Everspin Technologies, Inc 2026 Q3 Earnings Call

Thank you, operator, and good afternoon, everyone. Everspin released results for the third quarter 2026, ended September 30, 2026 this afternoon after market close. I am Monica Gould, investor relations for Everspin, and with me on today's call are 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'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, 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 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 adjustment, and other developments arising between now and the time that the financial results for this 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, 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'd 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 third quarter revenue of $20.6 million and non-GAAP EPS of $0.12. These results reflect another record revenue quarter, the highest in Everspin's history, and at the high end of our guidance range, driven by strong product and non-product revenue growth. We recorded strong product revenue growth, which rose 34% year-over-year and was up 11% sequentially. This growth was driven by strength in industrial automation, data center, medical, and energy management applications. Growth in industrial automation was led by a continued recovery in customer demand, particularly in Japan. In the data center market, we saw strong demand for RAID storage configurations, while energy management benefited from the transition of new design wins to shipments in Europe.

We have not discussed MRAM's role in medical applications in much detail before, so I would like to offer some additional perspective. Everspin MRAM is increasingly used in medical applications that demand high reliability, data retention during power loss, and endurance under continuous operation. MRAM's non-volatility, high speed, and inherent endurance make it ideal for use in life-critical systems where memory failure is unacceptable. Medical devices most commonly using Everspin MRAM include both patient-critical equipment and diagnostic instruments. For example, in dialysis machines, MRAM records operational and sensor data such as pressure, flow rate, and alarms. In infusion pumps and portable diagnostic services devices, MRAM stores calibration data, dosing logs, and firmware states. In defibrillators and patient monitors, MRAM retains event histories, shock delivery data, and configuration settings. We continue to make steady progress on our project with Microchip to build MRAM capabilities in the Gresham, Oregon fab.

Process development and transfer activities are ongoing, including the tape-out of masks for products. We remain on schedule with our goal of delivering first qualified silicon for our Toggle and sensor products by the second half of 2027 and STT products by the first half of 2028. Turning to some of our recent development efforts, we remain on track to have a 256 megabit xSPI prototype based on TSMC's 16 nanometer FinFET process technology in the first half of 2027. This prototype will verify our design and put us on the path to designing high-density UNISYST, unified code, and data memory products later in the year and beyond. 256 megabit xSPI will be the first product in our UNISYST family, which will then be expanded to include one gigabit, two gigabit, and eight gigabit densities.

These products will be deployed in low Earth orbit satellites for secure boot memory, FPGA for configuration memory, and flight control systems for fast data logging and security, for example. Our momentum with customers designing our PERSYST Toggle and STT-MRAM into space-based missions continues with both new design wins and existing design wins, continuing their progress into production. To further accelerate the adoption of Everspin's MRAM in the aerospace and defense segment, we recently signed a strategic partnership with Teledyne's HiRel Semiconductors business unit. Through the partnership, Teledyne HiRel will offer our 64 megabit, 128 megabit, and 256 megabit PERSYST STT-MRAM solutions as part of its memory products portfolio for military and aerospace customers with target applications such as avionics, VPX, and single-board computer platforms, radar and electronic warfare payloads, satellite electronics, and autonomous systems.

Last quarter, we discussed our strategy to expand our addressable market in the data center segment by developing products based on the Compute Express Link, or CXL, interface over the next few years. To further our efforts on this front, Everspin successfully demonstrated the world's first CXL connected MRAM at the Storage Networking Industry Association developer conference in September. CXL MRAM combines standard high-speed connectivity with MRAM's persistence. This solution creates a fast, persistent buffer, so data remains available through a power interruption or system restart without relying on battery-backed DRAM or having to first flush data to an SSD. Further, a CXL MRAM solution enables nanosecond class cache and writes up to 100x faster than NAND-based solid-state storage. A key use for this application is to hold data generated during AI processing before transferring it to long-term storage.

Other potential use cases include financial and algorithmic trading systems and in-memory databases, such as online transaction processing or OLTP, and online analytical processing or OLTP. Each of these use cases will benefit from CXL MRAM's strong value proposition in small block or low latency write. We continue to explore ways to expand Everspin's market opportunity. To this end, Everspin led the effort to form a LPDDR persistent memory task group at JEDEC, the standards-setting organization for the semiconductor industry, during their August committee meeting, and our VP of corporate strategy, Steffen Hellmold, is serving as the task group chair. This effort responds to strong industry demand for persistent memory solutions that can leverage the existing LPDDR ecosystem, thus creating a simpler path for system-level integration and ultimately easing the adoption of MRAM.

The work is intended to enable controller support for both DRAM and persistent memory, as well as approaches that enable LPDDR, DRAM, and persistent memory from multiple vendors to operate within compatible system architectures. Potential customers range from edge, IoT wearable, mobile, enterprise to data center, and hyperscale CSP markets. In closing, we remain focused on executing against our priorities, advancing our technology roadmap, and delivering value for our customers and shareholders. We believe our technology, customer relationships, and disciplined approach to execution position us well to capitalize on the opportunities ahead. I want to thank our customers for their continued trust and our employees for their commitment and hard work. I will now turn it over to our CFO, Bill Cooper, who will walk you through our third quarter financials and fourth quarter 2026 guidance.

Bill? Thank you, Sanjeev. During the third quarter, we delivered record revenue of $20.6 million, up 47% year-on-year, slightly exceeding our guidance range of $19.5 million-$20.5 million, driven primarily by strong product revenue growth.

MRAM product sales, which include both Toggle and STT-MRAM revenue, were $16.9 million, an increase of 34% over the third quarter of the prior year and up 11% sequentially. Licensing, royalty, engineering services, and other revenue increased to $3.7 million from $1.4 million in Q3 2025, primarily due to continued revenue recognition on our $40 million subcontract agreement with a U.S. prime contractor. Our GAAP gross margins of 51.4% were consistent when compared to 51.3% in the third quarter of 2025. A more favorable mix of high-margin non-product revenue was offset by higher manufacturing and production costs, which impacted product gross margins in the current quarter.