NVE NASDAQ: NVEC reported higher fourth-quarter profit as a rebound in non-defense product sales more than offset a sharp decline in defense revenue, while the company also marked the completion of a major manufacturing expansion.
Quarterly results driven by non-defense product sales growth
For the quarter ended March 31, 2026, Principal Financial Officer Daniel Nelson said total revenue increased 5% year-over-year to $7.65 million. Nelson attributed the increase to a 6% rise in product sales, partially offset by a 19% decline in contract R&D revenue.
Nelson said product sales growth reflected a 34% increase in non-defense product sales, which “partially offset” a 79% year-over-year decrease in defense sales. He noted that defense results can be volatile due to procurement cycles. Total revenue also rose 23% sequentially from the prior quarter.
President and CEO Dan Baker said net income rose 27% for the quarter, “driven by a 34% increase in our core non-defense sales, which more than offset a decrease in defense sales.”
Nelson reported quarterly gross margin of 78% of revenue, compared with 79% in the year-ago quarter. Operating expenses fell 19% year-over-year, which he said was due to a 26% decrease in R&D expense and a 5% decrease in SG&A.
He said R&D spending declined following the completion of certain wafer-level chip-scale packaging activities and the reassignment of some R&D resources to manufacturing. SG&A decreased “primarily due to the timing of selling and marketing activities” and the reassignment of some SG&A resources to manufacturing and new product development.
Nelson also cited tax benefits during the quarter. The company’s effective tax rate fell to 5% from 18% a year earlier, “primarily due to Advanced Manufacturing Investment Tax Credit on equipment we put into service in the past quarter.”
Net income increased to $4.9 million, or $1.02 per diluted share, from $3.89 million, or $0.80 per diluted share. Nelson said the quarter represented the company’s highest earnings since the chip and semiconductor shortages three years ago, adding that earnings “more than cover our $1 per share dividend for the past quarter.”
Nelson highlighted profitability metrics for the quarter, including operating margin of 62%, pre-tax margin of 68%, and net margin of 64%.
Full-year revenue increased modestly as late-year strength offset earlier softness
For fiscal 2026, Nelson said total revenue increased 2% to $26.3 million from $25.9 million, as gains in the final two quarters “more than offset” declines in the first half of the year.
On product sales, Nelson said the full-year increase was driven by a 21% rise in non-defense product sales, partially offset by a 67% decrease in defense sales. During the Q&A session, Nelson reiterated to an analyst that the decrease in defense sales was 67% and the increase in product sales was 21%.
The company’s full-year tax rate declined to 15% from 16% in fiscal 2025. Nelson said the decrease was mainly due to higher Advanced Manufacturing Investment Tax Credits, partially offset by reduced foreign-derived intangible income deductions. He said fiscal 2026 income tax provision included $1.07 million in Advanced Manufacturing Investment Tax Credits.
Nelson said the company expects those credits “to decrease significantly in fiscal 2027,” because manufacturing equipment purchases are expected to drop with the completion of the expansion. He also noted that a write-off of prior-year unamortized R&D expenses under new tax law reduced fiscal 2026 quarterly estimated tax payments by $1.4 million. Additionally, Nelson said the company expects a $1.3 million federal tax refund related to research and development and Advanced Manufacturing Investment Tax Credits claimed in the fourth quarter.
For the year, net income rose to $3.14 per diluted share from $3.11 per diluted share. Nelson attributed the increase to higher revenue, lower operating expenses, and a lower effective tax rate, partially offset by decreased gross margin and lower other income. Full-year operating margin was 60%, pre-tax margin was 68%, and net margin was 58%.
Cash flow and expansion spending
Nelson said cash flow from operations was $16.7 million for the year, up 16% from the prior year. He characterized cash flow as $1.5 million higher than net income, which he said showed the “high quality of our earnings.”
Inventories decreased 5% due to increased product sales. Nelson said raw materials and work-in-process inventory declined, while finished goods inventory increased. He said new equipment helped the company convert materials more efficiently and supported a higher finished goods position “to support increased product demand.”
Fixed asset purchases totaled $2.19 million for fiscal 2026, which Nelson described as “unusually large” for NVE, as the company substantially completed spending on a “two year multimillion-dollar expansion.” He said the last major equipment cluster was placed into service in the fourth quarter as planned, and he expects fixed asset purchases to decline significantly in fiscal 2027.
Vice President of Advanced Technology Pete Eames said the expansion was completed in the quarter. He said the new equipment increased capacity and capabilities and enabled NVE to produce “smaller and more precise wafer-level chip-scale package parts in-house.” Eames said the equipment allows “extremely precise control of spintronic materials deposition to well within one atomic layer,” translating into more precise devices and expanded capacity for existing products.
Eames added that the equipment is “building products,” and he expressed confidence it would pay back with higher revenue. He said the new equipment helped the company fill orders for new high-performance TMR sensors during the quarter.
New products, R&D focus, and go-to-market activity
Eames said NVE’s R&D strategy is focused on transitioning its technology into products for “high-value markets such as medical devices, electric and autonomous vehicles, advanced humanoid robotics, and highly automated fourth wave factories using the artificial intelligence of things.” He said NVE has a “continuous flow of new products,” and cited a newly announced wafer-level chip-scale sensor for medical and industrial applications.
According to Eames, the new part measures 0.65 mm on a side and is about one-third the area of the conventionally packaged version, which he said enables smaller medical devices and “especially precise robotics.” He also said the company invested during fiscal 2026 in advanced R&D initiatives including next-generation MRAM for anti-tamper applications, next-generation sensors for hearing aids and medical devices, and “extremely sensitive TMR sensors.”
On the commercial side, Baker said NVE named Semitech Incorporated as a new distributor for its isolator products, describing Semitech as specializing in electronics contract manufacturers. Baker said this market is “a good market for us.”
NVE also increased its trade show presence. Baker said the company exhibited for the first time at Medical Design and Manufacturing West in Anaheim, calling medical devices an important market and pointing to advantages such as small size, low power, and reliability. He said the company highlighted wafer-level chip-scale parts for implantable device and surgical robot miniaturization, MRI-safe and MRI-tolerant sensors, high-sensitivity sensors for navigation, and isolators designed to ensure medical instrument safety. Baker said the show generated “some good leads,” and that the company believes its investments in shows will pay off in future sales.
The company is also attending Sensors Converge in Silicon Valley with a focus on robotics and AIoT and plans to exhibit at SENSOR+TEST in Germany, where Baker said NVE will highlight robotics, AIoT, and power conversion products for cars and charging stations.
Defense outlook and customer support messaging
Nelson said the defense business has been “steadily recovering over the past year,” and he said the company “currently expect[s] defense sales to increase significantly” in fiscal 2027. He also said contract R&D revenue, which is “primarily defense and government related,” is expected to increase in fiscal 2027, though he noted those revenues can be uneven.
During the Q&A session, Eames discussed NVE’s power conversion products in the context of data center efficiency, saying NVE’s products typically operate at higher frequency than competitors, which can improve efficiency. “Overall efficiency is very important, but it tends to be a small percentage, maybe a few percent,” Eames said, adding that small improvements can still matter given data centers’ power use.
Baker also addressed marketing materials about discontinued parts from larger semiconductor manufacturers. He said NVE is “committed to long-term support of our customers and our products,” and that when conventional manufacturers discontinue parts, NVE can often offer alternatives with “better stability and better supply.”
Asked whether increased capacity could translate directly into doubled revenue, Baker reiterated that NVE does not provide specific guidance but said the company is optimistic, citing improved global semiconductor market conditions, ample inventories, new products, and additional capacity.
Baker said the company expects to provide its next update in July for the first quarter fiscal 2027 earnings call.
About NVE NASDAQ: NVEC
NVE Corporation NASDAQ: NVEC is a technology company specializing in the development, manufacturing, and marketing of spintronic products. The company's core expertise lies in magnetoresistive sensing and magnetic-field-based digital isolation, leveraging patented spin-valve and tunneling magnetoresistance technologies to deliver high-performance, low-power solutions.
NVE's product portfolio includes magnetic sensors for current, position, and angle sensing applications, as well as micro-isolators and digital isolators that provide galvanic isolation in industrial, automotive, medical, instrumentation, and consumer electronics systems.
See Also
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider NVE, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and NVE wasn't on the list.
While NVE currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
SpaceX has quietly filed to go public later this year. Ahead of what's expected to be the largest IPO of all time, there are seven space stocks that you can buy today that are positioned to benefit from accelerating space commercialization in 2026.
These seven companies are shaping the next phase of the space economy—from launch leaders and satellite networks to data, defense, and in-space infrastructure.
Get This Free Report
