In This Article:
NVE Corporation’s NVEC second-quarter fiscal 2025 performance highlights the company's adaptive shift toward research-driven growth amid evolving market conditions. Facing headwinds in product sales, NVEC has leaned into contract research and development (R&D), capitalizing on partnerships to diversify revenue sources.
While operating income was tempered by heightened expenses tied to innovation and overhead, the company’s improved gross margin reflects cost efficiencies in production. Despite a mixed quarter, NVE Corp’s robust cash position, investments in short-term securities and continued dividend commitment underscore its focus on long-term stability and shareholder returns.
NVE Corporation Price, Consensus and EPS Surprise
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Q2 Results
NVE Corp reported a 15% decline in earnings per diluted share to 83 cents from 98 cents in the previous-year quarter. This drop reflects a challenging market environment and a changing revenue mix.
Total quarterly revenues decreased 5% to $6.76 million from $7.13 million in the prior-year quarter.
The results were impacted by a significant decline in product sales due to softened demand within NVEC’s target markets. This was partly offset by a substantial rise in contract R&D revenues, underscoring a pivot toward diversified revenue streams.
Product Sales vs Contract R&D Growth
In NVE Corp’s recent financial report, its two core segments — product sales and contract R&D —demonstrated divergent performance trends.
Product sales for NVE Corp, its primary revenue stream, showed a 14% decline to $6.1 million in second-quarter fiscal 2025 from $7.1 million in second-quarter fiscal 2024. This reduction reflects softened demand within NVE’s target markets, likely due to broader economic challenges or shifts within the sectors it serves.
In contrast, contract R&D surged 3,950% from $16,154 in the prior-year quarter to $654,257 in the current quarter. This sharp upsurge underscores NVE’s strategic pivot toward innovation-driven partnerships and R&D initiatives.
Profitability Metrics
NVE Corp’s profitability metrics for second-quarter fiscal 2025 reflect a mixed performance compared with the prior-year quarter. Gross profit increased 5% to $5.81 million from $5.53 million in second-quarter fiscal 2024, translating to a gross margin of approximately 86%, which moved up from 78% a year ago. A decrease in the cost of sales primarily drove this margin improvement.
Operating income declined 5% year over year to $4.40 million from $4.62 million, reflecting the impacts of higher expenses in R&D, and selling, general and administrative categories. The 24% year-over-year increase in R&D spending to $0.85 million was driven by ongoing investments in developing advanced spintronic technology.