Core Insights - Vicor Corporation reported financial results for Q3 2025, showing an 18.5% year-over-year increase in product revenues and licensing income, totaling $110.4 million, but a 21.7% sequential decrease from Q2 2025 due to a prior patent litigation settlement [2][4]. Financial Performance - Gross margin for Q3 2025 was $63.5 million, up from $45.7 million year-over-year, but down from $92.1 million sequentially. The gross margin percentage increased to 57.5% compared to 49.1% a year ago, but decreased from 65.3% in Q2 2025 [3]. - Operating expenses rose to $42.6 million in Q3 2025 from $40.4 million a year ago, but decreased from $46.7 million in Q2 2025 [3]. - Net income for Q3 2025 was $28.3 million, or $0.63 per diluted share, compared to $11.6 million or $0.26 per diluted share a year ago, and down from $41.2 million or $0.91 per diluted share in Q2 2025 [4]. - Cash flow from operations was $38.5 million in Q3 2025, up from $22.6 million year-over-year, but down from $65.2 million in Q2 2025 [5]. Backlog and Market Position - The backlog for Q3 2025 was $152.8 million, a 1.5% increase from $150.6 million year-over-year, but a 1.5% sequential decrease from $155.2 million at the end of Q2 2025 [6]. - CEO Dr. Patrizio Vinciarelli highlighted that licensing revenue reached a record rate in Q3 2025 following a litigation settlement, indicating strong growth potential in Vicor's IP licensing practice [7]. Capital and Investments - Capital expenditures for Q3 2025 totaled $4.0 million, down from $8.4 million year-over-year and $6.2 million in Q2 2025 [5]. - Cash and cash equivalents increased by 7.0% sequentially to approximately $362.4 million as of September 30, 2025, compared to approximately $338.5 million as of June 30, 2025 [5]. Company Overview - Vicor Corporation designs, develops, manufactures, and markets modular power components and complete power systems, serving various markets including high-performance computing, industrial equipment, telecommunications, and aerospace [11].

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Core Insights - Vicor Corporation's intellectual property (IP) is crucial for performance in high-growth markets such as AI, automotive, and industrial sectors, with licensing being essential for supply chain resilience and scalability [1][2] Licensing and Revenue Impact - The International Trade Commission issued a Limited Exclusion Order (LEO) in 2025, banning the importation of infringing bus converters and related computing systems, which is expected to contribute nearly $300 million to Vicor's revenues through 2026 [2] - Vicor's licensing revenues in Q3 surpassed its quarterly investment in R&D, indicating a strong focus on innovation compared to competitors who rely on copying [4] Growth Strategy - Vicor is enhancing its IP licensing practice, led by General Counsel Andrew D'Amico, supported by an in-house team and external legal partners [3] - The company anticipates that its IP licensing practice will grow to represent a larger portion of its module business, driven by the demand from OEMs and hyperscalers for licenses and renewals [5] Product Development and Market Position - Vicor's high-density power systems, including bus converters and Vertical Power Delivery (VPD), are critical for high-performance computing, positioning the company favorably in the market [5] - The company designs and manufactures modular power components and complete power systems, serving various sectors including enterprise computing, industrial automation, telecommunications, and aerospace [6]

Core Insights - Vicor Corporation (NASDAQ: VICR) exemplifies the challenge of translating technical superiority into commercial success, having been ahead of its time in high-efficiency modular power conversion [1] Company Overview - Vicor was recognized for its innovative Factorized Power architecture, which has been a significant advancement in power conversion technology [1] Investment Perspective - The article highlights the importance of disciplined, fundamentals-driven investing, emphasizing capital preservation and long-term growth strategies [1]

Core Points - Vicor Corporation will hold its third quarter 2025 earnings conference call on October 21, 2025, at 5:00 p.m. Eastern Time [1] - The financial results for the third quarter will be released at the close of the NASDAQ Market Session on the same day [2] - Investors and analysts wishing to ask questions during the call must register with Notified to receive dial-in information [3] - A listen-only mode will be available via a webcast link posted on Vicor's Investor Relations page [4] - A replay of the conference call will be accessible on the Investor Relations page for those unable to attend live [5] Company Overview - Vicor Corporation specializes in designing, developing, manufacturing, and marketing modular power components and complete power systems [6] - The company is headquartered in Andover, Massachusetts, and serves various markets including enterprise computing, industrial equipment, telecommunications, and aerospace [6]

Core Insights - The Brown Capital Management Small Company Fund experienced an 8.59% return in Q2 2025, underperforming the Russell 2000® Growth index which returned 11.97% [1] - The underperformance was noted to occur in the last few weeks of the quarter [1] Fund Performance - Small-cap US stocks rebounded in Q2 2025 after a challenging first quarter [1] - The fund's top five holdings were highlighted as key picks for 2025 [1] Company Focus: Vicor Corporation - Vicor Corporation (NASDAQ:VICR) was mentioned as a notable stock, developing modular power components and systems [2] - Vicor's one-month return was 5.49%, but it experienced a significant decline of 38.15% over the past 52 weeks [2] - As of September 12, 2025, Vicor's stock closed at $50.77 per share, with a market capitalization of $2.281 billion [2] Fund Adjustments - In Q2 2025, there were no new additions to the Small Company Fund, but three stocks were removed: Helios Technologies (HLIO), Enfusion (ENFN), and Vicor Corporation (NASDAQ:VICR) [3]

Part I — Financial Information [Financial Statements (Unaudited)](index=4&type=section&id=Item%201%20-%20Financial%20Statements%20(Unaudited)) Unaudited statements for the period ended June 30, 2025, show significant financial improvement driven by a patent settlement and revenue growth [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $693.5 million, primarily from an increase in cash, while total liabilities and equity also rose compared to year-end 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$693,509** | **$641,118** | | Cash and cash equivalents | $338,541 | $277,273 | | Inventories | $95,493 | $106,032 | | **Total Liabilities** | **$84,643** | **$70,827** | | Total current liabilities | $73,840 | $61,820 | | **Total Equity** | **$608,866** | **$570,291** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net income of $41.2 million for Q2 2025, a significant turnaround driven by a $45 million patent settlement Q2 and H1 2025 vs 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net revenues and patent litigation settlement | $141,046 | $85,854 | $235,014 | $169,726 | | Patent litigation settlement | $45,000 | $— | $45,000 | $— | | Gross Margin | $92,128 | $42,771 | $136,493 | $87,894 | | Income (loss) from operations | $45,385 | $214 | $45,236 | $(15,901) | | Net income (loss) attributable to Vicor | $41,192 | $(1,196) | $43,731 | $(15,669) | | Diluted EPS | $0.91 | $(0.03) | $0.97 | $(0.35) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations substantially increased to $85.4 million for the first six months of 2025, boosted by higher net income Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $85,353 | $18,148 | | Net cash used for investing activities | $(10,754) | $(13,411) | | Net cash (used for) provided by financing activities | $(13,469) | $5,138 | | **Net increase in cash and cash equivalents** | **$61,268** | **$9,665** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail a $45 million patent settlement, revenue growth in Asia Pacific, and an accrued $26 million liability for ongoing litigation - The company received a **$45 million payment** in May 2025 from the settlement of various lawsuits, arbitrations, and appeals related to certain intellectual property claims[66](index=66&type=chunk) Revenue by Product Line (Six Months Ended June 30, in thousands) | Product Line | 2025 | 2024 | | :--- | :--- | :--- | | Advanced Products | $120,423 | $89,648 | | Brick Products | $69,591 | $80,078 | | **Total** | **$190,014** | **$169,726** | - The company is appealing a judgment in the SynQor patent infringement lawsuit totaling approximately **$26 million**, which has been fully accrued as a litigation liability[59](index=59&type=chunk)[63](index=63&type=chunk) - The company operates as a **single operating and reportable segment**, with performance assessed on a consolidated basis by the CEO[36](index=36&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202%20%E2%80%94%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q2 2025 results to a $45 million patent litigation settlement and an 11.9% increase in net revenues [Overview](index=26&type=section&id=Overview) Vicor designs modular power components, focusing investment on its high-growth Advanced Products line for markets like AI and data centers - The company's strategy emphasizes investment in its **Advanced Products line** for high-growth markets, while maintaining its profitable Brick Products business[78](index=78&type=chunk) - Vicor has established a leadership position in the emerging market for powering **high-performance processors used for AI acceleration**[79](index=79&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q2 2025 net revenues rose 11.9% year-over-year, with gross margin surging to 65.3% due to the patent settlement Q2 Revenue by Product Line (in thousands) | Product Line | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Advanced Products | $60,566 | $46,368 | $14,198 | 30.6% | | Brick Products | $35,480 | $39,486 | $(4,006) | (10.1)% | | **Total** | **$96,046** | **$85,854** | **$10,192** | **11.9%** | - Gross margin for Q2 2025 increased to **65.3%** of total net revenues and settlement, up from 49.8% in Q2 2024, primarily due to the **$45 million patent litigation settlement**[87](index=87&type=chunk) - SG&A expenses in Q2 2025 increased by **$4.6 million (19.9%)** YoY, mainly due to **$5.1 million in legal fees** associated with the patent litigation settlement[88](index=88&type=chunk) - For H1 2025, the company reported **net income of $43.7 million** ($0.97 per diluted share) compared to a **net loss of $(15.7) million** ($(0.35) per diluted share) for H1 2024[111](index=111&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong financial position with $338.5 million in cash and equivalents, sufficient for operational and capital needs - As of June 30, 2025, the company had **$338.5 million in cash and cash equivalents** and a current ratio of 7.0:1[112](index=112&type=chunk) - In H1 2025, primary cash uses included **$17.6 million for Common Stock repurchases** and **$10.8 million for property and equipment purchases**[114](index=114&type=chunk) - The company has approximately **$82.0 million remaining available for stock repurchases** under its New Repurchase Authorization as of June 30, 2025[115](index=115&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risks from interest rate changes and foreign currency fluctuations are identified but not considered significant at this time - The company's long-term investment portfolio consists of a single failed auction rate security with a par value of $3.0 million and an estimated fair value of approximately **$2.6 million** as of June 30, 2025[122](index=122&type=chunk) - Exposure to foreign currency exchange rate risk is primarily related to the operations of its **Japanese subsidiary (VJCL)**, whose functional currency is the Japanese Yen[123](index=123&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204%20%E2%80%94%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective, and a new ERP system implementation modified internal controls over financial reporting - Management concluded that **disclosure controls and procedures were effective** as of June 30, 2025[126](index=126&type=chunk) - A new enterprise resource planning (ERP) system was implemented in the first half of 2025, leading to **changes in internal controls over financial reporting**[128](index=128&type=chunk) Part II — Other Information [Legal Proceedings](index=43&type=section&id=Item%201%20%E2%80%94%20Legal%20Proceedings) This section directs readers to Note 11 for details on legal matters, including ongoing litigation and a recent $45 million settlement - For details on legal proceedings, the report refers to **Note 11** of the Condensed Consolidated Financial Statements[130](index=130&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K - There have been **no material changes in the risk factors** from those described in the company's 2024 Annual Report on Form 10-K[130](index=130&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, the company repurchased 412,219 shares of its common stock for approximately $17.7 million Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - 30, 2025 | 72,400 | $42.86 | | May 1 - 31, 2025 | 258,536 | $42.24 | | June 1 - 30, 2025 | 81,283 | $44.31 | | **Total** | **412,219** | **$43.00** | [Other Information](index=43&type=section&id=Item%205%20%E2%80%94%20Other%20Information) No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - During Q2 2025, **no director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement**[133](index=133&type=chunk) [Exhibits](index=45&type=section&id=Item%206%20%E2%80%94%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required CEO and CFO certifications - The filing includes **certifications from the CEO and CFO** pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[134](index=134&type=chunk)

Group 1 - Vicor Corporation's power-chip technology is positioned to be essential for future data centers, electric vehicles (EVs), and aerospace equipment [1] - The latest quarterly results were positively impacted by a one-time legal gain of $45 million, but the company is facing a declining order book [1] - The focus on artificial intelligence (AI) and the company's strategy is to produce objective, data-driven research primarily on small- to mid-cap companies, while occasionally analyzing large-cap companies for a broader market perspective [1]

Financial Data and Key Metrics Changes - Vicor recorded product revenues, licensing income, and a patent litigation settlement for Q2 of $141 million, up 50.1% sequentially from $94 million in Q1 2025 and up 64.3% from $85.9 million in Q2 2024 [8] - The gross profit margin for Q2 was 65.3%, an increase of 1810 basis points from the prior quarter, primarily due to the patent litigation settlement [8] - Net income for Q2 totaled $41.2 million, with GAAP diluted income per share at 91 cents based on a fully diluted share count of 45,077,000 shares [9] Business Line Data and Key Metrics Changes - Advanced products revenue increased 1.2% sequentially to $60.6 million, while Brick Products revenue increased 4% sequentially to $35.5 million [8] - Advanced Products' share of total revenue decreased to 63.1% from 63.7% in Q1 2025, with Brick Products' share increasing to 36.9% [8] Market Data and Key Metrics Changes - Shipments to stocking distributors increased 18.9% sequentially but decreased 14.3% year over year [8] - Exports as a percentage of total revenue decreased to approximately 51.9% from 60.8% in the prior quarter [8] Company Strategy and Development Direction - The company is focused on its top 100 customers and enabling high-performance modular power delivery networks, showcasing next-generation products with significant advances in power and current density [14][15] - The Gen five vertical power delivery solution is expected to engage with hyperscalers and AI processor companies, with a market SAM for these solutions expected to exceed $5 billion by 2027 [16][17] - The automotive market is seen as a high growth opportunity, with ongoing audits and collaborations with tier one OEMs [18] Management's Comments on Operating Environment and Future Outlook - Management indicated that 2025 is a year of uncertainty and opportunity, with a wide range of possible outcomes for quarterly and annual results [11] - The company expects 2025 to be a record year for revenue, despite uncertainties around tariffs and licensing [58] Other Important Information - The company undertook share repurchases totaling approximately $17.5 million during the quarter, with around 200,000 shares repurchased [83] - The book-to-bill ratio came in below one due to order cancellations from customers in China and hesitancy around tariffs [13] Q&A Session Summary Question: Inquiry about the patent litigation settlement and its implications - Management confirmed that the approximate return from the ITC case includes the patent litigation settlement and extends through 2026 [21][23] Question: Book-to-bill ratio and future bookings trend - Management believes the hesitancy around tariffs is now behind them, and customers are adapting to the new expectations [26] Question: Cancellations in end markets - Cancellations were primarily from the industrial market in China, affecting both older and advanced products [30] Question: Future of royalty streams - Management is actively pursuing infringers and expects to see continued growth in licensing streams, although challenges remain [31][63] Question: Dynamics of the new license settlement - Management could not disclose specifics but indicated that there are no ongoing royalties from the recent settlement [36] Question: Automotive market engagement - The company is in the audit phase with several customers, indicating a long-term strategy to establish itself as a supplier in the automotive market [68] Question: Future product delivery timelines - Management confirmed that they are on target with the delivery timelines for the Gen five vertical power delivery solution [46] Question: Operating expenses outlook - Management indicated that operating expenses may fluctuate but are currently balanced with revenue [75]

Financial Data and Key Metrics Changes - Vicor recorded product revenues, licensing income, and a patent litigation settlement for Q2 of $141 million, up 50.1% sequentially from $94 million in Q1 2025 and up 64.3% from $85.9 million in Q2 2024 [7] - The gross profit margin for Q2 was 65.3%, an increase of 1810 basis points from the prior quarter, primarily due to the patent litigation settlement [7] - Net income for Q2 totaled $41.2 million, with GAAP diluted income per share at 91 cents based on a fully diluted share count of 45,077,000 shares [9] Business Line Data and Key Metrics Changes - Advanced products revenue increased 1.2% sequentially to $60.6 million, while Brick Products revenue increased 4% sequentially to $35.5 million [7] - Advanced Products' share of total revenue decreased to 63.1% from 63.7% in Q1 2025, with Brick Products' share increasing to 36.9% [7] Market Data and Key Metrics Changes - Shipments to stocking distributors increased 18.9% sequentially but decreased 14.3% year over year [7] - Exports as a percentage of total revenue decreased sequentially to approximately 51.9% from 60.8% in the prior quarter [7] Company Strategy and Development Direction - The company is focused on its top 100 customers and enabling high-performance modular power delivery networks, with next-generation products being sampled to lead customers across four target markets [14] - The strategy includes pursuing additional actions against companies infringing on its intellectual property while continuing to innovate and expand customer engagements [16][19] Management's Comments on Operating Environment and Future Outlook - Management indicated that 2025 is a year of uncertainty and opportunity, with a wide range of possible outcomes for quarterly and annual results [11] - The company expects 2025 to be a record year for revenue, despite uncertainties related to tariffs and market conditions [56][58] Other Important Information - The company reported a cash and cash equivalents total of $338.5 million in Q2, an increase of $42.4 million sequentially [10] - The one-year backlog decreased by 9.6% from the prior quarter, closing at $155.2 million [11] Q&A Session Summary Question: Clarification on the patent litigation settlement and its financial implications - The settlement amount is part of the expected return through 2026, which includes royalties from OEM and hyperscaler licenses [22][24] Question: Book to bill ratio and future bookings trends - Management believes the hesitancy around tariffs is now behind them, and they expect improvements in bookings moving forward [27] Question: Details on order cancellations and affected markets - Cancellations were primarily from the industrial market in China, affecting both older and advanced products [31] Question: Future royalty streams and licensing growth - The company is actively pursuing infringers and expects to see growth in royalty streams as they enforce existing licenses [32] Question: Dynamics of the new licensing settlement - The settlement does not include ongoing royalties, and the company is focused on enforcing its intellectual property rights [39] Question: Progress on Gen five vertical power delivery solutions - The company is on target with the delivery timeline for Gen five solutions to lead customers, with significant progress reported [46][48] Question: Expectations for operating expenses going forward - Operating expenses are expected to remain balanced, with potential lumpiness due to ongoing legal actions [77]