Vicor Corporation (NASDAQ: VICR) stock surged 27% on Wednesday after the provider of power conversion and control solutions reported third-quarter fiscal 2025 results that significantly exceeded analysts’ expectations.
Revenue for the quarter rose 18.5% year-on-year to $110.4 million, surpassing the consensus forecast of $95.4 million.
The company posted GAAP earnings of $0.63 per share, dramatically above the $0.12 per share estimate, while adjusted EBITDA reached $26.1 million, nearly doubling the projected $13.2 million and representing a 23.6% margin.
The strong results were driven by operational execution and a notable increase in intellectual property (IP) licensing revenue.
CEO Patrizio Vinciarelli highlighted the growth in licensing as a key factor in the quarter’s performance, stating that licensing income is on track to double within a few years.
Vicor’s backlog at the end of Q3 stood at $152.8 million, a 1.5% increase from the previous year, reflecting continued demand for the company’s products.
Shares of Vicor responded positively to the earnings report, rising 27% to $83.61.
Drivers of growth: licensing, AI, and advanced modules
Management attributed the outperformance to several strategic and operational factors.
IP licensing saw a sharp rise, driven by new agreements and expanded deals with existing licensees, including both catch-up and recurring payments.
Vinciarelli described this development as a turning point for the company, with expectations to expand recurring licensing revenue substantially over the next two years.
Vicor’s advanced power modules, particularly those targeted at AI and data center applications, also contributed to the results.
Early adoption of these modules by key customers highlights the growing demand for high-current, high-density power solutions, outpacing traditional offerings.
The Andover chip fabrication facility, despite earlier ramp-up challenges, is now operating at world-class yields and cycle times, though under-absorption continues to affect product margins.
The company also benefited from a tactical shift in its segment mix, with Brick Products seeing a rebound due to improved distributor shipments and inventory management.
Legal enforcement of Vicor’s intellectual property through exclusion orders and litigation has further bolstered licensing agreements, particularly among hyperscalers, improving visibility into recurring revenues.
Outlook and future prospects
Looking forward, Vicor expects continued growth driven by AI and data center demand, further scaling of its second-generation Vertical Power Delivery (VPD) solutions, and expansion of IP licensing.
The company is working to bring its Gen 5 current multiplier technology into full-scale production for its lead customer in early 2026 while engaging additional hyperscalers and original equipment manufacturers.
CFO Jim Schmidt noted that while current fab utilization remains low, it is expected to improve significantly as VPD adoption increases, which would enhance product gross margins.
Management also plans to explore multi-sourcing and international fab expansion to mitigate supply chain risks.
With revenue growth, doubled net income of $28.3 million, and a strong licensing trajectory, Vicor is positioning itself to capitalize on AI-driven demand and further monetize its intellectual property portfolio, offering investors optimism about the company’s long-term growth prospects.
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