Everspin Raises Prices As Costs Squeeze Product Margins, And Books A Provision For A Commerce Fine
The memory maker's CFO said product margins slipped a couple of points, and an export-controls fine is not yet settled.
Everspin Technologies, which makes memory chips that keep data when power is lost, began raising prices in the fourth quarter to offset higher input costs, CFO Bill Cooper said on the company's third-quarter earnings call Wednesday. Cooper also said the company has booked a provision for an export-controls fine that is not settled yet.
Costs hit products, mix saved the total
Everspin reported record revenue of $20.6 million, up 47% from a year earlier, slightly above its guidance range of $19.5 million to $20.5 million. Non-GAAP earnings (which exclude stock pay, litigation costs and the regulatory provision) were $3.1 million, or $0.12 a share.
Gross margin on standard accounting was 51.4%, against 51.3% a year earlier. Cooper said a richer mix of high-margin non-product revenue offset higher manufacturing and production costs.
Asked about those costs, Cooper said product margins fell "a couple of points," pointing to materials and services. The company had seen it coming and had signaled it earlier, he said, adding that the pressure is confined to the product side. "To counter rising input costs," he said, Everspin began raising prices in the fourth quarter and expects product margins to improve from the third quarter. It still targets long-term gross margins above 50%.
A fine tied to export controls
An analyst at Craig Hallam Capital Group asked about the regulatory provision excluded from adjusted results. Cooper said it relates to a fine over export controls from BIS, a Commerce Department agency.
The company took the provision in anticipation of a settlement. "It's not settled yet," Cooper said, calling the amount the company's best estimate of where it will close out.
Separately, litigation costs were $6 million in the quarter and drove operating expenses to $18.5 million from $8.8 million a year earlier. Cooper expects fourth-quarter litigation costs to be slightly lower but still substantial. The matter goes to an administrative law judge at the end of this year, and he said those expenses should fall significantly in 2027.
Demand and balance sheet
MRAM product sales were $16.9 million, up 34% from a year earlier and 11% from the prior quarter. Licensing, royalty and engineering revenue rose to $3.7 million from $1.4 million, mainly from a $40 million subcontract with a U.S. prime contractor.
Everspin ended the quarter debt-free with $43 million in cash, down from $45 million the previous quarter. It guided fourth-quarter revenue to $21.5 million to $22.5 million. CEO Sanjeev Aggarwal said distributors are asking for MRAM to replace NOR flash as fabs shift capacity to DRAM; he called the volume not yet significant but said it could become so in the fourth quarter and the first quarter.
The company's market value was $339 million as of Wednesday's report.
Aggarwal said the next earnings call will come sometime in February.
Sources
- Everspin Technologies Non-GAAP EPS of $0.12 in-line, revenue of $20.65M beats by $0.58M (NASDAQ:MRAM) — seekingalpha.com
- Everspin Reports Unaudited Third Quarter 2026 Financial Results – Company Announcement - FT.com — Financial Times
