0001628280-26-028464
SEC filingProduct sales drove 13.2% revenue growth, offset by lower licensing; gross margin improved to 52.7%.
For the three months ended March 31, 2026, Everspin Technologies reported total revenue of $14.9 million, a 13.2% increase from $13.1 million in the same period a year ago. The growth was driven entirely by product sales, which increased 27.9% to $14.1 million, partially offset by a 63.4% decline in licensing, royalty, patent, engineering services and other revenue to $0.8 million. The licensing decline was attributed to the conclusion of an AI technology development agreement.
Gross profit rose to $7.8 million from $6.8 million, with gross margin improving to 52.7% from 51.4%. Management attributed the margin expansion to a favorable revenue mix and yield improvements. Cost of product sales increased 15.4% to $7.0 million, generally tracking with revenue growth, while cost of licensing dropped 79.2% to $0.1 million.
Operating expenses totaled $10.6 million, up 21.6% from $8.7 million in the prior year. Research and development expenses increased 7.4% to $3.6 million due to higher compensation and contract labor. General and administrative expenses rose 31.9% to $5.1 million, primarily from $1.6 million in litigation costs related to a patent infringement lawsuit. Sales and marketing expenses increased 27.0% to $1.9 million on higher compensation and contract labor. As a result, loss from operations widened to $2.7 million from $1.9 million in the prior year.
Net loss improved to $0.3 million from $1.2 million, aided by $2.1 million in other income from a strategic award for aerospace and defense manufacturing services. Interest income decreased slightly to $0.3 million due to lower interest rates.
The company operates two revenue streams: product sales and licensing/other revenue. Product sales represented 95% of total revenue in Q1 2026, up from 84% in Q1 2025, reflecting a significant mix shift toward core MRAM product sales. Licensing and other revenue, while higher-margin historically, is highly variable and characterized by a small number of annual transactions. The decline in this segment was driven by the conclusion of a single AI-related agreement.
Geographically, APAC remained the largest region at $9.2 million (62% of total), followed by North America at $2.8 million and EMEA at $2.8 million. APAC revenue grew 26.6% YoY, while EMEA declined 16.7%, partly offsetting overall growth. Distribution channels accounted for 90% of product revenue in Q1 2026, up from 60% a year ago.
Management did not provide quantitative guidance for future periods. The MD&A noted that licensing and royalty revenue is inherently variable, with annual adjustments based on actual sales in the first quarter. The company highlighted its strategic award for aerospace and defense manufacturing services as a source of other income. Cash and cash equivalents stood at $40.5 million as of March 31, 2026, down from $44.5 million at year-end 2025, with management expressing confidence in cash sufficiency for the next 12 months. Capital spending in Q1 2026 totaled $4.8 million, primarily for manufacturing equipment, signaling continued investment in production capacity.
Everspin's balance sheet remains robust with $40.5M in cash and cash equivalents, representing a decline of $4.0M from year-end 2025, driven by $4.8M in capital expenditures. The company has no bank debt or marketable securities. Total stockholders' equity stands at $70.2M, up from $68.9M, primarily due to stock-based compensation and option exercises offsetting the net loss. Inventory increased to $11.3M, mainly in work-in-process, reflecting manufacturing build-up. Contract obligations of $0.3M represent deferred revenue from a strategic award.
The notes disclose $3.1M in undiscounted lease payments (operating and finance) through 2029, with $1.1M due in the remainder of 2026. More notably, a subsequent event (Note 9) reveals a foundry services agreement with Microchip requiring an estimated $13.95M reimbursement for facility installation, plus minimum purchase commitments ramping to 1,300 wafers per quarter. Additionally, a strategic award of up to $14.6M from a U.S. government program was recognized in other income ($2.2M in Q1 2026), with $0.3M billed but unearned.
No share buybacks or dividends were conducted. Capital expenditures totaled $4.8M in Q1 2026, including $4.4M for property and equipment and $0.5M for intangible assets. This spending likely supports the new foundry setup and internal-use software. Stock-based compensation was $1.3M, with $13.4M remaining unrecognized for RSUs over a 3.2-year average period.
Everspin operates as a single reportable segment. The CODM uses net income to allocate resources. Revenue is disaggregated by geography: APAC contributed 62% ($9.2M), North America 19% ($2.8M), and EMEA 19% ($2.8M). The distributor channel accounted for 90% of revenue ($13.3M), with non-distributor sales at $1.6M. Revenue timing shows 96% recognized at point in time.
For the three months ended March 31, 2026, Everspin reported a net loss of $0.3M, yet generated $0.6M in operating cash flow, indicating positive cash flow quality driven by non-cash charges (depreciation and amortization of $0.7M, stock-based compensation of $1.3M) and favorable working capital changes (accounts payable up $1.6M, accrued liabilities up $0.9M). However, operating cash flow declined 60% year-over-year from $1.4M, primarily due to a larger increase in accounts receivable ($2.1M vs. $0.8M) and a swing in deferred revenue and contract obligations.
Capital expenditure intensity rose dramatically: purchases of property and equipment totaled $4.4M (vs. $0.9M in prior year), resulting in negative free cash flow of ($3.8M). No share repurchases or dividends were paid. The company financed the capex through existing cash, as cash and cash equivalents fell by $4.0M to $40.5M. An anomaly to note is the $1.2M decrease in contract obligations, which reversed a prior-year increase, and the $0.5M of property and equipment purchases still in accounts payable at period-end.