Everspin Technologies (MRAM) Q3 2026 earnings review
Everspin sales hit a record, but legal costs deepen losses
Everspin Technologies, a maker of specialized memory chips that retain data without power, posted record revenue while its reported loss widened. Total sales jumped 47% from a year ago, as chief executive Sanjeev Aggarwal cited industrial and data center demand alongside the defense engineering contract. However, $8.7 million in legal and regulatory charges pushed the company to a $7.2 million net loss, and chip gross margin fell to 43% by our math.
| MRAM product sales | $16.9M +33.5% from a year ago |
|---|---|
| Total revenue | $20.6M +46.9% from a year ago |
| GAAP net loss per share | $(0.29) missed $(0.10)–$(0.05) plan |
| Q4 revenue outlook | $21.5–22.5M middle of the range: +48.6% growth |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because strong top-line orders and a higher fourth-quarter sales plan were offset by worsening chip margins and escalating legal costs. While the fourth-quarter forecast points to 49% revenue growth at the middle of the range, litigation bills blew past finance chief Bill Cooper's prior indication by 50%, and Everspin added a new $2.7 million regulatory charge to its excluded costs.
The question now is whether growing chip volume can lift product margins and cover operating costs before the government engineering contracts wind down. Either larger factory runs will offset packaging and gold costs, or legal bills and low chip margins will keep the business in a reported loss even at record sales. Fourth-quarter product gross margin and the legal footnote in the 10-Q filing will tell.
🐂 Bull Case
Chip Sales Accelerated and Q4 Raises the Bar
Everspin sells magnetoresistive random access memory (MRAM), a type of computer memory that keeps data when the power goes off. Chief executive Sanjeev Aggarwal said third-quarter growth "was led by strength in Industrial Automation, Data Center, Medical and Energy Management". Chip sales rose 33.5% from a year ago to $16.9 million, up 10.7% from the second quarter and near the top of the $16.1–17.1 million range implied by the prior outlook.
This matters because the core chip business is growing on its own, separate from government engineering contracts. Management's fourth-quarter revenue forecast of $21.5–22.5 million points to 48.6% growth from a year ago at the middle of the range, up from 46.9% in the third quarter. Even if engineering service revenue stays flat, the plan requires another step-up in chip shipments.
What to watch: fourth-quarter MRAM product sales in the next release. A figure above $18 million would confirm that industrial and data center customers are expanding orders rather than just refilling inventory.
Services Lifted Revenue, But Prepayments Ran Down
Alongside memory chips, Everspin earns revenue from licensing, royalties and engineering services, now anchored by a $40 million defense subcontract signed earlier this year. Supporters view this work as a multi-year growth engine for US defense manufacturing, while skeptics see a temporary contract that hides losses in the chip business and ends in 2028.
In the third quarter, this non-product line jumped 170.3% from a year ago to $3.7 million, up from $3.4 million in the second quarter. By our math, gross margin on these services was 88.7%, generating $3.3 million in gross profit. However, contract obligations on the balance sheet—cash customers paid in advance for upcoming work—fell from $3.0 million in June to zero in September.
What to watch: the remaining contract value and deferred revenue note in the third-quarter 10-Q filing. A rise in new billings would show the defense project is moving to its next milestone rather than pausing.
Positives This Quarter Didn't Test
Three longer-term growth drivers received no text update in the preliminary earnings release and await the conference call or quarterly filing.
- Onshore foundry build-out with Microchip: non-recurring engineering charges excluded from profit dropped to zero from $1.1 million in the second quarter; the call will clarify whether Phase 1 equipment installation stayed on schedule.
- Data center CXL memory module: Everspin planned a September conference demonstration of its memory module on an AMD platform; management's call remarks will show whether customer trials followed.
- Space satellite design wins: the release did not break out aerospace and satellite orders; the call will test whether low-earth and geostationary orbit wins continued.
🐻 Bear Case
Litigation and Regulatory Charges Widened the Loss
"We remain focused on balancing strategic investments in our technology roadmap along with prudent expense management including ongoing litigation costs," finance chief Bill Cooper said. The numbers tell a different story. General and administrative expenses—the line that carries legal bills and overhead—jumped from 26.2% of revenue a year ago to 63.1% this quarter, or $13.0 million.
- Litigation expenses: $6.0 million, up from $4.0 million in the second quarter and zero a year ago
- New regulatory provision: $2.7 million, with no prior charge in the first half
- GAAP net loss: $7.2 million, or $(0.29) per share, missing the $(0.10) to $(0.05) outlook
- Total adjustments to profit: $10.2 million by our math, turning a $7.2 million loss into $3.1 million of profit excluding one-offs
The company also removed the $2.7 million regulatory charge from its headline profit, even though its own definition lists only stock-based compensation, Microchip foundry fees and litigation costs. Furthermore, the fourth-quarter outlook implies another $0.26 per share of excluded charges at the middle of the range, by our math.
What to watch: the legal contingencies footnote in the upcoming 10-Q filing. It will explain what triggered the $2.7 million regulatory provision and whether the $6.0 million legal bill marks a peak.
Chip Gross Margin Dropped Below 44%
Everspin's headline gross margin held at 51.4% against 51.3% a year ago, but fell 2.5 percentage points from 53.9% in the second quarter. The high-margin defense services contract is masking a slide in the profitability of the memory chips themselves. Last quarter, management noted that rising gold and chip-packaging costs were hurting product margins.
By our math, product gross margin—chip sales minus the direct cost of making the chips—fell to 43.2% in the third quarter, down from 45.8% in the second quarter and 50.7% in the first quarter. A year ago, product gross margin was 47.8%. Even though chip revenue grew 10.7% from last quarter, product gross profit rose only 4.4%, to $7.3 million.
This matters because the chip business still cannot cover Everspin's operating costs on its own. Without the $3.3 million of gross profit from licensing and engineering services, the company would have posted an operating loss even after stripping out stock-based compensation, legal bills and regulatory charges.
What to watch: fourth-quarter cost of product sales in the next release. A product gross margin below 43% while revenue hits a record would show that Everspin is unable to pass higher packaging costs on to customers.
Risks This Quarter Didn't Answer
Four standing risks from prior quarters depend on disclosures that only appear in the 10-Q filing or conference call.
- Avalanche trade complaint: litigation costs hit $6.0 million, and a $2.7 million regulatory provision appeared; the 10-Q will show whether the International Trade Commission case moved closer to a ruling.
- Chandler factory lease: Nokia is buying Everspin's Arizona manufacturing site from NXP; the call will test whether management has spoken directly with Nokia about extending its lease past 2028.
- Customer concentration: accounts receivable rose to $11.1 million from $8.1 million in December; the 10-Q will show whether a single customer still accounts for over a fifth of sales.
- Next-generation 16nm chip tape-out: the first test chip was scheduled to finish design in the fourth quarter; the call will show if that timetable holds.
💲 Other KPIs
Cash dipped by $0.9 million from June and $1.4 million since December. By our math, Everspin burned $0.5 million of free cash flow in the third quarter—operating cash flow of $0.9 million minus $1.4 million of factory equipment purchases—even though unpaid bills in accounts payable and accrued liabilities rose by $9.0 million over the first nine months.
Down from $1.2 million a year ago. This line records payments from a $14.6 million Department of Defense factory sustainment award outside normal operations. The drop matches management's plan for the award to wind down and finish in the first half of 2027, removing a source of income that previously offset operating losses.
The share count rose 5.3% from a year ago and 2.0% from the second quarter. Employees exercised stock options and bought shares through the employee stock plan, bringing in $5.6 million of cash over the first nine months of 2026 compared to $0.6 million in the prior-year period, while diluting existing holders.
🔮 Guidance
New. The plan calls for $22.0 million at the middle of the range, which is 48.6% growth from a year ago and 6.5% growth from the third quarter, by our math. Everspin has beaten the middle of its quarterly revenue plan for four straight quarters by an average of 6.3%; if the pattern holds, fourth-quarter revenue would reach $23.4 million, by our math.
New. The forecast has the net loss narrowing from $(0.29) per share in the third quarter to $(0.105) at the middle of the range. However, it still points to a fourth straight quarterly GAAP loss despite record sales. The release notes that legal bills remain "difficult to predict and subject to change".
New. At the middle of the range ($0.155), profit per share excluding one-offs rises 40.9% from $0.11 a year ago and 29.2% from $0.12 in the third quarter, by our math. Compared against the GAAP loss forecast, the plan embeds $0.26 per share of excluded charges—about $6.3 million on the current share count.
❓ Key Questions
What triggered the $2.7 million regulatory provision?
Everspin recorded a $2.7 million regulatory provision in the third quarter and excluded it from headline profit without explaining what agency or dispute caused it, or why it qualifies as a non-GAAP adjustment.
Why did litigation costs jump 50% above the plan?
On the second-quarter call, finance chief Bill Cooper said the third-quarter plan baked in litigation costs similar to the second quarter's $4.0 million. Actual legal expenses hit $6.0 million.
Why did chip gross margin drop to 43.2%?
By our math, product gross margin fell 2.6 percentage points from the second quarter and 7.5 points from the first quarter even as chip revenue grew to a record $16.9 million.
Why did Microchip foundry engineering charges drop to zero?
Non-recurring engineering expenses for the Microchip factory build-out were $1.1 million in the second quarter but zero in the third quarter. Investors need to know if work paused or shifted to capital spending.