Vicor Corporation

Vicor reported third-quarter product and royalty revenue of $197 million, up 37.5% sequentially from Q2 2026 ($143 million) and up 78.5% from Q3 2025 ($110 million). Advanced Products revenue, which includes royalty revenue, rose 47.5% sequentially to $139 million, while Brick Products revenue increased 18.4% sequentially to $58.3 million. Royalty revenue increased 119.1% to $66.6 million, though management said part of that increase reflected nonrecurring initial royalty payments from a new licensee. Consolidated gross margin was 68.3%, up 40 bps sequentially and 1,080 bps year over year. Operating expenses were $62.5 million, net income was $63.3 million, and GAAP diluted EPS was $1.33 based on 47.6 million diluted shares. Cash and cash equivalents were $513 million, up $59.6 million sequentially, and operating cash flow was $69.7 million. For Q4, management expects 10% product revenue growth, another double-digit sequential increase in Advanced Products revenue, and at least $43 million of royalty revenue if no new license agreements close this quarter.

Patrizio Vinciarelli was highly constructive and framed Vicor as entering a more important phase in AI power delivery and licensing. He argued that second-generation VPD is gaining traction with hyperscalers and OEMs because point-of-load constraints, not just rack-voltage architecture, are the real bottleneck for next-gen AI systems. He also said the company is now focused on a small set of top customers and that licensing will grow further as more firms realize the need to take licenses for freedom to operate.

Jim Schmidt emphasized the quarter’s financial improvement: $197 million of product and royalty revenue, 68.3% gross margin, $63.3 million of net income, $1.33 GAAP diluted EPS, and $513 million of cash. He noted operating expenses of $62.5 million, legal expense of $16.1 million, and said legal costs should average about 20% of royalty revenue in the near term. On liquidity and investment, he highlighted $69.7 million of operating cash flow, $16.1 million of capex, and said the company expects to fund Fab 2 and Fab 3 without raising capital. He also said Q4 royalty revenue should be at least $43 million absent new license deals, and that incremental revenue should support further margin expansion.

Analysts focused on how much of Q3 royalty revenue was catch-up versus recurring, and management said the right way to think about it is as a recurring licensing stream that will still have some lumpiness as more deals are signed. They also pressed for visibility on Fab 2 and Fab 3 timing and capital needs; management said Fab 2 gets initial equipment in Q2 2027 and that the company expects to self-fund the expansion. Several questions centered on whether VPD adoption is broadening beyond the lead AI customer, and management said conversations with hyperscalers and OEMs are early but encouraging, with strong interest shown at Open Compute. Analysts also asked about stage-based licensing; management explained that royalty rates rise as enforcement progresses, with higher stages tied to ITC activity and related legal milestones.