Vicor (NASDAQ:VICR) reported fourth-quarter 2025 results that included higher product revenue, lower sequential royalty revenue due to a prior-quarter catch-up, and a sharp improvement in full-year profitability driven by both operating performance and contributions from its intellectual property (IP) licensing activity. Management also highlighted improving bookings and a backlog increase, alongside a capacity outlook that could shape the company’s growth trajectory through 2026 and beyond.
Fourth-quarter revenue mix shows product growth, royalty normalization
Chief Financial Officer Jim Schmidt said Vicor recorded fourth-quarter product revenue of $92.7 million, up 4.5% from the third quarter and up 15.3% from the year-ago period. Royalty revenue totaled $14.5 million, down 33.1% sequentially and down 7.8% year-over-year. Schmidt attributed the sequential decline in royalty revenue to a catch-up amount included in third-quarter results.
Full-year 2025 results boosted by licensing and litigation settlement
For the year ended December 31, 2025, Vicor said product revenue increased 12.1% to $350.3 million. Full-year royalty revenue was $57.4 million, up 23.2% from 2024. Schmidt also noted that total product and royalty revenue including a $45 million patent litigation settlement rose 26.1% to $452.7 million.
Schmidt later clarified during Q&A that the $57.4 million figure for royalty revenue does not include the litigation settlement.
In the company’s segment detail, advanced products revenue for the year increased 26% to $248.6 million, while Brick products revenue decreased 1.6% to $159.1 million.
Margins and earnings improve; tax benefit drives Q4 net income
Vicor reported a consolidated gross margin of 55.4% in the fourth quarter, about 2.1 percentage points lower than the third quarter, which management linked to the third-quarter royalty catch-up. For full-year 2025, gross margin increased to 57.3% from 51.2% in 2024.
Operating expenses rose 2.7% sequentially in the fourth quarter. For the full year, total operating expenses as a percentage of revenue and the patent litigation settlement were 39.2%, down from 51.6% in the prior year.
Operating income in the fourth quarter was $15.7 million, representing an operating margin of 14.6%. For the full year, operating income was $81.8 million, or 18.1% of revenue and the settlement, compared with an operating loss of $1.3 million in 2024.
Schmidt said the company recorded a fourth-quarter tax benefit of approximately $27.3 million (effective tax rate of -142%), tied to partial recognition of certain deferred tax assets. Full-year 2025 tax benefit was approximately $41 million (effective tax rate of -25.4%).
Net income for the quarter was $46.5 million, with diluted EPS of $1.01 on 46.3 million diluted shares. For 2025, net income totaled $118.6 million and diluted EPS was $2.61, up from $0.14 in 2024.
Bookings and backlog strengthen as capacity becomes a focal point
Schmidt said fourth-quarter book-to-bill was “well above 1x,” and that one-year backlog increased 15.8% sequentially to $176.9 million. Vice President of Global Sales and Marketing Phil Davies added that book-to-bill was over 1.2x in Q4 and had continued to increase in Q1. In a later exchange, Davies said the company was already above that level in the first quarter.
Management repeatedly returned to capacity, particularly the utilization outlook for Vicor’s first ChiP fab. CEO Patrizio Vinciarelli said the company expects the existing fab to be “well utilized within a year,” driven by ramps across several markets, including AI/computing and test equipment. He also reiterated that while the fab could support “slightly above $1 billion” in revenue at full utilization, Vicor views about 80% utilization as a more practical operating level.
When asked about the implication for 2026 growth, Vinciarelli agreed an analyst’s interpretation that demand could reach a run rate consistent with high utilization. He said Vicor sees 2026 as “one of major increase in product revenue” and described a level “double the rate of last year,” adding that the outlook was supported by bookings received and additional bookings expected as the year progresses.
IP enforcement actions, licensing expansion, and Gen 4/Gen 5 VPD roadmap
Davies said Vicor’s IP licensing became a “major contributor” to 2025 top and bottom lines, and he pointed to an expanding opportunity in 2026. He also noted that the U.S. International Trade Commission instituted a second investigation into alleged illegal importation of infringing power modules and computing systems related to Vicor’s non-isolated bus converter IP. Management emphasized it intends to enforce its IP and argued that suppliers of infringing systems, including unlicensed OEMs and hyperscalers, put themselves and customers at risk.
On product, Davies said Vicor’s lead customer for VPD solutions is ramping a Gen 4 factorized power system, with an expected transition to a Gen 5-based solution starting in the second half of 2026. He added that Gen 4 production is expected to continue ramping “at a steep rate through the end of 2026.” Vicor said it will be selective in engaging additional Gen 5 VPD customers, in part because capacity in the first fab is being earmarked for strategic customers and additional capacity from a second fab “may not be available until 2028.”
During Q&A, Davies said the company planned to bring in its global field application engineering team for Gen 5 VPD training using demo boards and tools developed in Andover, after which the company would proceed selectively with customer engagements.
Management also discussed the potential scale of future licensing. Vinciarelli said Vicor has two major licensees today and expects more, describing the opportunity as substantial in high-end computing AI systems. He stated the company expects “hundreds of millions of dollars” in licensing revenues over time and said the previously discussed “$300 million” goal was a “relatively near-term goal” (though “not for this year”). He also suggested the number of substantial licensees in high-end computing could grow to roughly three times the current level.
On capacity expansion, Vinciarelli said Vicor has made two offers related to acquiring land for a facility, while also evaluating existing buildings within a 30-mile radius of Andover. He said the company had not decided which path to pursue, but expected to “do something on this very soon.” He described the expansion concept as a campus that could support up to 500,000 square feet of manufacturing space (compared with current facilities around 300,000 square feet) and said Vicor believed it could achieve more capacity per unit area in a next facility. On cost, he characterized the incremental capacity proposition as potentially on the order of $20 million to $90 million, depending on the approach.
Vicor said it is also discussing alternate sourcing for high current density Gen 5 VPD solutions, which management framed as a way to expand access to its technology and address the scale of demand. The company also said it has begun engaging customers on capacity reservation agreements, noting revenue recognition would still occur as shipments take place.
About Vicor (NASDAQ:VICR)
Vicor Corporation is a designer and manufacturer of modular power components and systems, serving a wide range of industries that demand high performance and efficiency. Headquartered in Andover, Massachusetts, the company develops power conversion solutions that help customers optimize energy delivery in applications from telecommunications and data centers to industrial and automotive systems.
The company’s product portfolio includes high-density DC-DC converters, AC-DC front-end modules, point-of-load regulators and complete power systems that combine multiple conversion stages in a single package.
