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VICOR CORP (VICR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $110.4M, up 18.5% YoY and down 21.7% QoQ due to the absence of the Q2 $45M patent settlement; gross margin was 57.5%, up 840 bps YoY and down 780 bps QoQ .
  • EPS was $0.63, versus $0.26 a year ago and $0.91 in Q2; operating expenses fell sequentially to $42.6M, while operating cash flow was $38.5M .
  • Results materially beat S&P Global consensus: revenue $110.4M vs $95.4M (+15.7%), EPS $0.63 vs $0.115 (+447.8%), EBITDA $26.5M vs $13.2M (+100.8%); management did not provide quarterly guidance due to licensing timing uncertainty* .
  • Catalysts: licensing run-rate approaching ~$90M/year, enforcement via ITC exclusion order, and Gen-5 VPD on track for lead customer production in Q1 2026; Q4 tax rate guided to low single digits, supporting near-term EPS* .

What Went Well and What Went Wrong

What Went Well

  • Licensing revenue momentum: “Licensing revenue reached a record rate in Q3... I expect Vicor’s IP licensing practice to grow substantially” .
  • Operational execution: Foundry processes delivering “98% final test yields for mass produced modules,” enabling margin leverage with higher utilization .
  • Strategic product progress: Gen-5 VPD met target specs; lead customer production launch slated for Q1 2026, with broader hyperscaler/OEM engagement starting in Q4 .

What Went Wrong

  • Sequential revenue/margin decline: Revenue fell 21.7% QoQ and gross margin fell 780 bps due to absence of Q2’s $45M litigation settlement .
  • Underabsorption pressure: Management cited low fab utilization suppressing product margins pending ramp of Gen-5 chips and 2nd-gen VPD .
  • Guidance uncertainty: Company declined quarterly guidance given variability in timing of license deals; book-to-bill was 0.98, implying flat-to-slightly down near-term orders .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$94.0 $141.0 $110.4
Product Revenue ($USD Millions)$83.2 $85.7 $88.7
Royalty Revenue ($USD Millions)$10.8 $10.4 $21.7
Patent Litigation Settlement ($USD Millions)—$45.0 —
Gross Margin ($USD Millions)$44.4 $92.1 $63.5
Gross Margin (%)47.2% 65.3% 57.5%
Operating Expenses ($USD Millions)$44.5 $46.7 $42.6
Net Income ($USD Millions, Vicor)$2.5 $41.2 $28.3
Diluted EPS ($)$0.06 $0.91 $0.63
Cash from Operations ($USD Millions)$20.1 $65.2 $38.5
Capital Expenditures ($USD Millions)$4.6 $6.2 $4.0
Backlog ($USD Millions, period-end)$171.7 $155.2 $152.8

Q3 2025 Actual vs S&P Global Consensus*

MetricQ3 2025 ActualQ3 2025 Consensus (S&P Global)*Surprise ($)Surprise (%)
Revenue ($USD Millions)$110.4 $95.4*$15.0+15.7%
Diluted EPS ($)$0.63 $0.115*$0.515+447.8%
EBITDA ($USD Millions)$26.5*$13.2*$13.3+100.8%

Note: Values marked with * retrieved from S&P Global.

Product Mix and Operating KPIs

MetricQ2 2025Q3 2025
Advanced Product Revenue ($USD Millions)$60.6 $65.5
Brick Product Revenue ($USD Millions)$35.5 $44.9
Advanced Share of Total Revenue (%)63.1% 59.3%
Brick Share of Total Revenue (%)36.9% 40.7%
Exports (% of Revenue)51.9% 42.8%
Shipments to Stocking Distributors+22.9% seq, −14.3% YoY +39% seq, +46% YoY
Book-to-Bill<1.0 0.98
DSO (days)—38
Inventory Turns (annualized)—1.9
Cash & Equivalents ($USD Millions)$338.5 $362.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Guidance (Revenue/EPS/Margins)Q4 2025Not provided Not provided due to licensing timing uncertainty Maintained (none)
Tax RateQ4 2025—Low single digits New/Lower
Licensing Run-RateOngoing—Nearly $90M/year as of Q3 Disclosure (not formal guidance)
Gen-5 VPD Launch (Lead Customer)Q1 2026—Target production launch Q1 2026 New timing milestone
Tariff SurchargeEffective July 2, 2025Instituted 10% surcharge Surcharge in effect; hesitancy “behind us” Maintained

Earnings Call Themes & Trends

TopicQ1 2025 (Previous Mentions)Q2 2025 (Previous Mentions)Q3 2025 (Current Period)Trend
IP Licensing & EnforcementLicensing gaining traction; margin headwinds from a licensee transitioning to unlicensed products .$45M settlement; additional actions planned; licensing central to strategy .Record licensing rate; run-rate ~ $90M; widespread OEM/hyperscaler licensing expected; stage-based royalty framework .Strong acceleration; broader enforcement and monetization.
AI/Gen-5 VPDASIC arrival to raise density; focus on delivering high-density VPD to lead customer before broader demos .Sampling next-gen products; VPD current density exceeding target; evaluation tools forthcoming .Lead customer specs met; Q1 2026 production; engagement with hyperscaler/OEMs; 133% solution taped out with samples in January .Milestones achieved; launch nearing; expanding pipeline.
Fab Utilization / YieldsUtilization needed to lift margins .Cycle times/yields improving; underabsorption persists .First chip fab at “world-class” yields; underabsorption suppresses margins pending product ramp .Operational metrics stronger; utilization still the lever.
Tariffs/Macro—10% surcharge; China cancellations; hesitancy around tariffs .Export mix down to 42.8%; management suggests tariff hesitancy behind; book-to-bill 0.98 .Stabilizing conditions; demand normalizing.
Product Performance/Mix—Advanced $60.6M; brick $35.5M; distributor shipments +22.9% seq .Advanced $65.5M; brick $44.9M; distributor shipments +39% seq, +46% YoY .Mix tilting toward bricks; strong distributor channel.
Automotive—Audits with large EU and upcoming Asian OEM; 48V/800V architectures; revenue impact long-dated (2029–2030) .Continued focus; 800V–48V 10kW module sampling in Q4 .Early pipeline; strategic positioning.
Licensing Scope—Settlement did not necessarily confer license .Current licenses do not include VPD; IBM bus converter patents asserted; staged rates; customs enforcement extended .Future expansion to VPD patents likely.

Management Commentary

  • CEO: “Licensing revenue reached a record rate in Q3… I expect Vicor’s IP licensing practice to grow substantially” .
  • CEO: “With foundry processes delivering 98% final test yields… higher margins await greater absorption of foundry capacity, exceeding $1 Billion per year” .
  • CFO: Effective tax rate −21.4% in Q3 driven by the One Big Beautiful Bill Act enabling immediate expensing of domestic R&D .
  • Sales VP: “Gen 5 vertical power delivery solution for Vicor’s lead customer has met target specifications and is now progressing to a Q1 2026 production launch” .

Q&A Highlights

  • Licensing drivers: A two-year additional license with an existing licensee included catch-up payments; recurring quarterly payments expected; licensing could grow ~50% annually .
  • Enforcement outlook: Expect licensing across “each OEM and each hyperscaler” in AI/data center; exclusion order affects broader ecosystem via contract manufacturers .
  • VPD readiness: 133% solution taped out; samples in January; even current 100% target enables design wins; thin packages (<3mm) unique spec advantage .
  • Second sourcing: Company open to multi-sourcing via licensing and potential shared fabs; current yields cited at 98% for certain high-volume modules .
  • Tax: Q4 tax rate expected in low single digits .

Estimates Context*

  • Q3 beats were broad-based vs S&P Global: revenue +15.7%, EPS +447.8%, EBITDA +100.8%. Near-term estimate risk skews positive given licensing run-rate visibility (~$90M/year) and lower tax rate guide, though quarterly variability in license timing persists .
  • Medium-term, estimates may rise on: (a) broader licensing across OEMs/hyperscalers; (b) Gen-5 VPD production in Q1 2026; (c) margin lift from fab utilization and distributor strength .

Note: Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q3 was clean operationally and a strong fundamental beat vs consensus, excluding the Q2 settlement; licensing and gross margin trajectory are improving YoY .
  • Earnings quality improved with lower OpEx and strong cash generation ($38.5M OCF), while buybacks ($15.6M) and cash build ($362.4M) provide capital flexibility .
  • Short-term trading: Positive skew from licensing flow and low Q4 tax rate; watch for additional licensing announcements and enforcement developments that can move the stock* .
  • Medium-term thesis: Margin expansion via fab absorption as Gen-5 chips/VPD ramp; strategic IP moat with ITC exclusion orders; potential VPD adoption by hyperscalers/OEMs .
  • Risk monitor: Quarterly licensing lumpiness; book-to-bill ~0.98 suggests cautious near-term orders; underabsorption persists until product ramp accelerates .
  • Strategic optionality: Multi-sourcing via licensing/shared fabs can de-risk customer concentration; 800V–48V front-end and VPD create end-to-end AI power delivery positioning .
  • Narrative that moves the stock: Continued IP monetization, VPD milestones, and signs of fab utilization improving will likely be the primary catalysts .