EPS of $3.11 increased by 294.9% from previous year
Gross margin of 79.2%
Net income of 3.89M
""We experienced a significant increase in contract R&D revenue, driving much of the revenue growth this quarter," said Daniel Nelson." - Daniel Nelson, CFO
NVE Corporation reported a remarkable performance in its fourth quarter of fiscal year 2025, with total revenues reaching $7.27 million, representing a 3% increase year-over-year and a substantial 44% increase quarter-over-quarter. This revenue growth was facilitated by a significant uptick in contract research and development (R&D) revenues, coupled with improving industry conditions. Gross margins improved to 79% due to a more favorable product mix, leading to net income of $3.89 million, with diluted earnings per share rising to $3.11. Management conveyed optimism regarding ongoing investments in R&D and capital expenditures, with a clear focus on new product developments that align with market demands.
### Key Insights from Management
- Revenue Growth:"We're pleased to report a 3% year-over-year increase in revenue...44% sequential revenue growth for the quarter as industry conditions improve," stated Dan Baker, President and CEO.
- R&D Investments: "Total expenses increased 17% for the fourth quarter...due to a 28% increase in R&D, partially offset by a 2% decrease in SG&A,â highlighted Daniel Nelson, CFO, emphasizing the focus on new product development.
- Market Conditions: Baker expressed optimism, noting, "We are also seeing interest in our new products," indicating a potential boost to future revenues.
"We experienced a significant increase in contract R&D revenue, driving much of the revenue growth this quarter," said Daniel Nelson.
â Daniel Nelson, CFO
"Our strategy is to lead the industry in terms of performance, accuracy, and efficiency of sensors," asserted Dan Baker.
â Dan Baker, President and CEO
Forward Guidance
Management anticipates continued improvements in revenue with a focus on expanding R&D efforts, spending approximately 14% of revenue on R&D. NVE expects to invest $2 million to $3 million in capital expenditures in FY 2026 to further enhance its production capabilities. Moreover, with plans to introduce wafer-level chip scale products, the company aims to capture significant new market opportunities. Investors are encouraged to monitor inventory levels and market demand closely, as these factors will greatly impact revenue stability going forward.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NVEC Focus
79.15%
58.40%
6.25%
19.80%
SLAB
54.30%
-17.20%
-2.21%
-43.47%
POWI
54.40%
3.72%
1.22%
95.89%
DIOD
32.70%
3.51%
0.46%
86.68%
MXL
55.60%
-44.70%
-11.20%
-7.22%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given NVE's proactive R&D strategy and investments in capital expenditures, alongside strong quarterly performance metrics, the outlook for investors remains positive. NVE's low debt levels and healthy profit margins further bolster its investment thesis. Future monitoring of product acceptance rates and market trends in the semiconductor space will be crucial as the company seeks to leverage its growth potential in a competitive landscape.
Key Investment Factors
Growth Potential
NVE's growth potential remains strong, driven by substantial R&D investments targeting advanced sensor technologies and a diversified product offering in industrial controls and medical devices. The strategic focus on new product development aligns with increasing demands in key markets.
Profitability Risk
Potential risks include exposure to tariff impacts on raw materials and uncertainties related to global economic conditions, which could impact sales performance. Additionally, competition within the semiconductor market necessitates continuous innovation to maintain market share.
Financial Position
NVE's balance sheet is robust, with total assets of $64.28 million and liabilities of just $2.01 million, resulting in minimal debt levels (total debt of $0.84 million). The current ratio is 28.40, indicating strong liquidity and financial health.
SWOT Analysis
Strengths
Strong gross margins at 79%
Robust cash flow management with a cash balance of $8.03 million
Low debt levels enhance financial stability
Weaknesses
Dependence on a narrow product line in specialized markets
Limited market penetration compared to larger semiconductor manufacturers
Opportunities
Expanding market for advanced sensors in IoT and medical applications
Growth in contract R&D services could diversify revenue sources
Threats
Economic downturns affecting semiconductor demand
Competitive pressures from larger industry players and new entrants