NVE CORP /NEW/ (NVEC)·Q4 2025 Earnings Summary

Executive Summary

• Q4 FY2025 revenue was $7.27M, up 3% year over year and up 44% sequentially; diluted EPS was $0.80, up 2% YoY, with gross margin at 79% and operating/net margins of 58%/54% for the quarter .
• Mix and channel normalization drove better margins: management cited a “more profitable product mix” and a larger share of direct (vs. distributor) sales as drivers of gross margin increasing to 79% from 76% YoY .
• The Board declared a $1.00 quarterly cash dividend (payable May 30, 2025), and management outlined a step-up in FY2026 capex to $2–$3M to expand capacity and enable more wafer-level chip-scale offerings .
• No Wall Street consensus from S&P Global was available for EPS or revenue for Q4 FY2025; comparisons to estimates are not applicable. Values retrieved from S&P Global.
• Likely stock catalysts: sharp sequential reacceleration (44% q/q), margin quality, and capacity expansion plans; watch for sustainability of product demand and timing of capex returns .

What Went Well and What Went Wrong

What Went Well

• Sequential snapback with quality mix: revenue +44% q/q, aided by a more profitable mix and higher direct sales; gross margin rose to 79% (from 76% YoY), supporting 58% operating and 54% net margins in the quarter .
• New products and demand signals: management noted “interest in our new products” and launched advanced omnidirectional magnetic switch sensors with better data and rugged operation; trade show presence (Sensor+Test and Sensors Converge) aims to convert interest to future sales .
• Strategic resilience to tariffs: in-house spintronics fabrication, ample raw material/WIP inventories, and country-of-origin rules limit tariff exposure and may create competitive opportunities versus U.S. peers .

Quote: “We’re pleased to report year-over-year and sequential revenue and earnings growth for the quarter.” — CEO Daniel A. Baker .

What Went Wrong

• Full-year declines reflect earlier softness: FY2025 revenue fell 13% to $25.9M and product sales declined 16% despite a 112% increase in contract R&D; FY net income fell 12% to $15.1M ($3.11 diluted EPS) amid industry headwinds .
• Higher R&D spend pressured opex: quarterly opex rose 17% YoY driven by +28% R&D for new product development; management is leaning into R&D to drive future growth .
• Prior-quarter weakness underscores volatility: Q3 FY2025 revenue declined 25% YoY to $5.06M and EPS fell to $0.63 as product sales were down 22% and contract R&D -74% YoY .

Financial Results

Headline P&L vs prior year and prior quarter

Notes: Management highlighted Q4 gross margin of 79% (up from 76% YoY), operating margin 58%, pretax margin 65%, and net margin 54% .

Revenue mix (segment detail)

Operating expenses

Estimates vs Actuals (S&P Global)

• S&P Global consensus for Q4 FY2025 EPS and revenue was not available; comparisons to estimates are not applicable. Values retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic positioning on tariffs and supply chain: “We’re uniquely well situated with respect to tariffs… ample raw material and work-in-process inventories… the great majority of our exports… are exempt from retaliatory tariffs.” — CEO Daniel A. Baker .
• Capacity expansion underway: “We completed our planned expansion… deployed [new] machines… a several million dollar machine is scheduled to arrive next quarter.” .
• Product leadership: “We launched the world’s most advanced magnetic switch sensors… more reliable data, more information and rugged operation.” .
• Margin commentary: “Gross margin increased to 79% from 76% due to a more profitable product mix and a larger portion of direct rather than distributor sales.” — Daniel Nelson, PFO .
• Dividend continuity: $1.00 per share quarterly dividend declared for payment May 30, 2025 .

Q&A Highlights

• Channel normalization vs. new business: “It was a combination of both… customers are replenishing… and we’ve seen new business and significant interest in our new products.” .
• New products/TAM expansion: Focused on medical devices and industrial control/IIoT; omnidirectional magnetic sensors enable flexibility in advanced robotics/mechatronics; strategy is to lead on size, sensitivity, power efficiency .
• Isolator performance: Interfaces for wide band-gap FETs with “highest isolation voltage in the industry up to 7 kilovolts” and best-in-industry CMTI, enabling faster high-voltage switching .
• Capex returns: Confidence based on prototype/sample feedback; expected to “open significant new markets,” with equipment cluster delivery in the September quarter .

Estimates Context

• S&P Global consensus for Q4 FY2025 EPS and revenue was not available; therefore, no beat/miss determination versus Street. Values retrieved from S&P Global.
• Implication: With no formal consensus and sparse coverage, revisions risk is limited; investor focus should center on sequential recovery, mix, and capex-led capacity expansion .

Key Takeaways for Investors

• Sequential inflection with quality mix: +44% q/q revenue and higher direct mix expanded margins (GM 79%, OM 58%, NM 54%), supporting earnings leverage even at modest revenue levels .
• Product cycle momentum: Multiple sensor launches and strong isolator specs (up to 7 kV isolation, industry-best CMTI) reinforce differentiation in medical/industrial end-markets .
• Capacity as growth enabler: $2–$3M FY2026 capex (equipment arriving next quarter) should expand capability and support wafer-level chip-scale offerings .
• Dividend durability: $1.00 quarterly dividend maintained; cash/marketable securities and high margins support ongoing returns of capital .
• Risk checks: Earlier-year softness (FY revenue -13%, product sales -16%) underscores demand volatility; R&D and SG&A investments elevate opex near term as the company pursues growth .
• Tariff insulation: Fabrication model, origin rules, and inventory strategy mitigate tariff risks and could offer competitive advantages versus U.S. peers with higher exposure .
• Watch next quarter: Conversion of pipeline/trade show interest to orders, progress on equipment installation/yields, and sustainability of channel replenishment are the near-term drivers .