Everspin Technologies, Inc. (MRAM) Earnings

Management highlights

- Core Business Performance * Q2 2026 posted the highest revenue in Everspin's history, exceeding guidance on both the top and bottom line, driven by strong product growth and the newly awarded defense subcontract * Product growth was led by strength in industrial automation (recovering demand in Japan), energy management (recovering demand in Europe), and aerospace and defense end markets * GAAP gross margin increased to 53.9% year-over-year, supported by a favorable revenue mix of higher-margin non-product revenue * The company remains debt-free with a strong balance sheet, holding $43.9 million in cash and cash equivalents at quarter-end - Product Development & Pipeline * The 256 megabit XPI (first product in the Unisys MRAM family) is on schedule for tape-out in late 2026; the 16nm FinFET test chip will sample to customers in early 2027 and ramp to production by the end of 2027, expanding Everspin's total addressable market by $3 billion * 128 megabit and 256 megabit XPI high-reliability MRAM parts launched ahead of schedule: 128 megabit entered production in Q2, and all 256 megabit SKUs entered production shortly after quarter-end, available for customer evaluation * The joint capacity expansion project with Microchip at the Gresham, Oregon fab kicked off in April 2026, split into two phases (toggle MRAM first, then STT MRAM). The project remains on schedule to deliver first qualified silicon 18-24 months after kickoff - New Market Expansion * Everspin is developing CXL interface-based MRAM solutions to address the data center persistent memory market, targeting product introduction over the next three years. CXL-attached MRAM is expected to close the latency gap between storage and main memory, improving XPU utilization from 60-70% to 90-95% for small write workloads like metadata and log data * A contract was signed with a data interface/controller firm to develop custom CXL controller IP, with a proof-of-concept demonstration planned for September 2026 at the SNEA Developers Conference * Everspin signed an MOU with MaxLinear to evaluate CXL-attached MRAM paired with MaxLinear storage accelerators for next-generation storage architectures targeting hyperscale cloud, AI infrastructure, and enterprise customers * The company secured its first GEO satellite design win with Astro Digital, which selected Everspin's 64-megabit STT MRAM as primary fail-safe boot memory for an upcoming mission - Defense Contract Updates * The 2.5-year $40 million U.S. defense subcontract (as a subcontractor to a prime contractor) began revenue recognition in Q2, focused on developing toggle MRAM process capabilities for U.S. defense customers * The prior $14.6 million DoD manufacturing sustainment contract is winding down, with $13.3 million recognized to date and full completion expected in H1 2027

Guidance

Everspin provided Q3 2026 guidance as follows: * Total revenue is guided to a range of $19.5 million to $20.5 million * GAAP fully diluted EPS is guided to a net loss of $0.05 to $0.10 per share * Non-GAAP fully diluted EPS (excluding litigation costs, Microchip manufacturing line NRE, and stock-based compensation) is guided to a range of 10 cents to 15 cents per share * Management continues to expect product gross margins to hold in the mid-upper 40% range, with total company gross margins remaining above 50%

Segment performance

Everspin recorded total Q2 2026 revenue of $18.7 million, an all-time company high, representing 42% year-over-year growth. The MRAM product segment (which includes both Toggle and STT MRAM) generated $15.3 million in revenue, accounting for approximately 81.8% of total revenue. This product revenue is 38% higher year-over-year and 9% higher sequentially. The non-product segment (which includes licensing, royalties, engineering services, and other income) generated $3.4 million in revenue, accounting for approximately 18.2% of total revenue, up from $2.1 million in Q2 2025. The non-product segment growth was driven primarily by initial revenue recognition from the $40 million U.S. prime contractor defense subcontract.

Risks & headwinds

- Ongoing litigation has generated $4 million in incremental Q2 2026 costs, with a similar level of litigation costs expected in Q3 2026 * Packaging and final test costs at OSATs have increased, driven by factors including rising gold prices, creating ongoing headwinds for product gross margins that are not expected to improve in the near term * NXP's planned sale of the Chandler fab to Nokia creates potential long-term uncertainty for Everspin's existing manufacturing operations at the facility; full operational continuity is only secured through the end of 2028, and future plans for the site from Nokia have not yet been finalized * All new product development (including Unisys MRAM, CXL MRAM, and the Microchip capacity expansion) carries inherent execution risk that could delay launch timelines or impact product performance * Future defense contract wins are not guaranteed; while there are early stage opportunities in the pipeline, no additional contracts have been finalized

Analyst Q&A

• Q: Can you share any demand trends outside of LEO satellites in the aerospace and defense end market, specifically regarding drones? What is the level of current demand? /

  A: Management stated that Everspin continues to engage and see healthy overall demand across all defense sector segments, but has not announced any specific finalized drone-related deals to date. No further details on drone-specific activity were provided. /

• Q: Will revenue from the $40 million defense contract increase linearly in Q3 2026 (which will be the first full quarter of the contract) after partial recognition in Q2? /

  A: Management confirmed that revenue recognition will not follow a linear or evenly scaled schedule. Non-product revenue from the contract is expected to remain in a similar range in Q3 as it was in Q2, with a potential bell-curve shaped recognition pattern over the contract term rather than steady step-ups. /

• Q: How should investors think about the long-term impact of NXP selling the Chandler fab to Nokia, and will Microchip's new capacity be sufficient to cover Everspin's needs if operations at Chandler are disrupted? /

  A: Management confirmed NXP will retain ownership of the facility through the end of 2028, so there will be no operational interruption before that date. Everspin has not yet held formal discussions with Nokia about future plans for the site, but the Microchip capacity expansion was explicitly developed to provide backup scaling capacity if Nokia repurposes the Chandler fab. Management noted that retaining both facilities would be ideal if business growth supports it. /

• Q: What is the strategic importance of the first GEO satellite design win with Astro Digital, and how would you characterize the overall satellite market opportunity for Everspin? /

  A: This is Everspin's first commercial MRAM design win for a GEO satellite mission, using standard commercially qualified (non-radiation-hardened) parts that Astro Digital is using for boot memory and telemetry logging. If the mission is successful, it opens up significant new opportunities across GEO, MEO, and LEO satellite applications beyond the existing LEO customer base that Everspin already serves, which management called an exciting expansion of the addressable aerospace market.