Everspin Technologies Inc.

03/04/2026 | Press release | Distributed by Public on 03/04/2026 16:21

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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 audited financial statements and related notes included elsewhere in this report. This discussion and other parts of this report contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions. As a result of many factors, including those factors set forth in the "Risk Factors" section of this report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
For an overview of our business, see "Part I - Item 1. Business."
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 generally accepted accounting principles in the United States (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.
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 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:
Year Ended December 31,
2025 2024
(in thousands)
Adjusted Net (Loss) Income reconciliation:
Net (loss) income $ (586) $ 781
Stock-based compensation expense 5,776 6,713
Adjusted Net (Loss) Income $ 5,190 $ 7,494
Design wins. To continue to grow our revenue, we must continue to achieve design wins for our MRAM products. We consider a design win to occur when an OEM or contract manufacturer notifies us that it has qualified one of our products as a component in a product or system for production. Because the life cycles for our customers' products can last for many years, if these products have successful commercial introductions, we expect to continue to generate revenues over an extended period of time for each successful design win. New design wins in each successive quarter of 2025 were 44, 53, 55, and 85, respectively, compared to 31, 44, 50, and 53 in each successive quarter of 2024, respectively.
Results of Operations
Below are factors we want to highlight for understanding our 2025 annual results and year-over-year comparison with proper historical perspective:
•Our commitment to improving our manufacturing excellence enabled us to drive yield improvements within our internal and external foundries network to sustain existing product margins.
The following table sets forth our results of operations for the periods indicated:
Year Ended December 31,
2025 2024 2025 2024
(In thousands) (As a percentage of revenue)
Product sales $ 48,292 $ 42,203 87 % 84 %
Licensing, royalty, patent, engineering services and other revenue 6,910 8,199 13 16
Total revenue 55,202 50,402 100 100
Cost of product sales 25,938 22,812 47 45
Cost of licensing, royalty, patent, engineering services and other revenue 1,022 1,464 2 3
Total cost of sales 26,960 24,276 49 48
Gross profit 28,242 26,126 51 52
Operating expenses:
Research and development 14,085 13,686 26 27
General and administrative 14,552 14,141 26 28
Sales and marketing 6,113 5,390 11 11
Total operating expenses 34,750 33,217 63 66
Loss from operations (6,508) (7,091) (12) (14)
Interest income 1,646 1,766 3 3
Other income, net 4,405 6,066 8 13
Net (loss) income before income taxes (457) 741 (1) 2
Income tax (expense) benefit (129) 40 - -
Net (loss) income and comprehensive (loss) income $ (586) $ 781 (1) % 2 %
Comparison of the Years Ended December 31, 2025 and 2024
Revenue
We generated 75% and 79% of our revenue from products sold through distributors for the years ended December 31, 2025 and 2024, 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 to where the end products in which they are assembled are shipped. Our revenue by region for the periods indicated was as follows (in thousands):
Year Ended December 31,
2025 2024
APAC $ 34,527 $ 28,688
North America 10,890 10,710
EMEA 9,785 11,004
Total revenue $ 55,202 $ 50,402
Year Ended December 31, Change
2025 2024 Amount %
(Dollars in thousands)
Product sales $ 48,292 $ 42,203 $ 6,089 14.4 %
Licensing, royalty, patent, engineering services and other revenue 6,910 8,199 (1,289) (15.7) %
Total revenue $ 55,202 $ 50,402 $ 4,800 9.5 %
Total revenue increased by $4.8 million, or 9.5%, from $50.4 million during the year ended December 31, 2024, to $55.2 million during the year ended December 31, 2025. The increase was due to an increase in product sales revenue of $6.1 million, and partially offset by a decrease in licensing, royalty, patent, engineering services and other revenue of $1.3 million.
Licensing, royalty, patent, 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. We estimate royalty revenue earned throughout the year, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year. Licensing, royalty, patent, engineering services and other revenue decreased by $1.3 million, from $8.2 million during the year ended December 31, 2024, to $6.9 million during the year ended December 31, 2025. The decrease was primarily due to the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM.
Cost of Sales and Gross Margin
Year Ended December 31, Change
2025 2024 Amount %
(Dollars in thousands)
Cost of sales $ 25,938 $ 22,812 $ 3,126 13.7 %
Cost of licensing, royalty, patent, engineering services and other revenue 1,022 1,464 (442) (30.2) %
Total cost of sales $ 26,960 $ 24,276 $ 2,684 11.1 %
Gross margin 51.2 % 51.8 % * *
Cost of product sales increased by $3.1 million, or 13.7%, from $22.8 million during the year ended December 31, 2024, to $25.9 million during the year ended December 31, 2025. Cost of product sales relate primarily to costs of our Toggle and STT products and have increased consistently and proportionately with the increase in revenues.
Cost of licensing, royalty, patent, engineering services and other revenue decreased by $0.4 million, or 30.2%, from $1.5 million during the year ended December 31, 2024, to $1.0 million during the year ended December 31, 2025. The decrease was primarily due to a decrease in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects.
Gross margin decreased from 51.8% during the year ended December 31, 2024, to 51.2% during the year ended December 31, 2025. Gross margin slightly decreased as a result of the different revenue mix.
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 component of each of our operating expense categories.
Year Ended December 31, Change
2025 2024 Amount %
(Dollars in thousands)
Research and development $ 14,085 $ 13,686 $ 399 2.9 %
Research and development as a % of revenue 26 % 27 %
Research and Development Expenses. Research and development expenses increased by $0.4 million, or 2.9%, from $13.7 million during the year ended December 31, 2024, to $14.1 million during the year ended December 31, 2025. Research and development expenses relate primarily to the development and enhancement of our new Extended Serial Peripheral Interface (xSPI) family of STT-MRAM products, which offer high-performance, multiple I/O, SPI-compatibility and feature a high-speed, low pin count SPI compatible interface.
Year Ended December 31, Change
2025 2024 Amount %
(Dollars in thousands)
General and administrative $ 14,552 $ 14,141 $ 411 2.9 %
General and administrative as a % of revenue 26 % 28 %
General and Administrative Expenses. General and administrative expenses increased by $0.4 million, or 2.9%, from $14.1 million during the year ended December 31, 2024, to $14.6 million during the year ended December 31, 2025. The increase is primarily due to one-time professional service fees.
Year Ended December 31, Change
2025 2024 Amount %
(Dollars in thousands)
Sales and marketing $ 6,113 $ 5,390 $ 723 13.4 %
Sales and marketing as a % of revenue 11 % 11 %
Sales and Marketing Expenses. Sales and marketing expenses increased by $0.7 million, or 13.4%, from $5.4 million during the year ended December 31, 2024, to $6.1 million during the year ended December 31, 2025. The increase is sales and marketing expenses relates primarily to higher compensation costs and contract labor.
Interest Income
Year Ended December 31, Change
2025 2024 Amount %
(Dollars in thousands)
Interest income $ 1,646 $ 1,766 $ (120) (6.8) %
Interest income decreased by $0.1 million, or 6.8%, from $1.8 million during the year ended December 31, 2024, to $1.6 million during the year ended December 31, 2025. The decrease is primarily due to the decrease in interest rates.
Other Income, Net
Year Ended December 31, Change
2025 2024 Amount %
(Dollars in thousands)
Other income, net $ 4,405 $ 6,066 $ (1,661) (27.4) %
Other income, net decreased by $1.7 million, from $6.1 million during the year ended December 31, 2024, to $4.4 million during the year ended December 31, 2025. 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 aerospace and defense segments.
On July 4, 2025, the OBBBA was enacted. The OBBBA maintains the 21 percent corporate tax rate and makes permanent many of the beneficial expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act of 2017, including the immediate expensing of domestic research and development expenditures, more favorable interest deductibility and 100 percent bonus depreciation with effective dates in 2025. Revisions to the international tax framework are effective in 2026. In the fourth quarter of 2025, the Company elected to immediately expense new domestic research and development expenditures, but continue amortizing the existing capitalized and unamortized expenditures as of December 31, 2024.
Liquidity and Capital Resources
As of December 31, 2025, we had $44.5 million of cash and cash equivalents, compared to $42.1 million as of December 31, 2024. 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):
Year Ended December 31,
2025 2024
(In thousands)
Cash provided by operating activities $ 9,960 $ 7,099
Cash used in investing activities (8,674) (3,060)
Cash provided by financing activities 1,067 1,112
Cash Flows from Operating Activities
During the year ended December 31, 2025, cash provided by operating activities was $10.0 million, which consisted of net loss of $0.6 million, non-cash charges of $9.0 millionand changes in net operating assets and liabilities of $1.6 million. The non-cash charges primarily consisted of stock-based compensation of $5.8 million and depreciation and amortization of $3.2 million. The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $3.6 milliondue to timing of cash receipts for outstanding balances, an increase in accrued liabilities of $0.8 million, a decrease in other assets of $0.4 million, an increase in long-term income tax liability of $0.1 million, offset by an increase in inventory of $1.6 million to meet anticipated production volumes, a decrease in accounts payable of $0.5 million, a decrease in contract obligations of $0.6 million, and an increase in prepaid and other current assets of $0.6 million.
During the year ended December 31, 2024, cash provided by operating activities was $7.1 million, which consisted of net income of $0.8 million, non-cash charges of $8.4 millionand changes in net operating assets and liabilities of $2.1 million. The non-cash charges primarily consisted of stock-based compensation of $6.7 millionand depreciation and amortization of $1.7 million. The change in our net operating assets and liabilities was primarily due to an increase in
contract obligations of $2.0 milliondue to contracts the Company entered into in the third quarter of 2024, an increase in accounts receivable of $0.2 milliondue to timing of cash receipts for outstanding balances, an increase in inventory of $0.7 millionto meet anticipated production volumes, an increase in prepaid and other current assets of $0.3 million, an increase in other assets of $0.5 million, a decrease in accounts payable of $0.4 million, a decrease in accrued liabilities of $1.9 million, and a decrease in deferred revenue of $0.3 million.
Cash Flows from Investing Activities
During the year ended December 31, 2025, cash used in investing activities was $8.7 million, which consisted of capital expenditures primarily for the purchase of manufacturing equipment and purchased software.
During the year ended December 31, 2024, cash used in investing activities was $3.1 million, which consisted of capital expenditures primarily for the purchase of manufacturing equipment and purchased software.
Cash Flows from Financing Activities
During the year ended December 31, 2025, cash provided by financing activities was $1.1 million, which consisted of proceeds from stock option exercises and purchases of shares under our employee stock purchase plan.
During the year ended December 31, 2024, cash used in financing activities was $1.1 million, which consisted of proceeds from stock option exercises and purchases of shares under our employee stock purchase plan.
Critical Accounting Policies and Significant Judgments and Estimates
Our financial statements have been prepared in accordance with U.S. GAAP. The preparation of these 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.
Revenue Recognition
We recognize revenue when a customer obtains control of the promised products or services, in an amount that reflects the consideration we expect to receive in exchange for those products or services. We recognize revenue net of allowances for returns and price concessions, and any taxes imposed on revenue transactions, which are subsequently remitted to governmental authorities.
Nature of Products and Services
We derive our revenue from the sale of MRAM-based products in discrete unit form, licenses of and royalties on our MRAM and magnetic sensor technology, the sale of backend foundry services, and design services to third parties. We recognize sales of products in discrete unit form at a point in time, revenue related to licensing agreements when we have delivered control of the technology, revenue related to royalty agreements in the period in which sales generated from products sold using our technology occurs, sales of backend foundry services over time, and design services to third parties either at a point in time or over time, depending on the nature of the services.
Product Revenue
For products sold in their discrete form, we either sell our products directly to OEMs, ODMs, contract manufacturers (CMs), or through a network of distributors, who in turn sell to those customers. For sales directly to OEMs, ODMs and CMs, we recognize revenue when the OEM, ODM or CM obtains control of the product, which occurs at a point in time, generally upon shipment to the customer.
From time to time, we may provide distributors with price adjustments subsequent to the delivery of product to them and such amounts are dependent on the end customer and product sales price. Price adjustments can be based on a variety of factors, including customer, product, quantity, geography, and competitive differentiation. Price protection rights grant distributors the right to a credit in the event of declines in the price of our products. Under these circumstances, we remit back to the distributor a portion of their original purchase price after the resale transaction is completed in the form of a credit against the distributors' outstanding accounts receivable balance. The credits are on a per unit basis and are not given to the distributor until the distributor provides information regarding the sale to their end customer. We estimate these credits and record such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of an allowance for price adjustments for amounts due to distributors. We estimate credits to distributors based on the historical rate of credits provided to distributors relative to sales and evaluation of current market conditions. Revenue on shipments to distributors is recorded when control of the products has been transferred to the distributor.
We estimate the amount of our product sales that may be returned by our customers and record this estimate as a reduction of revenue in the period the related product revenue is recognized. We estimate our product return liability by analyzing our historical returns, current economic trends and changes in customer demand and acceptance of products. We have received insignificant returns to date and believe that returns of our products will continue to be minimal.
Upon the transfer of control, generally at shipment, we record a trade receivable for the selling price as there is a legally enforceable obligation of the distributor to pay for the product delivered, an allowance is recorded for the estimated discount that will be provided to the distributor, and the net of these amounts is recorded as revenue on the statements of operations and comprehensive (loss) income.
License Revenue
For licenses of technology, recognition of revenue is dependent upon whether we have delivered rights to the technology, and whether there are future performance obligations under the contract. In some instances, the license agreements call for future events or activities to occur in order for milestone amounts to become due from the customer. The terms of such agreements include payment to us of one or more of the following: non-refundable upfront fees; and royalties on net sales of licensed products. Historically, these license agreements have not included other future performance obligations once the license has been transferred to the customer.
We recognize revenue from non-refundable upfront payments when the license is transferred to the customer and we have no other performance obligations.
We also have entered into multiple contractual agreements with customers for the development of a RAD-Hard product, consisting of a technology license, a design license agreement and development contract and for the development of a strategic radiation hardened field programmable gate array product, consisting of a technology license to provide design and development services under the contractual agreements. We applied a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the performance obligation is satisfied.
We concluded these contractual arrangements represent one arrangement and evaluated our promises to the customer and whether the performance obligations granted under the arrangement were distinct. The licenses provided to the customer are not transferable, are of limited value without the promised development services, and the customer cannot benefit from the license agreements without the specific obligated services in the development subcontract, as there is strong interdependence between the licenses and the development subcontract. Accordingly, we determined the licenses were not distinct within the context of the contract and combined the license with other performance obligations.
As a result, we are recognizing revenue related to the performance obligations over time using the input method based on costs incurred to date relative to the total expected costs of the contract over the performance obligation period.
Inventory
We record inventories at the lower of cost, determined on a first-in, first-out basis or net realizable value. We write down inventory for estimated excess or obsolete inventory equal to the difference between cost and estimated net realizable value. Inventory write downs establish a new cost basis for inventory and charges are not subsequently reversed even if
circumstances subsequently indicate that increased carrying amounts are recoverable. In estimating these reserves, our evaluation takes into consideration historical and expected future demand considering current market conditions and trends, the effect new products may have on the sale of existing products, technological obsolescence, and other factors. We record inventory write-downs for the valuation of inventory when required based on our analyses and any write-downs result in a new cost basis for the affected item.
Recent Accounting Pronouncements
See Note 2 in the accompanying Notes to Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.
Everspin Technologies Inc. published this content on March 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 04, 2026 at 22:21 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]