Overview of NVE Corporation’s Financial Performance

NVE Corporation is a technology company that develops and sells devices using spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store, and transmit information. The company’s key financial highlights for the quarter and nine months ended December 31, 2024, are as follows:

Quarter Ended December 31, 2024 vs 2023

• Total revenue decreased 25.1% due to a 22.1% decrease in product sales and a 73.7% decrease in contract research and development revenue.
• Gross profit margin increased from 79.9% to 84.2% due to a more profitable product mix and a larger portion of direct rather than distributor sales.
• Total expenses increased 40.2% due to a 60.8% increase in research and development and an 11.7% increase in selling, general, and administrative expenses.
• Net income decreased 27.1% primarily due to the decrease in revenue, increase in expenses, and decrease in interest income, partially offset by the increase in gross profit margin and other income.

Nine Months Ended December 31, 2024 vs 2023

• Total revenue decreased 18.1% due to a 20.3% decrease in product sales, partially offset by a 71.9% increase in contract research and development revenue.
• Gross profit margin increased from 77.8% to 85.4% due to a more profitable product mix and a larger portion of direct rather than distributor sales.
• Total expenses increased 28.2% due to a 35.2% increase in research and development and a 18.9% increase in selling, general, and administrative expenses.
• Net income decreased 16.1% primarily due to the decrease in revenue, increase in expenses, and decrease in interest income, partially offset by the increase in gross profit margin and other income.

Liquidity and Capital Resources

• Cash and cash equivalents decreased $4.8 million during the first nine months of fiscal 2025 due to $2.2 million used in investing activities and $14.4 million used in financing activities, partially offset by $11.8 million provided by operating activities.
• The company plans to significantly increase fixed asset purchases in fiscal 2025 and 2026 to support increases in production capacity and new product development.
• NVE paid $14.5 million in cash dividends to shareholders during the first nine months of fiscal 2025 and announced an additional $4.8 million dividend to be paid in February 2025.

Outlook NVE’s financial performance in the quarter and nine-month period was impacted by decreased revenue, primarily due to lower product sales, and increased operating expenses, particularly in research and development. However, the company was able to improve its gross profit margin through a more favorable product mix and sales channel.

Looking ahead, NVE plans to invest significantly in fixed assets to expand production capacity and support new product development. The company will also continue to return capital to shareholders through quarterly dividends, though the sustainability of these dividends will depend on future operating results and cash flow.

Overall, NVE faces some near-term headwinds but appears to be taking steps to position itself for long-term growth, including through investments in its technology and manufacturing capabilities. The company’s ability to manage costs, develop innovative products, and maintain strong customer relationships will be key to its future success.