EVERSPIN TECHNOLOGIES INC.

Previous wording

Item 2. Management’s Discussion and Analysi****s of Financial Condition and Results of Operations

Current wording

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Previous wording

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 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

Current wording

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 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.

Previous wording

We generated 66% and 87% of our revenue from products sold to distributors for the three months ended June 30, 2025 and 2024, respectively.

Current wording

We generated 86% and 84% of our revenue from products sold to distributors for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Total revenue increased by $2.6 million, or 24.1%, from $10.6 million during the three months ended June 30, 2024 to $13.2 million during the three months ended June 30, 2025. The increase was due to an increase in product sales of $1.2 million, and an increase of licensing, royalty, patent, and other revenue of $1.4 million.

Current wording

Total revenue increased by $2.0 million, or 16.3%, from $12.1 million during the three months ended September 30, 2024 to $14.1 million during the three months ended September 30, 2025. The increase was due to an increase in product sales of $2.2 million, and partially offset by a decrease of licensing, royalty, patent, and other revenue of $0.3 million.

Previous wording

Licensing, royalty, patent, 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. Licensing, royalty, patent, and other revenue increased by $1.4 million, or 181.7% from $0.7 million during the three months ended June 30, 2024, to $2.1 million during the three months ended June 30, 2025. Theincrease was primarily due to the progression of our contractual agreements with customers for the development of RAD-Hard products, a new agreement for the development of an AI technology application, partially offset by the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM. Our best estimate of royalty revenue earned is made throughout the year for royalty contracts with an annual performance period, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year.

Current wording

Licensing, royalty, patent, 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. Licensing, royalty, patent, and other revenue decreased by $0.3 million, or 17.0% from $1.7 million during the three months ended September 30, 2024, to $1.4 million during the three months ended September 30, 2025. Thedecrease was primarily due to the reduced pace of deliverables in our contractual agreements with customers for the development of RAD-Hard products, along with the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM, and partially offset by a new agreement for the development of an AI technology application.

Previous wording

Cost of product sales increased by $0.9 million, or 17.8%, from $5.2 million during the three months ended June 30, 2024, to $6.2 million during the three months ended June 30, 2025. Cost of product sales relate primarily to costs of our toggle and STT products.

Current wording

Cost of product sales increased by$0.9 million, or 15.2%, from$5.8 million during the three months ended September 30, 2024, to$6.6 million during the three months ended September 30, 2025. Cost of product sales relate primarily to costs of our toggle and STT products.

Previous wording

Cost of licensing, royalty, patent, and other revenue slightly increased by $0.1 million, or 44.3% from $0.2 million during the three months ended June 30, 2024, to $0.3 million during the three months ended June 30, 2025. The increase was primarily due to an increase in costs related to labor and materials associated with the progression of our RAD-Hard and AI technology application projects.

Current wording

Cost of licensing, royalty, patent, and other revenue slightly decreased by $0.2 million, or 42.1% from $0.4 million during the three months ended September 30, 2024, to $0.2 million during the three months ended September 30, 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.

Previous wording

Gross margin increased from 49.0% during the three months ended June 30, 2024, to 51.3% during the three months ended June 30, 2025. Gross margin increased as a result of a shift in product mix, an increase in licensing, royalty, patent, and other revenue revenue, offset by a decrease in FAB loadings.

Current wording

Gross margin increased from 49.2% during the three months ended September 30, 2024, to 51.3% during the three months ended September 30, 2025. Gross margin increased as a result of improved yields and improved fabrication facility ("Fab") utilization.

Previous wording

Research and Development ExpensesResearch and development expenses increased by $0.1 million, or 0.9%, from $6.9 million during the six months ended June 30, 2024, to $6.9 million during the six months ended June 30, 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.

Current wording

Research and Development Expenses. Research and development expenses increased by$0.2 million, or 5.9%, from$3.4 million during the three months ended September 30, 2024, to$3.6 million during the three months ended September 30, 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.

Previous wording

*General and Administrative Expenses.*General and administrative expenses increased by $0.4 million, or 11.9%, from $3.3 million during the three months ended June 30, 2024, to $3.6 million during the three months ended June 30, 2025. The increase is primarily due to one-time professional services.

Current wording

General and Administrative Expenses. General and administrative expenses increased by $0.3 million, or 9.7%, from $3.4 million during the three months ended September 30, 2024, to $3.7 million during the three months ended September 30, 2025. The increase is primarily due to increases in professional service fees.

Previous wording

*Sales and Marketing Expenses.*Sales and marketing expenses increased by $0.2 million, or 13.8%, from $1.3 million during the three months ended June 30, 2024, to $1.5 million during the three months ended June 30, 2025. Sales and marketing expenses relate primarily to compensation costs and contract labor.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $0.2 million, or 12.0%, from $1.3 million during the three months ended September 30, 2024, to $1.5 million during the three months ended September 30, 2025. Sales and marketing expenses relate primarily to compensation costs and contract labor.

Previous wording

Other income (expense), net increased by $0.9 million, or 2906.7%, from $30,000 other expense during the three months ended June 30, 2024, to $0.8 million other income during the three months ended June 30, 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.

Current wording

Other income, net decreased by $2.8 million, or 70.4%, from $3.9 million other expense during the three months ended September 30, 2024, to $1.2 million other income during the three months ended September 30, 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.

Previous wording

We generated 63% and 78% of our revenue from products sold to distributors for the six months ended June 30, 2025 and 2024, respectively.

Current wording

We generated 71% and 80% of our revenue from products sold to distributors for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Total revenue increased by $1.3 million, or 5.1%, from $25.1 million during the six months ended June 30, 2024 to $26.3 million during the six months ended June 30, 2025. The increase was primarily due to an increase in product sales revenue of $1.4 million.

Current wording

Total revenue increased by $3.2 million, or 8.7%, from $37.2 million during the nine months ended September 30, 2024 to $40.4 million during the nine months ended September 30, 2025. The increase was due to increase in product sales revenue of $3.6 million.

Previous wording

Licensing, royalty, patent, and other revenue decreased by $0.1 million, or 2.2% from $4.3 million during the six months ended June 30, 2024, to $4.2 million during the six months ended June 30, 2025. Thedecreasewas primarily due to the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic

Current wording

Licensing, royalty, patent, and other revenue decreased by $0.4 million, or 6.3% from $6.0 million during the nine months ended September 30, 2024, to $5.6 million during the nine months ended September 30, 2025. Thedecreasewas primarily due to the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM, and by the reduced pace of deliverables in our contractual agreements with customers for the development of RAD-Hard products a new agreement for the development of an AI technology application.

Previous wording

Cost of product sales increased by $1.0 million, or 8.5%, from $11.2 million during the six months ended June 30, 2024, to $12.2 million during the six months ended June 30, 2025. Cost of product sales relate primarily to costs of our toggle and STT products.

Current wording

Cost of product sales increased by$1.8 million, or 10.8%, from$17.0 million during thenine months ended September 30, 2024, to$18.8 million during thenine months ended September 30, 2025. Cost of product sales relate primarily to costs of our toggle and STT products.

Previous wording

Gross margin decreased from 53.4% during the six months ended June 30, 2024, to 51.3% during the six months ended June 30, 2025. Gross margin decreased as a result of a decrease in FAB loadings, and a decrease in other revenue.

Current wording

Gross margin decreased from 52.0% during the nine months ended September 30, 2024, to 51.3% during the nine months ended September 30, 2025. Gross margin decreased as a result of a decrease in other revenue.

Previous wording

*Research and Development Expenses.*Research and development expenses increased by $0.1 million, or 3.6%, from $3.5 million during the three months ended June 30, 2024, to $3.6 million during the three months ended June 30, 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-

Current wording

Research and development expenses increased by$0.3 million, or 2.5%, from$10.3 million during thenine months ended September 30, 2024, to $10.5 million during thenine months ended September 30, 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.

Previous wording

*General and Administrative Expenses.*General and administrative expenses increased by $0.2 million, or 2.6%, from $7.3 million during the six months ended June 30, 2024, to $7.5 million during the six months ended June 30, 2025. The increase is primarily due to one-time professional services.

Current wording

General and Administrative Expenses. General and administrative expenses increased by $0.5 million, or 4.9%, from $10.7 million during the nine months ended September 30, 2024, to $11.2 million during the nine months ended September 30, 2025. The increase is primarily due to one-time professional service fees.

Previous wording

*Sales and Marketing Expenses.*Sales and marketing expenses increased by $0.4 million, or 14.0%, from $2.6 million during the six months ended June 30, 2024, to $3.0 million during the six months ended June 30, 2025. Sales and marketing expenses relate primarily to compensation costs and contract labor.

Current wording

Sales and Marketing Expenses. Sales and marketing expenses increased by $0.5 million, or 13.3%, from $4.0 million during the nine months ended September 30, 2024, to $4.5 million during the nine months ended September 30, 2025. Sales and marketing expenses relate primarily to compensation costs and contract labor.

Previous wording

Interest income remained consistent at $0.4 million during the three months ended June 30, 2025 and 2024, respectively.

Current wording

Interest income remained consistent at $1.3 million during the nine months ended September 30, 2024 and 2025, respectively.

Previous wording

Other income (expense), net increased by $1.3 million, or 1,832.4%, from $0.1 million other expense during the six months ended June 30, 2024, to $1.2 million other income during the six months ended June 30, 2025. Other income relates primarily to income recognized from a strategic award we received to develop a long-term plan to provide manufacturing services for aerospace and defense industries.

Current wording

Other income, net decreased by $1.5 million, or 38.0%, from $3.9 million other expense during the nine months ended September 30, 2024, to $2.4 million other income during the nine months ended September 30, 2025. Other income relates primarily to income recognized from a strategic award we received to develop a long-term plan to provide manufacturing services for aerospace and defense industries.

Previous wording

As of June 30, 2025, we had $45.0 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 future capital requirements will depend on many factors, including, among other things, our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products.

Current wording

As of September 30, 2025, we had $45.3 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 research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products.

Previous wording

During the six months ended June 30, 2025, cash provided by operating activities was$6.5 million, which consisted of net loss of$1.8 million, non-cash charges of$4.7 millionand changes of net operating assets and liabilities of$3.6 million. The non-cash charges consisted of stock-based compensation of $3.0 million and depreciation and amortization of $1.7 million. The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $4.4 million due toa one-time distributor transition, which provided improved payment terms, an increase in accounts payable of $0.8 million, an increase in contract obligation of $0.7 million, a decrease in prepaid and other current assets of $0.2 million, offset by an increase in inventory of $2.2 million and a decrease in accrued liabilities of $0.2 million.

Current wording

During thenine months ended September 30, 2025, cash provided by operating activities was$7.3 million, which consisted of net loss of$1.8 million, non-cash charges of$6.9 millionand changes of net operating assets and liabilities of$2.2 million. The non-cash charges consisted of stock-based compensation of$4.4 million and depreciation and amortization of$2.6 million. The change in our net operating assets and liabilities was primarily due toa decrease in accounts receivable of $3.0 million, an increase in deferred revenue of $0.9 million, an increase in accrued liabilities of $0.5 million, an increase in contract obligation of $0.5 million, a decrease in prepaid and other current assets of $0.4 million, an increase in long-term income tax liability of $0.1 million, offset by an increase in inventory of $2.7 million and a decrease in accounts payable of $0.6 million.

Previous wording

During the six months ended June 30, 2024, cash provided by operating activities was $0.4 million, which consisted of net loss of $2.7 million, non-cash charges of $4.4 million and changes of net operating assets and liabilities of $1.2 million. The non-cash charges consisted of stock-based compensation of $3.6 million and depreciation and amortization of $0.8 million. The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $1.4 million due to timing of cash receipts for outstanding balances, a decrease in prepaid and other current assets of $0.5 million, and a decrease in inventory of $0.4 million offset by a decrease in accounts payable of $0.6 million, a decrease in accrued liabilities of $2.6 million and a decrease in deferred revenue of $0.3 million.

Current wording

During thenine months ended September 30, 2024, cash provided by operating activities was$3.3 million, which consisted of net loss of$0.4 million, non-cash charges of $6.3 million and changes of net operating assets and liabilities of$2.6 million. The non-cash charges primarily consisted of stock-based compensation of$5.1 million, depreciation and amortization of$1.2 million. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable of$0.2 million, an increase in contract obligations of$3.0 million, an increase in prepaid and other current assets of$3.6 million, a decrease in accounts receivable of$0.1 million due to timing of cash receipts for outstanding balances, and a decrease in accrued liabilities of$2.2 million.

Previous wording

Cash used in investing activities during the six months ended June 30, 2025 was $3.9 million due to $2.9 million of purchases of manufacturing equipment and $1.0 million in purchases of intangible assets.

Current wording

Cash used in investing activities during the nine months ended September 30, 2025 was $4.7 million due to $3.2 million of purchases of manufacturing equipment and $1.5 million in purchases of intangible assets.

Previous wording

Cash used in investing activities during the six months ended June 30, 2024 was $1.2 million, reflecting purchases of manufacturing equipment.

Current wording

Cash used in investing activities during the nine months ended September 30, 2024 was $1.3 million, reflecting purchases of manufacturing equipment.

Previous wording

Cash provided by financing activities during the six months ended June 30, 2025 was $0.3 million, primarily due to proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan offset by a nominal amount in payments on finance leases.

Current wording

Cash provided by financing activities during the nine months ended September 30, 2025 was $0.6 million, primarily due to proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan offset by a nominal amount in payments on finance leases.

Previous wording

Cash provided by financing activities during the six months ended June 30, 2024 was $0.6 million, consisting of proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan.

Current wording

Cash provided by financing activities during the nine months ended September 30, 2024 was $0.7 million, consisting of proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan.

Previous wording

Critical Accounting Policies and Significant Judgements and Estimates

Current wording

Critical Accounting Policies and Significant Judgments and Estimates