Everspin Technologies, Inc 2026 Q2 Earnings Call

Thank you, operator, and good afternoon, everyone. Everspin released results for the second quarter 2026, ended June 30th, 2026 this afternoon after market close. I'm Monica Gould, Investor Relations for Everspin, and with me on today's call are Sanjeev Aggarwal, President and Chief Executive Officer, and William 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's future business, financial performance and goals, customer and industry adoption of MRAM technology, successfully bringing to market and manufacturing products in Everspin'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. All forward-looking statements are made as of the date of this call, except as required by law, the company undertakes no obligation to update or alter any forward-looking statements 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 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's website at www.everspin.com. Now, I would like to turn the call over to Everspin's President and CEO, Sanjeev Aggarwal.

Sanjeev, please go ahead. Thank you, Monica, and thanks, everyone, for joining us on the call today.

We are pleased to report second quarter revenue of $18.7 million and non-GAAP EPS of $0.11. These results reflect the highest revenue quarter in Everspin's history, which exceeded our guidance range on both the top and bottom line, driven by strong product revenue growth and the $40 million agreement we announced with a U.S. prime contractor on our last earnings call. During the quarter, we began to recognize non-product revenue under the two-and-a-half year agreement. As a reminder, Everspin is a subcontractor on an existing prime contract and is providing engineering services to develop and qualify Toggle MRAM process technology capabilities for U.S. defense industrial-based customers. In addition to this new contract, we also recorded strong product revenue growth, which rose 38% year-over-year and was up 9% sequentially.

This growth was driven by strength in industrial automation, energy management, and aerospace and defense applications. Growth in industrial and energy management was driven by a continued recovery in customer demand, particularly in Japan and Europe, respectively. In aerospace and defense, we saw continued broad-based growth across our customer base, including several low Earth orbit customers who are expanding the mission profiles where Everspin MRAM delivers long-term reliability for mission-critical applications. Recently, Astro Digital selected Everspin's PERSYST 64-megabit STT-MRAM for use on an upcoming Raven bus geosynchronous Earth orbit, or GEO, satellite mission. Our MRAM is deployed as a primary fail-safe memory for the system boot memory, which stores the essential code needed in case of power loss and fast access to initialize spacecraft electronics during startup or recovery.

As we noted last quarter, our $14.6 million contract with the DoD contractor to develop a sustainment plan for our MRAM manufacturing facility to provide continuous onshore MRAM capabilities to their aerospace and defense customers is beginning to wind down. In the second quarter, we recognized $0.5 million in other income related to this contract and $13.3 million to date. We expect this business to continue to wind down over the coming quarters with estimated completion in the first half of 2027. Turning to some of our product development efforts. Our first xSPI family of MRAM products, the 256 megabit X-Fi, is on schedule to tape out later this year. As a reminder, this is a test chip designed on 16 nanometer FinFET CMOS at TSMC. Engineering samples are expected to be available in early 2027, with ramp to production later in the year.

The xSPI family of products will serve the high-density standalone NOR flash market, which will expand our addressable market by approximately $3 billion. Our goal is to capture 5%-10% of this market in the early years and then grow further. We are pleased to announce that our high-density 128 megabit and 256 megabit X-Fi high-reliability parts were made available to our customers ahead of schedule. During the second quarter, we released 128 megabit high-reliability parts to production. Subsequent to the quarter end, we released all SKUs of X-Fi 256 megabit density to production, including high-reliability parts. Customers now have these parts on hand to evaluate them in their designs. We kicked off our project with Microchip in April to build MRAM capabilities in their Gresham, Oregon fab. This project comprises 2 phases, with phase 1 focused on Toggle MRAM and phase 2 on STT-MRAM.

We are finalizing the installation of unique MRAM equipment and completing process gap analysis, if any, for the non-MRAM equipment. This project is on schedule with a goal to deliver the first qualified silicon in 18-24 months from project kickoff. We continue to see strong growth across our existing business while executing on our product pipeline and developing solutions that will further expand our addressable market and drive long-term growth. One of these future opportunities is focused on expanding our TAM in the data center market. We are planning to introduce some new products over the next three years based on the Compute Express Link, or CXL, interface. To provide a little background, in the memory hierarchy, there is 100X-1000X latency gap between storage, with a latency of approximately 100 microseconds, and main memory, with a latency of approximately 100 nanoseconds.

CXL-attached random access memory can provide approximately 100X lower latency when compared to SSD solutions available today. We continue to advance our development work on CXL interface-based MRAM solutions, which will address the demand for nanosecond-class persistent memory solutions, bringing storage closer to XPU, enhancing compute and power efficiency, resulting in significant overall cost savings. We are targeting to improve XPU utilization from 60%-70% currently to as much as 90%-95%, especially from small writes, for example, meta or log data. We are currently working on developing proof of concept demo vehicles to validate the expected gains. Subsequent to quarter end, we signed a contract with a high-performance data interface and controller company to develop and provide CXL controller IP for MRAM.

We are collaborating on an AMD UltraScale+ FPGA-based platform using the CXL controller IP under development to connect to Everspin MRAM DIMMs dual inline memory modules. We plan to demonstrate this solution at the SNIA Developers Conference, or SDC, in September. We also recently announced that we signed a memorandum of understanding with MaxLinear to evaluate the use of Everspin CXL-attached MRAM with MaxLinear storage accelerators for next-generation storage and acceleration architectures. Together, we will assess opportunities to apply persistent, byte-accessible, low-latency MRAM to storage functions such as metadata, log data, write buffers, and caches with the goal of improving system performance, reliability, power efficiency, and data persistence in next-generation storage architectures. By combining Everspin's industry-leading MRAM with MaxLinear's storage accelerators, we believe we can enable new persistent memory solutions for hyperscale cloud, AI infrastructure, and enterprise Tier 1 customers.

I will now turn it over to our CFO, Bill Cooper, who will walk you through our second quarter financials and third quarter 2026 guidance.

Bill? Thank you, Sanjeev. During the second quarter, we delivered record revenue of $18.7 million, up 42% year-on-year, exceeding our guidance range of $15.5 million-$16.5 million, driven by both strong product and non-product revenue growth.