Everspin Technologies Balances MRAM Growth and Costs

Everspin Technologies Inc ((MRAM)) has held its Q1 earnings call. Read on for the main highlights of the call.

Everspin Technologies’ latest earnings call struck a cautiously optimistic tone, as management balanced robust product-driven growth and healthy margins against mounting litigation costs and uneven cash flow. Investors heard a story of strengthening core MRAM demand and strategic wins, tempered by near-term profitability pressure and uncertainty around the pacing of new defense-related revenue.

Revenue Growth Near Top of Guidance

Everspin reported first-quarter revenue of $14.9 million, landing toward the high end of its guidance range and rising 14% from a year earlier. Management framed this as evidence of solid demand recovery across key end markets, particularly in industrial and transportation applications.

MRAM Product Sales Power Top Line

MRAM product revenue reached $14.1 million, up 28% year over year and 5% sequentially, making it the primary engine of growth. Both Toggle and STT-MRAM contributed, underscoring increasing adoption of the company’s persistent memory solutions in critical applications.

Non-GAAP Profitability Strengthens Sharply

Non-GAAP net income climbed to $2.6 million, or $0.11 per diluted share, compared with $0.4 million and $0.02 a year ago. This roughly 450% jump placed results at the high end of guidance and highlighted the earnings leverage from higher volumes and disciplined cost control outside of litigation.

Gross Margins Stay Above 50% Target

GAAP gross margin improved to 52.7%, up from 51.4% in the prior year, keeping the company above its 50% long-term goal. Management credited better capacity utilization and manufacturing yields, reinforcing confidence that the business can sustain premium economics even as volumes scale.

Strategic Contracts and Foundry Deal Add Scale

The company announced a new 2.5-year, $40 million subcontract with a U.S. prime contractor, expanding its defense-related revenue pipeline. It also signed a 10-year foundry services agreement with Microchip to create an onshore MRAM line, while noting that $12.8 million has already been recognized from a separate $14.6 million defense contract.

UNISYST Roadmap Expands Addressable Market

Everspin introduced its UNISYST MRAM family aimed at the high-density NOR Flash segment, which could expand its addressable market by about $3 billion. Management targets capturing 5% to 10% of this space over time, with high-reliability 128Mb and 256Mb parts planned for the second half of 2026 and engineering samples in late 2026.

Balance Sheet Remains Debt-Free and Liquid

The company ended the quarter with $40.5 million in cash and cash equivalents and no debt, positioning it to fund its foundry commitments and product roadmap. Management emphasized that current liquidity should comfortably support both the Microchip collaboration and ongoing development initiatives.

End-Market Diversification Gains Traction

Demand was broad-based, with industrial automation benefiting from inventory normalization, including in Japan, and transportation supported by rail axle-counter design wins. The data center market also remains an opportunity, with ongoing work around IBM’s FCM4 and FCM5 and RAID reference designs engaging top hyperscale customers.

Licensing Revenue Declines Sharply

Licensing, royalty, patent and other revenue fell to $0.8 million from $2.1 million a year ago, a roughly 62% drop. Management attributed the decline to fewer active licensing projects, underscoring a shift toward a more product-centric revenue mix.

Operating Expenses Move Higher

GAAP operating expenses climbed to $10.6 million from $8.7 million, an increase of about 22%. The rise was driven by litigation-related costs, higher compensation, and professional fees, contributing to pressure on GAAP profitability despite stronger operations.

Litigation Costs Weigh on Earnings

The company booked approximately $1.6 million in litigation expenses during the quarter and expects spending to remain at similar levels for at least the next few quarters. While management continues to exclude these costs from non-GAAP results, they represent a meaningful drag on reported earnings and cash flow.

Cash Flow Softens as Cash Balance Eases

Cash and equivalents declined to $40.5 million from $44.5 million, a drop of about 9% quarter over quarter. Operating cash flow weakened sharply to $0.5 million from $2.6 million, largely due to litigation spending and higher working capital needs tied to growth and strategic projects.

New Subcontract Brings Timing Uncertainty

While the new $40 million subcontract is expected to be materially positive over its 2.5-year life, management declined to provide near-term revenue or milestone details. That lack of phasing guidance introduces some short-term uncertainty around quarterly revenue and margin patterns, even as the overall contract strengthens long-term visibility.

CapEx Elevated for Capacity Expansion

The company signaled above-trend capital expenditures over the next two years to support improvements at its Chandler facility and the upcoming Microchip foundry ramp. These investments are necessary to support growth but will likely pressure near-term cash deployment and free cash flow metrics.

Near-Term Profitability Volatility in Q2

For the second quarter, Everspin guided to total revenue of $15.5 million to $16.5 million, excluding any impact from the new subcontract. GAAP results are expected to show a net loss of $0.12 to $0.07 per share, while non-GAAP net income is projected between breakeven and $0.03, highlighting ongoing volatility in reported earnings.

Longer-Term Contributions from UNISYST and Foundry

Management reiterated that UNISYST is unlikely to deliver significant revenue within its three-to-five-year $100 million corporate target window, given customer qualification cycles of 18 to 24 months after production readiness. Similarly, first products from the Microchip onshore MRAM line are not expected until the second half of 2027, pointing to a multi-year horizon before these initiatives fully impact the income statement.

Everspin’s quarter showcased a company gaining momentum in its core MRAM business while laying foundations for sizable long-term opportunities in defense, high-density memory, and onshore manufacturing. Investors will need to navigate near-term noise from litigation, CapEx, and revenue timing, but the underlying trajectory of product growth and margin resilience remains a central positive takeaway.