MRAM

Afternoon, and welcome to Everspin Technologies' first quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. At the conclusion of management's prepared remarks, instructions will be provided for the question-and-answer session. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Amy Farrow, Investor Relations for Everspin. You may begin.

Thank you, operator, and good afternoon, everyone. Everspin released results for the first quarter 2026 ended 31st March 2026 this afternoon after market close. I'm Amy Farrow, Investor Relations for Everspin. With me on today's call are Sanjeev Aggarwal, President and Chief Executive Officer, and Bill Cooper, Chief Financial Officer. Before we begin the call, I would like to remind you that today's discussion may contain forward-looking statements regarding future events, including, but not limited to, the Company's expectations for Everspin's future business, financial performance and goals, customer and industry adoption of MRAM technology, successfully bringing to market and manufacturing products in Everspin's design pipeline, and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends, and market conditions and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

We would encourage you to review the Company's SEC filings, including the annual report on Form 10-K and other SEC filings made from time to time in which the Company may discuss risk factors associated with investing in Everspin. All forward-looking statements are made as of the date of this call, and except as required by law, the Company undertakes no obligation to update or alter any forward-looking statement made on this call, whether as a result of new information, future events, or otherwise. The financial results discussed today reflect the Company's preliminary estimates, are based on the information available as of the date hereof, and are subject to further review by Everspin and its external auditors.

The Company's actual results may differ materially from these estimates as a result of the completion of financial closing procedures, final adjustments, and other developments arising between now and the time that the financial results for the period are finalized. Additionally, the Company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the Company's press release are definitions and reconciliations of GAAP net income to non-GAAP net income, which provide additional details. A copy of the press release is posted on the Investor Relations section of Everspin's website at www.everspin.com. Now I'd like to turn the call over to Everspin's President and CEO, Sanjeev Aggarwal. Sanjeev, please go ahead.

Thank you, Amy, and thanks everyone for joining us on the call today. Before I discuss our first quarter results, I would like to share some exciting news. Today, after market close, we announced a new two-and-a-half year, $40 million agreement with a U.S. prime contractor. Under the agreement, Everspin will be a subcontractor on an existing prime contract and will provide Toggle MRAM process technology capabilities and engineering services for U.S. defense industrial-based customers. In addition, Everspin will provide engineering and foundry services for U.S. Department of War, or DOW, products through its recently announced foundry services agreement with Microchip. This agreement builds on our long history of supporting military and aerospace applications where performance, reliability, longevity, and domestic production are critical. Now turning to our first quarter results.

We are pleased to report results at the high end of our guidance range with revenue of $14.9 million and non-GAAP EPS of $0.11 per diluted share. Our performance this quarter was driven by strength in industrial automation, transportation, and data center applications. Industrial automation growth was driven by a recovery in customer demand, including Japan, as inventory levels have been worked down. In the transportation segment, growth was driven by the transition of design wins to production at several customers, including two rail applications. One such customer is a railroad operator in Asia who is utilizing our MRAM technology for critical railway signal applications, such as train axle counters. Axle counters, and by extension their components, must operate in harsh vibratory conditions which MRAM can withstand better than other memory technologies.

Modern axle counters use MRAM for storing large amounts of diagnostic and maintenance data, allowing for real-time monitoring, such as wheel detection and predictive maintenance. Additionally, MRAM enables more robust data storage, contributing to the high safety integrity levels, SIL four, required for axle counter systems, ensuring accurate detection and reducing false alarms. Another customer is a leading embedded computing company in Asia who chose Everspin's MRAM solutions for rail transit systems because they reliably preserve critical data during power loss and support unlimited erase and write cycles. In data center, growth continues to be driven by our ongoing work with IBM on the FCM4 and FCM5 modules and the redundant array of independent disks or RAID reference design at the top five hyperscale operators.

With respect to below-the-line items, we recognized $2.1 million in other income in the first quarter and $12.8 million to date from the $14.6 million contract we have with the DoD contractor to develop a sustainment plan for our MRAM manufacturing facilities to provide continuous onshore MRAM capabilities to their aerospace and defense customers. We expect this business to begin to wind down over the coming quarters with estimated completion in the first half of 2027. Turning to some of our product development efforts. During the quarter, we formally introduced our UNISYST MRAM family at Embedded World in early March. This product family represents a new generation of unified memory solutions designed to fundamentally change how embedded systems store and access code and data.

UNISYST delivers high bandwidth read and write speeds in a non-volatile memory device, enabling fast boot, rapid updates, and predictable performance without the trade-offs of traditional flash-based designs. UNISYST will extend our MRAM roadmap to higher densities while giving customers a practical way to start with PERSYST today and migrate to a code and data MRAM architecture as soon as it is available. Everspin will initially offer the UNISYST family in densities ranging from 128 Mb to two gigabits using a standard XSPI interface operating up to octal SPI at 200 megahertz. Target use cases include AI at the edge, military and aerospace, automotive, industrial, and casino gaming. Engineering samples of UNISYST are expected to be available in the fourth quarter of 2026.

As a reminder, the UNISYST family of products will serve the high-density standalone NOR flash market, which will expand our addressable market by approximately $3 billion. Our goal is to capture 5%-10% of this market in the early years and then grow further. With respect to the high reliability parts that we announced last quarter, customers have our PERSYST 64 Mb XSPI STT-MRAM devices in hand and are engaged in design activity. Additionally, we remain on track to qualify our 128 Mb and 256 Mb high reliability parts and continue to expect them to be available in high volume in the second half of this year. Customers have engineering samples of these parts on hand as they evaluate them in their designs.

Building on our existing relationship with Microchip, we recently announced a strategic manufacturing agreement with the company to expand our onshore production capacity and strengthen our long-term supply chain resiliency by creating a second domestic source of supply for our customers. Under the 10-year agreement, we will establish a MRAM line at Microchip's fab in Oregon to manufacture MRAM and TMR sensor products currently produced at our line in Chandler. We expect to ship the first products from the new line in the second half of 2027. I will now turn it over to our CFO, Bill Cooper, who will walk you through our first quarter financials and second quarter 2026 guidance. Bill?

Thank you, Sanjeev. Our results reflect the consistency of our execution. During the first quarter, we delivered revenue of $14.9 million, up 14% year-over-year, and toward the high end of our guidance range of $14 million-$15 million, driven by higher product sales. MRAM product sales, which include both Toggle and STT MRAM revenue, were $14.1 million, an increase of 28% over the first quarter of the prior year and up 5% sequentially. Licensing, royalty, patent, and other revenue decreased to $0.8 million from $2.1 million in Q1 2025 due to fewer currently active projects. Our GAAP gross margin increased to 52.7% from 51.4% in the first quarter of 2025 due to higher capacity utilization.

GAAP operating expenses were $10.6 million, up from $8.7 million in the first quarter of 2025, due primarily to litigation costs as well as higher compensation costs for new and existing employees and professional fees. Other income of $2.1 million was related to the strategic award we won in mid-2024 to upgrade manufacturing equipment in our existing manufacturing facility located in Chandler, Arizona. We recorded fourth quarter non-GAAP net income of $2.6 million or $0.11 per diluted share based on 23.1 million weighted average diluted shares outstanding.

This was at the high end of our guidance range of non-GAAP net income of $0.07-$0.12 per share and compares to non-GAAP net income of $0.4 million or $0.02 per share in the first quarter of 2025. Our reported non-GAAP results exclude the impact of stock-based compensation as well as litigation expenses. Our balance sheet remains strong and debt-free. We ended the quarter with cash and cash equivalents of $40.5 million, down $4 million from the $44.5 million at the end of the prior quarter. Cash flow generated from operations decreased to $0.5 million for the first quarter from $2.6 million in the fourth quarter due to the litigation costs I mentioned earlier, as well as increased working capital needs.

We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements to execute upon our foundry services agreement with Microchip Technology and continue to invest in product development to support our future roadmap and enable the company to drive growth. Turning to guidance. Excluding any impact from the new subcontractor agreement that Sanjeev mentioned, we expect Q2 total revenue to be in the range of $15.5 million-$16.5 million. GAAP results per fully diluted share to be between a net loss of $0.12 to a loss of $0.07. On a non-GAAP basis, we anticipate results to be between breakeven and net income of $0.03 per fully diluted share. These non-GAAP figures exclude the impact of patent litigation costs in addition to stock-based compensation expense.

In summary, we are pleased with our solid performance this quarter and remain committed to maintaining financial discipline while focusing on scaling our business and converting additional design wins to revenue. Operator, you may now open the line for questions.

Thank you. Ladies and gentlemen, to ask the question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please Press Star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Neil Young with Needham & Company. Your line is open.

Hey, everyone. Thank you for letting me ask a question. The $40 million contract that you just announced, could you give us, you know, like, a shape on how you're thinking that revenue layers in or, you know, anything you can share on the milestone payments, such as, you know, how achievable you think the milestones are? What are the biggest risks to the milestones? Lastly, will that revenue live in the licensing royalty patent bucket? I have a follow-up. Thank you.

Hey, Neil. This is Bill. Thanks for the question. Yes. We really aren't giving any guidance related to that particular subcontract agreement just yet. Of course, we do expect it to have a significant positive impact over the next 2.5 years to the financials. In terms of, you know, meeting and achieving the milestones, yes, that was, you know, negotiated with the group involved, and, you know, we're very confident in our ability to deliver on the milestones.

Okay. Thanks. Could you maybe speak to what drove the gross margin strength in the quarter? You know, as the STT portfolio continues to evolve, you know, are you maybe starting to see higher ASPs come through here? Also, you know, should we sort of expect to see the gross margin hold in this range or revert back to similar levels of 4Q 2025? Thank you.

Yeah, good question. I think a couple of things, right? The first is a strong quarter on the margins. You know, again, as we've sort of always noted, we do target 50% plus in terms of gross margin. You know, I think, as we sort of see that lift in the top line and that volume increase, right, you kind of get into that beneficial arena of, you know, higher capacity utilization. Obviously, right, the guys are always looking at ways to reduce costs and improve our yields. All those things factor in.

Thank you.

Thank you. Our next question comes from the line of Richard Shannon with Craig-Hallum Capital Group. Your line is open.

Hey, Sanjeev and Bill. Thanks for letting me ask some questions here. I'm gonna follow up on this $40 million contract here. I guess a few questions here for me and one to follow up from your response, Bill, here, about why you don't have any revenue thoughts here you can give today. Is that because you're not allowed to or because you don't know what the shape and structure and timing looks like? Then also, wanna get a sense of what kind of margin profile we should expect over the life of the contract with this.

Okay. Yeah, good questions. You know, I'll try and elaborate a little bit further. You know, the contract itself, right? The, the ink on that is just drying. Obviously, it's gonna have a significant impact on the financials. You know, we're looking at all of the various impacts of that. As, as we, you know, run through Q2 and get the results and get the kickoff of the contract and all the various pieces, right, we'll give you guys better guidance, as we go into the end of this Q2 results. Then in terms of margin, yes, I would expect that, you know, that is also gonna have a bit of a beneficial impact to margin as well.

You know, again, that sort of have to be a little careful there. We're going to, again, reiterate, we do target the 50% plus margin for gross margins. Again, we have to sort through all the particulars of that significant contract.

I want to ask you a follow-up on about this contract in context of other activities you have or may have going on in the future here. You've referenced today and in the past year, this, I think it's a $14.6 million contract for, I forget the word you used here, you know, co-continuity plan or something. I think there's an RFQ out there from the U.S. government about, you know, maybe establishing 300 millimeter capacity here. You've obviously recently, as you announced, I can't remember, last month or whatever, adding some more capacity at Microchip. To what degree do all of these things interrelate here? Can you kind of tie these things together? If they're not tied together, tell us.

I'd just love to get a kind of some context here, please.

Yeah, hi, Richard. This is Sanjeev. A good question, and I think maybe I can help, and then maybe there's a follow-on to further clarify. The bottom line is the RFI for the 300 millimeter MRAM line is independent of the three other items you mentioned, namely the $14.6 contract that we got in 2024, the Microchip foundry services agreement, and the new contract that we just talked about today. As far as the $14.6 million contract that we got in 2024, that is the one where we basically got some support from the U.S. government to improve the supply chain for MRAM or Toggle MRAM for the U.S. government. That revenue, as you know, was actually being recognized below the line.

That was not above the line. There's a lot of CapEx and supply chain robustness involved in that discussion. The Microchip Foundry Services Agreement was simply between Everspin and Microchip, where we basically went out to increase our capacity. That was independent of these two contracts in that sense. We went out to increase our capacity given the high demand that we've been seeing over the last couple of quarters. Now, this new agreement that we just signed is basically we are going to provide a technology information, a recipe, a compendium, if you will, for mil and aerospace Toggle MRAM to this contractor, to this U.S. prime contractor. Okay?

In addition, they would have a right to second source the Everspin Toggle MRAM for mil-aero applications again in case Everspin decides to exit the business. Obviously, we have no intention of doing that, but we do give them the rights and all the technology and all the recipes, et cetera, associated with it in case we do exit, right? Also under this agreement, they actually get access to this Microchip Technology fab that we're bringing up to qualify their existing products on that line. There's NRE associated with getting that activity done. Finally, there is a new product that the U.S. government is actually planning to tape out.

The R&D for that product and the production support for that product would also be part of this contract that we just talked about. Hopefully, that helps.

That does help a lot. I appreciate that. If you don't mind, I'm gonna throw one more question before jumping back into the queue, and that's really about the guidance here. I mean, it sounds like we should expect most of the sequential growth in dollar terms here to come from products here. How do we think about it between the kind of the STT that's mostly going to IBM versus other products here within that? Any idea or can you just give us a sense of what kind of litigation spend you're expecting in the second quarter? Thanks.

Yes. On the first point, what I would say is, you know, definitely, seeing very strong product sales. We're up year-on-year 28%. I think, you know, most of that growth from Q1-Q2 is gonna be in that product sales category. Again, we are seeing, you know, I would say just good solid product sales across all the various categories. On your second question, we do show the $1.6 million that we had to expend in Q1 on litigation costs. What I would say is, you know, unfortunately, litigation is expensive, and I think we're kind of expecting it to continue in that range for at least, you know, the next couple of quarters.

Again, we'll see how that ultimately pans out.

Okay. Appreciate that detail. I will jump out of line, guys. Thank you.

Okay.

Thank you. Ladies and gentlemen, I am showing no further questions in the queue. We did have a question, a follow-up question to come through. One moment.

Okay.

We have a follow-up question from the line of Richard Shannon with Craig-Hallum. The line is open.

I guess I didn't have to jump out of line, let's hear maybe two more from you guys here. I noticed you've had two quarters of some above trend CapEx numbers in the fourth quarter, now the first here. While I could certainly expect some of that coming from maybe your Microchip agreement or not, I'm not sure. How do we look at that going forward here?

Yes, we did. We had a, I'll call it a unique period of capital spend, that again, was related to some of the improvements that we saw in the Chandler facility primarily, across a couple of different contracts. That flurry of activity, I think will start to settle down until we get into the real heart of this foundry services agreement.

This foundry services agreement, is that referring to Microchip specifically?

That's right. That's right. That's right.

When do we start to see that pick up? Any idea how to think about that sum total over, I don't even know what period of time to expect it to do there. I assume it's at least a couple of years, but what do we think about there?

There will be some significant capital spend over the next two years. Again, you know, it's gonna be spread out over time a little bit, probably some later this year as well as early next year. In terms of the overall CapEx, you know, not so significant that we can't manage it. I think, again, it's gonna be in the range, you know, of kind of what our historical spend has been annually.

Okay. Fair enough. My last question, I will jump on the line. If I took notes here, I seem to recall them being consistent with what I've heard in the past in regard to the UNISYST product line here, you talked about this being a $3 billion TAM. Sanjeev, if I caught your comments right, you're expecting kind of a 5%-10% share early on here. You know, 5% share of that number is $150 million in a year, and you're talking about last quarter you talked about getting to a goal of $100 million within 3-5 years.

I look at that 5%-10% share early on, quote, unquote, early on, seems to be a little bit longer timeframe than what would fit in here. Are we either thinking it's gonna take a while to get that kind of share, or is there some meaningful upside in terms of timing to hit that $100 million total corporate level goal?

Yeah, that's a good question for clarification, Richard. I think we've talked about this in the past. I don't think that UNISYST is gonna strongly contribute to the $100 million target that we have in the next 3-5 years. The reason being that it takes about 18-24 months for the qualification of these products at our customers. Let's say we have the product available, samples in Q4 of 2026, production, let's say Q1 or Q2 of 2027, then you basically have another 18 months before it's gonna ramp to production. I don't think it's gonna contribute significantly, but it will contribute some.

Okay. It's early on would be after that qualification period that you said takes up to two years then, so okay.

That is correct.

That makes sense.

Yeah. That's correct.

Okay.

Yeah.

Perfect. That's all for me, guys. Thank you.

Thank you.

Thanks.

Thank you. I will now turn the call back over to Sanjeev for closing remarks.

I just wanna say, thank you everyone for joining the call today, and we look forward to talking to you at the end of Q2. Thanks a lot for your time. Bye now.

Ladies and gentlemen, that concludes today's Conference Call. Thank you for your participation. You may now disconnect.

Good afternoon, and welcome to Everspin Technologies Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Monica Gould, Investor Relations of Everspin.

Thank you, operator, and good afternoon, everyone. Everspin released results for the fourth quarter and full year 2025 ended December 31, 2025, this afternoon after market close. I'm Monica Gould, Investor Relations for Everspin. And with me on today's call are Sanjeev Aggarwal, President and Chief Executive Officer; and Bill Cooper, Chief Financial Officer. Before we begin the call, I would like to remind you that today's discussion may contain forward-looking statements regarding future events, including, but not limited to, the company's expectations for Everspin's future business, financial performance and goals, customer and industry adoption of MRAM technology, successfully bringing to market and manufacturing products in Everspin's design pipeline and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends and market conditions and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We would encourage you to review the company's SEC filings, including the annual report on Form 10-K and other SEC filings made from time to time in which the company may discuss risk factors associated with investing in Everspin. All forward-looking statements are made as of the date of this call, and except as required by law, the company undertakes no obligation to update or alter any forward-looking statements made on this call, whether as a result of new information, future events or otherwise. The financial results discussed today reflect the company's preliminary estimates are based on information available as of the date hereof and are subject to further review by Everspin and its external auditors. The company's actual results may differ materially from these estimates as a result of the completion of financial closing procedures, final adjustments and other developments arising between now and the time that the financial results for this period are finalized. Additionally, the company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP net income to non-GAAP net income, which provide additional details. A copy of the press release is posted on the Investor Relations section of Everspin's website at www.everspin.com. And now I'd like to turn the call over to Everspin's President and CEO, Sanjeev Aggarwal. Sanjeev, please go ahead.

Thank you, Monica, and thanks, everyone, for joining us on the call today. We are pleased to report fourth quarter results with revenue of $14.8 million and non-GAAP EPS of $0.11 per diluted share with revenue towards the high end of our guidance range and EPS in line with our expectations. Our performance this quarter was driven by strength in data center, energy management and industrial automation applications. Growth in data center was driven by our ongoing work with IBM on the FCM4 module as well as its recently introduced FCM5 and the redundant array of independent disks or RAID reference design at the top 5 hyperscale operators. Within Energy Management and Industrial Automation, we saw demand return to normal levels after a period of inventory consumption that dampened demand in the prior year. With respect to below-the-line items, we recognized $2 million in other income in the fourth quarter and $10.5 million to date from the $14.6 million contract we have with a DoD contractor to develop a sustainment plan for our MRAM manufacturing facilities to provide continuous onshore MRAM capabilities to their aerospace and defense customers. We expect this business to progress on schedule with estimated completion in the first half of 2027. On the product side, we had a total of 238 design wins in 2025, up from 178 in the prior year. Our pipeline of new design wins for our MRAM products speaks to the continuing technical innovation from the Everspin team introducing new products to meet customer demand. These design wins support new customers and existing customers with new programs in industrial automation, casino gaming, energy management and military and aerospace applications. Turning to some of our product development efforts. We continue to expand our xSPI STT-MRAM portfolio in response to demand from our customers. We are pleased to announce that during the fourth quarter, we ramped our PERSYST 64-megabit xSPI STT-MRAM high reliability product to full production and saw strong demand driven by new customer interest and design wins, specifically in the low earth orbital or LEO satellite market. These devices are AEC-Q100 Grade 1 qualified and ideally suited for use in harsh conditions such as 125C Celsius operating temperature with a minimum 10 years of data retention. These capabilities are demanded by our customers to secure critical data in a variety of systems from aerospace and defense to industrial applications, including automotive. We are taking orders to support high-volume production from our customers and began shipping in the current quarter. In addition, we are in the process of qualifying higher density, high reliability parts of 128-megabit and 256-megabit that will be available in high volume in the second half of this year. We are on track to tape out a monolithic 256-megabit xSPI STT-MRAM device on a 16-nanometer FinFET node at TSMC in the second half of this year. This part will be our first product in the UNISYST family, unifying code storage and data memory in a high-density, nonvolatile architecture for edge AI, industrial and mission-critical designs. It is designed to deliver high bandwidth read and write speeds in a nonvolatile memory device, enabling fast boot, rapid updates and predictable performance without the trade-offs of traditional flash-based designs. By combining high-speed access with persistent storage, this family of parts will support software design systems that require frequent reconfiguration while maintaining data integrity across power cycles. As part of our efforts to build on to our partner network, we recently qualified our PERSYST 64-megabit xSPI STT-MRAM for Microchip's PIC64-HPSC series of 64-bit microprocessors or MPUs and are supporting the ecosystem for components being qualified by Microchip. This ecosystem includes several industry partners that jointly offer solutions tailored for the harsh environmental conditions in space. The high-density, high reliability xSPI STT-MRAM parts I discussed earlier would be an ideal solution for this application. MRAM is achieving significant success as a leading embedded nonvolatile memory in IoT, automotive and AI edge devices, yet the densities and performance options of embedded MRAM macros have been limited. At the same time, the semiconductor industry is moving towards chiplets to overcome rising costs, manufacturing complexity and yield limitations of traditional large monolithic chips, especially when combining leading-edge logic with volatile or nonvolatile memory. Chiplets enable mix and match process nodes, greater customization and reuse of building blocks, providing new freedom of degrees in the form of heterogeneous packaging solutions. With organizations such as the Open Compute project, embracing chiplets from the hyperscale data center to the edge, it is foreseeable that chiplets will be ubiquitous. This trend increasingly favors Everspin given our focus on marketing chip solutions, including chiplets and licensing our technology to embedded MRAM partners. In 2025, we further advanced our efforts in this area through several initiatives. We engaged with the Fraunhofer Chiplet Center of Excellence to analyze next-generation automotive compute platforms and corresponding MRAM use cases. We subsequently progressed to engage on system-level simulations into which we plan to provide MRAM simulation models to allow an assessment as well as quantification of the benefits that MRAM can provide in various use cases. Everspin is also participating in an effort to bring MRAM chiplets to the IMEC ecosystem that is aligned with the framework of the Open Compute Project chiplet work streams. IMEC launched the Automotive Chiplet Forum in 2024 to bring together members from the automotive industry to enable an open chiplet ecosystem essential for accelerating innovation, reducing costs and reinforcing the supply chain. More recently, we joined the newly formed Physical AI Chiplet Ecosystem or PACE, to help enable MRAM-based solutions for physical AI. As part of this effort to co-develop interoperable and reusable chiplets to reduce development costs and speed time to market for system and ASIC companies, Everspin will provide a robust, high-performance, nonvolatile memory to assist securing pace chiplets for boot, weight and code storage as well as life cycle management solutions. We expect to see chiplets addressing various applications over the next few years. As a reminder, the chiplet is part of our UNISYST unified code and data memory solutions, which are currently in the design phase. To further enhance our position in the auto industry, we are working with Quintauris, a joint venture of leading semiconductor companies on a next-generation RISC-V-based automotive reference design platform. RISC-V is an open standard instruction set architecture or ISA based on reduced instruction set computer or RISC principles, allowing anyone to design, manufacture and sell chips without paying a license fee for the ISA. Its modular architecture allows designers to create purpose-built accelerators using RISC-V core technology as well as extensions. This also includes new instructions that uniquely integrate and leverage MRAM as a persistent working memory. Given its rapid adoption, it offers a greenfield opportunity to create new MRAM-based architectures that fully utilize all the features and benefits that MRAM has to offer. Before I close, I would like to discuss our long-term strategy, which entails reaching $100 million in annual revenue over the next 3 to 5 years. We believe this growth will be driven by the ramp of new products, most notably our new XY parts in our PERSYST product portfolio, such as the 64-megabit part I described earlier and continued solid growth in our Toggle MRAM and licensing business. Our new PERSYST X5 parts are getting solid traction. They are offered in densities from 4 megabit to 256-megabit and include the power-optimized SC families and the high reliability or HR families with quad and optical SPI interfaces. For example, in industrial automation, energy management, electric vehicle and casino gaming markets, reliable high-density memory is required for next-generation systems. In aerospace and defense markets, such as LEO satellites, flight control systems require reliable, fast read and write speeds and fast boot for configuration. And in the FPGA and the MPU markets for Edge AI, low standby power, instant on and high-density memory is needed for larger bitstreams. We expect our first enhanced Serial NOR like UNISYST product family to be in production in 2027 and anticipate these products to contribute to our $100 million revenue target. Before I turn the call over to Bill to walk through our financials and guidance, I would like to briefly touch on the industry environment. As has been widely publicized, the industry is expecting -- experiencing memory shortages. Memory suppliers who have for decades been pushed into commoditization have been -- have seen a shift based on unprecedented memory shortages driven by the demands of AI. As a result, they have gone into allocation mode and are moving their capacity up the food chain. Companies that can make NOR flash, NAND and DRAM are shifting those capacities to where they can get more margin out of their fixed capacity. NOR suppliers, for example, are converting their lines to support DRAM to maximize their margins and generate more revenue. This has created a gap in the supply for NOR flash and driving customers to look for alternatives. We are in conversations with customers to evaluate our xSPI STT-MRAM to replace NOR flash. We have the capacity to support such demand and our parts are compatible with NOR flash. While these market dynamics are speeding up such conversations, revenue is contingent upon the qualification cycles of our potential customers. I will now turn it over to our CFO, Bill Cooper, who will walk you through our fourth quarter financials and first quarter 2026 guidance. Bill?

Thank you, Sanjeev. Our results reflect the consistency of our execution. During the fourth quarter, we delivered revenue of $14.8 million, up 12% year-over-year and toward the high end of our guidance range of $14 million to $15 million, driven by higher product sales. MRAM product sales in the fourth quarter, which include both Toggle and STT-MRAM revenue were $13.5 million, up 22% over the fourth quarter of the prior year. Licensing, royalty, patent and other revenue in the fourth quarter decreased to $1.3 million from $2.2 million in Q4 '24 due to the completion of projects which were active in Q4 '24. Turning to gross margin. Our GAAP gross margin decreased to 50.8% for the fourth quarter, down slightly from the 51.3% in the fourth quarter of 2024 due to lower licensing and other revenue. GAAP operating expenses for the fourth quarter of 2025 were $8.6 million, down sequentially and up slightly from $8.4 million in the fourth quarter of 2024. Other income of $2 million was related to the strategic award we won in mid-2024 to upgrade manufacturing equipment in our existing facility located in Chandler, Arizona. We recorded fourth quarter non-GAAP net income of $2.6 million or $0.11 per diluted share based on 23.8 million weighted average diluted shares outstanding. This was in line with our guidance range of non-GAAP net income of $0.08 to $0.13 per share and compares to non-GAAP net income of $2.8 million or $0.13 per share in the fourth quarter of 2024. As a reminder, reported non-GAAP results exclude the impact of stock-based compensation. We are pleased that our balance sheet remains strong and debt-free. We ended the quarter with cash and cash equivalents of $44.5 million, down $0.8 million from $45.3 million at the end of the prior quarter. Cash flow generated from operations increased to $2.8 million for the fourth quarter from $0.9 million in the third quarter. We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements. Our capital requirements 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. We did not experience any material tariff-related impact on our results in the fourth quarter and do not expect any material tariff-related impact in the coming quarters. Turning to guidance. We expect Q1 total revenue to be consistent with Q4 '25 and in the range of $14 million to $15 million and GAAP net loss per fully diluted share to be between $0.03 and net income of $0.02. On a non-GAAP basis, we anticipate net income per fully diluted share to be between $0.07 and $0.12. Going forward, we expect to exclude the impact of patent defense costs in addition to stock-based compensation from non-GAAP results. We expect a sequential decline in non-product revenue due to a project completion in Q4 '25, which will result in a gross margin headwind. However, we are still targeting gross margin to be in the 50% range. In summary, we are pleased with our solid performance this quarter and remain committed to maintaining financial discipline while focusing on scaling our business and converting additional design wins to revenue. Operator, you may now open the line for questions.

[Operator Instructions] Our first question comes from the line of Neil Young with Needham & Company.

Great to hear about the NOR flash opportunity. I'm curious sort of -- you're talking about that you're in conversations. I guess, sort of how fast or how quickly do you think you could see upside from that? And sort of if you could any way size the upside, that would be really helpful of possible upside in revenue.

Neil, thank you for the question. So like I said in the prepared remarks, I think it really depends on the qualification cycle for our potential customers. I can say that we are now getting listed as an alternate for NOR flash at various distributors worldwide because of the tight supply chain issues that we are seeing with NOR flash. So we do expect some upside, but it's very difficult to quantify today as to what that upside can be. But we are obviously available to meet the demand if the requests come in, and it just depends on the call cycle at the customers.

Great. That's helpful. Just one more question for me. You talked about the inventory levels in energy management and industrial automation. They're starting to look pretty healthy or you think they do look healthy at this point. I guess what gives you confidence that, that shouldn't be an issue next quarter and going forward?

Yes. So based on the backlog that we are seeing at our distributors and the forecast that we're seeing at our customers, we do feel that they have burned through the inventory that they had overbuilt over the last year or so. So we're pretty confident that going forward, we would not run into that same issue at least in 2026.

Our next question comes from the line of Richard Shannon with Craig-Hallum.

I'll ask one kind of in the context of this year here. I want to ask about 2 different contributors here. First of all, on the strategic RAD-Hard project you've been working with your partner, and this has talked about a much better year. I'm wondering if that's something similar that you're expecting as well. And then also this quarter and a couple of past ones, you've been talking about some increasing contributions from the LEO satellite market. Great to get a sense of how kind of -- what's kind of the sense of scale of that today? And do you see that increasing over this year and over the next couple of years?

Thanks for the question, Richard, and thanks for joining. Clearly, you seem to be a little bit under the weather, but thank you for joining. As far as the LEO satellite market is concerned, I'll let Bill address it. On the QuickLogic project, I think the award that QuickLogic talked about does not relate to the project that we've been working on jointly. And in fact, I think that's the project that Bill was talking about in his prepared remarks that is not going to renew in the near future, and we're going to see some decline in that non-product revenue in Q1 of this year. That is still waiting for some milestones to be met by the other partners in the program, and we expect that to be kicking in again towards the second half of this year, but not in the first half. Bill on the LEO satellite.

Yes. Thanks, Sanjeev, and thanks, Richard, for the question. Yes, I would say that the LEO satellite market is still that burgeoning market, and that's what we see both in terms of our orders and our backlog, and we feel confident about our products and our position there. And we expect to again kind of move up with that increased demand, especially as we've introduced our high reliability products as well that sort of fits perfectly in that particular market space as well.

Okay. Great. Second question, just on your NOR flash replacement products and maybe taking a different angle than one of the last questions here and also your very interesting comments. But obviously, you've been targeting NOR flash replacement in certain markets. And if I caught your comments right, Sanjeev, you're talking about, I think, a win with -- I think it was Microchip on an MCU. I'd love to get a sense of when you see that becoming a material contributor. And then also maybe, I think in the past, you talked about some other engagements, particularly in the FPGA space where you're excited about some progress there. Maybe give us an update there as well, please.

Yes. Good question, Richard. I think there are 2 partner programs that we're really excited about, in particular. One is the one with Lattice and the other one is this Microchip. And I think we are seeing steady progress with both those partners, trying to get our product qualified and integrated into their standard offering. And I think that's where this PIC64 at Microchip comes into play. There -- the markets that they are targeting align very well with Everspin in the aerospace and defense market. And then I think we can then expect to take into the commercial market as well. But right now, the PIC64 is targeted towards the aerospace and defense as well.

Okay. My last question, I'll jump out of line here. Sanjeev, you talked about a goal of driving towards or driving to $100 million of revenues within, I think, 3 to 5 years. I'd love to get a sense any way you quantify or at least rank order of the contributors of that revenue. I think the big picture here that I think of this as the toggle, the the STT products and licensing, I guess, if there's any other way you'd categorize the contributors, that would be very helpful.

So the way I look at it is the major contributor is going to be the PERSYST products, followed by perhaps equal contributions from our licensing and UNISYST in 3 to 5 years down the road towards the $100 million. In the PERSYST, I'm including the Toggle MRAM market products as well as the xSPI STT products that we are shipping today as well as the ST-DDR products that we're shipping to IBM. So I think those 3 would form the portion of the HR -- from the portion of the PERSYST products that are going to contribute. And this high reliability product family that we have just introduced is going to actually give us a nice boost over there. And then in 2027, we expect UNISYST to kick in some volume. And so I think between that, UNISYST and our licensing is what's going to get us to the $100 million mark down the road.

Ladies and gentlemen, I'm showing no further questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect.