Revenue: Q2 fiscal 2026 total revenue increased 4% sequentially vs. Q1 fiscal 2026, but decreased 6% year-over-year vs. Q2 fiscal 2025 (CFO). Year-over-year decline driven by a 68% decrease in contract R&D revenue, partially offset by a 1% increase in product sales (CFO).
Product sales breakdown: Nondefense product sales increased 21% year-over-year; defense product sales decreased 64% year-over-year (CFO). Defense products were 8% of total revenue in the quarter (CFO). Contract R&D (primarily defense/government) was 3% of revenue (CFO).
Distributor sales: Increased “nicely” both sequentially and year-over-year (CFO). Strong distributor sales noted as a factor in margin mix (CFO).
Gross margin: 78% for Q2 fiscal 2026, down from 86% in Q2 fiscal 2025 due to less profitable product mix and strong distributor sales (CFO).
Operating margin: 58% for Q2 fiscal 2026 (CFO).
Pretax margin: 65% for Q2 fiscal 2026 (CFO).
Net margin: 52% for Q2 fiscal 2026 (CFO).
Net income: $3.31 million, or $0.68 per diluted share for Q2 fiscal 2026, vs. $4.03 million ($0.83) in Q2 fiscal 2025 (CFO). Decrease due to lower revenue, lower margins, higher tax rate, partially offset by decreased expenses (CFO).
First-half fiscal 2026: Total revenue $12.5 million; net income $6.89 million ($1.42 per diluted share) (CFO).
Cash flow from operations: $7.98 million in the first 6 months of fiscal 2026 (CFO).
Capital expenditures: Fixed asset purchases $1.13 million in H1 fiscal 2026, primarily for a cluster of production equipment installed in the past quarter (CFO). Expect additional $1 million to $1.5 million in fixed assets in the remaining 6 months of fiscal 2026 to complete production expansion (CFO).
New products launched in Q2: Three new products — a rotation sensor (network utility meters, robotics), a new data coupler (motor control, energy conversion), and a new wafer-level chip-scale voltage regulator (ultra-miniature, ultra-robust power conversion) (VP of Advanced Technology).
Tax rate: Q2 fiscal 2026 effective tax rate 20% vs. 17% a year ago (CFO). Full-year fiscal 2026 expected tax rate 16%–17% due to advanced manufacturing investment tax credits of $700,000–$1 million (CFO). Next fiscal year also expected ~16%–17% (CFO).
Official Guidance
Full-year fiscal 2026 tax rate: 16%–17% (CFO).
Advanced manufacturing investment tax credits: Expected $700,000–$1 million for fiscal 2026 (CFO).
Capital expenditures outlook: Additional $1 million–$1.5 million on fixed assets in the last 6 months of fiscal 2026 (CFO).
Management Quotes
“Our profitability metrics remained strong. Operating margin was 58%, pretax margin was 65% and net margin was 52%.” (CFO)
“Our R&D strategy is to make the world's best electronics for high-value markets such as medical devices, electric and autonomous vehicles, advanced factory and humanoid robotics…” (VP of Advanced Technology)
“The decrease in SG&A was primarily due to the timing of sales and marketing activities and reassignment of some SG&A resources to manufacturing and new product development.” (CFO)
“Defense business has been steadily recovering this fiscal year and as expected, defense industries sales increased sequentially in the past quarter.” (CEO)
“New equipment in the past year will increase our capacity, increase our capabilities and allow us to do wafer-level chip scale packaging in-house.” (VP of Advanced Technology)