Vicor (NASDAQ:VICR) held its first-quarter earnings conference call on Tuesday. Below is the complete transcript from the call.
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View the webcast at https://edge.media-server.com/mmc/p/3wkwiew3/
Summary
Vicor reported Q1 2026 revenues of $113 million, a 5.3% increase sequentially and a 20.2% increase year-over-year.
Gross profit margin for Q1 stood at 55.2%, a slight decline from the previous quarter but an increase of 800 basis points from the same period last year.
The company expects Q2 revenues of nearly $126 million and full-year 2026 revenues of approximately $570 million.
Vicor is undertaking capacity expansion efforts, aiming to increase the capacity of its first fab to support $1.5 billion in annual revenue, with plans to explore a second fab.
Bookings were strong in high-performance computing, industrial, aerospace, and defense markets, with a book-to-bill ratio above 2.
Management highlighted ongoing strategic focus on vertical power delivery (VPD) technology, with advancements aimed at dominating the AI and computing markets.
The company anticipates continued growth in its licensing business, expecting it to become a significant portion of its revenue.
Vicor faced legal expenses related to intellectual property enforcement but expects these efforts to drive future licensing opportunities.
Full Transcript
OPERATOR
Good day and thank you for standing by. Welcome to the Vicor first quarter 2026 earnings conference call. At this time, all participants are in listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today. Jim Schmidt, Chief Financial Officer. Please go ahead.
Jim Schmidt (Chief Financial Officer)
Thank you. Good morning and welcome to Vicor Corporation’s earnings call for the first quarter ended March 31, 2026. I’m Jim Schmidt, Chief Financial Officer and I’m in Andover with Patrizio Vinciarelli, Chief Executive Officer and Phil Davies, Corporate Vice President, Global Sales and Marketing. Earlier this morning we issued a press release summarizing our financial results for the three months ended March 31, 2026. This press release has been posted on the investor Relations page of our website, www.vicorpower.com. we also filed a Form 8K today related to the issuance of this press release. I remind listeners this conference call is being recorded and as the copyrighted property of Vicor Corporation. I also remind you various remarks we make during this call may constitute forward looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform act of 1995. Except for historical information contained in this call, the matters discussed on this call, including any statements regarding current and planned products, current and potential customers, potential market opportunities, expected events and announcements, and our capacity expansion, as well as management’s expectations for sales growth, spending and profitability are forward looking statements involving risk and uncertainties. In light of these risks and uncertainties, we can offer no assurance that any forward looking statement will in fact prove to be correct. Actual results may differ materially from those explicitly set forth in or implied by any of our remarks today. The risks and uncertainties we face are discussed in Item 1A of our 2025 Form 10K, which we filed with the SEC on March 2, 2026. This document is available via the EDGAR system on the SEC’s website. Please note, the information provided during this conference call is accurate only as of today, Tuesday, April 21, 2026. Vicor undertakes no obligation to update any statements, including forward looking statements made during this call and you should not rely upon such statements after the conclusion of this call. A webcast replay of today’s call will be available shortly on the Investor Relations page of our website. I’ll now turn to a review of Q1 financial performance, after which Phil will review recent market developments and Patrizio, Phil and I will take your questions. In my remarks. I will focus mostly on the sequential quarterly changes for P and L and balance sheet items and refer you to our press release or our upcoming Form 10Q for additional information. As stated in today’s press release, VICOR recorded product and royalty revenue for the first quarter of $113 million, up 5.3% sequentially from the fourth quarter of 2025 total of $107.3 million and up 20.2% from the first quarter of 2025 total of $94 million. Advanced products revenue increased 3.7% sequentially to $64.9 million, and brick products revenue increased 7.7% sequentially to $48 million. Shipments to stocking distributors increased 0.5% sequentially and and increased 63.6% year over year. Exports for the first quarter decreased sequentially as a percentage of total revenue to approximately 48.9% from the prior quarter’s 49.3%. For Q1 advanced product share of total revenue decreased to 57.5% compared to 58.4% for the fourth quarter of 2025, with brick products share correspondingly increasing to 42.5% of total revenue. Turning to Q1 gross margin, we recorded a consolidated gross Profit margin of 55.2%, a 20 basis point decrease from the prior quarter. Q1 gross margin increased 800 basis points from the same quarter last year. I’ll now turn to Q1 operating expenses. Total operating expense increased 4% sequentially from the fourth quarter of 2025 to $45.5 million. This increase included higher legal expenses related to enforcement of RIP. The amounts of total equity based compensation expense for Q1 included in cost of goods, SGA and R&D was 836,000 1,959 and 1,057,000 respectively, totaling approximately $3.9 million. Turning to income taxes, we recorded a tax benefit for Q1 of approximately $0.3 million, representing an effective tax rate for the quarter of -1.3%. The company’s tax provision and effective tax rate for the quarter ended March 31, 2026 was positively impacted by stock options exercised in the quarter. Net income for Q1 totaled $20.7 million. GAAP diluted income per share was $0.44 based on a fully diluted share count of 47,254,000 shares. Turning to our cash flow and balance sheet, cash and Cash equivalents totaled $404.2 million at Q1, an increase of $1.4 million sequentially. Accounts receivable net of reserves totaled $67.4 million at quarter end, with DSOs for trade receivables at 42 days. Inventories net of reserves increased 3.8% sequentially to $94.8 million. Annualized inventory turns were 2.1. Cash flow used for operating activities totaled $3.9 million for the quarter, which was net of a litigation settlement payment of 28.6 million. Capital expenditures for Q1 totaled $12.4 million. We ended the quarter with a construction in progress balance primarily for manufacturing equipment of approximately $10.7 million and with approximately $33.9 million remaining to be spent. I’ll now address bookings and backlog Q1 book to Bill came in above 2 and 1 year backlog increased 70% from the prior quarter, closing at $300.6 million. 2026 is a year of great opportunity for Vicor. We expect Q2 revenues of nearly 126 million and 2026 revenues of nearly 570 million. This guidance is based on conservative assumptions about our licensing practice, specifically that we will not enter into new licensing agreements until our second ITC case gets to its final determination in 2027. Additional exclusion orders further restricting importation of infringing computing systems will provide motivation to close new licensing deals on the right terms. Along with revenue growth in 2026, we expect margin expansion.
Phil Davies (Corporate Vice President, Global Sales and Marketing)
Phil thank you Jim. With the book to bill above, two Q1 bookings were strong across our high performance computing, industrial and aerospace and defense markets. They remain strong in the second quarter and I’ll discuss each of them in turn. Our lead computing customer is continuing a steep production ramp of its wafer scale engine with best in class AI inference performance. Wafer scale engines and future embedded multi die and COAS packages for AI Chiplet solutions are uniquely enabled by vertical power delivery. Further advances in AI performance are about to be enabled by Vicor’s second generation VPD solution with 3amps per square millimeter current density and a current multiplication factor of up to 40 in a 1.5 millimeter thin package. Per my Q4 comments, engagement with other HPC customers for second generation VPD solutions will follow the generational transition by our lead customer with capacity in our first chip fab earmarked for existing strategic customers. We will continue to be selective as we add additional customers on the VPD front, competition is handicapped by a multiplicity of issues including inadequate current density and stacked packages that are not mechanically and thermally adept. That’s because competition copied a first generation VPD solution whose pioneering aspects are still immature and at risk of continuity of supply challenges caused by patent infringement. Our broad industrial market, which is supported by our global distribution partners, had a strong first quarter and our top 100 industrial OEMs in the automated test and semiconductor manufacturing equipment markets continue to benefit from the AI data center buildout with strong order placement. We are also winning next generation platforms with earlier generation and new factorized power system solutions. Our current multipliers supplying high power to ASIC and memory test heads and pin electronics remain unchallenged and in terms of current density, low noise and thin packages, geopolitical developments have been a key driver of our aerospace and defence business in recent quarters. Increases in spending as a percentage of GDP and replenishment of defensive and offensive systems supports the growth of this market. Our objectives, goals and strategies for 2026 remain unchanged, with a focus on a portfolio of 100 customers globally across four market segments. Future growth opportunities will require capacity expansion, including a second fab Our combinatorial strategy of being the power system technology innovator and an IP licensing company is delivering results. With that, we’ll take your questions.
OPERATOR
Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Quinn Bolton with Needham and Company. Your line is now open.
Quinn Bolton (Equity Analyst)
Hey guys, congratulations on the nice results and outlook. I guess I wanted to start with just the assumptions you’re making around 2026 for the IP licensing business. Looks like royalty revenue and Q1 was about $15 million or about $60 million annualized. I know you’re not assuming any additional or new licenses signed, but where do you see royalty or licensing revenue this year as part of that 570 guidance?
Patrizio Vinciarelli (Chief Executive Officer)
The 570 guidance includes royalties, which would increase somewhat based on existing licensing agreement, but in terms of providing, in effect, safe guidance, we thought it would be best to set aside any opportunity with respect to, in other words, early deals relating to current actions. So our working assumption for guidance purposes is that we’re not going to have any until we get to further diminution on our second case next year, but it could be that we do get some ahead of that time frame. Understood.
Quinn Bolton (Equity Analyst)
And then Patricia, last quarter you seemed Pretty confident that the utilization in Andover would approach 80% by the end of 26 or early 2027. Look, looks like you’re on a strong product ramp. But are you still sort of comfortable or still expecting utilization to sort of achieve those levels that you discussed last quarter?
Patrizio Vinciarelli (Chief Executive Officer)
Yes, in absolute terms with respect to product revenues. What has transpired since we last spoke on this topic is that we actually have a significant level of elasticity with respect to expansion capacity within the fellow state facility. That’s giving us a little bit more flexibility with respect to the timing and choice of the location for the second fab. So to get a little bit more specific, we’ve seen an opportunity for relatively significant dispatching capacity. It could be as much as 50% above what had been planned to be supported in terms of annual revenues out of the Fellow Street facility. So that gives us cushion with respect to timing, which were put into good use in terms of the choice of a location. And to give you a little bit more flavor with respect to that. We’ve also come around to focusing on existing buildings as opposed to a piece of land because of the fact that with an existing building we can execute much more rapidly in terms of capacity expansion. And part of strategy with respect to getting more out of the Fellow Street facility is to selectively source outside of that facility, you know, some of the process steps that can be more easily relocated. So that should give you the picture with respect to both the capacity utilization and the plans with respect to capacity expansion.
Quinn Bolton (Equity Analyst)
Sorry, Patrice, just a quick clarification. Did you say that in the first Andover facility you would be outsourcing some manufacturing steps either to third parties or would that be to the second chip fab?
Patrizio Vinciarelli (Chief Executive Officer)
It would be to an interim solution for the second chip fab, but this will still be totally within Vigo control. But there are process steps that can be easily located in a nearby building and that’s part of the plan to extend capacity of the fell state facility. Understood. Thank you. I’ll get back in queue.
OPERATOR
Thank you. Our next question comes from the line of Justin Claire with Roth Capital Partners. Your line is now open.
Justin Claire (Equity Analyst)
Hey, good morning. Thanks for the questions here. So I think first off, you mentioned engagement with additional VPD customers. I think could follow the generational transition for the lead customer from Gen4 to Gen5. Was wondering if …
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