NVE (NVEC) Q3 2026 earnings summary

Executive summary

• Revenue for Q3 FY2026 increased 23% year-over-year to $6.22 million, driven by 16% growth in product sales and a 335% surge in contract R&D revenue, with broad-based growth across defense, non-defense, distributor, and direct channels.

• Net income for the quarter rose 11% year-over-year to $3.38 million ($0.70 per diluted share), driven by higher revenue and lower operating expenses, partially offset by lower gross margin and higher tax rate.

• For the first nine months, revenue grew 0.4% to $18.7 million, with net income down 8% to $10.3 million ($2.12 per diluted share).

Financial highlights

• Quarterly gross margin declined to 79% from 84% due to less profitable product mix and higher distributor sales.

• Operating margin was 60% and net margin 54% for the quarter.

• Quarterly gross profit increased to $4.89 million from $4.27 million year-over-year.

• Operating expenses fell 12% due to lower R&D (down 9%) and SG&A (down 19%).

• Cash and cash equivalents at quarter-end were $3.41 million, down from $8.04 million at March 31, 2025.

Outlook and guidance

• Full-year effective tax rate expected at 16%-17%, aided by $700,000–$1 million in advanced manufacturing investment tax credits.

• Accelerated R&D expense deductions expected to reduce cash taxes by $1.1 million for FY2026.

• Optimism for defense business returning to normal flow and continued growth in non-defense and medical markets.

• Dividends to be funded through operating cash flow and maturing securities; future dividends subject to board approval and business conditions.