Everspin Technologies Inc.

11/13/2026 | Press release | Distributed by Public on 11/13/2026 15:10

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and related notes included in Part I, Item 1 of this report and with our audited financial statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2025.
Forward-Looking Statements
This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Forward-looking statements are identified by words such as "believe," "will," "may," "estimate," "continue," "anticipate," "intend," "should," "plan," "expect," "predict," "could," "potentially" or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other "forward-looking" information. These statements relate to, among other things, our industry, business, future plans, strategies, objectives, expectations, intentions and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part II, Item 1A - "Risk Factors," and elsewhere in this report, as well as in our other filings with the Securities and Exchange Commission (SEC). Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.
Overview
We are a pioneer in the successful commercialization of Magnetoresistive Random Access Memory (MRAM) technology. Our portfolio of MRAM technologies, including Toggle MRAM, Tunnel Magneto Resistance (TMR) Sensors, and Spin-transfer Torque MRAM (STT-MRAM), is delivering superior performance, persistence and reliability in non-volatile memories that transform how mission-critical data is protected against power loss. With almost 20 years of MRAM technology and manufacturing leadership, our memory solutions deliver significant value to our customers in key markets such as industrial, medical, automotive/transportation, aerospace, military and defense, and data center. We are the leading supplier of discrete MRAM components and a successful licensor of our broad portfolio of related technology and intellectual property.
We sell our products directly and through our established distribution channels to industry-leading original equipment manufacturers, original design manufacturers and contract manufacturers.
We manufacture our MRAM products using both captive and third-party manufacturing capabilities. We purchase industry-standard complementary metal-oxide semiconductor (CMOS) wafers from semiconductor foundries and perform back end of line (BEOL) processing that includes our magnetic-bit technology at our leased 200mm fabrication facility in Chandler, Arizona. We also manufacture full-flow 300mm CMOS wafers with our STT-MRAM magnetic-bit technology integrated in BEOL as part of our strategic relationship with GLOBALFOUNDRIES Inc.
Key Metrics
We monitor a variety of key financial metrics to help us evaluate trends, establish budgets, measure the effectiveness of our business strategies, and assess operational efficiencies. These financial metrics include revenue, gross margin, operating expenses, and operating income determined in accordance with GAAP. Additionally, we monitor and project cash flow to determine our sources and uses for working capital to fund our operations. We also monitor adjusted net income, a non-GAAP financial measure, and design wins. We define adjusted net income as net income adjusted for stock-based compensation expense, litigation costs, the regulatory provision, and non-recurring engineering fees (NRE).
Adjusted net income. Our management and board of directors use adjusted net income to assess and evaluate our overall performance and financial trends, inform the annual budgeting process, and guide both short-term and long-term operational and strategic planning. As such, we believe adjusted net income provides meaningful insight for investors into our financial performance, consistent with how our management team and board of directors view and analyze our results. Adjusted net income is a non-GAAP financial measure and should be considered alongside, but not as a replacement for or superior to, net income as reported in accordance with GAAP. The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to adjusted net income for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(in thousands)
Adjusted net (loss) income reconciliation:
Net (loss) income $ (7,175) $ 54 $ (11,060) $ (1,782)
Stock-based compensation expense 1,531 1,407 4,205 4,403
Litigation costs 5,987 - 11,643 -
Regulatory provision 2,715 - 2,715 -
Non-recurring engineering fees - - 1,050 -
Adjusted net income $ 3,058 $ 1,461 $ 8,553 $ 2,621
Results of Operations
The following tables set forth our results of operations for the periods indicated:
Three Months Ended September 30,
2026 2025 2026 2025
(In thousands) (As a percentage of revenue)
Product sales $ 16,945 $ 12,690 82 % 90 %
Licensing, royalty, engineering services and other revenue 3,703 1,370 18 10
Total revenue 20,648 14,060 100 100
Cost of product sales 9,622 6,628 47 47
Cost of licensing, royalty, engineering services and other revenue 417 226 2 2
Total cost of sales 10,039 6,854 49 49
Gross profit 10,609 7,206 51 51
Operating expenses:
Research and development 3,553 3,583 17 25
General and administrative 13,029 3,690 63 26
Sales and marketing 1,956 1,478 9 11
Total operating expenses 18,538 8,751 89 62
Loss from operations (7,929) (1,545) (38) (11)
Interest income 351 432 2 3
Other income, net 413 1,164 2 8
Net (loss) income before income taxes (7,165) 51 (34) -
Income tax (expense) benefit (10) 3 - -
Net (loss) income and comprehensive (loss) income $ (7,175) $ 54 (34) % - %
Comparison of the three months ended September 30, 2026 and 2025
Revenue
We generated 81% and 86% of our revenue from products sold through distributors for the three months ended September 30, 2026 and 2025, respectively.
We maintain a direct selling relationship, for strategic purposes, with several key customer accounts. We have organized our sales team and representatives into three primary regions: Asia-Pacific (APAC); North America; and Europe, Middle East and Africa (EMEA). We recognize revenue by geography based on the region in which our products are sold, and not where the end products in which they are assembled are shipped. Our revenue by region for the periods indicated was as follows (in thousands):
Three Months Ended September 30,
2026 2025
APAC $ 12,759 $ 8,571
North America 5,246 2,497
EMEA 2,643 2,992
Total revenue $ 20,648 $ 14,060
Three Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Product sales $ 16,945 $ 12,690 $ 4,255 33.5 %
Licensing, royalty, engineering services and other revenue 3,703 1,370 2,333 170.3 %
Total revenue $ 20,648 $ 14,060 $ 6,588 46.9 %
Total revenue increased by $6.6 million, or 46.9%, from $14.1 million during the three months ended September 30, 2025 to $20.6 million during the three months ended September 30, 2026.
Product sales saw an increase of $4.3 million or 33.5%, primarily driven by higher customer demand and increased unit shipments.
Licensing, royalty, engineering services and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction. Licensing, royalty, engineering services and other revenue increased by $2.3 million, or 170.3%, from $1.4 million during the three months ended September 30, 2025, to $3.7 million during the three months ended September 30, 2026. The increase was primarily due to a subcontract agreement providing engineering services for military and defense applications.
Cost of Sales and Gross Margin
Three Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Cost of product sales $ 9,622 $ 6,628 $ 2,994 45.2 %
Cost of licensing, royalty, engineering services and other revenue 417 226 191 84.5 %
Total cost of sales $ 10,039 $ 6,854 $ 3,185 46.5 %
Gross margin 51.4 % 51.3 %
Cost of product sales increased by $3.0 million, or 45.2%, from $6.6 million during the three months ended September 30, 2025, to $9.6 million during the three months ended September 30, 2026. The increase was primarily due to higher product sales volume and higher manufacturing costs associated with our STT-MRAM products.
Cost of licensing, royalty, engineering services and other revenue increased by $0.2 million, or 84.5%, from $0.2 million during the three months ended September 30, 2025, to $0.4 million during the three months ended September 30, 2026. The increase was primarily attributable to the progression of our engineering services subcontract agreements.
Gross margin increased from 51.3% during the three months ended September 30, 2025, to 51.4% during the three months ended September 30, 2026. Gross margin increased primarily due to a higher proportion of licensing, royalty, engineering services and other revenue, which carries higher margins, partially offset by lower product margins.
Operating Expenses
Our operating expenses consist of research and development, general and administrative and sales and marketing expenses. Personnel-related expenses, including salaries, benefits, bonuses and stock-based compensation, are among the most significant components of each of our operating expense categories.
Three Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Research and development $ 3,553 $ 3,583 $ (30) (0.8) %
Research and development as a % of revenue 17 % 25 %
Research and Development Expenses. Research and development expenses remained consistent at $3.6 million during each of the three months ended September 30, 2025 and 2026.
Three Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
General and administrative $ 13,029 $ 3,690 $ 9,339 253.1 %
General and administrative as a % of revenue 63 % 26 %
General and Administrative Expenses. General and administrative expenses increased by $9.3 million, or 253.1%, from $3.7 million during the three months ended September 30, 2025, to $13.0 million during the three months ended
September 30, 2026. The increase is primarily due to the litigation costs related to the patent infringement lawsuit and the $2.7 million related to the regulatory provision, each described in Note 5 to our condensed financial statements included in Item 1 of this report.
Three Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Sales and marketing $ 1,956 $ 1,478 $ 478 32.3 %
Sales and marketing as a % of revenue 9 % 11 %
Sales and Marketing Expenses. Sales and marketing expenses increased by $0.5 million, or 32.3%, from $1.5 million during the three months ended September 30, 2025, to $2.0 million during the three months ended September 30, 2026. The increase in sales and marketing expenses relates primarily to higher compensation costs and contract labor.
Three Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Interest income $ 351 $ 432 $ (81) (18.8) %
Interest income decreased by $0.1 million, or 18.8%, from $0.4 million during the three months ended September 30, 2025, to $0.4 million during the three months ended September 30, 2026. The decrease is primarily due to the decrease in interest rates.
Other Income, Net
Three Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Other income, net $ 413 $ 1,164 $ (751) (64.5) %
Other income, net decreased by $0.8 million, or 64.5%, from $1.2 million during the three months ended September 30, 2025, to $0.4 million during the three months ended September 30, 2026. Other income relates primarily to other income recognized from a strategic award we received to develop a long-term plan to provide manufacturing services for military and defense segments.
Nine Months Ended September 30,
2026 2025 2026 2025
(In thousands) (As a percentage of revenue)
Product sales $ 46,358 $ 34,807 85 % 86 %
Licensing, royalty, engineering services and other revenue 7,898 5,592 15 14
Total revenue 54,256 40,399 100 100
Cost of product sales 24,873 18,823 46 47
Cost of licensing, royalty, engineering services and other revenue 834 849 2 2
Total cost of sales 25,707 19,672 48 49
Gross profit 28,549 20,727 52 51
Operating expenses:
Research and development 11,996 10,519 22 26
General and administrative 25,917 11,170 48 28
Sales and marketing 5,664 4,476 10 11
Total operating expenses 43,577 26,165 80 65
Loss from operations (15,028) (5,438) (28) (13)
Interest income 984 1,263 2 3
Other income, net 2,997 2,394 6 6
Net (loss) income before income taxes
(11,047) (1,781) (20) (4)
Income tax (expense) benefit
(13) (1) - -
Net (loss) income and comprehensive (loss) income
$ (11,060) $ (1,782) (20) % (4) %
Comparison of the nine months ended September 30, 2026 and 2025
Revenue
We generated 82% and 71% of our revenue from products sold through distributors for the nine months ended September 30, 2026 and 2025, respectively.
We maintain a direct selling relationship, for strategic purposes, with several key customer accounts. We have organized our sales team and representatives into three primary regions: Asia-Pacific (APAC); North America; and Europe, Middle East and Africa (EMEA). We recognize revenue by geography based on the region in which our products are sold, and not where the end products in which they are assembled are shipped. Our revenue by region for the periods indicated was as follows (in thousands):
Nine Months Ended September 30,
2026 2025
APAC $ 32,819 $ 24,412
North America 13,350 7,906
EMEA 8,087 8,081
Total revenue $ 54,256 $ 40,399
Nine Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Product sales $ 46,358 $ 34,807 $ 11,551 33.2 %
Licensing, royalty, engineering services and other revenue 7,898 5,592 2,306 41.2 %
Total revenue $ 54,256 $ 40,399 $ 13,857 34.3 %
Total revenue increased by $13.9 million, or 34.3%, from $40.4 million during the nine months ended September 30, 2025 to $54.3 million during the nine months ended September 30, 2026.
Product sales saw an increase of $11.6 million or 33.2%, primarily driven by higher customer demand and increased unit shipments.
Licensing, royalty, engineering services and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction. Licensing, royalty, engineering services and other revenue increased by $2.3 million, or 41.2%, from $5.6 million during the nine months ended September 30, 2025 to $7.9 million during the nine months ended September 30, 2026. The increase was primarily due to a subcontract agreement providing engineering services for military and defense applications.
Cost of Sales and Gross Margin
Nine Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Cost of product sales $ 24,873 $ 18,823 $ 6,050 32.1 %
Cost of licensing, royalty, engineering services and other revenue 834 849 (15) (1.8) %
Total cost of sales $ 25,707 $ 19,672 $ 6,035 30.7 %
Gross margin 52.6 % 51.3 %
Cost of product sales increased by $6.1 million, or 32.1%, from $18.8 million during the nine months ended September 30, 2025, to $24.9 million during the nine months ended September 30, 2026. Cost of product sales has increased consistently and proportionately with the increase in revenues on our Toggle and STT products.
Cost of licensing, royalty, engineering services and other revenue remained consistent at $0.8 million during the nine months ended September 30, 2025, and the nine months ended September 30, 2026, despite an increase in related revenue, primarily due to changes in the mix of labor and materials costs associated with the progression of our engineering services subcontract agreements.
Gross margin increased from 51.3% during the nine months ended September 30, 2025, to 52.6% during the nine months ended September 30, 2026. Gross margin increased primarily due to higher margins on licensing, royalty, engineering services and other revenue, which also increased as a proportion of total revenue, and a slight improvement in product margins.
Operating Expenses
Our operating expenses consist of research and development, general and administrative and sales and marketing expenses. Personnel-related expenses, including salaries, benefits, bonuses and stock-based compensation, are among the most significant components of each of our operating expense categories.
Nine Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Research and development $ 11,996 $ 10,519 $ 1,477 14.0 %
Research and development as a % of revenue 22 % 26 %
Research and Development Expenses. Research and development expenses increased by $1.5 million, or 14.0%, from $10.5 million during the nine months ended September 30, 2025, to $12.0 million during the nine months ended September 30, 2026. The increase in research and development expenses relates primarily to non-recurring engineering fees.
Nine Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
General and administrative $ 25,917 $ 11,170 $ 14,747 132.0 %
General and administrative as a % of revenue 48 % 28 %
General and Administrative Expenses. General and administrative expenses increased by $14.7 million, or 132.0%, from $11.2 million during the nine months ended September 30, 2025, to $25.9 million during the nine months ended September 30, 2026. The increase is primarily due to the litigation costs related to the patent infringement lawsuit and the $2.7 million related to the regulatory provision, each described in Note 5 to our condensed financial statements included in Item 1 of this report.
Nine Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Sales and marketing $ 5,664 $ 4,476 $ 1,188 26.5 %
Sales and marketing as a % of revenue 10 % 11 %
Sales and Marketing Expenses. Sales and marketing expenses increased by $1.2 million, or 26.5%, from $4.5 million during the nine months ended September 30, 2025, to $5.7 million during the nine months ended September 30, 2026. The increase in sales and marketing expenses relates primarily to higher compensation costs and contract labor.
Nine Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Interest income $ 984 $ 1,263 $ (279) (22.1) %
Interest income decreased by $0.3 million, or 22.1%, from $1.3 million during the nine months ended September 30, 2025, to $1.0 million during the nine months ended September 30, 2026. The change is primarily due to the decrease in interest rates.
Other Income, Net
Nine Months Ended
September 30, 		Change
2026 2025 Amount %
(Dollars in thousands)
Other income, net $ 2,997 $ 2,394 $ 603 25.2 %
Other income, net increased by $0.6 million, or 25.2%, from $2.4 million during the nine months ended September 30, 2025, to $3.0 million during the nine months ended September 30, 2026. Other income relates primarily to income recognized from a strategic award we received to develop a long-term plan to provide manufacturing services for military and defense segments.
Liquidity and Capital Resources
As of September 30, 2026, we had $43.0 million of cash and cash equivalents, compared to $44.5 million as of December 31, 2025. We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements in the next 12 months. Our long-term capital requirements will depend on many factors, including, among other things, our growth rate, the timing and extent of our spending to support our current and future manufacturing requirements, research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
Nine Months Ended September 30,
2026 2025
(In thousands)
Cash provided by operating activities $ 1,592 $ 7,336
Cash used in investing activities (8,559) (4,733)
Cash provided by financing activities 5,559 557
Cash Flows From Operating Activities
During the nine months ended September 30, 2026, cash provided by operating activities was $1.6 million, which consisted of net loss of $11.1 million, non-cash charges of $6.3 million and changes of net operating assets and liabilities of $6.3 million. The non-cash charges consisted of stock-based compensation of $4.2 million and depreciation and amortization of $2.1 million. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable of $8.2 million, an increase in accrued liabilities of $6.0 million, partially offset by an increase in inventory of $3.2 million, an increase in accounts receivable of $3.0 million, a decrease in contract obligations of $1.5 million and an increase in other assets of $0.5 million.
During the nine months ended September 30, 2025, cash provided by operating activities was $7.3 million, which consisted of net loss of $1.8 million, non-cash charges of $6.9 million and changes of net operating assets and liabilities of $2.2 million. The non-cash charges consisted of stock-based compensation of $4.4 million and depreciation and amortization of $2.6 million. The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $3.0 million, an increase in deferred revenue of $0.9 million, an increase in accrued liabilities of $0.5 million, an increase in contract obligations of $0.5 million, a decrease in prepaid and other current assets of $0.4
million, an increase in long-term income tax liability of $0.1 million, offset by an increase in inventory of $2.7 million and a decrease in accounts payable of $0.6 million.
Cash Flows From Investing Activities
Cash used in investing activities during the nine months ended September 30, 2026 was $8.6 million due to $7.1 million in purchases of property and equipment and $1.5 million in purchases of intangible assets.
Cash used in investing activities during the nine months ended September 30, 2025 was $4.7 million due to $3.2 million of purchases of property and equipment and $1.5 million in purchases of intangible assets.
Cash Flows From Financing Activities
Cash provided by financing activities during the nine months ended September 30, 2026 was $5.6 million, primarily due to proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan offset by a nominal amount in payments on finance leases.
Cash provided by financing activities during the nine months ended September 30, 2025 was $0.6 million, primarily due to proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan offset by a nominal amount in payments on finance leases.
Critical Accounting Policies and Significant Judgments and Estimates
Our condensed financial statements have been prepared in accordance with GAAP. The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. We base our estimates on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no changes to our critical accounting policies and estimates described in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 4, 2026, that have had a material impact on our condensed financial statements and related notes.
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