NVE Corp. (NVEC) Q1 2027 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026 (First Quarter of Fiscal Year 2027). NVE Corporation develops and sells spintronic devices, utilizing nanotechnology that relies on electron spin to acquire, store, and transmit information. The company is a non-accelerated filer and a smaller reporting company.
Key Financial Metrics
| Metric | Q1 2027 (Jun 30, 2026) | Q1 2026 (Jun 30, 2025) |
|---|---|---|
| Total Revenue | $11,034,057 | $6,104,644 |
| Gross Profit | $8,968,012 | $4,922,121 |
| Gross Margin | 81.3% | 80.6% |
| Net Income | $6,394,191 | $3,575,818 |
| Diluted EPS | $1.32 | $0.74 |
| Operating Cash Flow | $5,306,318 | $5,190,660 |
| Cash & Equivalents | $2,896,148 | $3,222,552 |
| Total Assets | $62,116,940 | $60,379,532 |
| Total Liabilities | $2,337,150 | $2,130,033 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 81% year-over-year, driven by an 82% increase in product sales (both defense and non-defense) and a 53% increase in contract research and development revenue.
- Profitability: Net income rose 79% to $6.4 million. Operating income increased 92% to $7.3 million.
- Expense Increases: Total operating expenses rose 50%. Research and development expenses increased 31% due to staffing and new product development. Selling, general, and administrative (SG&A) expenses surged 81%, primarily due to increased performance-based compensation.
- Balance Sheet: Accounts receivable increased by $3.1 million due to higher sales volume and payment timing. Inventory decreased by $410,000 as sales outpaced production accumulation.
- Investments: The company holds approximately $43.1 million in marketable securities (69% of total assets). There was a net unrealized loss of $40,783 on these securities for the quarter.
Outlook, Risks, and Management Commentary
- Dividends: The company declared a quarterly cash dividend of $1.00 per share on July 22, 2026, payable August 31, 2026. This follows a similar dividend paid in the current quarter.
- Capital Allocation: Management intends to fund dividends through operating cash flows and maturing marketable securities. No stock repurchases were made during the quarter; $3.52 million remains authorized under the repurchase program.
- Fixed Assets: Capital expenditures are expected to be significantly lower in Fiscal 2027 compared to the prior year following the completion of facility expansion.
- Risks: Key risks include reliance on a few large customers for a significant percentage of revenue, economic uncertainties in served industries, and potential trade barriers (tariffs/customs). No material legal proceedings are pending.
- Accounting Updates: The company adopted ASU 2025-05 regarding credit losses for accounts receivable with no material impact. New expense disaggregation standards (ASU 2024-03) will be effective in Fiscal 2028.
Investor Verification Checklist
- Customer Concentration: Verify the specific percentage of revenue derived from top customers to assess concentration risk.
- SG&A Drivers: Confirm the sustainability of the 81% increase in SG&A expenses and the specific terms of performance-based compensation.
- Accounts Receivable Aging: Review the aging of the $6.5 million receivable balance to ensure collectability given the sharp increase.
- Dividend Sustainability: Assess whether operating cash flows and investment income can consistently support the $1.00 quarterly dividend payout.
- Defense vs. Non-Defense Mix: Determine the split between defense and commercial sales to evaluate exposure to government budget cycles.