Vicor Corporation Q2 FY2025 earnings call

• Financial Performance: Q2 product revenues, licensing income, and patent litigation settlement totaled $141 million, up 50.1% sequentially from Q1 2025. Gross margin was 65.3%, a 1,810 basis point increase from prior quarter due to patent litigation settlement. Total operating expense increased 5% sequentially to $46.7 million. Net income was $41.2 million, and GAAP diluted income per share was $0.91. - Market Developments: Q2 book-to-bill ratio was below 1 due to order cancellations in China and tariff hesitancy; a 10% tariff surcharge is in effect. - Product Advancements: Next-generation products are being sampled to lead customers, with Gen 5 vertical power delivery solution for a lead customer exceeding current density target. Automotive business has audits in Europe and ASEAN; industrial and aerospace/d defense pipelines are healthy. - Legal Actions: Pursuing additional IP infringement actions, with first ITC action resulting in cease and desist orders and exclusion orders.

In the second quarter, Advanced Products revenue was $60.6 million, up 1.2% sequentially, and Brick Products revenue was $35.5 million, up 4% sequentially. Advanced Products accounted for 63.1% of total revenue in Q2, down from 63.7% in Q1 of 2025, while new product share increased to 36.9% of total revenue. Shipments to stocking distributors increased 18.9% sequentially but decreased 14.3% year-over-year. Exports as a percentage of total revenue decreased to approximately 51.9% from 60.8% in the prior quarter.

• Management stated they are unable to provide quarterly guidance due to wide range of scenarios. - Expect 2025 to be a record year. - Licensing business is expected to become more predictable over time as the licensee base diversifies.

• Tariff uncertainty, including ongoing concerns around tariffs and their impact on bookings. - Uncertainties in timing of patent litigation settlements and licensing agreements. - Challenges in forecasting due to variable scenarios in licensing and IP-related revenues.

Q: Congratulations on the patent litigation settlement. Could you talk about the return on the money spent on the ITC case and the time frame?

A: Patrizio Vinciarelli said the approximate amount locked in so far is through 2026.

Q: Book-to-bill was below 1 in Q2. Have you seen improvements in July bookings and will book-to-bill get above 1:1 in Q3?

A: Phil Davies said hesitancy around tariffs is behind us and it's on to future quarters.

Q: Could you talk about cancellations in end markets?

A: Phil Davies said most cancellations were from the industrial market in China across distribution channels.

Q: Describe the new license settlement and ongoing royalties?

A: Patrizio Vinciarelli couldn't disclose specific details but stated no license in connection with the particular action.

Q: On Gen 5 vertical power delivery, is it still on target?

A: Patrizio Vinciarelli said things are progressing well, and Philip Davies confirmed they're still on target with the slide shown.

Q: Thoughts on OpEx going forward?

A: Jim Schmidt said OpEx won't be guided on, but excluding the $5.1 million incentive legal fee, OpEx will drop sequentially.