NVE Corporation reported its Q2 2025 results, revealing a 5% decrease in total revenue, primarily driven by a 14% drop in product sales, which was mitigated by an impressive 3,950% rise in contract R&D revenue. Management cited ongoing challenges in the semiconductor sector due to inventory excesses and weak demand but remains cautiously optimistic as certain markets, such as the Industrial Internet of Things and electrification, are experiencing growth.
While gross profit increased 5% year-over-year to $5.81 million, contributing to a robust gross margin of 86%, net income suffered a more pronounced 15% decline compared to the prior quarter, attributed to increasing research and development (R&D) and selling, general, and administrative (SG&A) expenses. These related investments are crucial for enhancing NVE's product portfolio, especially with the introduction of innovative technologies like the ALT521-10E sensor. Investors are encouraged to monitor market dynamics and NVE's positioning amid the industry recovery.