NVE Corp: Form 10-Q for the period ended Sep 30, 2025
Filed with the SEC on Oct 22, 2025 and accepted by EDGAR at Oct 22, 2025, 16:09 ET.
Management's discussion and analysis
As filed, 13,057 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Forward-looking statements
Some of the statements made in this Report or in the documents incorporated by reference in this Report and in other materials filed or to be filed by us with the Securities and Exchange Commission (“SEC”) as well as information included in verbal or written statements made by us constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to the safe harbor provisions of the reform act. Forward-looking statements may be identified by the use of terminology such as may, will, expect, anticipate, intend, believe, estimate, should, or continue, or the negatives of these terms or other variations on these words or comparable terminology. To the extent that this Report contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of NVE, you should be aware that our actual financial condition, operating results, and business performance may differ materially from that projected or estimated by us in the forward-looking statements. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from their current expectations. These differences may be caused by a variety of factors, including but not limited to risks related to our reliance on several large customers for a significant percentage of revenue, uncertainties related to the economic environments in the industries we serve, uncertainties related to future sales and revenues, risks and uncertainties related to tariffs, customs, duties, and other trade barriers, risks and uncertainties related to future stock repurchases and dividend payments, and other specific risks that may be alluded to in this Report or in the documents incorporated by reference in this Report.
Further information regarding our risks and uncertainties is contained in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.
General
NVE Corporation referred to as NVE, we, us, or our, develops and sells devices that use spintronics, a nanotechnology that relies on electron spin rather than electron charge to acquire, store, and transmit information. We manufacture high-performance spintronic products including sensors and couplers that are used to acquire and transmit data.
Critical accounting policies
A description of our critical accounting policies is provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025. As of September 30, 2025, our critical accounting policies and estimates continued to include marketable securities valuation, inventory valuation, and deferred tax assets estimation.
Quarter ended September 30, 2025, compared to quarter ended September 30, 2024
The table shown below summarizes the percentage of revenue and quarter-to-quarter changes for various items:
| Revenue | Percentage of Revenue Quarter Ended September 30, 2025 | 2024 | Quarter- to-Quarter Change |
|---|---|---|---|
| Product sales | 96.7% | 90.3% | 0.6% |
| Contract research and development | 3.3% | 9.7% | (68.2)% |
| Total revenue | 100.0% | 100.0% | (6.1)% |
| Cost of sales | 21.7% | 14.0% | 45.5% |
| Gross profit | 78.3% | 86.0% | (14.5 ) % |
| Expenses | |||
| Research and development | 13.8% | 12.5% | 3.1% |
| Selling, general, and administrative | 6.8% | 8.4% | (23.1)% |
| Total expenses | 20.6% | 20.9% | (7.4)% |
| Income from operations | 57.7% | 65.1% | (16.8 ) % |
| Interest income | 7.6% | 6.9% | 4.3% |
| Other income | 0.0% | -% | - |
| Income before taxes | 65.3% | 72.0% | (14.7)% |
| Provision for income taxes | 13.1% | 12.4% | (7.1 ) % |
| Net income | 52.2% | 59.6% | (16.3)% |
Total revenue for the quarter ended September 30, 2025 (the second quarter of fiscal 2026) decreased 6% compared to the quarter ended September 30, 2024 (the second quarter of fiscal 2025). The decrease was due to a 68% decrease in contract research and development revenue, partially offset by a 1% increase in product sales. The increase in product sales was due to a significant increase in nondefense product sales, partially offset by a decrease in sales to the defense industry. Defense industry sales can be highly variable because of procurement cycles. The decrease in contract research and development revenue was due to the timing of revenue recognition and fewer research and development contracts in the quarter ended September 30, 2025 compared to the prior-year quarter.
Gross margin for the second quarter of fiscal 2026 was 78% of revenue compared to 86% the prior-year quarter. The decrease in gross margin percentage was due to a less profitable product mix and increased distributor sales for the quarter. Distributor sales typically have lower gross margin than direct sales.
Total operating expenses decreased 7% for the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025, due to a 3% increase in research and development expense and a 23% decrease in selling, general, and administrative expense. The increase in research and development expense was due to increased new product development. The decrease in selling, general, and administrative expenses was primarily due to the timing of sales and marketing activities, and reassignment of some selling, general and administrative resources to manufacturing and new product development.
Interest income increased 4% due to an increase in interest rates compared to the prior year.
Our effective tax rate, which is the provision for income taxes as a percentage of income before taxes, increased to 20% for the second quarter of fiscal 2026 compared to 17% for the second quarter of fiscal 2025. The increase in our effective tax rate was primarily due to the non-cash impact of tax law changes on certain tax deductions this fiscal year. We currently expect a full-year tax rate of 16% to 17% in fiscal 2026 because we expect advanced manufacturing investment tax credits of between $700,000 and $1,000,000 to offset the impact of other tax law changes.
The decrease in net income in the second quarter of fiscal 2026 compared to the prior-year quarter was primarily due to decreased revenue, decreased gross margin, and an increase in our effective tax rate, partially offset by decreased operating expenses and increased interest income.
Six months ended September 30, 2025, compared to six months ended September 30, 2024
The table shown below summarizes the percentage of revenue and year-to-year changes for various items:
| Revenue | Percentage of Revenue Six Months Ended Sept. 30, 2025 | 2024 | Period- to-Period Change |
|---|---|---|---|
| Product sales | 96.8% | 93.9% | (5.3)% |
| Contract research and development | 3.2% | 6.1% | (50.8)% |
| Total revenue | 100.0% | 100.0% | (8.1)% |
| Cost of sales | 20.6% | 14.2% | 33.2% |
| Gross profit | 79.4% | 85.8% | (14.9 ) % |
| Expenses | |||
| Research and development | 12.8% | 12.7% | (7.7)% |
| Selling, general, and administrative | 6.9% | 8.2% | (22.8)% |
| Total expenses | 19.7% | 20.9% | (13.6)% |
| Income from operations | 59.7% | 64.9% | (15.3 ) % |
| Interest income | 7.9% | 7.1% | 2.5% |
| Other income | 0.0% | -% | - |
| Income before taxes | 67.6% | 72.0% | (13.5)% |
| Provision for income taxes | 12.3% | 12.0% | (8.5 ) % |
| Net income | 55.3% | 60.0% | (14.5)% |
Total revenue for the six months ended September 30, 2025 decreased 8% compared to the six months ended September 30, 2024. The decrease was due to a 5% decrease in product sales and a 51% decrease in contract research and development revenue. The decrease in product sales was primarily due to a decrease in defense industry sales during the six months ended September 30, 2025 compared to the prior-year period. Defense industry sales can be highly variable because of procurement cycles. The decrease in contract research and development revenue was primarily due to the timing of revenue recognition and fewer research and development contracts for the six months ended September 30, 2025, compared to the prior-year period.
Gross margin for the first six months of fiscal 2026 was 79% of revenue, compared to 86% for the first six months of fiscal 2025. The decrease in gross margin percentage was due to a less profitable product mix and increased distributor sales for the six months ended September 30, 2025, compared to the prior-year period.
Total operating expenses decreased 14% for the first six months of fiscal 2026 compared to the first six months of fiscal 2025, due to an 8% decrease in research and development expense and a 23% decrease in selling, general, and administrative expense. The decrease in research and development expense was due to the completion of some of our wafer-level chip scale packaging activities and reassignment of some research and development resources to manufacturing. The decrease in selling, general, and administrative expenses was primarily due to the timing of sales and marketing activities, and reassignment of some selling, general and administrative resources to manufacturing and new product development.
Our effective tax rate increased to 18% for the first six months of fiscal 2026 compared to 17% for the first six months of fiscal 2025. The increase in our effective tax rate was primarily due to the non-cash impact of tax law changes on certain tax deductions this fiscal year.
The decrease in net income in the first six months of fiscal 2026 compared to the prior-year period was primarily due to decreased revenue, decreased gross margin, and an increase in our effective tax rate, partially offset by decreased operating expenses and increased interest income.
Liquidity and Capital Resources
Overview
Cash and cash equivalents were $5,107,481 as of September 30, 2025, compared to $8,036,564 as of March 31, 2025. The $2,929,083 decrease in cash and cash equivalents during the first six months of fiscal 2026 was due to $1,237,963 of net cash used in investing activities and $9,674,332 of cash used in financing activities, partially offset by $7,983,212 in net cash provided by operating activities.
Operating Activities
Net cash provided by operating activities related to product sales and research and development contract revenue was our primary source of working capital for the current and prior-year periods.
Non-cash operating lease expenses increased $103,931 primarily due to our receipt of a $100,000 leasehold improvement allowance.
Accounts receivable decreased $1,148,412 during the first six months of fiscal 2026 primarily due to the timing of customer payments.
Prepaid expenses and other assets increased $729,679 primarily due to increased accrued bond interest and a decrease in federal and state taxes due. The decrease in taxes due was because we deducted previously unamortized research and development expenses in the quarter ended September 30, 2025 as permitted under the Federal budget reconciliation bill enacted July 4, 2025. We expect accelerated deductions of previously unamortized research and development expenses to reduce our cash taxes by approximately $1,000,000 over the three quarters beginning with the quarter ending December 31, 2025.
Accrued payroll and other current liabilities decreased $285,774 primarily due to the payment of federal and state taxes balance due as of March 31, 2025.
Investing Activities
Cash used by investing activities during the six months ended September 30, 2025, consisted of $10,108,982 of marketable securities purchases and $1,128,981 of fixed asset purchases, partially offset by $10,000,000 in proceeds from maturities of marketable securities. Fixed asset purchases were primarily production equipment. We currently expect an additional $1,000,000 to $1,500,000 of fixed asset purchases in the last six months of the fiscal year to complete a production expansion.
Financing Activities
Cash used in financing activities during the six months ended September 30, 2025, consisted of $9,674,332 of cash dividends paid to shareholders.
In addition to cash dividends paid to shareholders in the first half of fiscal 2026, on October 22, 2025, we announced that our Board of Directors had declared a cash dividend of $1.00 per share of Common Stock, or $4,837,166 based on shares outstanding as of September 30, 2025, to be paid on November 28, 2025.
We plan to fund dividends through cash provided by operating activities and proceeds from maturities of marketable securities. All future dividends will be subject to Board approval and subject to the company’s results of operations, cash and marketable security balances, estimates of future cash requirements, and other factors the Board may deem relevant. Furthermore, dividends may be modified or discontinued at any time without notice.
Controls and procedures
As filed, 1,282 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Disclosure Controls and Procedures
Management, with the participation of the Chief Executive Officer and Principal Financial Officer, has performed an evaluation of our disclosure controls and procedures that are defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Report. This evaluation included consideration of the controls, processes, and procedures that are designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management concluded that, as of September 30, 2025, our disclosure controls and procedures were effective.
Changes in Internal Controls
During the quarter ended September 30, 2025, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Risk factors
As filed, 143 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2025-09-30. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Cost of revenue | 3 months2025-07-01 to 2025-09-30 | $1.4m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months2025-04-01 to 2025-09-30 | $2.6m | us-gaap:CostOfRevenue |
| Gross profit | 3 months2025-07-01 to 2025-09-30 | $5.0m | us-gaap:GrossProfit |
| Gross profit | 6 months2025-04-01 to 2025-09-30 | $9.9m | us-gaap:GrossProfit |
| Research and development | 3 months2025-07-01 to 2025-09-30 | $873.5k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months2025-04-01 to 2025-09-30 | $1.6m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months2025-07-01 to 2025-09-30 | $3.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months2025-04-01 to 2025-09-30 | $7.4m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months2025-07-01 to 2025-09-30 | $834.7k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months2025-04-01 to 2025-09-30 | $1.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2025-07-01 to 2025-09-30 | $3.3m | us-gaap:NetIncomeLoss |
| Net income | 6 months2025-04-01 to 2025-09-30 | $6.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2025-07-01 to 2025-09-30 | $0.68 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months2025-04-01 to 2025-09-30 | $1.42 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2025-07-01 to 2025-09-30 | $0.68 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months2025-04-01 to 2025-09-30 | $1.42 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2025-07-01 to 2025-09-30 | 4,839,243 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months2025-04-01 to 2025-09-30 | 4,839,049 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months2025-04-01 to 2025-09-30 | $8.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months2025-04-01 to 2025-09-30 | $1.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | At period end2025-09-30 | $5.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | At period end2025-09-30 | $28.8m | us-gaap:AssetsCurrent |
| Total assets | At period end2025-09-30 | $61.5m | us-gaap:Assets |
| Current liabilities | At period end2025-09-30 | $970.7k | us-gaap:LiabilitiesCurrent |
| Total liabilities | At period end2025-09-30 | $1.8m | us-gaap:Liabilities |
| Shareholders' equity | At period end2025-09-30 | $59.7m | us-gaap:StockholdersEquity |
| Shares outstanding | At period end2025-09-30 | 4,837,166 shares | dei:EntityCommonStockSharesOutstanding |
Source: SEC EDGAR, the filing index for accession 0001376474-25-000857. Last ingested by Listed: Nov 5, 2026, 19:10 ET. Listed shows no prices and gives no investment advice.