Vicor NASDAQ: VICR reported a sharp sequential revenue increase for the second quarter of 2026, driven by growth in advanced products and royalty income from a recent licensing agreement, while management pointed to additional capacity, licensing activity and demand for power delivery technology as key factors in its outlook.
Chief Financial Officer Jim Schmidt said the company recorded product and royalty revenue of $143.4 million for the quarter ended June 30, up 26.9% from $113 million in the first quarter of 2026. Revenue was up 1.6% from the second quarter of 2025, which included a $45 million patent litigation settlement.
Advanced products revenue rose 45% sequentially to $94.2 million, while brick products revenue increased 2.4% to $49.2 million. Advanced products represented 65.7% of total revenue, up from 57.5% in the prior quarter. Shipments to stocking distributors increased 4.2% from the first quarter and 38.8% year over year.
Royalty Income Boosts Second-Quarter Results
Schmidt said royalty income from Vicor’s most recent license agreement contributed $15 million to second-quarter revenue. The agreement provides for four $5 million quarterly payments in its first year and $10 million quarterly payments in its second year, for a total of $60 million.
Because of the accounting treatment of the agreement, Schmidt said the license is expected to contribute $5 million in revenue in the third quarter and $10 million per quarter for the following four quarters. He later clarified during the question-and-answer session that the $15 million recognized in the second quarter differed from cash collections because of GAAP accounting treatment and termination clauses in the agreement.
Chief Executive Officer Patrizio Vinciarelli declined to identify the licensee, saying the company does not comment on licensee identities. He said Vicor has “a multiplicity of OEM licensees” and one hyperscaler licensee as of now.
Margins, Expenses and Profitability
Vicor reported a consolidated gross profit margin of 58%, up 280 basis points from the prior quarter. Schmidt said total operating expenses increased 6.1% sequentially to $48.2 million, with a substantial portion of the increase tied to contingent legal expenses paid to law firms involved in the licensing deal reached during the quarter.
The company recorded a tax benefit of approximately $10.9 million, representing an effective tax rate of negative 27.9%. Schmidt said the tax provision and effective tax rate were positively affected by stock options exercised during the quarter.
Net income totaled $49.8 million, and GAAP diluted income per share was $1.04, based on 47.7 million diluted shares.
Cash and cash equivalents were $453.6 million at quarter-end, up $49.4 million sequentially. Schmidt also said Vicor received a $14.3 million payment from the IRS on July 13 related to its application for a CHIPS Act investment tax credit as a refund from its 2023 tax return. He said additional tax credit amounts expected from later tax returns should add to the company’s cash balance in the third quarter and beyond.
Backlog Rises as Company Guides for Growth
Vicor’s second-quarter book-to-bill ratio was above one, and one-year backlog rose 26% from the prior quarter to $379.7 million. Schmidt said the company expects “a nearly 10% increase” in third-quarter revenue and more than $600 million in 2026 revenue.
To meet those growth objectives, Schmidt said Vicor is planning for double-digit sequential increases in product revenue for advanced products. He added that the guidance is based on conservative assumptions about the company’s licensing practice, noting that new licensing agreements may not occur until Vicor’s second International Trade Commission case reaches a final determination in 2027.
In response to a question about backlog, Vinciarelli said relatively little of the increase was attributable to the new licensing agreement. He and Corporate Vice President of Global Sales and Marketing Phil Davies cited strength across multiple markets, including aerospace and defense, industrial, high-performance computing and automatic test equipment.
Vertical Power Delivery Remains Central to Strategy
Davies said Vicor’s updated financial objectives are $2.5 billion in revenue, 70% gross margins and 40% operating income. He said those targets supersede prior objectives of $1 billion in revenue and 65% gross margins set in 2023 and are based on a two-pronged strategy involving power module sales and intellectual property licensing.
Davies said the company’s power module business is focused on 100 customers across high-performance computing, industrial, automotive, and aerospace and defense markets. He highlighted Vertical Power Delivery, or VPD, as a key opportunity for AI data center hyperscalers and OEMs seeking higher compute density.
Vinciarelli said Vicor has completed development for an initial chipset for its lead customer at a baseline of 3 amps per square millimeter current density and is completing demo systems for other customers. He said the company is working to raise performance beyond that level late this year or early next year.
Davies said Vicor expects to engage with a hyperscaler and a couple of OEMs during the remainder of the year, with programs potentially evolving into production systems in the late third quarter or fourth quarter of next year. He said Vicor’s second-generation VPD offers three amps per square millimeter now, moving toward five amps per square millimeter early next year, with a 1.5 millimeter package.
Capacity Expansion and Second Fab Plans
Management said capacity remains a major focus. Vinciarelli said Vicor is expanding and absorbing capacity at its first chip fab and is approaching higher utilization. He said the company is working to close on a second facility and has several site options, with decisions likely in the next few weeks.
Asked whether Vicor could reach its $2.5 billion revenue target with its existing facility, Vinciarelli said, “No,” adding that a second fab would be required. He said the company is evaluating sites that could support “as much as 2x, potentially 3x” the first fab, although he later clarified that the second facility would be built out in stages to avoid unnecessary or premature depreciation.
Vinciarelli said Vicor’s near-term strategy has shifted toward adding capacity through a second chip fab that it can fully control, rather than relying on alternative sources. He said alternate sourcing may still be part of the long-term strategy, but would not provide the needed predictability and timing for key customers over the next couple of years.
Management also said lead times have stretched somewhat, consistent with broader industry trends where demand exceeds capacity in several areas. Vinciarelli said Vicor is in a position to be selective about customer engagements as it approaches capacity utilization.
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.
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