NVE Corporation Reports Moderate Growth in Q4 Fiscal 2025
Shares of NVE Corporation (NVEC) have risen 11.5% since the release of its fourth-quarter results for fiscal 2025. In comparison, the S&P 500 index has experienced a modest increase of 0.5% during the same period. However, in the last month, NVEC’s stock has seen a decline of 6.5%, while the S&P 500 has surged 9.7%, indicating underperformance in the broader market despite initial post-earnings enthusiasm.
Q4 Performance: Modest Revenue Growth
For the fiscal fourth quarter, NVEC reported revenues of $7.27 million, marking a 3% increase from $7.08 million in the prior year. This growth was largely driven by a remarkable 558% rise in contract research and development revenues, reaching $318,000 from $48,000 the previous year. However, product sales saw a slight decline, decreasing by 1% to $6.95 million.
Earnings per diluted share grew by 1.3%, reaching 80 cents versus 79 cents in the same quarter last year. Net income also saw a marginal increase to $3.89 million from $3.81 million. Additionally, the gross margin improved to 79%, up from 76%, due to a favorable product mix and a shift toward direct sales instead of distributor channels.
NVE Corporation: Price Trends and Earnings Surprise
NVE Corporation price-consensus-eps-surprise-chart | NVE Corporation Quote
Operating Metrics and Profitability
Operating income increased to $4.25 million from $4.06 million a year ago, with the operating margin remaining robust at 58%. The pre-tax margin was reported at 65%, while the net margin reached 54%, indicating continued profitability. Research and development expenses rose by 28% year-over-year, reflecting a strategic commitment to innovation, even as selling, general, and administrative expenses dropped by 2%, demonstrating cost discipline.
For the fiscal year, total revenues fell by 13%, amounting to $25.87 million, mainly due to decreases in the first three quarters. Despite this, the annual gross margin improved significantly, increasing to 84% from 77% in fiscal 2024. Net income fell by 12%, totaling $15.1 million, or $3.11 per diluted share, compared to $17.1 million, or $3.54 per share, in the previous year. Total annual expenses rose 25%, driven by a 33% increase in R&D expenditures and a 13% rise in SG&A costs.
Management Insights: Confidence in Future Growth
CEO Dan Baker emphasized the sustained strength of revenue performance, attributing it to both replenishment in customer channels and consistent demand for products. He noted that quarterly revenues were a result of channel restocking and business generated from recent product launches. The management remains optimistic that the investments in R&D and capacity enhancements will produce positive returns in upcoming quarters.
The company also reported growing interest in its recently launched omnidirectional magnetic sensors, which are designed for industrial automation and medical devices. Baker highlighted that these products offer improved accuracy, smaller sizes, and reduced power consumption, enhancing NVEC’s competitive edge in critical markets.
Factors Influencing Financial Results
The 44% sequential increase in revenues was largely attributed to a 40% rise in product sales and a substantial 210% increase in contract R&D revenues, indicating a rebound in customer demand amidst favorable market conditions. The improvement in gross margins underscored a transition toward higher-margin products and increased direct sales.
Management cited stable manufacturing operations and sufficient inventory levels as mitigators against ongoing tariff and supply-chain challenges. NVEC’s advantageous tariff position—featuring exemptions in key export markets and domestic production capabilities—has contributed to overall operational stability.
Capital Expenditure and Future Projections
Looking ahead, NVEC plans to significantly enhance capital spending in fiscal 2026, with estimates for fixed asset investments ranging from $2 million to $3 million, compared to $1.26 million in fiscal 2025. The primary focus will be on acquiring new wafer fabrication equipment, expected to arrive by the end of September. Management expressed confidence in the return on this investment, bolstered by positive customer feedback on prototypes and anticipated market expansion.
Recent Developments
During the quarter, NVE Corp extended its supplier agreement with Abbott Laboratories, a pivotal client in the implantable medical device sector. This amended agreement further solidifies NVE’s role as a long-term partner in the industry.
In conclusion, NVEC ended fiscal 2025 on a relatively positive note, showing signs of sequential recovery and maintained profitability. While its full-year results reflected broader industry challenges, the fourth quarter indicated early signs of recovery, driven by product innovation, operational resilience, and strategic investments.
