Vicor's latest financial results for the third quarter of 2025 demonstrate a dynamic period marked by strong revenue growth and strategic advancements in its intellectual property (IP) licensing and power delivery technologies. The company reported $110.4 million in total product revenues and licensing income, an 18.5% increase year-over-year. This growth was fueled by an 8.2% sequential rise in Advanced Products revenue to $65.5 million and a 26.6% sequential increase in Brick Products revenue to $44.9 million. Shipments to stocking distributors surged by 39% sequentially and 46% year-over-year, indicating robust market demand. Despite a sequential decrease in gross margin to 57.5% due to the absence of a $45 million patent litigation settlement from the previous quarter, the year-over-year gross margin saw an impressive 840 basis point increase. Vicor's commitment to innovation was also evident in its R&D investments, which, along with SG&A, contributed to operating expenses. The company benefited from a $5 million income tax benefit, resulting in a negative 21.4% effective tax rate, thanks to the One Big Beautiful Bill Act allowing immediate R&D expensing. Net income for the quarter stood at $28.3 million, with diluted earnings per share of $0.63.
A significant focus of the earnings call was Vicor's burgeoning IP licensing business and its groundbreaking second-generation Vertical Power Delivery (VPD) solution. The company has achieved a licensing revenue run rate of nearly $90 million per year, with projections for a 50% annual growth rate, aiming to double the business within two years. This expansion is driven by newly signed agreements and the strategic enforcement of existing power module patents. Management clarified that current licensing revenue is solely from power module IP, with no VPD IP yet asserted, presenting future growth opportunities. Furthermore, Vicor's completed $1 billion Andover chip fab is now operating with world-class yields and cycle times, although underutilization currently impacts product gross margins. The second-generation VPD, incorporating fifth-generation current multiplier technology, offers superior current densities and thinner packages, addressing the escalating power demands of AI data centers. This advanced solution is on track for a Q1 2026 production launch with its lead customer, and qualification engagements are underway with major OEMs and hyperscalers, underscoring Vicor's strategic positioning in the high-growth AI market.
Vicor's leadership emphasized the critical differentiation of its VPD technology, which overcomes the limitations of conventional power distribution architectures. Unlike traditional Voltage Regulators (VRs) and Integrated Voltage Regulators (IVRs) that struggle with high current densities and thermal management, Vicor's Gen 5 current multipliers offer up to five amperes per square millimeter peak current density in a 1.5 millimeter thin, thermally efficient package. This capability eliminates mechanical and thermal challenges faced by competitors, enabling more robust and scalable solutions for powering advanced processors. The company also highlighted its flexible licensing arrangements, offering various royalty structures without requiring upfront fees, thereby facilitating broader adoption of its patented technologies. With a strong operational foundation, including short cycle times, high yields, and stringent quality control, Vicor is well-prepared to meet the future demands of AI, asserting its position as an indispensable partner for hyperscalers and OEMs seeking cutting-edge power solutions.
