Ladies and gentlemen, thank you for standing by, and welcome to the NPE Third Quarter Results Conference Call. Questions. Please be advised that today's conference is being recorded. Would now like to hand the conference to your speaker today, Danielle Baker, President and CEO. Please go ahead, sir.
Thank you. Good afternoon, and welcome to our conference call the quarter ended December 31, 2019. As always, I'm joined by Kurt Reinders, our Chief Financial Officer. This call is being webcast live and being recorded. A replay will be available through our website, nve.com.
After my opening comments, Kirk will present a financial review of the quarter. I'll cover new products and design wins, and then we'll open the call to questions. We issued our press release and filed our quarterly report on Form 10 Q in the past hour following the close of market. Links to documents are available through the SEC's website, our website, and our Twitter timeline. Comments we may make that relate to future plans, events, financial results or performance are forward looking statements that are subject to certain risks and uncertainties, including among others such factors as risks and uncertainties related to future sales and revenue risks related to changes in tariffs and other trade barriers, uncertainties related to the impacts of the Federal Tax Reform Act enacted in 2017 as well as the risk factors listed from time to time and our filings with the SEC, including our annual report on Form 10 K for the year ended March 31, 2019.
The company undertakes no obligation to update forward looking statements we may make. We're pleased to report a 9% increase in net income for the quarter driven by a 3% increase in revenue and a decrease in expenses. Kurt will cover details of our financial results and then I'll cover new products and share 2 new design win examples. Craig?
Thanks, Dan. As Dan said, total revenue for the quarter ended December 31, 2019 increased 3% compared to the quarter ended December 31, 2018. The increase was due to a 3 The growth was despite continued weakness in Semiconductor Industry sales decreased 11% year to year in the most recent available month according to the Semiconductor industry association. The increase in our product sales included sales of new smart sensors, The increase in contract R and D revenue was due to timing of progress towards contract completion. We hope to have another quarter of year over year revenue net income growth this quarter, the quarter ending March 31.
Expenses decreased 21% from the prior year due to a 32% decrease in R&D partially offset by a 22% increase of certain product development activities. Dan will discuss ongoing and future product development activities in a few minutes. The increase in SG And A was primarily due to staffing changes. We've added more sales and sales support staff. Interest income for the third quarter decreased 3% due to a decrease in the average interest rates on our marketable securities and money market funds.
On the strength of increased revenue and decreased expenses Net income for the quarter increased 9 percent to $3,730,000 or $0.77 per diluted share. Compared to 3,420,000 or $0.71 per share for the prior year quarter. The $1 per share or $4,850,000 dividend this past quarter brought our total dividends paid to more than $100,000,000 since we began quarterly dividends in 2015. Additionally, we announced another quarterly dividend today payable February 28 to shareholders of record February 3. For the 1st 9 months of the fiscal year, total revenue decreased 8% due to a 7% decrease in product sales and a 14% decrease in contract R And D Net income for the 1st 9 months decreased 4 percent to $11,200,000 or $2.40 per share increase for the fiscal year to date, despite the decrease in net income.
Comprehensive income for the 1st 9 months increased 2% to $11,900,000 from $11,700,000 for the prior year period, as an unrealized gain for marketable securities more than offset the decrease in net income. The gain was due to $12,500,000. Cash plus marketable securities as of December 31, 2019 was $73,100,000 compared to $74,300,000 at the end of the last fiscal year as operating cash flow and unrealized gains in marketable securities nearly covered 14,500,000 in dividends paid. Now, I'll turn the call over to Dan to cover the business. Dan?
Thanks, Curt. I'll cover new products and design wins We had line with a wider field range smart magnetometer, which is very useful in industrial automation proximity detection. In the September quarter, we announced our first tunneling magnetoresistance or TMR magnetic switches. Our technology makes these switches inherently lower power than conventional semiconductors. To achieve low power semiconductor sensors need to be turned on and off, what's called duty cycling.
This reduces their speed, which is a problem for motor and other controls, and duty cycling introduces noise, which is problem for hearing aids and other audio devices. The parts we introduced in the September quarter run on 1.5 volt batteries such as alkaline or zinc air and do not require duty cycling. In the past quarter, we introduced TMR magnetic switches that run on 3 to 4 volts, which is ideal for rechargeable device such as over the counter hearing aids and smart audio devices. There's a video on our website and our YouTube channel showing the unique combination of low power and high speed for these new products. In the past quarter, we also announced a high field TMR magnetic switch which operates at a field strength of thousands of Ersteds compared to our traditional sensors, which operate in the tens of Ersteds.
This high field capability allows our sensors to continue to operate when exposed to the large fields of MRI machines which enables MRI tolerant medical devices. And MRI tolerance is important as both medical implants and MRI imaging become more common. TMR technology also uses very little power, which extends the life of battery powered medical devices. Highfield switches are also used in security and industrial applications. We are leaders in TMR Development, TMR uses structures called magnetic tunnel junctions and is generally lower power and more precise than our older giant magnetoresistance or GMR based based products.
An example of our TMR research is in a paper by 5 of our researchers presented at the annual magnetism and magnetic materials conference in the past quarter. That was titled Noise Optimization And Magnetic Tunnel Junction, We reported on our development of sensors with higher than ever detectivity, which is a key performance figure of merit affecting accuracy. These sensor elements have been deployed site and our Twitter timeline. In addition to product introductions, we met a significant smart sensor development milestone recently with the release of a new custom integrated circuit design to our foundry, a milestone that's often called tape out. This is after an R and D investment of several $100,000 customized seas are expensive, but this will allow us to make our most accurate smart sensor ever.
The IC represents the culmination of a lot of hard work and ingenuity by our engineers, scientists and contractors. In the past quarter, we completed a NASA contract by successfully qualifying couplers for the Europa Clipper mission to 1 of Jupiter's moons. We had shipped the couplers to the Jet Propulsion laboratory in a previous quarter, but we still had testing to do to qualify the production lot. We did environmental stress testing and other tests. NASA did even more rigorous testing, including total ionizing dose radiation testing to ensure the parts can withstand the harsh deep space environment.
Testing of our parts is a high priority at JPL because our parts will be in a number of spacecraft systems. NASA is targeting to have the spacecraft complete and ready for launch as soon as 2023. In a paper published in the past quarter in the journal Nature Astronomy, NASA scientists believe they detected water which would mean Europa has all of the elements necessary for life. The Europa mission will do a detailed survey and look for landing sites for future missions. Our part of the Europa project was for a bit more than $100,000, so not huge revenues, but it validates the ruggedness of our technology, which is applicable to commercial markets.
For example, we have begun selling versions of similar couplers for internet communication satellite constellations which have been in the news as a way As we start working day of 2019 with our announcement of the world's only smart tunneling magnetoresistance angle sensor, Other new smart sensor products, including a smart TMR magnetometer, 2 new lines of ultra low power TMR magnetic switches for for medical devices and battery powered systems. The high field sensors we discussed a few minutes ago high speed automotive couplers using the Can FD network protocol and new couplers for the industrial internet of things that use a lower voltage data bus. We've been pleased with the response to our new products, especially our smart sensors. I'd like to share 2 application examples The first example is a smart sensor design win for a sophisticated proximity sensor with a European robotics manufacturer. The design went quickly and is a good validation of our smart sensor strategy.
We demonstrated the product to the customer in May, and we shipped a first production order of several 1000 smart magnetometers in the past quarter. We gave them an evaluation kit, so they were able to quick evaluate the sensor without having to design a circuit board or write firmware. After testing, they said it was a very good product and selected it for their project contingent on some customizations with the flexibility of our smart sensor architecture team was able to turn those customizations around in just a few months. The first order was for $10,000 to $20,000 and we hope the first of many orders for this project and for this customer. In addition to revenue, feedback from this customer helped us improve the sensor and improve our development spencer developed in cooperation with one of our distributors for a major supplier of consumer batteries in Japan.
The system uses our smart sensors to detect whether the dispenser is running low on batteries. The system notifies the merchandiser via smartphone so the batteries can be replenished. This optimizes travel inventory and spoilage. The system is being field tested now and was shown as a smart sensor use case at a trade show in the past quarter. The advantages of our sensor in this application our high sensitivity for wide design latitude and low power since the system not only dispenses batteries, but uses batteries for power.
Now, I'd like to open the call for questions.
You. And our first question comes from Jeff Bernstein with Tom. Your line is now open.
Hey, good evening guys. So quick question for you on a couple of the products that assumptions. Do you ever have design wins on these products for a particular customer before you announce the general availability of the product?
We often will develop new products with the input from customers so maybe not what you strictly classify as a design win, but, in many cases, we're developing a product that the customers requested and the presumption is that if, that if it's good product meets their expectations, that they'll use it. So we try to work closely with our customers and those smart sensors fell into that category. But those two examples that I gave were both from, what would you call it, a standing start. So, those were customers who learned about the product when we announced it. And we had development kits and, and data sheets, final data sheets ready to go.
So the development environment was very important to that first customer robotics manufacturer that I mentioned.
Yes. So I was interested particularly in the TMR magnetic switch, as you mentioned, that that 1.5 volt you said, I think that, that would be appropriate for hearing aids. And I know there's a phonak hearing aid that's out now and there was a discussion about it, talking about a disposable type battery and then wanting to go to a rechargeable battery. And it sounded like the the second TMR magnetic switch you talked about would be appropriate for that. Do you have some wins in the hearing aids already?
We have, a fair amount of business in the hearing aid sector. Generally don't talk about it. Specific products because our customers tend to guard that fairly closely. But as you correctly point out, there's interest in rechargeable battery systems, both by traditional hearing aid manufacturer. And companies entering the hearing market sometimes for hearing aids or personal sound amplification devices and sometimes for devices for normal hearing folks, things like translators or, or navigation systems.
So the higher voltage products that we mentioned, as you know, are ideal for rechargeable batteries. And there's been a fair amount of interest. We have a design win in that space. We haven't said, we haven't said whom But, but there's a lot of interest in rechargeable battery systems, which can go up to 4.2 volts. And then also as you know, the 1.5 volt Zincare, battery is still used quite a bit in traditional hearing aids.
And that's a different type of challenge because that's not very much voltage to get a sensor to run on a single zinc care battery.
Yes, got you. Okay. And then I was just curious from, obviously, you've had phonak as a disclosed customer in the past, they have this $6000 hearing aid, super fancy hearing aid that's supposed to be potentially paradigm changing. And I guess Starkey has been talked about as having a product in that class as well. And I know they're cool to you, I think, in Minnesota.
And then, but at the same time, you have this change in the regulation where they're allowing these personal amplification devices, which are supposed to be much, much cheaper, like an order of magnitude cheaper than that. Is the opportunity set different for you in these different things, I would assume that the low price would be much higher volume. But do you get a premium if it's going into a premium price product or anything you can sort of say about the hearing aid segments?
Right. So that's a great point, Jeff. Is that there's a very broad market for, for hearing devices and, ranging from, as you say, some very high end amazing products that are coming out and to some lower cost products. And we have product lines that span those types of offerings. So we have different products for for different applications.
And, the voltages are different, which is one thing that you've pointed out because because whether they're running on single cells that are typically 1.5 volts or they're running on rechargeable batteries, they require different sensor elements. And then the types of sensing that they do, the fields that they're sensitive to, the outputs, the amount of current that they draw, those all vary with the application. And so, we've been developing a lot of products in that space, particularly using our tunneling magnetoresistance platform, which gives us a lot more flexibility and a lot more horsepower, if you will, that we can trade either for sensitivity or power or voltage. So, our development team has done a great job of working with our customers and developing products that fit in those various markets. And as you know, it's really an exciting time in that marketplace.
I think you had pointed out an article where, somebody had said that hearing aids were going to be like, Jarvis from the from Ironman and that the year is the new wrist. It's the it's the new, peripheral platform for wearables. So, we think we're well positioned to lead that market.
So it sounds like you have the capability to price, to value, to to some degree where there's some pretty significant kinds of parameters that have to be hit and there's some ability to price to that?
Yes. Typically, exactly. So typically, if we've got a higher performance product, it costs more to make and it has more value. And then we recognize that, that there are some products that are much more price sensitive and we have defeatured products that we can make less expensively that are targeted at those.
Got you. Okay. And then, I just wondered if you could say anything about you've talked about in the past, automotive and robotics and you talk about a robotics design win, but you've talked about current sensing or patient sensing, having that smart interface for those products in automotive and couplers also being automotive opportunities. Can you just talk about each one of those segments and us an update on what kind of traction, if any, you're making in automotive specifically?
Right. So we see automotive as an excellent growth market for us. And the number of sensors in cars has projected to increase rapidly, driven by a move towards electric, autonomous and more sophisticated safety systems. So as you mentioned, we have sensors that can be used to sense current which is used for battery management systems in cars, rotation sensors, which is used for engine cam and crank, electric motors for electric vehicles, as well as a lot of user interfaces knobs and dials and things that turn. Then proximity sensing.
And then on the coupler side, our parts are smaller, more precise, lower power and more rugged, than conventional electronics transmit information. So we plan to market those products through our private label partnership with a company that has strong automotive sales channels. We have an automotive task force letter of conformance and IATF International Automotive Task Force letter of conformance, which remove some of the barriers to the automotive market. We're working on specific products and then particular, we're focusing on current sensors and proximity sensors because we have interest from automotive manufacturers, getting those qualified and getting those through the rigorous qualification process that automotive manufacturers have and get them into cars. Now that's sort of a longer term or a medium term opportunity, perhaps a couple of years to get qualified, but it's a very large market.
It's growing rapidly. And we think it's well worth the investment. We're We're pushing that as fast as we possibly can to get our parts qualified. And in particular, as I mentioned, one of the thrusts is one of our current sensing smart sensors that can be used for battery management systems.
Got you. Great. And then, I think, obviously, the puff business can be a little bit volatile you saw some recovery there. I think it was last quarter. And just wondering how that's looking, what kind of visibility you have on that going forward.
Yes, yes, I can answer that. We had a little bit of visibility on that. The medical market, expect to stabilize, in the most current quarter, the quarter we're in right now. Obviously, longer term, demographics are very favorable for those types of devices. And so, but the, we have had some struggles with the, weakness in the semiconductor market as well as some of our anti tamper business can be kind of up and down.
And that anti tamper is there. Do you have some visibility now on that in the next couple of quarters or or is that a sort of quarter by quarter basis?
That's really a quarter by quarter basis. We don't have a lot of forward visibility on that and we're pretty early in the current quarter.
Got you. Good. Okay. And then any progress you guys are making on the exosome detection or the food safety applications or are those sort of suspended for now?
Well, we're still working on them. We don't have, any specifics to report but exosomes is a very exciting area for, cancer detection, early cancer detection. And, we continue to work on some of the remaining issues with, with biosensors, particularly for food safety and hopefully we'll have something some more specifics to report in future quarters. But we view those as longer term opportunities, but very exciting opportunities. And it's one of the research areas that, that we continue to invest in.
Great, great. Thanks. I'll let somebody else ask some.
I'm not showing any further questions at this time. I would now like to turn the call back over to Daniel Baker for any closing remarks.
Well, thanks, Joelle, and thank you. We were pleased to report solid revenue growth and earnings growth and 2 new products in the past quarter. We look forward to speaking with you again in early May to discuss fourth quarter and full fiscal year results. Thank you again for participating in the call.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.