Everspin Technologies Reports Strong Q3 Growth Amid Challenges

Everspin Technologies Inc ((MRAM)) has held its Q3 earnings call. Read on for the main highlights of the call.

Everspin Technologies’ recent earnings call reflected a positive sentiment, highlighting strong revenue growth and improvements in gross margin. The company emphasized its strategic collaborations and robust balance sheet, although it acknowledged challenges such as decreased licensing revenue and variability in Department of Defense (DoD) contract services impacting non-GAAP net income.

Strong Revenue Growth

Everspin Technologies reported impressive revenue growth for the third quarter, reaching $14.1 million, a 16% increase year-over-year. This growth was primarily driven by higher product sales, showcasing the company’s ability to expand its market presence and capitalize on demand.

MRAM Product Sales Increase

The company’s MRAM product sales saw a significant boost, with third-quarter sales totaling $12.7 million, marking a 22% rise compared to the same period last year. This increase underscores Everspin’s success in advancing its MRAM technology and meeting customer needs.

Improved Gross Margin

Everspin achieved a notable improvement in its GAAP gross margin, which rose to 51.3% in the third quarter, up over 200 basis points from the previous year’s 49.2%. This enhancement was attributed to better yields on STT products, reflecting operational efficiencies.

Strategic Collaborations

A key highlight of the earnings call was Everspin’s strategic collaboration with Quintauris. This partnership aims to enhance RISC-V-based platforms for automotive, industrial, and edge applications, positioning Everspin for future growth in these sectors.

Strong Balance Sheet

Everspin continues to maintain a strong financial position, ending the quarter with $45.3 million in cash and cash equivalents, an increase of $0.3 million from the previous quarter. The company remains debt-free, providing a solid foundation for future investments and growth opportunities.

Decrease in Licensing and Other Revenue

The earnings call highlighted a decrease in licensing, royalty, patent, and other revenue, which fell to $1.4 million from $1.7 million in the third quarter of the previous year. This decline poses a challenge for the company as it navigates the variability in these revenue streams.

Lower Non-GAAP Net Income

Everspin reported a decrease in non-GAAP net income, which was $1.5 million or $0.06 per diluted share, down from $3.8 million or $0.17 per share in the previous year. This decline was attributed to lower other income, influenced by the lumpiness in DoD contract services.

Lumpiness in DoD Contract Services

The variability in DoD MRAM contract services contributed to the decrease in non-GAAP net income. This highlights the challenges Everspin faces in managing income fluctuations from government contracts.

Forward-Looking Guidance

Looking ahead, Everspin Technologies anticipates fourth-quarter revenue between $14 million and $15 million. The company forecasts GAAP net income per share to range from $0.02 to $0.07, with non-GAAP net income per share expected between $0.08 and $0.13. These projections indicate Everspin’s confidence in sustaining its growth trajectory while managing potential challenges.

In conclusion, Everspin Technologies’ earnings call conveyed a generally positive outlook, driven by strong revenue growth and improved gross margins. The company’s strategic collaborations and solid balance sheet position it well for future opportunities, despite challenges in licensing revenue and DoD contract services. Investors will be keen to see how Everspin navigates these dynamics in the coming quarters.