Vicor (VICR) Q2 2025 Earnings Call July 22, 2025 05:00 PM ET Company ParticipantsJames Schmidt - Corporate VP, CFO, Treasurer & SecretaryPhilip Davies - Corporate VP - Global Sales & MarketingPatrizio Vinciarelli - Chairman, President & CEOJon Tanwanteng - Managing DirectorJames Liberman - Financial AdvisorDonald McKenna - Financial AdvisorConference Call ParticipantsQuinn Bolton - Senior AnalystRichard Shannon - Senior Research AnalystNone - AnalystOperatorHello, and welcome to Vicor's Second Quarter Earni ...

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]