the high end of guidance ($14 million to $15 million).
• Non-GAAP EPS: $0.11 per diluted share, compared to $0.02 in Q1 2025.
• MRAM Product Sales: $14.1 million, a 28% increase year-over-year and 5% sequential growth.
• Licensing and Other Revenue: Decreased to $0.8 million from $2.1 million in Q1 2025.
• GAAP Gross Margin: Increased to 52.7% from 51.4% year-over-year.
• GAAP Operating Expenses: Rose to $10.6 million from $8.7 million, driven by litigation and compensation costs.
• Cash Position: $40.5 million, down from $44.5 million in the previous quarter.

2. Strategic Updates and Business Highlights:

• New Contract: Announced a $40 million, 2.5-year agreement with a U.S. prime contractor to provide Toggle MRAM technology and engineering services for defense applications.
• Product Development: Launched the UNISYST MRAM family, targeting a $3 billion market with plans to capture 5-10% in early years.
• Foundry Services Agreement: Expanded onshore production capacity with Microchip, establishing a new MRAM line in Oregon, expected to start shipping in H2 2027.
• Customer Engagement: Strong demand in Industrial Automation, Transportation, and Data Center sectors, with notable design wins in rail applications and partnerships with IBM.

3. Forward Guidance and Outlook:

• Q2 2026 Revenue Guidance: Expected to be between $15.5 million and $16.5 million.
• GAAP EPS Guidance: Projected net loss of $0.12 to $0.07 per share; non-GAAP results anticipated to be breakeven to $0.03 per share.
• Long-term Goals: Aiming for a $100 million revenue target within 3-5 years, although contributions from the UNISYST line may take longer due to qualification timelines.

4. Bad News, Challenges, or Points of Concern:

• Declining Licensing Revenue: Significant drop in licensing and other revenue, indicating fewer active projects.
• Litigation Costs: Ongoing litigation expenses are expected to persist, impacting profitability.
• Cash Flow: Decrease in cash flow from operations, down to $0.5 million from $2.6 million in the previous quarter, raising concerns about cash management amid litigation costs.
• Market Risks: Uncertainties surrounding the timing and revenue recognition from the new $40 million contract and potential competitive pressures in the MRAM space.

5. Notable Q&A Insights:

• Contract Revenue Structure: Management refrained from providing specific revenue guidance for the new contract, indicating confidence in meeting milestones but needing more clarity post-Q2 results.
• Gross Margin Drivers: Increased capacity utilization and cost management contributed to improved gross margins; management targets maintaining margins above 50%.
• CapEx Trends: Elevated capital expenditures in recent quarters are expected to stabilize, with significant spending anticipated over the next two years related to the Foundry Services Agreement with Microchip.
• UNISYST Product Timeline: Qualification for the UNISYST line will take 18-24 months, suggesting limited immediate revenue impact, which may delay achieving long-term revenue targets.

Overall, Everspin Technologies reported solid financial results for Q1 2026, driven by strong product sales and strategic agreements, but faces challenges from declining licensing revenue and ongoing litigation costs. The company remains optimistic about future growth and product development while managing operational risks.