Q1 2025 Vicor Corp Earnings Call
Unknown Executive: Good day and thank you for standing by.
Good day and thank you for standing by welcome to the Q1 2025 Vycor.
Unknown Executive: Welcome to the Q1 2025 Vicar Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Earnings Conference call.
At this time all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
Unknown Executive: To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 again.
Ask a question during the session you will need to press star one on your telephone you didn't hear an automated message advising your hand is raised.
To withdraw your question. Please press star one again.
Unknown Executive: Please be advised that today's conference is being recorded.
Please be advised that today's conference is being recorded.
Jim Schmidt: I would now like to turn the conference over to Jim Schmidt, Chief Financial Officer. Please go ahead. Thank you.
I would now like to turn the conference over to Jill Smith, Chief Financial Officer. Please go ahead.
Jim Schmidt: Good afternoon and welcome to Vicor Corporation's earnings call for the first quarter ended March 31, 2025. 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 & Marketing. After the markets closed today, we issued a press release summarizing our financial results for the three months ended March 31. 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 is the copyrighted property of Vicor Corporation.
Thank you.
Jill Smith: Good afternoon, and welcome to <unk> Corporation's earnings call for the first quarter ended March 31 2025.
Jill Smith: I'm, Jim Schmidt Chief Financial Officer.
Speaker Change: Over with Patrice you have into your Alley, Chief Executive Officer, and Phil Babies, corporate Vice President Global sales and marketing.
Speaker Change: After the market's close today, we issued a press release summarizing our financial results for the three months ended March 31.
Speaker Change: This press release has been posted on the Investor Relations page of our website.
Speaker Change: Www dot very core powered dot com.
Speaker Change: We also filed a form 8-K today related to the issuance of this press release.
Speaker Change: I remind listeners this conference call is being recorded and is the copyrighted property of <unk> Corporation.
Jim Schmidt: I also remind you various remarks we make during this call may constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Several 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 uncertainty. In light of these risks and uncertainties, we can offer no assurance that any forward-looking statement will, in fact, prove to be correct.
Speaker Change: To remind you various remarks, we make during this call may constitute forward looking statements for purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1995.
Speaker Change: 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.
Speaker Change: Events, and announcements and our capacity expansion as well as management's expectations for sales growth spending and profitability are.
Speaker Change: Forward looking statements involving risks and uncertainties.
Speaker Change: In light of these risks and uncertainties, we can offer no assurance that any forward looking statement will in fact prove to be correct.
Jim Schmidt: 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 2024 Form 10-K, which we filed with the SEC on March 3, 2025. 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 29, 2025, 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.
Speaker Change: 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 one a of our 2024 Form 10-K, which we filed with the FCC on March three 2025.
This document is available via the Edgar system on the Sec's website.
Speaker Change: Please note the information provided during this conference call is accurate only as of today.
Speaker Change: April 29 2025.
Speaker Change: <unk> 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.
Unknown Executive: A webcast replay of today's call will be available shortly on the Investor Relations page of our website.
Speaker Change: A webcast replay of today's call will be available shortly on the Investor Relations page of our website.
Jim Schmidt: I'll now turn to a review of our 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&L and balance sheet items and refer you to our press release or our upcoming Form 10-Q for additional information. As stated in today's press release, Vicor recorded total revenue for the first quarter of $94 million, down 2.3% sequentially from the fourth quarter of 2024, total of $96.2 million. And up 12% from the first quarter of 2024, a total of $83.9 million.
Speaker Change: I'll now turn to a review of our Q1 financial performance after which Bill will review recent market developments and pet treats you, Phil and I will take your questions.
Speaker Change: In my remarks, I will focus mostly on the sequential quarterly changes for P&L and balance sheet items and refer you to our press release, our upcoming Form 10-Q for additional information.
Speaker Change: As stated in today's press release <unk> recorded total revenue for the first quarter of $94 million.
Speaker Change: Down two 3% sequentially from the fourth quarter of 2020 for total of $96 2 million.
Speaker Change: And up 12% from the first quarter of 2020 for total of $83 9 million.
Jim Schmidt: Advanced product revenue increased 2.7% sequentially to $59.9 million. While BRIC product revenue decreased 10% sequentially to $34.1 million. Schmidt's stocking distributors decreased 16.9% sequentially and decreased 33.8% year-over-year. Exports for the first quarter increased sequentially as a percentage of total revenue to approximately 60.8 percent from the prior quarter's 56.9 percent. For Q1, advanced product share of total revenue increased to 63.7%, compared to 60.6% for the fourth quarter of 2024, with BRIC product share correspondingly decreasing to 36.3% of total revenue. Turning to Q1 Gross Margin, we recorded a consolidated gross profit margin of 47.2%. which is a 520 basis point decrease from the prior quarter.
Speaker Change: Advanced product revenue increased two 7% sequentially to $59 9 million.
Speaker Change: While brick product revenue decreased 10% sequentially to $34 1 million.
Speaker Change: Shipments to stocking distributors decreased 16, 9% sequentially and decreased 33, 8% year over year.
Speaker Change: Exports for the first quarter increased sequentially as a percentage of total revenue to approximately 68% from the prior quarter's 56, 9%.
Speaker Change: For Q1 advanced products share of total revenue increased to 63, 7%.
Speaker Change: Compared to 66% for the fourth quarter of 2024.
Speaker Change: With brick by brick product sure correspondingly decreasing to 36, 3% of total revenue.
Speaker Change: Turning to Q1 gross margin.
We recorded a consolidated gross profit margin of 47, 2%.
Speaker Change: Which is a 520 basis point decrease from the prior quarter.
Jim Schmidt: To elaborate on the factors causing the sequential decline in gross margin, I'd like to first mention that over the course of the fourth quarter of last year and into the first quarter of this year, Vicor transitioned off of a legacy ERP system and onto a state-of-the-art ERP system, SAP, which went live on January 1st. in planning for a successful transition and to de-risk it, we increased production in Q4. required a mandatory week of paid time off in December by any employees not involved in the cutover and funded outside consultants who provided the necessary expertise as we implemented the change.
To elaborate on the factors, causing the sequential decline in gross margin I'd like to first mention that over the course of a full quarter of last year.
Speaker Change: And into the first quarter of this year <unk> transitioned off of a legacy ERP system and onto our state of the art ERP system SAP.
Speaker Change: Which went live on January one.
Speaker Change: And planning for a successful transition and to Derisk. It we increased production in Q4 <unk>.
Speaker Change: It required a mandatory week of paid time off in December by any employees not involved in the cutover.
Speaker Change: And funded outside consultants, who provided the necessary expertise as we implemented the change.
Jim Schmidt: All required actions were successfully concluded in Q1. What I've just described is an important contributor to about half of the percentage point decline in gross margin. As sequentially... Utilization and absorption declined, compensation increased, and so did consulting expense. Aside from these factors, a sequential decline in royalty revenue, which on its own accounted for about half of the percentage point decline in gross margins. Other components of the decline included the normal seasonal reset hire, a FICA expense to start the year, as well as incremental depreciation expense associated with bringing online capital investments in U.S.-based semiconductor manufacturing in both Andover and Rhode Island.
Speaker Change: All required actions were successfully completed in Q1.
Speaker Change: What I've just described is an important contributor to about half of the percentage point decline in gross margin and sequentially.
Speaker Change: Utilization and absorption declined compensation increased and so did consulting expense.
Speaker Change: Aside from these factors that sequential decline in royalty revenue, which on its own accounted for about half a percentage point decline in gross margin.
Speaker Change: Other components of the decline included the normal seasonal reset higher FICA expense to start the year.
Speaker Change: As well as incremental depreciation expense associated with bringing online capital investments in U S based semiconductor manufacturing and both Andover and Rhode Island.
Jim Schmidt: Tariff expense, net of duty drawback was approximately $700,000 in Q1.
Speaker Change: Tariff expense net of duty drawback was approximately $700000 in Q1.
Jim Schmidt: I'll now turn to Q1 Operating Expense. Total operating expense increased 8.2% sequentially from the fourth quarter of 2024 to $44.5 million. The sequential increase was primarily due to an increase in research and development expenses. Here, too, the sequential increase was due in part to the mandatory time off in Q4 that did not repeat in Q1. as well as the normal seasonal reset hire of FICA expenses. The amounts of total equity-based compensation expense for Q1 included in cost of goods, SG&A, and R&D was $967,000. $2,194,000 and $1,188,000 respectively, totaling approximately $4.3 million. Turning to income taxes, we recorded a tax provision for Q1 of approximately $0.4 million.
Speaker Change: I'll now turn to Q1 operating expenses.
Speaker Change: Total operating expense increased eight 2% sequentially from the fourth quarter of 2024 to $44 $5 million. The sequential increase was primarily due to an increase in research and development expenses here to the sequential increase was due in part to the mandatory time off in Q4 that did not repeat in Q1.
Speaker Change: As well as the normal seasonal reset higher FICA expense.
Speaker Change: The amounts of total equity based compensation expense for Q1 included in cost of goods SG&A and R&D was 967000.
Speaker Change: 2.194 million and $1 million 188000, respectively totaling approximately $4 3 million.
Speaker Change: Turning to income taxes, we recorded a tax provision for Q1 of approximately $4 million representing.
Jim Schmidt: representing an effective tax rate for the quarter of 14.2 percent. Net income for Q1 totaled $2.5 million, got diluted earnings per share with $0.06 based on a fully diluted share count of 45,495,000 shares. Turning to our cash flow and balance sheet, cash and cash equivalents totaled $296.1 million at Q1. Accounts receivable net of reserves totaled $65.9 million at quarter end, with DSOs for trade receivables at 43 days. Inventory's net reserves decreased 7.1 sequentially to 98.5 million. Annualized inventory returns were 1.7. Operating cash flow totaled $20.1 million for the quarter. Capital expenditures for Q1 totaled $4.6 million.
Speaker Change: Representing an effective tax rate for the quarter or 14, 2%.
Speaker Change: Net income for Q1 totaled $2 $5 million.
Speaker Change: GAAP diluted earnings per share was <unk> <unk> based on a fully diluted share count of $45 million 495000 shares.
Speaker Change: Turning to our cash flow and balance sheet cash and cash equivalents totaled $296 1 million in Q1 account.
Speaker Change: Accounts receivable net of reserves totaled $65 9 million at quarter end.
Speaker Change: With Dsos for trade receivables at 43 days.
Speaker Change: Inventories net of reserves decreased to seven one sequentially to $98 5 million.
Speaker Change: Annualized inventory turns were one seven.
Speaker Change: Operating cash flow totaled $20 1 million for the quarter.
Speaker Change: Capital expenditures for Q1 totaled $4 6 million.
Jim Schmidt: We ended the quarter with a construction-in-progress balance primarily for manufacturing equipment of approximately $9.9 million, and with approximately $12.3 million remaining to be spent.
Speaker Change: We ended the quarter with the construction in progress balance primarily for manufacturing equipment of approximately $9 9 million and.
Speaker Change: And with approximately $12 3 million remaining to be spent.
Jim Schmidt: I'll now address bookings and backlog. Q1 book-to-bill came in above one, and one-year backlog increased 10.4% from the prior quarter, closing at $171.7 million. As we said on last quarter earnings call, 2025 is a year of uncertainty and opportunity. As of today, the quarterly and annual outcome, in terms of top line and bottom line, is subject to a relatively wide range of scenarios. Given the wide range of possible outcomes, we are unable to provide quarterly guidance until we are further along resolving uncertainties and capitalizing on opportunities.
Speaker Change: I'll now address bookings and backlog.
Speaker Change: Q1 book to Bill came in above one and one year backlog increased 10, 4% from the prior quarter closing at $171 7 million.
Speaker Change: As we said on last quarter earnings call 2025 is a year of uncertainty and opportunity.
Speaker Change: As of today, the quarterly and annual outcome in terms of topline and Bottomline is subject to a relatively wide range of scenarios given the wide range of possible outcomes.
Speaker Change: We are unable to provide quarterly guidance until we are further along resolving uncertainties and capitalizing on opportunities.
Phil Davies: With that, Phil will provide an overview of recent market developments, and then Patrizio, Phil and I will take your questions.
Speaker Change: With that Tom will provide an overview of recent market developments, and then Petruzziello, Phil and I will take your questions.
Unknown Executive: I ask that you limit yourselves to one question and a related follow-up so that we can respond to as many of you as possible in the limited time available. If you have more than one topic to address, please get back in the queue.
Speaker Change: I ask that you limit yourselves to one question unrelated follow up so that we can respond to as many of you as possible in the limited time available.
Speaker Change: If you have more than one topic to address please get back in the queue.
Phil Davies: Thank you, Jim. Our first quarter book-to-bill ratio increased well above 1, with new orders for NBMs in our HPC business from a hyperscaler licensee. Conversations continue with potential licensees facing a first exclusion order following the ITC final determination and presidential review period. Our second-generation high-density VPD for leading AI applications is coming to fruition, with the recent arrival of an ASIC raising the bar on the density and bandwidth of our MCM current multipliers. Second generation VPD will enable AI processors to set new standards for performance. Development of the next-generation VPD system for a lead customer is approaching completion, and we will soon provide evaluation systems to processor chip companies and hyperscalers.
Speaker Change: Phil.
Phil: Thank you Jim.
Phil: Our first quarter book to Bill ratio increased well above one with new orders for <unk> and our <unk> business from a hyper scaler licensee.
Phil: Conversations continue with potential licensees facing a first exclusion order following the ITC final determination and presidential review period.
Phil: Our second generation high density <unk> for leading AI applications is coming to fruition with the recent arrival of an ASIC raising the bar on the density and bandwidth of our MCM current multipliers.
Phil: Second generation Bpd will enable AI processors to set new standards for performance.
Phil: Development of the next generation <unk> system for our lead customer is approaching completion and we will soon provide evaluation systems to processor chip companies and Hyperscale.
Phil Davies: Appetite for factorized power VPD solutions is growing, as multi-phase voltage regulators are unable to deliver the performance and current density required by future AI systems. With AI driving rack power up to 160 kilowatts, the HPC industry is evaluating a transition to 800-volt power delivery to the rack and bus conversion to 48-volt nodes within the rack on the way to the point of load. VICO's Fixed Ratio Bus Converter Modules with Industry-Leading Power Density and Liquid-Cooled Thermal Management Flexibility. are a perfect solution for these requirements. Given these market forces, Vicor will be uniquely positioned to offer front-end 800-volt to 48-volt bus converters and direct VPD 48-volt to sub-1-volt solutions, enabling a complete high-efficiency, high-density power delivery network for our customers.
Phil: Appetite for factor is power Bpd solutions is growing as multi phase voltage regulators are unable to deliver the performance and current density required by future AI systems.
Phil: With AI driving rack power up to 160 kilowatts. The HBC industry is evaluating a transition to 800 volt power delivery to the rack and <unk> conversion to 48 volt nodes within the rack on the way to the point of load.
Phil: Veeco is fixed ratio of bus converter modules with industry, leading power density and liquid cooled thermal management flexibility.
Phil: Not a perfect solution for these requirements.
Phil: Given these market forces FICO will be uniquely positioned to offer front and 800 volt 48 volt bus converters and direct V. PD 48 volt to sub one volt solutions, enabling a complete high efficiency high density power delivery network for our customers.
Phil Davies: The market, Sam, for these solutions is expected to exceed $5 billion by 2028. As with other USA-based manufacturers, we are navigating a changing tariff landscape. Components used in our power modules are not exempt from tariff.
Phil: The market size for these solutions is expected to exceed $5 billion by 2028.
Phil: As with other USA based manufacturers, we are navigating the changing tariff landscape.
Phil: Components used in our power modules are not exempt from tariffs in.
Phil Davies: In Q1, we informed our customers and channel partners that a 10% tariff surcharge line item will be added to invoices for shipments after July the 2nd. Due to higher reciprocal tariffs levied by the Chinese government, we have also seen cancellation requests from China-based customers. But these potential cancellations are not at levels high enough to impact our overall business. New product introductions will continue to ramp as we move through 2025. In Q1, we announced availability for general sale of a new high-density 48-volt DC-to-DC converter family. We have also initiated sampling of a new family of three-phase AC to DC power modules to lead customers in the aerospace market.
Phil: In Q1, we informed our customers and channel partners that a 10% tariff surcharge line item will be added to invoices for shipments after July the second.
Phil: Due to higher reciprocal tariffs levied by the Chinese government. We've also seen cancellation requests from China based customers, but these potential cancellations or not at levels enough high enough to impact our overall business.
Phil: New product introductions will continue to ramp as we move through 2025 in Q1, we announced the availability for general sale of our new high density 48 volt DC to DC converter family.
Phil: We have also initiated sampling of our new family of three phase AC to DC power modules to lead customers in the aerospace market.
Phil Davies: This will be a new market for Vicor, offering excellent growth opportunities. Our engagement with our top 100 customers continues to strengthen as 48-volt power delivery moves to the mainstream, along with 800-volt DC-based front-end power systems. Our strategy of developing complete front-end-to-point-of-load solutions that are centered on a 48-volt hub offering high power density, ease of use, scalability, and flexibility across product platforms is proving to be right, as evidenced by strong engagements across our top 100 customers in our four target business segments.
Phil: This will be a new market for veeco offering excellent growth opportunities.
Phil: Our engagement with our top 100 customers continues to strengthen as 48 volt power delivery moves to the mainstream along with 800 volt DC based front end power systems.
Phil: Our strategy of developing complete front end to point of load solutions that are centered on a 48 volt hub offering high power density ease of use scalability and flexibility across product platforms is proving to be right.
Phil: Evidenced by strong engagements across our top 100 customers.
Phil: Our target business segments.
Phil Davies: As stated in our Q4 call, we see 2025 as a year of opportunities and of high confidence in our business.
Phil: As stated in our Q4 call. We see 2025 is a year of opportunities and have high confidence in our business.
Unknown Executive: Thank you. We will now take your questions.
Phil: Thank you, we'll now take your questions.
Unknown Executive: Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we come to the first question.
Phil: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone you would.
Phil: Then here an automated message advising you had this raise we also ask that you. Please wait for your name and company to be announced before proceeding with your question.
Phil: One moment, while they come to the first question.
Quinn Bolton: The first question will come from the line of Quinn Bolton of Needham & Company. Your line is open. Hey, guys, I wanted to ask about something in the press release. In the press release, you mentioned revenue and gross margins declined sequentially with reduced income from a licensee transitioning to a new generation of unlicensed products. Can you just elaborate on that? Is that, you know, new generation of products span an entire family of new GPUs or XPUs? Or is it more limited just just, you know, trying to gauge how significant the change in your licensing or royalty income might be the result of this transition?
Speaker Change: The first question will come from the line of Quinn Bolton of Needham <unk> Company. Your line is open.
Phil: Okay.
Speaker Change: Hey, guys I wanted to ask you about something in the press release in the press release, you mentioned revenue and gross margins declined sequentially with reduced income from our licensee transitioning to a new generation of unlicensed products can you just elaborate on that is is that new.
Phil: New generation of products span.
Phil: An entire family of new.
Phil: Gpus or SP use or is it more limited just just trying to gauge how significant.
Phil: The change in your licensing or royalty income might be the result of this transition.
Jim Schmidt: I really cannot, for a variety of reasons, elaborate on that. Can you elaborate just on the impact of Vicor? Would you expect a material change in the licensing outlook with that licensee? Well, obviously, that's a short term impact, you know, somehow. for Q1. But we remain confident with respect to licensing business being a growth business that will contribute substantially. of deciding levels to both the top line and particularly the bottom line.
Phil: I cannot quote a variety of reasons to elaborate on that.
Speaker Change: Can you elaborate just on the impact of <unk> quarter would you expect a material change in our licensing outlook with that licensee.
Speaker Change: Well, obviously as I said in short term impact.
Speaker Change: While Q1.
Speaker Change: But we remain confident to with respect to <unk>.
Speaker Change: Our licensing business of being a growth business that will contribute substantially.
Speaker Change: On the funding levels to both the topline and bottom line at the bottom line.
Quinn Bolton: And Patrizio may be there. That was my sort of follow on. I think in the script, you guys mentioned ongoing negotiations or discussions with additional licensees. Can you clarify now that we have, I think, the injunction against Delta? If non-licensee hyperscalers import, you know, modules from Delta, would that be subject to the injunction? Yes. Got it. Okay, I will get back in the queue with a couple more. Thank you. One moment for the next question.
Speaker Change: And Patricia maybe there that was my sort of follow on I think in the script you guys mentioned ongoing negotiations or discussions with additional licensees.
Speaker Change: Can you clarify now that we have I think the injunction against Delta.
Speaker Change: If if non licensee hyper scaler.
Speaker Change: Imports.
Speaker Change: Yeah.
Speaker Change: Modules from Delta would that be subject to the injunction.
Speaker Change: Yes.
Speaker Change: Got it Okay, I will get back in the queue with a couple more thank you.
Speaker Change: Okay.
Speaker Change: Thank you one moment for the next question.
John Tanwanteng: And our next question will be coming from the line of John Tanwanteng of CJS. Your line is open. Hi, thank you for taking my questions. I was wondering if you could just talk about the indirect impacts from tariffs and the direct impacts from tariffs. If you've made any assumptions going forward, you know, what do you think the Excuse me. What do you think the indirect might be on supply and demand, as potentially other suppliers may not be able to import as much stuff, and the impact on your own tariff paying to modules from China? So we've got fast on of Microsoft.
Speaker Change: And our next question will be coming from the line of John Tang Wengen C. J S. Your line is open.
Speaker Change: Yes.
Speaker Change: Hi, Thank you for taking my questions.
Was wondering if you could just talk about the <unk>.
Speaker Change: Indirect impacts from tariffs on the direct impacts from tariffs if you've made any assumptions going forward.
Speaker Change: What do you think the.
Speaker Change: Excuse me if what do you think the indirect might be on supply and demand.
Speaker Change: Potentially other suppliers may not be able to input.
Speaker Change: As much stuff.
Speaker Change: On your own tariffs team to modules from China.
Speaker Change: So we have SaaS.
Speaker Change: The impact.
Speaker Change: No.
Speaker Change: Uh huh.
Speaker Change: Bill of material.
Speaker Change: And obviously.
Speaker Change: Our bodies, depending on which particular product platform, we're talking about.
Phil Davies: of components from various countries of origin. But having gone through that assessment as of weeks ago. We took collective action, as Phil pointed out in his previous remarks. in terms of instituting a 10% tariffs to share motion that would be applied at the beginning of the third quarter. We don't expect that to have an appreciable negative impact on... demands for our products. When it comes to reciprocal tariffs, as Phil pointed out, in China. We do expect, with some of the programs, to see an impact. You know, quantity, as Phil pointed out, is not, as of now, assessed to be significant in terms of moving the needle or altering revenue.
Speaker Change: The mix.
Speaker Change: Ill components from various countries of origin.
Speaker Change: But having gone through that assessment.
Speaker Change: So a weeks ago.
Speaker Change: We took corrective action as Phil pointed out in his prepared remarks.
Speaker Change: In terms of you said using is 10% tariffs with China.
Speaker Change: Would be applied.
Speaker Change: At the beginning of the third quarter.
Speaker Change: We don't expect that to have.
Speaker Change: An appreciable magazine impact.
Speaker Change:
Speaker Change: Demand for our products.
Speaker Change: But.
Speaker Change: When it comes to Vascepa valves types as Phil pointed out.
Speaker Change: In China, we do expect that with some of the programs to see any impact in that.
Speaker Change: <unk> pointed out.
Speaker Change: He is not as of now.
Speaker Change: Assess to be significant at Samsung.
Speaker Change: Neither are paying out.
Speaker Change: Rob.
Speaker Change: Revenue.
John Tanwanteng: Okay, great.
Phil Davies: And then my second question just, has there been any change to the timeline for ramping your second generation VP products to lead customer? Do you still expect that to be happening at the end of this year or maybe early next? So based on the testing that's been done today on a recently received ESIC, which is instrumental to the point-of-load car multiplier. We feel. very good with respect to being able to bring the development the fruition, as mentioned in the press release and in Phil's remarks. We remain totally focused on our lead customer, very important to.
Speaker Change: Okay, Great and then my second question just has there been any change to the timeline for ramping your second generation GPU products can be customer do you still expect that to be happening at the end of this year or maybe early next year.
So based on the past things as being down today.
Speaker Change: Today on recently received.
Speaker Change: As sika, which he has been instrumental to the point of load current multiplier.
Speaker Change: <unk>.
Speaker Change: We feel.
Speaker Change: Very good with respect to being able to bring the development to.
Speaker Change: The fruition.
Speaker Change: As mentioned in the press release and the Appeals remarks with.
Speaker Change: We remain totally focused on.
Speaker Change: Cathmor very important too.
Phil Davies: I'll raise the bar on current capability of delivering the goods for that national airstrike application first, and we'll follow that up with demo systems. for the Provincial Customer Base at large, you know, as soon as we completed the effort for the lead customer.
Speaker Change: <unk> raised the bar on current capability in delivering the goods.
For that National Ashok pre cassia.
Speaker Change: First and we'll follow that up with <unk>.
Speaker Change: Sure.
Speaker Change: The eventual customer base are large.
Speaker Change: As soon as we've completed the effort.
Denise Castillo: Denise Castillo.
Unknown Executive: Thank you. I'll jump back. Thank you. One moment for the next question.
Denise Castillo: Thank you I'll jump back in queue.
Denise Castillo: Thank you one moment for the next question is.
John Dillon: And the next question will come from the line of John Dillon of D&B Capital. Your line is open. Thank you.
And the next question will come from the line of John Dillon.
Speaker Change: Dnb capital your line is open.
Patrizio Vinciarelli: Patrizio, I have a follow up to John's question. That's in regard to what you're shipping to your lead customer. Are those alpha or beta units? And can you kind of give us a timeframe or schedule what it's going to take to actually productize the Gen 5 point of load that you're giving to that customer? You know, so it's available, generally available, and you can manufacture that in quantities. Thank you. So typically, we are. On our end, with respect to lead customer on an older generation platform, as I mentioned this I think in of the most recently quarterly call, and we are closing in on being able to ship units that meet the expectations as they've evolved in terms of current capability and current density.
Speaker Change: Thank you.
Speaker Change: Curious John as a follow up to John's question. That's in regard to what Youre shipping to your lead customer.
Speaker Change: Those alpha or beta units and can you kind of give us a timeframe or schedule, what it's going to take tax rate product ties.
Speaker Change: Gen five point of load that you've given to that customer. So it's available generally available and you can manufacture that in quantities.
Speaker Change: So typically.
Speaker Change: We are.
Speaker Change: On a ramp.
Speaker Change: We expect to lead cast them.
On an all of the Jive Ashok platform.
As I mentioned this I think Kim.
Speaker Change: Our most recently quarterly call.
Speaker Change: And we are closing in on being able to.
Speaker Change: Shipped units that.
Speaker Change: Yes, the cash outs as they've evolved.
Speaker Change: Intel so cockup ability and crowds absurdity.
Patrizio Vinciarelli: But we're not quite there yet. We expect to be there soon. And we are targeting for the time being. Thank you.
But we're not quite there yet we expect to be there.
Speaker Change: Soon.
Speaker Change: And we are targeting.
Speaker Change: Power production in the second half of this year.
Speaker Change: Okay.
Speaker Change: The <unk> solution.
Patrizio Vinciarelli: Okay, and that would be a productized and would that be completely productized? I mean, what I mean by that is, you know, typically, when, when I've been in the industry, when we ship the initial product to a customer, they, they evaluate it, and they find some bugs, and then they feed it back to Vicor, then Vicor makes the corrections, and then they give it back to them. Do you expect a lot of that to go on? Or are you very confident that you can make the second half of the year to ship to them production quality units?
Speaker Change: Okay, and that would be a product ties and would that be completely product ties and what I mean by that is now typically when I've been in the industry. When we ship the initial product to a customer.
Speaker Change: <unk> evaluated may find some bonds and then they feed it back to buy core and by Comex. The corrections and then I'll give it back to them and do you expect a lot of that to go on or are you very confident that you can make the second half of the year to ships then production quality units.
Patrizio Vinciarelli: Well, obviously. In order to be very confident, we need to complete the development effort. But as you can imagine, based on your experience, this has not been a case where it all awaits. the in a matter of short weeks. And we expect, with that fact... be able to achieve the base-level performance originally being targeted by our company. I guess I understand that. But then after that, you still got to get to a product that you can manufacture in quantities and sell to the customer, correct? Or am I missing something? No, you're not missing anything. And to your point, the challenge is a complex challenge, right, that involves, you know, electrical, mechanical, thermal, as well as, to your point, process capability, equipment capacity, and all that is involved in being able to ramp.
Speaker Change: Well obviously.
Speaker Change: In order to be.
Speaker Change: Very confidence we need to compete to develop our platform.
Speaker Change: As you can imagine vessel USPS.
Speaker Change: This has not been our case.
Speaker Change: In all ways.
Speaker Change: Volatility of fully functional units, so we've been able to.
Speaker Change: Making tremendous SaaS happen even before.
Speaker Change: The arrival of the <unk>, which we recently received.
Speaker Change: And we now expect this next major SAP.
Speaker Change: And to begin to deliver.
Speaker Change: Current multipliers using that ASIC.
Speaker Change: In <unk> saw weeks.
Speaker Change: And we expect with that staff to be able to achieve.
Speaker Change: Yeah.
Speaker Change: Base level performer <unk> being targeted by a capstone.
Speaker Change: I guess I understand that but then after that you still got to get to a product that you can manufacturing quantities and sell to the customer correct.
Speaker Change: Am I missing something.
Speaker Change: No you're not missing anything and to your point.
Speaker Change: The challenge is a complex challenge.
Speaker Change: <unk>.
Speaker Change: Electrical.
Speaker Change: Can you go to a mall.
Speaker Change: As well as to your point.
Speaker Change: A process capability equipment capacity.
Speaker Change: All of that is involved in being able to ramp the.
Patrizio Vinciarelli: and the Chipset for this application. It's a multi-faceted... challenge. But again, with respect to each of the elements of challenge, He has been making good progress, in particular when it comes to the processes. and the capacity. We've been able to make steps in the right direction, and I expect that all of it will come together as it has. in prior initiatives of a similar kind as we progress through the summer months. Right. Thank you very much for that detailed response. I'll get back in the queue. Thank you.
Speaker Change: The chipset for this uptick Ashok.
Speaker Change: If this is not.
Speaker Change: It's a multifaceted.
Speaker Change: <unk>.
Speaker Change: A challenge, but again with respect to each of the elements of challenge.
Speaker Change: Yes.
Speaker Change: Making good progress.
Speaker Change: When it comes to the processes.
Speaker Change: And the capacity.
Speaker Change: You've been at books.
Speaker Change: Steps in the right direction and I expect that all of it will come together as it as in prior initiatives of our Simi archive.
Speaker Change: As we progress through the summer months.
Speaker Change: Great. Thank you very much for that detailed response I'll get back in the queue. Thank.
Speaker Change: Thank you.
Unknown Executive: One moment for the next question.
Speaker Change: Thank you one moment for the next question.
Richard Shannon: The next question is coming from the line of Richard Shannon of Craighalem. Your line is open. Well, thanks, guys, for taking my question. I just want to follow up on the comments in the press release, I think Quinn asked on as well here, which is the hyperscaler or some some customer transitioning to an unlicensed product. Is this also an infringing product? And if so, are there some actions being contemplated here to alter the trajectory of what this customer is doing? Yes, yes, yes. Okay.
Speaker Change: And the next question is coming from the line of Richard Shannon of Craig Hallum. Your line is open.
Richard Shannon: Well, thanks, guys for taking my question.
Richard Shannon: I guess I wanted to follow up on the comments in the press release I think when asked on as well here, which is the <unk>.
Richard Shannon: Hyper scaler or somewhat some customer transitioning to an unlicensed product because this also and then bridging product and if so.
Richard Shannon: There are some actions being contemplated here to alter the trajectory of what this customer is doing.
Speaker Change: Yes, yes, yes.
Richard Shannon: Okay.
Richard Shannon: Well, maybe I'll follow up on this topic here on licensing here, following on the prior response here on looking at this revenue stream here. But how do we how do we think about this? And we're turning to a growth track. Here's something we expect to start in the second quarter, in the second half or and what are the dynamics under which that occurred? Well, I think it's again a combination of Increased prior revenues, and needless to say, the step up in the bookings and the backlog, sets the stage for that. as well as increased licensing.
Well, maybe I'll follow up on this topic here a license that youre falling on the prior response here.
Richard Shannon: Looking at this revenue stream here, but how do we how do we think about returning to a growth track here is something we expect to start in the second quarter in the second half or and what are the dynamics under which that occurs.
Richard Shannon: Well I think it's again a combination of.
Richard Shannon:
Richard Shannon: Okay.
Richard Shannon: Increased product revenues and <unk>.
Richard Shannon: Say D.
Richard Shannon: Set up in the bookings and the backlog.
Richard Shannon: Sets the stage for that.
Richard Shannon: As well as increased licensing income.
Richard Shannon: It's as simple as that. Those are the components of the revenue growth that we anticipate happening as the year progresses. Okay, I'll jump back in the queue. Thank you.
Richard Shannon: It's as simple as that.
Richard Shannon: <unk> of the revenue growth that we anticipate happening as the year progresses.
Richard Shannon: Okay, I will jump back in the queue. Thank you. Thank you.
Alan Hicks: And our next question will come from the line of Alan Hicks. of Ainslie Capital Markets, excuse me, Management, your line is open. Royalties and advanced products sounded like royalties fell about $5 million or about a third, while advanced products still grew. So in-house produced products grew about 16%. and they did in the fourth quarter also.
Richard Shannon: Thank you.
Alan Hicks: And our next question will come from the line of Alan Hicks.
Alan Hicks: Thanks to the capital markets excuse me management your line is open.
Alan Hicks: Good afternoon.
Alan Hicks: Clarify.
Alan Hicks: Royalties of advanced products.
Alan Hicks: It sounded like royalties fell about $5 million or better.
Alan Hicks: Well advanced products still grew.
Alan Hicks: And has produced products grew about 16%.
Alan Hicks: And they did in the fourth quarter also.
Jim Schmidt: So I guess my question is. Did you sign up your licenses in the Q1 and So that will continue to grow in royalties. We did sign up a licensee in Q1, a new licensee. But you're right to say that the advanced products, excluding the decline in royalty, grew. The product revenue in the factory grew on the advanced product side. So that was a positive outcome. Okay, so you had a significant customer that transitioned from royalties to accepting in-house produced products?
Alan Hicks: So I guess my question is.
Alan Hicks: Did you sign up new licensees in the Q1.
Alan Hicks: So that will continue to grow and royalties.
Alan Hicks: We did sign up licensing in Q1, our new licensee, but youre right to say that the advanced products, excluding the decline in royalty.
Alan Hicks: Grew the product revenue in the factory grew on the advanced product side.
So that was a positive outcome.
Alan Hicks: Okay.
Alan Hicks: Significant customers of that.
Alan Hicks: Transitioned from royalties to accepting in house produced products.
Jim Schmidt: And I'm going to make the assumption that that wouldn't be the right assumption. Okay, so what's driving the actual in-house produced growth? An existing customer ramping further on production and as well as new opportunities that we... Yeah, and as mentioned, the facilities and, you know, as earlier asked... We did have an existing licensee transition to, you know, a new product platform where this new product is unlicensed.
Alan Hicks: Yes.
Alan Hicks: That wouldn't be the right assumption yes.
Alan Hicks: Okay.
Alan Hicks: So what's driving.
Alan Hicks: The actual and has produced in.
Alan Hicks: An existing customer ramping further on production as well as new opportunities that we yes.
Alan Hicks: As mentioned in the press release.
As earlier asked.
Alan Hicks: We did have.
Alan Hicks: An existing licensee transition tool.
Alan Hicks: Product platform.
Alan Hicks: Where do you see your product.
Alan Hicks: It is on license.
Jim Schmidt: Okay, is that a new version of the NBM product?
Speaker Change: Okay is it.
Speaker Change: And then a new version of the Nbn project.
Jim Schmidt: That's all I can say at this point in time. already to the extent that Okay, so we can expect continued growth and royalties and continued growth and product sales the rest of the year. I think we can confidently say that and we seek both in licensing income. We are still, obviously, when it comes to Let's say the licensee comes. relying on a very small multiplicity of licensees. And with that. There can be surprises as it happens in Quarterm. There can be negative surprises, there can be positive surprises. of OEMs and hyperscalers, their technical license increases.
Speaker Change: That's all I can say at this point in time I think this question is the asset.
Speaker Change: Alright.
Ken: Hey, Ken.
Ken: Okay. So we can expect continued growth in royalties and continued growth in product sales to the rest of the year.
Ken: I think.
Ken: We have confidence you say that.
Ken: We see growth in <unk> revenues, and we can see both in licensing income.
Ken: We have seal obviously when it comes to.
Ken: Let's take the licensing income.
Ken:
Ken: Your line.
Ken: On.
Ken: Small multiplicity of licensees.
Ken: And with that.
Ken: Okay.
Ken: There can be surprises as it happened this quarter.
Ken: Yes.
Ken: It can be negative surprises E com policies.
Ken: And once the.
ACD.
Ken: Yes.
Ken: And <unk> taken a license.
Jim Schmidt: then I would expect the licensing business is going to become. or predictable in terms of its quarter to quarter revolution. And the same can be said of on the private revenue side. Obviously, we have invested a great deal in RFID technology. We believe it's unique without equals, without close competition. Obviously, it's taking longer than expected, but it is a reflection. of the challenge we are on and I believe it will pay great dividends as you point out. We have strong revenue growth opportunities in years to come, being enabled by that capability. Okay.
Ken: Increases.
Ken: And then with respect to the licensing business is going to become.
Ken: Our predictable in terms of quarter.
Ken: Quarter to quarter evolution.
Ken: The same can be said.
Ken: On the product revenue side, obviously, we have invested a great deal in.
Ken: Our <unk> technology, we believe.
Ken: <unk> unique without equal so without cross competition.
Ken: Obviously, it's taken longer than expected, but it is a reflection.
Ken: <unk>.
Ken: Magnesia is a challenge.
Ken: <unk>.
Ken: And I believe it will.
Ken: Pay great dividends.
Ken: You pointed out.
Ken: So we had strong revenue growth opportunities in years to come.
Ken: Enabled by that capability.
Unknown Executive: Can you give any update on the ITC case? It was a Texas case on damages, I think. Can you say anything about that?
Ken: Okay, and then can you give any update on the ITC case is a Texas based on damages I think can you say.
Speaker Change: Jamie you think about that.
Unknown Executive: So the ITC case came to an end with the ITC issuing its final determination. He came to a further end once the 60 days The presidential review period came to an end, as you may know, through the presidential review period. You know, respondents, their customers can continue to impart. of the Washington Post, people.
Ken: So the ITC case.
Ken: Came to an end with the ICC issuing its final as Amin Asher.
Ken: Came to a further and once the 60 days.
Ken: This is actually a review period.
Ken: Two in hand, as you may know through the potentially Vieux viel.
Ken: Yeah.
Ken: <unk> the cast almost and continue to import.
Ken: In finishing product.
Ken: We're seeing a bond.
Ken: Following.
Ken: At the end of the presidential review period.
Ken: There is an exclusion order outstanding if they can no longer import infringing product.
Unknown Executive: So that's where things stand with respect to the IDC case. There are certain aspects. of the Founders of the Emanation that are objectionable, and with respect to which Ligars found Saab on their journal.
Ken: So thats, where things stand with respect to the ITC case.
Ken: There are certain aspects.
Ken: Of the thousands of <unk> that are.
Ken: Objectionable and with respect to which <unk> trial.
Ken: Hey.
Ken: And our appeal.
Ken: Hello.
Ken: And so thats the Max SaaS.
Ken: SaaS on federal front.
Jim Schmidt: Okay, and lastly, BBU products fell about 4 million. But, but is that going to continue about that level? Or what do you see in the BBU area? I would say, yeah, I mean, I think that we wouldn't expect, you know, it bounces around a bit. I think it's fairly stable, I guess, you know, as Phil mentioned, a potential risk element is in the China reciprocal tariffs and the cost per product being higher in China, but I think we're sorting that out. And as Phil said, so far, at least there's no appreciable, significant impact. So I would say that, you know, steady as she goes with a brick business over the course of the year.
Ken: Okay, and then lastly, CPU products fell about $4 million.
Ken: Is that going to continue at that level.
Ken: What are you seeing the Btu area.
Ken: I would say, yes, I mean, I think that we wouldn't expect it bounces around a bit I think it is fairly stable I guess, it's Phil mentioned.
Speaker Change: Potential risk element is in the China tariffs and the customer product being higher in China, but I think we're sorting that out and as Bill said, so far at least Theres no appreciable significant impact.
Ken: So I would say that.
Ken: Steady as she goes with the brick business over the course of the year.
Unknown Executive: Okay, thank you very much. Thank you. One moment for the next question.
Ken: Okay. Thank you very much.
Ken: Thank you one moment with the next question.
John Tanwanteng: The next question is going to be a follow up from Jon Tanwanteng of CJS. Your line is open. Hi, could you clarify what your pricing expects to look like after you implement the tariff surcharges? Is that plus 10% on just the advanced products that have the Chinese component exposure or is that across BRICS as well? Which portion of your portfolio has that increase? Thank you.
Speaker Change: The next question is going to be a follow up from John Tang One Teng of.
Speaker Change: C J F. Your line is open.
Speaker Change: Hi could you clarify what your pricing is expected to look like after you implement tire surcharges is that plus 10% on just the advanced products.
Speaker Change: The Chinese component exposure or is that across bricks as well, which portion of your portfolio has that increase thank you.
Phil Davies: Hi Jon, it's Philip. So it's across the board. It's a 10% tariff surcharge, as Patrizio mentioned, that will go into effect after the beginning of July. It's 10% across the board. We've analysed, as Patrizio mentioned, you know, the different products, the different variations in it, up or down on the tariff impact. So 10% was a good base number to begin with. Okay, and does that cover the expected gross profit you were expecting to make before the tariffs and maybe to loot the margins a little bit? Or is it a different formula than that? We expect to be able to maintain the margin.
John Israel: Hi, John Israel, So it's across the board.
John Israel: Percent tariff surcharge as Patricio mentioned that will go into effect.
John Israel: At the beginning of July.
John Israel: 10% across the board, we've analyzed as Patricio mentioned.
John Israel: The different products that different variations.
John Israel: Down on the tariff impact so 10% was a good base number to begin with.
Speaker Change: Okay and does that cover the expected gross profit you expected to make before the tariffs and maybe dilute the margins a little bit or is it a different formula than that.
John Israel: We expect to be able to maintain that margin so to be clear.
Phil Davies: So to be clear, you know, we've analyzed products, including some high volume products. were the impact of the Tyson charge, as of a few weeks ago, was as high as 31-32%, but then there are other products where the impact is less. And for simplicity, it didn't make sense to have a Unique Surcharge based on the Partiga customer application, so it's an across-the-board app, if you will. Check out. other costs, and the maintenance of margin. Understood. Thank you.
John Israel: We've analyzed it products, including some high volume products.
John Israel: The impact of the tax charge as of a few weeks ago was as high as 31, 32% dependent on other products what the impact is less.
John Israel: For simplicity.
John Israel: Sure.
John Israel: It makes sense to have.
John Israel: <unk>.
John Israel: Unique.
John Israel: So charge based on the FERC.
John Israel: Cost of our free cash them so.
John Israel: Across the board if you will.
John Israel: Check counts.
John Israel: Bumped costs.
John Israel: Other costs.
John Israel: Our maintenance margin.
Jim Schmidt: And then finally, could you talk a little bit more about your expected OPEX heading forward, including R&D and maybe any litigation or legal expense you might have coming Well, I would say, you know, John, we've taken the position that we're not going to guide specifically on on any of the P&L elements. What I tried to describe the Q4 to Q1 transition did have some moving parts in there that we felt was worth kind of describing and talking through. But beyond that, you know, I think Vicor is a very stable place relative to spend and headcount, etc.
Speaker Change: Understood. Thank you and then finally could you talk a little bit more about your expected opex heading forward, including R&D and maybe any litigation or legal expenses, you might have coming up.
Speaker Change: Well I would say John we've taken the position that we're not going to guide specifically on any of the P&L elements.
Speaker Change: What I tried to describe the Q4 to Q1 transition did have some moving parts in there that we felt was worth describing in talking through.
Speaker Change: But beyond that I think backwards, a very stable place relative to spend and head count et cetera. So.
Unknown Executive: So that's, I think, as much as I would say on it. Okay, great. Thank you. One moment.
Speaker Change: I think it was much as I would say on it.
Speaker Change: Okay, great. Thank you.
Quinn Bolton: And we have a follow up coming from the line of Quinn Bolton of Needham & Company. Your line is open. Hey guys, I wanted to follow up. I think you said in the prepared script that you'd seen a recovery in the MBM business, which I think might be associated with one of your licensees. Just wondering if you could give us, you know, as you look out through the year, would you expect that MBM business to, you know, continue to grow? Would it be stable at Q1 levels? Just any kind of shape to that MBM business on a go forward basis?
Speaker Change: Thank you one moment and we have a follow up coming from the line of Quinn Bolton of Needham <unk> Company. Your line is open.
Quinn Bolton: Hey, guys I wanted to follow up I think you said in the prepared script that you'd seen a recovery in the MVM business, which I think might be so.
Quinn Bolton: <unk> with one of your licensees just wondering if you could give us.
Quinn Bolton: Out through the year would you expect that MDM business too.
Quinn Bolton: <unk> to grow would it be stable like Q1 levels, just just any kind of shape to that MDM business on a go forward basis, and then I've got a follow up.
Phil Davies: And then I've got a follow up. So we expect the NBN business to grow. And, you know, these come. to say in the obvious. years ago, we had enjoyed the significant ramp of revenues associated with NBMs until infringers came about and undermined our market opportunity. The win we scored at the IETC and concern on the part of OEMs and hyperscalers with respect to the exclusion order has brought about a revival of demand for R&D.
Quinn Bolton: So we expect <unk> business to grow.
Quinn Bolton: And.
Quinn Bolton: These cove.
Quinn Bolton: Say the obvious.
Quinn Bolton: Years ago, we had enjoyed the significant.
Quinn Bolton: Ramp of revenues associated with <unk> until <unk>.
Quinn Bolton: <unk> came about.
Quinn Bolton: And undermined our market opportunity.
When we scored at the ITC.
Quinn Bolton: And concern on the part of Oems and Hyperscale is with respect to.
Quinn Bolton: The exclusion of all of them.
Quinn Bolton: As.
Quinn Bolton: What about any viable you've had thus far our nbn.
Quinn Bolton: Thank you for that. And then I just want to make sure I sort of understand your comments about licensing or royalty income going forward. You said that you expect that to grow. I think some of that is driven by an expectation or the likelihood of additional licensees signing agreements with you. But I guess I just wanted to clarify, if you've got a licensee that's currently transitioned to an unlicensed product, I think in response to Richard's comment, it didn't sound like that was something that necessarily changes in a quarter. And so to the extent licensing or royalty income grows, say, in 2025, would you expect that to be mostly generated from new licensees signing new license agreements, or would you expect that existing licensee revenue to recover?
Thank you for that and then just wanted to make sure I sort of understand your comments about licensing or royalty income going forward.
Quinn Bolton: You said that you expect that to grow I think some of that is driven by an expectation or the.
Quinn Bolton: The likelihood of additional licensees.
Quinn Bolton: Signing agreements with you but.
Quinn Bolton: I guess I just wanted to clarify if you've got a licensee that is currently transitioned to an unlicensed product.
Richard Shannon: I think in response to Richard's comment it didn't sound like that was something that.
Richard Shannon: Necessarily changes in a quarter and so to the extent licensing or royalty income grows say in 'twenty. Five would you expect that to be mostly generated from new licensees, signing new license agreements or would you expect that existing licensee revenue to recover.
Jim Schmidt: There's a lot of moving pieces there. And so I. I'm not able to...
Richard Shannon: These are all the moving pieces there.
And so I.
Richard Shannon: Yeah.
Richard Shannon: I am not able to.
Jim Schmidt: make a specific How each of these components will play out. Enough to know that in the aggregate, we have lost opportunities. with both existing licensees. Who's revenue licensee income is ramping All the licensees there's been a change That could lead to a number of different places And then there is potential for additional licensees, you know, how each of these components play out is Frankly difficult to predict But there is enough opportunity in the aggregate to be comfortable in forecasting that licensing revenue is going to be a growth business survival. Understood. Okay.
Richard Shannon: Make a specific.
Richard Shannon:
Richard Shannon: Statement with these facts it too.
Richard Shannon: How each of these components will play out.
Richard Shannon: But it's.
Enough to know that in the aggregate.
Richard Shannon: <unk>.
Richard Shannon: Lots of opportunities.
With both.
Richard Shannon: Are you seeing license fees.
Richard Shannon: Was revenue or license fee income is ramping.
Richard Shannon: All of our licensees theres been a change.
Richard Shannon: That could lead to a number of different places.
Richard Shannon: And then there is potential for additional license fees.
Richard Shannon: How each of these components will play out is frankly difficult to predict.
Speaker Change: Did you see enough opportunity in the aggregate to be comfortable in.
Richard Shannon: Forecasting.
Richard Shannon: Lessons fee income is going to the licensing revenue is going to be a growth business survival.
Patrizio Vinciarelli: Thank you, Patrizio. Thank you.
Richard Shannon: Understood. Okay. Thank you Patricia thank you.
John Dillon: One moment. And we do have a follow up from John Dillon of DB Capital. Your line is open.
Richard Shannon: Thank you one moment.
Speaker Change: And we do have a follow up from John Dillon.
Speaker Change: Of DB capital your line is open.
Patrizio Vinciarelli: Patrizio, on the last conference call, you mentioned that you're expecting a record year. So I'm just wondering, are you still expecting a record year? Yes. Excellent.
John Dillon: I'd be curious you on the last conference call you had mentioned that Youre expecting a record year. So I'm. Just wondering are you still expecting a record year, yes.
Patrizio Vinciarelli: And my follow up is I was wondering about the new fab are all the kinks iron out of the new fab and in particular is the plating turnkey and is it better than what you're getting from your previous outsource supplier? Yes. We are happy with the progress we made. We have a lot of capacity. We're going to put that capacity to good use, particularly with our 5G power platform. We made the right decisions. It's a big investment.
Speaker Change: Yes.
Speaker Change: One.
Speaker Change: And my follow up is I was wondering about the new fab or all the Kinks ironed out of the new fab and in particular is the plating turnkey is it better than what youre getting from your previous outsource supplier.
Speaker Change: Yes.
Speaker Change: We are happy with the progress we made we have a lot of capacity, we're going to put that capacity to good use but clearly with our phase G.
Speaker Change: Top platforms.
Speaker Change: We've made the right decisions, it's a big investment.
Patrizio Vinciarelli: Needless to say, in terms of margins, You know, we have been paying a price of late with all the equipment that we're depreciating, not being close to being fully utilized. But we think that as we get into later this year and to next year, we're going to see improvements in power margins beyond the contribution from licensing. That sounds good. Thank you very much for that response. Thank you.
Speaker Change: And he has to say in terms of margins.
Speaker Change: We have been paying a price of late with all of the equipment.
Speaker Change: That we're depreciating not.
Speaker Change: Not being close to being fully utilized but we think of that as we get into.
Speaker Change: Later, this year and through next year.
Speaker Change: We're going to see improvement seen prior margins beyond the contribution from licensing income.
Speaker Change: That sounds that sounds good. Thank you very much for that response.
Unknown Executive: And we'll talk next quarter or the annual meeting, I guess. Yeah, that's right. Thank you. One moment.
Speaker Change: Thank you and we'll talk next quarter or the annual meeting I guess, yes.
Speaker Change: Right.
Speaker Change: Thank you one moment.
Richard Shannon: And we have a follow-up coming from the line of Richard Shannon of Craig Haley. Your line is open. Hi guys, thanks for let me ask a follow up here. I want to ask about, you know, product growth the rest of the year, and I've heard a couple of pieces and other responses here. I think you're talking about NBMs growing nicely here. It sounds like work will be flat. Obviously, it sounds like advanced that include NBMs will be up to some degree. Obviously, you're not going to quantify, but also love it if maybe you could divine out what this is going to look like between end markets.
Speaker Change: And we have a follow up coming from the line of Richard Shannon of Craig Hallum. Your line is open.
Richard Shannon: Hi, guys. Thanks for let me ask a follow up here.
Richard Shannon: I wanted to ask you about.
Richard Shannon: Product gross the rest of the year and I've heard a couple of pieces and other responses here I think youre talking about mbm's growing nicely here.
Richard Shannon: It sounds like where it could be flat obviously it sounds like advance that included Mbm's it'll be up to some degree obviously youre not going to quantify but also love love It but maybe you could.
Richard Shannon: Divine out what this is going to look like between end markets. Obviously, you talked mostly about HBC versus everything else here, how do we see those two end markets relatively speaking.
Richard Shannon: Obviously, you talk mostly about HPC versus everything else here. How do we see those two end markets, relatively speaking, growing the rest of the year?
Richard Shannon: Growing the rest of the year.
Phil Davies: Hi, Richard, it's Phil. So, again, so HPC is a growth business for us, not just MBMs. Patrizio talked about a lead customer that's ramping their high performance AI system on existing solutions that we're shipping. So we're excited to see that happen. And we'll follow that on with Gen 5. If I look at the defense and aerospace market, we've been planting a lot of seeds there over the last number of years that are coming to fruition on new, you know, sort of defense systems, aerospace applications, you know, sort of warfare equipment. Unfortunately, the state of the world, that's a growth market for us.
Richard Shannon: Hey, Richard it's Phil So so again, so <unk> is a growth business for us not just mbm's Patrice you talked about.
Speaker Change: Lead customer that's ramping their high performance AI system on existing solutions that were shipping so.
I did see that happen and we'll follow that on with Gen. Five.
Speaker Change: If I look at the defense and aerospace market we've been.
Speaker Change: Planting a lot of seats there over the last number of years that are coming to fruition.
Speaker Change: On new.
Speaker Change: Defense systems aerospace applications.
Speaker Change: Sort of warfare equipment.
Unfortunately, the state of the Gopro.
Speaker Change: That's a growth market for us.
Phil Davies: In the industrial area, lots of, again, seeds planted over the last number of years with channel partners at smaller accounts, but also we've targeted very specific application segments such as the ATE, you know, test equipment market, and picked up four or five new entries into that, entrants into that marketplace, which are now growing for us with advanced products. So it's really sort of across the board that we're seeing the lift, and certainly having consolidated the channel to mainly Avanit and Arrow and Maknica in Asia, we're getting far more focused, far more targeted at customer bases and specific segments that value the density and what we bring.
Speaker Change: In the industrial area.
Speaker Change: Lots of again seeds.
Speaker Change: Seeds planted over the last number of years with channel partners at smaller accounts, but also we've targeted very specific application segments such as the <unk>.
Speaker Change: Test equipment market.
Speaker Change: Picked up four of five new entries into that.
Speaker Change: Entrants into that marketplace, which are now growing for us with advanced products.
Speaker Change: So it's really sort of across the board that we're seeing the lift and.
Speaker Change: Certainly having consolidated the channel to mainly Avnet and Arrow and Mac Nieca in Asia, we're getting far more focused.
Speaker Change: More targeted that.
Speaker Change: That customer basis in specific segments that value the density and what we bring so so that's also giving us a general lift so it's occurring right across the four well the three businesses in automotive.
Phil Davies: So that's also giving us a general lift. So it's occurring, you know, right across the four, well, the three businesses.
Phil Davies: In automotive, that's still fledgling. We're pulling down NREs for collaborations, but that's not really impacting anything at this point in time. But next year, we'll see production start to ramp with some high-end OEMs there. So again, that will contribute to our portfolio.
Fledgling we're pulling down <unk> four collaborations, but that's not really impacting anything at this point in time, but next year, we'll see production start to ramp with some high end Oems there. So so again that will contribute to our portfolio.
Richard Shannon: Okay, thanks for that detail, Phil. Maybe a quick question for Jim, on gross margins, if I heard the prepared remarks, sound like they're of the gross margin decline, about half of it was from some investments for the the S&P system and other things, and the rest of it was from royalties here. So I guess, I guess my question is, and all of all other things equal basis here as we go into the second quarter. And obviously, I'm not sure how complicated adding tariffs into this might affect gross margins here. But I'm assuming the gross margins in the second quarter, all things being will be kind of roughly halfway between the fourth quarter and the first.
Speaker Change: Okay. Thanks for that detail, Phil maybe a quick question for Jim.
Speaker Change: Gross margins if I heard the prepared remarks it sounded like there are the gross margin decline about half of it was from some investments for.
Speaker Change: The S&P system and other things and the rest of it was from.
Speaker Change: Royalties here, so I guess I guess my question is in all other things equal basis here as we go into the second quarter.
Speaker Change: And obviously I am not sure how complicated adding tariffs into this might affect gross margins here, but I'm, assuming the gross margins in the second quarter, all things being able to be kind of roughly half of it came in the fourth quarter and the first is that a good starting point to think about.
Jim Schmidt: Is that a good starting point to think about? Sorry, Richard, did you say half of... Yes, halfway between first quarter and fourth. Oh, well, I mean, we're going to have to be reluctant about offering guidance of any kind. It's just that's the position we've taken. I will say that I described the SAP installation as one that would cause the sequential kind of changes because we've required PTO in fourth quarter and drew down the vacation balance and then ramped up vacation accrual again in Q1. So there was some lumpiness associated with that. That investment is behind us now.
Richard Shannon: Sorry, Richard did you say half of it.
Richard Shannon: Yes, halfway between first quarter and fourth Oh, well I mean, we're going to we're going to have to be reluctant about offering guidance of any kind of just that's the position we've taken I will say that.
Richard Shannon: I described the SAP installation.
Richard Shannon: Installation is.
Richard Shannon: Cause the sequential kind of changes because we've required PTO in fourth quarter and drew down the vacation balance and then ramped up vacation accrual again in Q1. So there was some lumpiness associated with that that investment is behind US now. So we are done with the SAP project.
Jim Schmidt: So we are done with the SAP project. So without giving you a specific on the guidance, I think, you know, we feel like we're well positioned. I mean, I feel very good about the factory. I feel good about the infrastructure in Vicor. It's state of the art. So everything is set to move the needle on GM going forward once we get more loading and keep building up the licensing revenue. And on the tariff front, what we're building now in the second quarter is out of components that were procured largely before the institution of recent And by the time we get into the third quarter, where the Boncosta is going to start suffering because of tariffs.
Richard Shannon: So without giving you a specific on the guidance I think.
Richard Shannon: We feel like we're well positioned I mean, I feel very good about the factory I feel good about the infrastructure and VI Cor.
Speaker Change: David the art.
Speaker Change: So everything is set to move the needle on GM going forward once we get more loading.
Speaker Change: And keep building up the licensing revenue.
Speaker Change: And the other tiny from.
Speaker Change: We are building now.
Speaker Change: Second quarter is out of our components of the walk procured largely before.
Speaker Change: The institution of recent.
Speaker Change: Paris.
Speaker Change: And by the time, we get into the third quarter.
Speaker Change: The.
Speaker Change: The bond cost is going to stop suffering because of pad is will be compensating for that nice surcharge.
Jim Schmidt: will be compensating for that through my solution. As a matter of interest, as a matter of interest, it's worth noting that, you know, success over multiple years has been good relative to tariffs and our ability to manage it. Now, the future is changing, but we've gone from, you know, 10 to 8 to 4 to, you know, less than a million a quarter. So that's a good track record, but that's rear view mirror and the environment's changing rapidly. But, you know, so far, I mean, our track record has been strong.
Speaker Change: Great. Thank you guys.
Speaker Change: Just a comment on tariffs as a matter of interest it's worth noting that.
Speaker Change: The success over multiple years has been good relative to tariffs and our ability to manage it the futures changing but we've gone from 10 to $8 <unk> to less than $1 million a quarter. So thats a good track record but.
Speaker Change: That's very.
Speaker Change: Rearview mirror.
Speaker Change: <unk> changing rapidly, but so far our track record has been trouble.
Unknown Executive: Great. Thanks for the comments, guys. Thank you.
Speaker Change: Okay, great. Thanks for the comments guys.
James Lieberman: One moment for the next question. And the next question is coming from the line of James Lieberman of American Trust. Investment Services. Your line is open. Thank you. I really appreciate the progress you're making and looking forward to the year as it rolls out. Are you able to comment? Maybe you have already given some some comment on the Foxconn appeal. What in terms of the timeline or process that might take where the International Trade Commission could realize that they're, in fact, defrauding and that the bill, the indications that they have rights to your technology is not correct?
Speaker Change: Thank you the next question.
Speaker Change: And the next question is coming from the line of James Lieberman of American Trust.
Speaker Change: Investment services your line is open.
James Lieberman: Thank you I really appreciate the progress, you're making and looking forward to the year as it rolls out.
James Lieberman: Well to comment maybe you have already given some some comment on the sox kind of appeal.
James Lieberman: In terms of the timeline or process that might take where the international trade Commission could realize that they are in fact, the flooding and the C.
James Lieberman: The bills.
Speaker Change: Indications that they have rights to your technology is that not correct.
Patrizio Vinciarelli: I'm not going. be very specific with respect to, you know, this pro-Foxconn license. and the appeal to the Federal Circuit that relates to that. beyond saying what we said in the past, which is that, you know, the... The ITC process, just as with every formal litigation, eSensitivity Analysis. You can't expect It's... Judges get it 100% right, particularly when confronted with legal teams that put a lot of dust up in the air and try to confuse the issues. But what I can tell you is that The Administrative Law Judge at the ITC and the D.C. Court Judge in the Federal D.C.
Speaker Change: It could.
Speaker Change: Be very specific with respect to.
Speaker Change: Fosterville license.
Speaker Change: And the appeal to the federal circuit, because it relates to that.
Speaker Change: We are saying, what we said in the past which is that.
Speaker Change: The.
Speaker Change: The ITC process.
Speaker Change: Just as with every formerly the gash on.
Speaker Change: Asset process you can't expect.
Speaker Change: Yes.
Speaker Change: Charges again at 100% right.
Speaker Change: Particularly when confronted with.
Our legal team set.
Speaker Change: With a lot of.
Speaker Change: Thus <unk> and try to confuse the issues.
Speaker Change: What I can tell you is that.
Speaker Change: Yes, Mr <unk>.
Speaker Change: Low judge.
Speaker Change: The ITC and the District Court Judge in District Court in Boston.
Patrizio Vinciarelli: Court in Boston got it right, which is Foxon has no license. took a different position which is contrary to all the evidence and we feel good about being able to The license that the Commission found to have been acquired, quote-unquote, by virtue of Foxconn issuing purchase orders with boilerplate fines. contradicted by our sales order and other relevant evidence, including the conduct of the parties over many, many years. We think that, um, matter in the long term for many reasons, again, no list of which. There's only one talent that was found licensed. Vigor is a very big talent portfolio and ultimately being able to compete in this industry will depend on, you know, parties that practice advanced...
Speaker Change: Right, which is Fox zone as <unk> license.
Speaker Change: The Commission.
Speaker Change: Took a different position, which we believe is contrary to all the evidence and we feel good about being able to.
Speaker Change: Overcome that and in any case.
Speaker Change: The license the commission found.
Speaker Change: We have been.
Speaker Change: Acquired quote unquote by a virtue.
Speaker Change: Paul.
Speaker Change: Issuing purchase orders with boilerplate.
Speaker Change: Sure.
Speaker Change: Contradicted by.
Our sales are that anymore.
Speaker Change: And other.
Speaker Change: Rob.
Speaker Change: Evidence, including the conduct of the parties so in many many years.
Speaker Change: Sure.
Speaker Change: We think of that.
Speaker Change: Okay.
Speaker Change: Matter in the long term <unk> again knowledge, so which is.
Speaker Change: There's only one patent that was found license <unk> is a very big power portfolio.
Speaker Change: <unk>.
Speaker Change: And ultimately being able to compete in this industry.
Speaker Change: We'll depend on.
Speaker Change: Parties that practice advance.
Our system ethanol.
Speaker Change: Having the license.
Patrizio Vinciarelli: to many, many thousands. not just one.
Speaker Change: Too many many pattern.
Patrizio Vinciarelli: But even with respect to that one, we expect that the Federal Circuit will come to the right conclusion as both the amnesty law judge Mr. Tulas many thank you very much and please comment. That was precisely the color I was looking for. Thank you so much. Appreciate it. Thank you.
Speaker Change: Not just one but even with respect to that one we expect that the federal circuit will come to that conclusion is both Jimmy says low Josh.
Speaker Change: In Boston.
<unk> found.
Speaker Change: Yes that was precisely the color I was looking for thank you. So much I appreciate you.
Unknown Executive: We'll move on to the next question.
Speaker Change: Thanks next question.
Jessica: Next question is coming from the line of Jessica. of Wall Street Research, your line is open. Hello, thanks for taking my question. So just a little color on this customer that is transitioning to a non licensed product.
Speaker Change: Next question is coming from the line of Jeff Cohen.
Speaker Change: Of Wall Street Research your line is open.
Jeff Cohen: Hello, Thanks for taking my question. So just a little color on this customer that is transitioning to a non licensed product what is the ITC injunction.
Patrizio Vinciarelli: Wouldn't the ITC injunction You know, make that prohibitive or is this somebody through Foxconn or can you give me a little color on the situation? I really can't. It would be beyond what I said earlier. We think that This was a unwise decision. And as I mentioned in answer to an earlier question, believe these unlicensed products in huge relevant LIGOR IP. So would we expect legal expense to go up as a result of that or is that already being litigated? Uh, well, I think you should expect. Over. and the foreseeable future. are illegal operating expense.
Jeff Cohen: Make that prohibitive or is it somebody through Fox Con.
Jeff Cohen: Can you give me a little color on the situation.
Jeff Cohen: I really can't.
Jeff Cohen: It would be beyond that what I said earlier so we.
Jeff Cohen: We think that.
Jeff Cohen: This was.
Jeff Cohen: <unk>.
Jeff Cohen: A.
Jeff Cohen: On wise.
Jeff Cohen: Decision and.
Jeff Cohen: <unk>.
Jeff Cohen: As I'm answering answer to an earlier question.
Jeff Cohen: I believe the licensed products featured elements like our IP.
Jeff Cohen: So would we expect legal expense to go up as a result of that or has that already been.
Jeff Cohen: Litigated.
Jeff Cohen: Well I think you should expect.
Jeff Cohen: Over.
Jeff Cohen: The foreseeable future.
Jeff Cohen: Our E mail.
Jeff Cohen: But adding expenses.
Jeff Cohen: Two.
Patrizio Vinciarelli: vary from time to time. the need to continue to protect a very valuable intellectual property. Lieberman's got a very comprehensive, licensable portfolio and, you know, some liens and hyperscalers. have done the right thing. That guy gonna lie. Others have been taking their chances. need to make sure that, uh... RIP is consistently applied and consistently protected, and from time to time that will require substantial investment. and his CKs. I think somewhere around 12-15 million dollars in their general ballpark. I think the return on investment on that is going to be stellar. and it warrants additional investments of that kind if infringement in the industry persists.
Jeff Cohen: Vary from time to time.
Jeff Cohen: So.
Jeff Cohen: If we need to continue to protect very valuable intellectual property.
Jeff Cohen: <unk> got very comprehensive lesson.
Jeff Cohen: Licensed Sybil Qualia.
Jeff Cohen: Some.
Jeff Cohen: <unk> catalysts.
Jeff Cohen: All right.
Jeff Cohen: I think.
Jeff Cohen: <unk>.
Jeff Cohen: Taking a license.
Jeff Cohen: Others.
Jeff Cohen: <unk> been taking their chances.
Jeff Cohen: We need to make sure that.
Jeff Cohen: Yeah.
Jeff Cohen: Our IP is consistently.
Jeff Cohen: Apply them consistently protected.
Jeff Cohen: And from time to time that will require substantial investment.
Jeff Cohen: C case.
Jeff Cohen: Caused by guar.
Jeff Cohen: I think somewhere around $12 million to $15 million in that general ballpark.
Jeff Cohen: I think three return on investment on that is going to be.
Jeff Cohen: Hello.
Jeff Cohen: And.
Jeff Cohen: And it warrants additional investments of that kind.
Jeff Cohen: <unk>.
Jeff Cohen: Infringement in the in the sea persists.
Patrizio Vinciarelli: Okay, so I'm hearing that the ITC decision, the injunction, is not a panacea. Well, in this kind of A A A A dispute. I don't think one should think in terms of nausea, but let's put it this way. all within our rights to protect the IP, assert it as appropriate, and thus far we've done quite well with that. quite good, and we expect it to continue to be that way. And going back to your call question. That does imply that you're betting expense line item when it comes to legal expense. may from time to time take significant steps, and that's our business model going forward.
Jeff Cohen: Okay.
Speaker Change: Okay. So I'm hearing that the ITC decision junction is not a panacea.
Speaker Change: Well does that.
Speaker Change: In.
Speaker Change: Just kind of.
Speaker Change: A.
Speaker Change: Dispute.
Speaker Change: I don't think one should think in terms of nausea, but.
Speaker Change: Let's put it this way.
Speaker Change: And believe we are.
Speaker Change: Well within our rights.
Speaker Change: Two.
Speaker Change: Protect IP.
Speaker Change: Okay.
Speaker Change: As appropriate.
Speaker Change: And.
Speaker Change: Thus far we've done.
Speaker Change: Quite well with that.
Speaker Change: The return on investment.
Speaker Change: Quite good and we expect it to continue to be that way going back to your core question.
Speaker Change: That does imply that.
Speaker Change: The overriding expense line item when it comes to legal expenses.
Speaker Change: From time to time take significant steps and Thats part of our business model going forward.
Unknown Executive: Okay. All right. Well, thank you. Thank you. One moment for the next question.
Speaker Change: Okay, Alright, well thank you thank.
Speaker Change: Thank you.
Speaker Change: Thank you one moment, Sir the next question and the next question will come from the line of.
John Dillon: And the next question will come from the line of John Dillion of D&B Capital. Your line is open. Hi guys, thanks for taking my call. Again, I had another one pop up. Phil, you mentioned new opportunities in the data center with 800 volts to 48 volts. I'm just wondering how much customer interest are you getting in this? And what's the timeframe for orders? And will it move the needle on revenues at all? So, you know, it's interesting. I would say that, you know, six months ago we started to hear You know, from engineers, power system engineers at different customers that they were looking at 400 volt, a 400 volt system.
John Dugan: John Dugan.
Speaker Change: <unk> capital your line is open.
Speaker Change: Hey, guys. Thanks for taking my call again, I had another one pop up.
Speaker Change: You mentioned new opportunities in the data center with 800 volts to 48 volts I'm just wondering how much customer interest you are getting in this and whats the timeframe for orders and will it move the needle on revenues at all.
Speaker Change: So.
Speaker Change: It's interesting I would say that six months ago, we started to hear.
Speaker Change: From engineers power system engineers that different customers.
Speaker Change: Looking at the 400 volt, a 400 volt system and then within the last few months, we've seen because of the AI powered growth on the rack polo growth that jumped to 800 volt systems and we're hearing it now from.
Phil Davies: And then within the last few months, we've seen because of the AI power growth and the rack power growth that jumped to 800 volt systems. And we're hearing it now from Pretty much all of the big hyperscalers and any of the companies, you know, chip companies that have transitioned to providing rack-based systems, looking at that type of technology. And I mean, that is right in our wheelhouse. We've been supplying 800-volt to 48-volt products to automotive OEMs and Tier 1s for the last three, four years, building out that business. And so the technology comes from a number of years ago, but we're sitting really, really well with great products and technologies that we can, you know, do derivatives off of for higher powers and really engage with these customers now in the coming months, which is what our plan is.
Speaker Change: Pretty much all of the Big Hyperscale is under any of the companies chip companies that have transitioned to providing rack based systems I'm looking at that type of technology and that is right in our wheelhouse we've been.
Speaker Change: Supplying 800 volt 48 volt products to automotive Oems and tier ones for the last three four years building out that business and so the technology comes from a number of years.
Speaker Change: Sitting really really well.
Speaker Change: With great products and technologies that we can.
Speaker Change: Do derivatives awful for higher powers, and and really engage with these customers now in the coming months, which is what our plan is.
Phil Davies: You know, Patrizio and I are making a trip to the Valley, and we're having conversations with a couple of big hyperscalers about those systems in the next few weeks. So it's an exciting time. I'm really excited by that opportunity, John.
Speaker Change: Patricio and I'm, making a trip to the valley and we're having conversations with a couple of big Hyperscale is about those systems in the next few weeks. So it's an exciting time I'm really excited by that opportunity John.
Phil Davies: So it sounds like this is significant, and it could move the needle some on revenues, say, in six months to a year, is what I think I'm hearing. I think you're looking at probably at, you know, early 400-volt systems coming to market early 27, and then I think 800-volt later in 27. That's what we're hearing. Gotcha. This is very synergistic with what is going on in the automotive world. We have design-ins for active suspensions involving 800 volt, 48 volt, high density, lightweight, fast converters, that, once again, getting to the IP side of things. fall within many claims of several enabling VIGOR patterns with respect to these kinds of high voltage bus converters.
Speaker Change: So it sounds like this is significant and it could move the needle someone revenues.
Speaker Change: Let's say six months to a year and I think I'm hearing I think youre looking at probably early 400 volt systems coming to market early.
Speaker Change: 27, and then I think 800 volt later.
Speaker Change: But thats what we are.
Speaker Change: Yes. Thanks.
Speaker Change: Got you.
Speaker Change: It's synergistic with what is going on in the other markets, Yes, yes, yes.
Speaker Change: We have design ins for <unk>.
Speaker Change: Substantial involving 800 volt with vault.
Speaker Change: High density lightweight ship bus converters.
Speaker Change: Once again getting to the IP side of things.
Speaker Change: Full within many claims of.
Speaker Change: Several enabling veeco patterns with respect to.
Speaker Change: These kinds of high voltage bus converters.
Phil Davies: of the call system, some of the backup. There are many aspects to the portfolio that is relevant on this kind of high-input voltage bus. Yeah, it's actually really exciting. It looks like you have a very long runway of products and opportunities coming out the next several years. So I'm looking forward to this. Thank you.
Speaker Change: Ranging from.
Speaker Change: The pulse system.
Speaker Change: Some of that some of them back up to the audience.
Speaker Change: R J.
Speaker Change: There are many.
Speaker Change: Aspects too.
Speaker Change: A portfolio that is relevant on these kinds of high voltage high voltage Boston.
Speaker Change: Yes, it's actually really exciting it looks like you have a very long runway of products and opportunities coming out for the next several years. So looking forward to this thank you.
Speaker Change: Okay.
Unknown Executive: And this does conclude today's conference call. Thank you so much for participating. You may all disconnect. Thank you.
Speaker Change: Thank you and this does conclude today's conference call. Thank you. So much for participating you may all disconnect.
Speaker Change: Thank you. Thank you.