10q10k10q10k.net

What changed in VICOR CORP's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of VICOR CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+104 added−104 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-03)

Top changes in VICOR CORP's 2025 10-K

104 paragraphs added · 104 removed · 86 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

21 edited+3 added−2 removed108 unchanged
Biggest changeWe continue the development of our vertical power delivery solutions and shipped prototype products to a certain customer in 2022. Our proprietary technologies enable us to offer a range of Advanced Products, in various package formats across functional families, applicable to other market segments and power distribution architectures other than FPA.
Biggest changeOur proprietary technologies enable us to offer a range of Advanced Products, in various package formats across functional families, applicable to other market segments and power distribution architectures other than FPA. Within computing, these market segments include AC to DC voltage conversion and DC voltage distribution in server racks and high voltage conversion across datacenter infrastructure.
Domestic TSCs are located in: Andover, Massachusetts; Lombard, Illinois; and Santa Clara, California. International TSCs are located in: Beijing, China; Hong Kong, China; Shanghai, China; Shenzhen, China; Munich, Germany; Bangalore, India; Milan, Italy; Tokyo, Japan; Seoul, South Korea; Taipei, Taiwan (Republic of China); and Camberley, United Kingdom.
Domestic TSCs are located in: Andover, Massachusetts; Lombard, Illinois; and Santa Clara, California. International TSCs are located in: Beijing, China; Hong Kong, China; Shanghai, China; Shenzhen, China; Munich, Germany; Bangalore, India; Milan, Italy; Tokyo, Japan; Seoul, South Korea; Singapore; Taipei, Taiwan (Republic of China); and Camberley, United Kingdom.
Available Information We maintain a website with the address www.vicorpower.com and make available free of charge through this website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
Available Information We maintain a website with the address www.vicorpower.com and make available free of charge through this website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
We recovered $1,669,000, $6,954,000 and $229,000 for the years ended December 31, 2024, 2023 and 2022, respectively, however, we are not able to estimate the amount or timing of any additional recoveries, and there can be no assurance that there will be any additional recoveries.
We recovered $907,000, $1,669,000 and $6,954,000 for the years ended December 31, 2025, 2024 and 2023, respectively, however, we are not able to estimate the amount or timing of any additional recoveries, and there can be no assurance that there will be any additional recoveries.
In 2024, our order backlog remained approximately flat, and consequently our book-to-bill ratio was approximately 1.0 during the year. An influence on turns volume has been our transition to larger OEM customers, which typically schedule large volumes for delivery over multiple quarters and frequently reschedule deliveries for either earlier or later shipment.
In 2025, our order backlog remained approximately flat, and consequently our book-to-bill ratio was approximately 1.0 during the year with an improvement in the fourth quarter. An influence on turns volume has been our transition to larger OEM customers, which typically schedule large volumes for delivery over multiple quarters and frequently reschedule deliveries for either earlier or later shipment.
Annual revenue associated with the sale of Brick Products, inclusive of such sales of our Vicor Custom Power and VJCL subsidiaries, was approximately 45.0%, 44.7%, and 39.0% of the Company’s consolidated revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
Annual revenue associated with the sale of Brick Products, inclusive of such sales of our Vicor Custom Power and VJCL subsidiaries, was approximately 39.0%, 45.0%, and 44.7% of the Company’s consolidated total net revenues for the years ended December 31, 2025, 2024, and 2023, respectively.
As of December 31, 2024, the Company’s order backlog was approximately $155,505,000, compared to $160,805,000 as of December 31, 2023. Backlog, as presented here, consists of orders for products for which shipment is scheduled within the following 12 months, subject to our scheduling and cancellation policies.
As of December 31, 2025, the Company’s order backlog was approximately $176,938,000, compared to $155,505,000 as of December 31, 2024. Backlog, as presented here, consists of orders for products for which shipment is scheduled within the following 12 months, subject to our scheduling and cancellation policies.
Annual revenue associated with the sale of Advanced Products which includes royalty revenue, was approximately 55.0%, 55.3%, and 61.0% of the Company’s consolidated revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
Annual revenue associated with the sale of Advanced Products which includes royalty revenue, was approximately 61.0%, 55.0%, and 55.3% of the Company’s consolidated total net revenues for the years ended December 31, 2025, 2024, and 2023, respectively.
Vertically-mounting the solution allows unrestricted access to microprocessor input/output I/O pins on the top side of the motherboard, thereby 5 Table of Contents improving I/O speed and memory access, which are a priority for GPUs and AI ASICs in AI applications.
Vertically-mounting the solution allows unrestricted access to microprocessor input/output I/O pins on the top side of the motherboard, thereby 5 Table of Contents improving I/O speed and memory access, which are a priority for GPUs and AI ASICs in AI applications. We continue the development of our vertical power delivery solutions.
As stated, our strategy involves maintaining high levels of customer engagement and support for design and engineering. We incurred approximately $49,827,000, $52,938,000, and $49,708,000 in marketing and sales expenses in 2024, 2023, and 2022, respectively, representing approximately 13.9%, 13.1%, and 12.5% of revenues in 2024, 2023, and 2022, respectively.
As stated, our strategy involves maintaining high levels of customer engagement and support for design and engineering. We incurred approximately $51,334,000, $49,827,000, and $52,938,000 in marketing and sales expenses in 2025, 2024, and 2023, respectively, representing approximately 12.6%, 13.9%, and 13.1% of total net revenues in 2025, 2024, and 2023, respectively.
In granting licenses, we generally retain the right to use our patented technologies and manufacture and sell our products in all licensed geographic areas and fields of use. Revenues from licensing arrangements were approximately $46,595,000, $15,872,000, and $2,801,000 in 2024, 2023, and 2022, respectively, representing approximately 13.0%, 3.9%, and 0.7% of revenues in 2024, 2023, and 2022, respectively.
In granting licenses, we generally retain the right to use our patented technologies and manufacture and sell our products in all licensed geographic areas and fields of use. Revenues from licensing arrangements were approximately $57,384,000, $46,595,000, and $15,872,000 in 2025, 2024, and 2023, respectively, representing approximately 14.1%, 13.0%, and 3.9% of total net revenues in 2025, 2024, and 2023, respectively.
Although we believe patents are an effective way of protecting our technology, there can be no assurances our patents will prove to be enforceable in any given jurisdiction. In addition to generating revenue from product sales, we seek to license our intellectual property.
We have vigorously protected our rights under these patents and will continue to do so. Although we believe patents are an effective way of protecting our technology, there can be no assurances our patents will prove to be enforceable in any given jurisdiction. In addition to generating revenue from product sales, we seek to license our intellectual property.
As of December 31, 2024, we had 1,074 full-time employees, of which 984 were in the U.S. and 90 were in our international locations. As of December 31, 2024, we also had 26 part-time temporary employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
As of December 31, 2025, we had 1,092 full-time employees, of which 1,006 were in the U.S. and 86 were in our international locations. As of December 31, 2025, we also had 23 part-time temporary employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
Average quarterly turns volume was approximately 30% of 2024 revenue, approximately 18% of 2023 revenue, and approximately 11% of 2022 revenue. Competition and Market Characteristics The competitive characteristics of the markets we serve with Advanced Products and Brick Products can differ significantly.
Average quarterly turns volume was approximately 34% of 2025 total net revenues, approximately 30% of 2024 total net revenues, and approximately 18% of 2023 total net revenues. Competition and Market Characteristics The competitive characteristics of the markets we serve with Advanced Products and Brick Products can differ significantly.
Intellectual Property Our competitive positioning has been, and will continue to be, supported by our long-standing commitment to research and development of power distribution architectures, power conversion technologies, advanced packaging and manufacturing, and innovative approaches to solving customer problems.
To mitigate the impact of tariffs, we implemented a 10% tariff surcharge on our products in July 2025. Intellectual Property Our competitive positioning has been, and will continue to be, supported by our long-standing commitment to research and development of power distribution architectures, power conversion technologies, advanced packaging and manufacturing, and innovative approaches to solving customer problems.
We generally sell our products on the basis of our standard terms and conditions, and we most commonly warrant our products for a period of two years. The warranty period is three years for a range of H Grade, M Grade, and MI Family DC-DC products.
We generally sell our products on the basis of our standard terms and conditions, and we most commonly warrant our products for a period of two years.
As of December 31, 2024, in the United States, we have been issued 121 patents having expirations scheduled between 2025 and 2040 and have filed a number of patent applications which are still pending, many of which are expected to issue as patents in 2025. We have vigorously protected our rights under these patents and will continue to do so.
As of December 31, 2025, in the United States, we have been issued 128 patents having expirations scheduled between 2026 and 2043 and have filed a number of patent applications which are still pending, many of which are expected to issue as patents in 2026 and beyond.
For the year ended December 31, 2024, costs associated with tariffs totaled approximately $4,189,000, a decrease of 47.5% compared to $7,985,000 in costs incurred for the year ended December 31, 2023. For the year ended December 31, 2022, costs associated with tariffs totaled approximately $10,201,000.
For the year ended December 31, 2025, costs associated with tariffs totaled approximately $7,375,000, an increase of 76.1% compared to $4,189,000 in costs incurred for the year ended December 31, 2024. For the year ended December 31, 2023, costs associated with tariffs totaled approximately $7,985,000.
Over the course of recent years the supply picture for the semiconductor industry generally improved and we have reduced quoted lead time to 22 – 28 weeks, depending on product family. In the final quarter of 2024, we increased prices for most products as part of our portfolio management process.
Over the course of recent years the supply picture for the semiconductor industry generally improved and we have reduced quoted lead time to 22 – 28 weeks, depending on product family. In the second half of 2025, we added a 10% tariff surcharge on our products to cover the estimated cost of tariffs introduced during the year.
Human Capital Management High-caliber employees are important to achieving Vicor’s mission of providing the highest performance power solutions to meet the requirements of the most demanding applications. In order to maintain leadership in power systems design in a highly competitive employment market, attracting and retaining the best team worldwide is critical.
In order to maintain leadership in power systems design in a highly competitive employment market, attracting and retaining the best team worldwide is critical.
We incurred approximately $68,922,000, $67,857,000, and $60,594,000 in research and development expenses in 2024, 2023, and 2022, respectively, representing approximately 19.2%, 16.8%, and 15.2% of revenues in 2024, 2023, and 2022, respectively. We believe our intellectual property affords advantages by building fundamental and multilayered barriers to competitive encroachment upon key features and performance benefits of our principal product families.
We believe our intellectual property affords advantages by building fundamental and multilayered barriers to competitive encroachment upon key features and performance benefits of our principal product families.
Removed
Within computing, these market segments include AC to DC voltage conversion and DC voltage distribution in server racks and high voltage conversion across datacenter infrastructure.
Added
For 2025, exports to China and Hong Kong were approximately $48,347,000, representing approximately 11.9% of total net revenues and an approximately 7.0% increase compared to the 2024 total net revenues of approximately $45,199,000.
Removed
For 2024, exports to China and Hong Kong were approximately $45,199,000, representing approximately 12.6% of total revenue and an approximately 36.8% decrease compared to the 2023 total of approximately $71,554,000. We believe this decreased volume was primarily associated with a softer market in this region driving lower demand for our products.
Added
We incurred approximately $78,570,000, $68,922,000, and $67,857,000 in research and development expenses in 2025, 2024, and 2023, respectively, representing approximately 19.3%, 19.2%, and 16.8% of total net revenues in 2025, 2024, and 2023, respectively.
Added
In the second quarter of 2025, we received $45 million as a patent litigation settlement. Human Capital Management High-caliber employees are important to achieving Vicor’s mission of providing the highest performance power solutions to meet the requirements of the most demanding applications.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

16 edited+3 added−4 removed100 unchanged
Biggest changeIf we fail to develop and commercialize leading-edge technologies and products that are cost effective and maintain high standards of quality, and introduce them to the market on a timely basis, our competitive position and results of operations could be materially adversely affected. 15 Table of Contents Our future success depends upon our ability to develop and market differentiated, leading-edge power conversion products for larger customers, potentially contributing to lengthy product development and sales cycles that may result in significant expenditures before revenues are generated.
Biggest changeIf we fail to develop and commercialize leading-edge technologies and products that are cost effective and 15 Table of Contents maintain high standards of quality, and introduce them to the market on a timely basis, our competitive position and results of operations could be materially adversely affected.
Our strategic focus on higher volume opportunities with OEMs, ODMs, and contract manufacturers has caused the actions of a relative few such customers to disproportionately influence our operating results. 10 Table of Contents Unanticipated delays in purchase orders from, and shipments to, certain large customers have resulted in lower than expected revenue.
Our strategic focus on higher volume opportunities with OEMs, ODMs, and contract 10 Table of Contents manufacturers has caused the actions of a relative few such customers to disproportionately influence our operating results. Unanticipated delays in purchase orders from, and shipments to, certain large customers have resulted in lower than expected revenue.
In the event our Chief Executive Officer or Chief Financial Officer, our certifying officers under SOX, or our independent registered public accounting firm determines our internal controls over financial reporting are not effective as defined under Section 404, we may be unable to produce reliable financial reports or prevent fraud, which could materially 17 Table of Contents harm our business.
In the event our Chief Executive Officer or Chief Financial Officer, our certifying officers under SOX, or our 17 Table of Contents independent registered public accounting firm determines our internal controls over financial reporting are not effective as defined under Section 404, we may be unable to produce reliable financial reports or prevent fraud, which could materially harm our business.
The implementation, interpretation and impact on our business of these rules and other regulatory actions taken by the U.S. government is uncertain and evolving, and these rules, other regulatory actions or changes, and other actions taken by the governments of either the U.S. or China, or both, that have occurred and may occur in the future could materially and adversely affect our business, revenue and results of operations.
The implementation, interpretation and impact on our business of these rules and other regulatory actions taken by the U.S. government is uncertain and evolving, and these rules, other regulatory actions or changes, and other actions taken by the governments of either the U.S. or China, or both, that have occurred and may continue to occur in the future could materially and adversely affect our business, revenue and results of operations.
We have no formal policy regarding dividends and, as such, investors cannot make assumptions regarding the possibility of future dividend payments nor the amounts and timing thereof. As of December 31, 2024, we have no plans to declare or pay a cash dividend. The ownership of our Common Stock is concentrated between Dr.
We have no formal policy regarding dividends and, as such, investors cannot make assumptions regarding the possibility of future dividend payments nor the amounts and timing thereof. As of December 31, 2025, we have no plans to declare or pay a cash dividend. The ownership of our Common Stock is concentrated between Dr.
Accordingly, the market float for our Common Stock and average daily trading volumes are relatively small, which may negatively impact investors’ ability to buy or sell shares of our Common Stock in a timely manner. Dr. Vinciarelli owns 93.9% of the issued and outstanding shares of our Class B Common Stock, which possess 10 votes per share. Dr. Estia J.
Accordingly, the market float for our Common Stock and average daily trading volumes are relatively small, which may negatively impact investors’ ability to buy or sell shares of our Common Stock in a timely manner. Dr. Vinciarelli owns 94.0% of the issued and outstanding shares of our Class B Common Stock, which possess 10 votes per share. Dr. Estia J.
We have incurred and expect to incur significant financial costs in the defense of our patented technologies and have devoted 16 Table of Contents and expect to devote significant resources to these efforts which, if unsuccessful, may have a material adverse effect on our operating results and financial position.
We have incurred and expect to incur significant financial costs in the defense of our patented technologies and have devoted and expect to devote significant resources to these efforts which, if unsuccessful, may have a material adverse effect on our operating results and financial position.
In addition, the intellectual property laws of foreign countries may not protect our rights to the same extent as those of the United States. We have been defending and may need to continue to defend or challenge patents.
In addition, the intellectual property laws of foreign countries may not protect our rights to the 16 Table of Contents same extent as those of the United States. We have been defending and may need to continue to defend or challenge patents.
He also holds 11,023,648 shares of our unregistered Class B Common Stock (which may only be sold or transferred after required conversion, on a one-for-one basis, into registered shares of Common Stock), which together with his ownership of Common Stock, represents 47.3% of our total issued and outstanding shares of capital stock.
He also holds 11,023,648 shares of our unregistered Class B Common Stock (which may only be sold or transferred after required conversion, on a one-for-one basis, into registered shares of Common Stock), which together with his ownership of Common Stock, represents 46.9% of our total issued and outstanding shares of capital stock.
We recovered $1,669,000 for the year ended December 31, 2024, however, we are not able to estimate the amount or timing of any additional recoveries, and there can be no assurance that there will be any additional recoveries. Uncertain macroeconomic conditions, extended trade disputes, an evolving and unpredictable tariff environment, export controls, and the relative strength of the U.S.
We recovered $907,000 for the year ended December 31, 2025, however, we are not able to estimate the amount or timing of any additional recoveries, and there can be no assurance that there will be any additional recoveries. Uncertain macroeconomic conditions, extended trade disputes, an evolving and unpredictable tariff environment, export controls, and the relative strength of the U.S.
For the years ended December 31, 2024, 2023, and 2022, revenues from sales outside the United States were 48.2%, 63.1%, and 67.6%, respectively, of our total revenues. Net revenues from customers in China and Hong Kong, accounted for approximately 12.6% in 2024, approximately 17.7% in 2023, and approximately 18.8% in 2022 of total net revenues.
For the years ended December 31, 2025, 2024, and 2023, net revenues from sales outside the United States were 50.8%, 48.2%, and 63.1%, respectively, of our total net revenues. Net revenues from customers in China and Hong Kong, accounted for approximately 11.9% in 2025, approximately 12.6% in 2024, and approximately 17.7% in 2023 of our total net revenues.
For 2024, 2023 and 2022, Section 301 Tariffs totaled approximately 1.2%, 2.0% and 2.6%, respectively, of annual revenue, representing a reduction in our gross profit margin as a percentage of annual revenue. We have filed “duty drawback” applications with U.S.
For 2025, 2024 and 2023, Section 301 Tariffs totaled approximately 1.8%, 1.2% and 2.0%, respectively, of total annual net revenues, representing a reduction in our gross profit margin as a percentage of total annual net revenues. We have filed “duty drawback” applications with U.S.
However, the costs of Section 301 Tariffs have had a material impact on our profitability. For the year ended December 31, 2024, Section 301 Tariffs totaled approximately $4,189,000, a decrease of 47.5% compared to $7,985,000 incurred for 2023. For the year ended December 31, 2022, costs associated with tariffs totaled approximately $10,201,000.
However, the costs of Section 301 Tariffs have had a material impact on our profitability. For the year ended December 31, 2025, Section 301 Tariffs totaled approximately $7,375,000, an increase of 76.1% compared to $4,189,000 incurred for 2024. For the year ended December 31, 2023, costs associated with tariffs totaled approximately $7,985,000.
Vinciarelli and a limited number of institutional investors. As of December 31, 2024, Dr. Vinciarelli was the beneficial owner of 10,021,388 shares of our Common Stock, plus 6,199 shares which Dr. Vinciarelli has the right to acquire upon exercise of options to purchase Common Stock within 60 days of December 31, 2024.
Vinciarelli and a limited number of institutional investors. As of December 31, 2025, Dr. Vinciarelli was the beneficial owner of 9,879,288 shares of our Common Stock, plus 12,086 shares which Dr. Vinciarelli has the right to acquire upon exercise of options to purchase Common Stock within 60 days of December 31, 2025.
We may face legal claims and litigation from product warranty or other claims that could be costly to resolve and could impact our business. We have in the past and may in the future encounter legal action from customers, vendors, or others concerning product warranty or other claims.
In addition, increased adoption of AI technology by us and third-party partners may also increase the risks of cybersecurity incidents. We may face legal claims and litigation from product warranty or other claims that could be costly to resolve and could impact our business.
We generally offer a two-year warranty from the date title passes from us for all of our standard products. The warranty period is three years for a range of H Grade, M Grade and MI Family DC-DC legacy products.
We have in the past and may in the future encounter legal action from customers, vendors, or others concerning product warranty or other claims. We generally offer a two-year warranty from the date title passes from us for all of our standard products.
Removed
On January 1, 2025, Vicor converted from a legacy enterprise resource planning (“ERP”) system to a modern ERP system. While this system change is a technology upgrade, we may not be able to successfully implement the ERP system without delays related to resource constraints or challenges with the design or testing phases of the implementation.
Added
Integrating artificial intelligence ("AI") and machine learning presents significant strategic advantages, yet necessitates a proactive approach to mitigating multifaceted business, financial, and legal risks. While AI and machine learning advancements can significantly boost performance and efficiency, their integration introduces critical operational, legal, and financial risks.
Removed
Inefficiencies in our financial reporting processes due to the conversion to a new ERP system could adversely affect our ability to produce accurate financial statements on a timely basis until the new ERP system and processes have matured.
Added
As we evaluate the adoption of these tools, we must also rigorously guard against risks associated with them. These risks include potential security breaches or incidents, inadvertently disclosing confidential or sensitive data, inaccuracies or improper bias in our operations, legal claims, noncompliance with industry standards, complications establishing or asserting intellectual property ownership and reputational harm.
Removed
Additionally, the effectiveness of our internal control over financial reporting could be adversely affected if the new ERP system is not successfully implemented. If we are not able to effectively integrate the new ERP system, on the anticipated timeline or at all, our operating results and financial condition could be materially and adversely affected.
Added
Our future success depends upon our ability to develop and market differentiated, leading-edge power conversion products for larger customers, potentially contributing to lengthy product development and sales cycles that may result in significant expenditures before revenues are generated.
Removed
We cannot be certain what changes to the regulatory environment might occur under the new administration. However, if the regulatory environment changes in ways that disrupt our business there could be a material and adverse effect on our operations and financial performance.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed13 unchanged
Biggest changeTo stay informed about emerging threats, we regularly consult with external providers and other sources such as government publications and notices. Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition.
Biggest changeTo stay informed about emerging threats, we regularly consult with external providers and other sources such as government publications and notices. Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed3 unchanged
Biggest changeThe historical information set forth below is not necessarily indicative of future performance. 21 Table of Contents Comparison of Five Year Cumulative Return Among Vicor Corporation, S&P 500 Index, and S&P SmallCap 600 Index 2019 2020 2021 2022 2023 2024 Vicor Corporation $ 100.00 $ 197.39 $ 271.79 $ 115.03 $ 96.17 $ 103.39 S&P 500 Index $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P SmallCap 600 Index $ 100.00 $ 111.29 $ 141.13 $ 118.41 $ 137.42 $ 149.37 Equity Compensation Plan Information Our equity plan information required by this item is incorporated by reference to the information in Part III, Item 12 of this Annual Report on Form 10-K.
Biggest changeThe historical information set forth below is not necessarily indicative of future performance. 21 Table of Contents Comparison of Five Year Cumulative Return Among Vicor Corporation, S&P 500 Index, and S&P SmallCap 600 Index 2020 2021 2022 2023 2024 2025 Vicor Corporation $ 100.00 $ 137.69 $ 58.28 $ 48.72 $ 52.38 $ 118.79 S&P 500 Index $ 100.00 $ 128.71 $ 105.40 $ 133.10 $ 166.40 $ 196.16 S&P SmallCap 600 Index $ 100.00 $ 126.82 $ 106.40 $ 123.48 $ 134.22 $ 142.30 Equity Compensation Plan Information Our equity plan information required by this item is incorporated by reference to the information in Part III, Item 12 of this Annual Report on Form 10-K.
We have no formal policy regarding dividends and, as such, investors cannot make assumptions regarding the possibility of future dividend payments nor the amounts and timing thereof. As of December 31, 2024, we have no plans to declare or pay a cash dividend in the foreseeable future.
We have no formal policy regarding dividends and, as such, investors cannot make assumptions regarding the possibility of future dividend payments nor the amounts and timing thereof. As of December 31, 2025, we have no plans to declare or pay a cash dividend in the foreseeable future.
The graph assumes an investment of $100 on December 31, 2019, in each of our Common Stock, the S&P 500 Index, and the S&P SmallCap 600 Index, and assumes reinvestment of all dividends.
The graph assumes an investment of $100 on December 31, 2020, in each of our Common Stock, the S&P 500 Index, and the S&P SmallCap 600 Index, and assumes reinvestment of all dividends.
Month of Fourth Quarter 2024 Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2024 — $ — — $ 99,502,521 November 1 - 30, 2024 — $ — — $ 99,502,521 December 1 - 31, 2024 — $ — — $ 99,502,521 Total — $ — — $ 99,502,521 Stockholder Return Performance Graph The graph set forth below presents the cumulative, five-year stockholder return for each of (i) the Company’s Common Stock, (ii) the Standard & Poor’s 500 Index (“S&P 500 Index”), a value-weighted index made up of 500 of the largest, by market capitalization, listed companies, and (iii) the Standard & Poor’s SmallCap 600 Index (“S&P SmallCap 600 Index”), a value-weighted index of 600 listed companies with market capitalizations between $750,000,000 and $4,600,000,000.
Month of Fourth Quarter 2025 Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2025 42,800 $ 49.37 42,800 $ 64,327,067 November 1 - 30, 2025 — $ — — $ 64,327,067 December 1 - 31, 2025 — $ — — $ 64,327,067 Total 42,800 $ 49.37 42,800 $ 64,327,067 Stockholder Return Performance Graph The graph set forth below presents the cumulative, five-year stockholder return for each of (i) the Company’s Common Stock, (ii) the Standard & Poor’s 500 Index (“S&P 500 Index”), a value-weighted index made up of 500 of the largest, by market capitalization, listed companies, and (iii) the Standard & Poor’s SmallCap 600 Index (“S&P SmallCap 600 Index”), a value-weighted index of 600 listed companies with market capitalizations between $750,000,000 and $4,600,000,000.
As of February 18, 2025, there were 92 holders of record of our Common Stock and 11 holders of record of our Class B Common Stock. These numbers do not reflect persons or entities that hold their shares in nominee or “street name” through various brokerage firms.
As of February 23, 2026, there were 76 holders of record of our Common Stock and 10 holders of record of our Class B Common Stock. These numbers do not reflect persons or entities that hold their shares in nominee or “street name” through various brokerage firms.
Added
The S&P SmallCap 600 Index was selected because it includes companies with market capitalizations comparable to ours and because we do not believe that we can reasonably identify a published industry or line-of-business index or a specific peer group that would offer a meaningful comparison.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

37 edited+11 added−12 removed29 unchanged
Biggest changeThe decrease in gross margin dollars was primarily the result of lower sales volume in 2024, with the increase in gross margin percentage primarily attributable to higher royalty revenue and improved production efficiencies compared to 2023 along with certain reductions in supply chain costs. • Backlog, representing the total of orders received for products for which shipment is scheduled within the next 12 months, was approximately $155,505,000 at the end of 2024, as compared to $160,805,000 at the end of 2023. • Operating expenses for 2024 increased $31,737,000, or 20.7%, to $185,308,000 from $153,571,000 for 2023.
Biggest changeThe increase in gross margin dollars and gross margin percentage was primarily attributable to the $45,000,000 patent litigation settlement payment received by the Company in the second quarter of 2025 and the favorable impact from higher sales volume and improved sales mix on that revenue, including royalty revenue, when compared to 2024, offset by the unfavorable impact of production inefficiencies including an increase in freight-in and tariff spending of $3,949,000 (net of approximately $907,000 in duty drawback recovery in 2025 and $1,669,000 in duty drawback recovery in 2024 of previously paid tariffs). • Backlog, representing the total of orders received for products for which shipment is scheduled within the next 12 months, was approximately $176,938,000 at the end of 2025, as compared to $155,505,000 at the end of 2024. • Operating expenses for 2025 decreased $7,707,000, or 4.2%, to $177,601,000 from $185,308,000 for 2024.
Supply chain disruptions, including those associated with our reliance on outsourced package 23 Table of Contents process steps that are essential in the production of some of our Advanced Products, and those relating, for example, to the procurement of raw material, have in the past negatively impacted and may in the future negatively impact our operating results.
Supply chain disruptions, including those associated with our reliance on outsourced package process steps that are essential in the production of some 23 Table of Contents of our Advanced Products, and those relating, for example, to the procurement of raw material, have in the past negatively impacted and may in the future negatively impact our operating results.
Our quarterly gross margin as a percentage of net revenues may vary, depending on production volumes, licensing income, average selling prices, average unit costs, the mix of products sold during that quarter, and the level of importation of raw materials subject to tariffs.
Our quarterly gross margin as a percentage of total net revenues may vary, depending on production volumes, licensing income, average selling prices, average unit costs, the mix of products sold during that quarter, and the level of importation of raw materials subject to tariffs.
Litigation-contingency expense was $19,500,000 for 2024, which related to the litigation with SynQor, Inc. ("SynQor"), as compared to $0 for 2023.
Litigation-contingency expense was $0 for 2025, as compared to $19,500,000 for 2024, which related to the litigation with SynQor, Inc. ("SynQor").
Actual results may differ from these estimates under different assumptions or conditions. We also have other policies we consider key accounting policies (See Note 2 to the Consolidated Financial Statements – Significant Accounting Policies –Impact of recently issued accounting standards ).
Actual results may differ from these estimates under different assumptions or conditions. We also have other policies we consider key accounting policies (See Note 2 to the Consolidated Financial Statements – Significant Accounting Policies – Impact of newly adopted and recently issued but not adopted accounting standards ).
As of December 31, 2024, we had approximately $99,503,000 remaining available for repurchases of our Common Stock under the New Repurchase Authorization. The timing and amounts of Common Stock repurchases under the New Repurchase Authorization are at the discretion of the Company's President and Chief Executive Officer based upon economic and financial market conditions.
As of December 31, 2025, we had approximately $64,327,000 remaining available for repurchases of our Common Stock under the New Repurchase Authorization. The timing and amounts of Common Stock repurchases under the New Repurchase Authorization are at the discretion of the Company's President and Chief Executive Officer based upon economic and financial market conditions.
Our primary needs for liquidity are for making continuing investments in manufacturing and production equipment. We believe cash generated from operations together with our available cash and cash equivalents will be sufficient to fund planned operational needs and capital equipment purchases for the foreseeable future.
Our primary needs for liquidity are for making continuing investments in manufacturing and production equipment. We believe cash generated from operations together with our available cash and cash equivalents will be sufficient to fund planned operational needs and capital equipment purchases, for both the short and long term.
("VJCL"), for which the functional currency is the Japanese Yen, and all other subsidiaries in Europe and Asia, for which the functional currency is the U.S. Dollar. These subsidiaries in Europe and Asia experienced more unfavorable foreign currency exchange rate fluctuations in 2024 compared to 2023.
("VJCL"), for which the functional currency is the Japanese Yen, and all other subsidiaries in Europe and Asia, for which the functional currency is the U.S. Dollar. These subsidiaries in Europe and Asia experienced favorable foreign currency exchange rate fluctuations in 2025 compared to 2024.
In addition, external factors such as supply chain uncertainties, which are often associated with the cyclicality of the electronics industry, regional macroeconomic and trade-related circumstances, and force majeure events (most recently evidenced by the COVID-19 pandemic), have caused our operating results to vary meaningfully.
In addition, external factors such as supply chain uncertainties, which are often associated with the cyclicality of the electronics industry, regional macroeconomic and trade-related circumstances, and force majeure events, have caused our operating results to vary meaningfully.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview A discussion regarding our results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022, was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, on pages 27-29 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which was filed with the SEC on February 28, 2024.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview A discussion regarding our results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, on pages 24 and 26-28 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which was filed with the SEC on March 3, 2025.
In 2024, interest income increased due to higher balances of cash and cash equivalents held by the Company. Income before income taxes was $10,487,000 in 2024, as compared to $60,244,000 in 2023.
In 2025, interest income increased due to higher balances of cash and cash equivalents held by the Company. Income before income taxes was $94,571,000 in 2025, as compared to $10,487,000 in 2024.
As of December 31, 2024, we had a total of approximately $12,669,000 of cancelable and non-cancelable capital expenditure commitments, principally for manufacturing and production equipment, which we intend to fund with existing cash, and approximately $1,946,000 of capital expenditure items and internal-use software which had been received and included in Property, plant and equipment in the accompanying Consolidated Balance Sheets, but not yet paid for.
As of December 31, 2025, we had a total of approximately $3,877,000 of cancelable and non-cancelable capital expenditure commitments, principally for manufacturing and production equipment, which we intend to fund with existing cash, and approximately $1,144,000 of capital expenditure items which had been received and included in Property, plant and equipment, net in the accompanying Consolidated Balance Sheets, but not yet paid for.
Our quarterly operating margin as a percentage of net revenues also may vary with changes in revenue and product level profitability, but our operating costs are largely associated with compensation and related employee costs, which are not subject to sudden or significant changes. 2024 Financial Highlights • Net revenues decreased 11.4% to $359,058,000 for 2024, from $405,059,000 for 2023.
Our quarterly operating margin as a percentage of total net revenues also may vary with changes in revenue and product level profitability, but our operating costs are largely associated with compensation and related employee costs, which are not subject to sudden or significant changes. 2025 Financial Highlights • Total net revenues increased 13.5% to $407,701,000 for 2025, from $359,058,000 for 2024.
Year Ended December 31, 2024 2023 2022 Net revenues 100.0 % 100.0 % 100.0 % Gross margin 51.2 % 50.6 % 45.2 % Selling, general and administrative expenses 27.0 % 21.2 % 21.6 % Research and development expenses 19.2 % 16.8 % 15.2 % Income before income taxes 2.9 % 14.9 % 7.2 % Critical Accounting Policies and Estimates 24 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.
This table and the subsequent discussion should be read in conjunction with the Consolidated Financial Statements and related notes contained elsewhere in this report. 24 Table of Contents Year Ended December 31, 2025 2024 2023 Total net revenues and patent litigation settlement 100.0 % 100.0 % 100.0 % Gross margin 57.3 % 51.2 % 50.6 % Selling, general and administrative expenses 21.9 % 27.0 % 21.2 % Research and development expenses 17.4 % 19.2 % 16.8 % Income before income taxes 20.9 % 2.9 % 14.9 % Critical Accounting Policies and Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.
The provision for income taxes and the effective income tax rate for the years ended December 31 were as follows (dollars in thousands): 2024 2023 Provision for income taxes $ 4,348 $ 6,644 Effective income tax rate 41.5 % 11.0 % The effective tax rates differ from the statutory tax rates for the years ended December 31, 2024 and 2023 primarily due to the Company’s full valuation allowance position against net domestic deferred tax assets.
The (benefit) provision for income taxes and the effective income tax rate for the years ended December 31 were as follows (dollars in thousands): 2025 2024 (Benefit) provision for income taxes $ (24,025 ) $ 4,348 (25.4 )% 41.5 % The effective tax rates differ from the statutory tax rates for the years ended December 31, 2025 and 2024 primarily due to the release of a portion of the valuation allowance and the Company’s full valuation allowance position against certain domestic deferred tax assets.
See Note 16 to the Consolidated Financial Statements for additional information regarding the SynQor litigation-contingency expense. • We reported net income for 2024 of $6,129,000, or $0.14 per diluted share, compared to net income of $53,595,000, or $1.19 per diluted share, for 2023. • In 2024, as a result of a full year of activities in our expanded manufacturing facility and the related capital equipment being placed in service during the year, depreciation and amortization totaled $18,626,000, and capital expenditures were $23,602,000, compared to $17,240,000 and $33,452,000, respectively, for 2023. • Inventories decreased by approximately $547,000, or 0.5%, to $106,032,000 at the end of 2024, as compared to $106,579,000 at the end of 2023.
See Note 16 to the Consolidated Financial Statements for additional information regarding the SynQor litigation-contingency expense. • We reported net income for 2025 of $118,556,000, or $2.61 per diluted share, compared to net income of $6,129,000, or $0.14 per diluted share, for 2024. • In 2025, as a result of two full years of activities in our expanded manufacturing facility and the related capital equipment being placed in service during 2024 and 2025, depreciation and amortization totaled $20,786,000, and capital expenditures were $20,318,000, compared to $18,626,000 and $23,602,000, respectively, for 2024. • Inventories decreased by approximately $14,692,000, or 13.9%, to $91,340,000 at the end of 2025, as compared to $106,032,000 at the end of 2024.
We reported net income for the year ended December 31, 2024 of $6,129,000, or $0.14 per diluted share, as compared to $53,595,000, or $1.19 per diluted share, for the year ended December 31, 2023. Liquidity and Capital Resources At December 31, 2024, we had $277,273,000 in cash and cash equivalents.
We reported net income for the year ended December 31, 2025 of $118,556,000, or $2.61 per diluted share, as compared to $6,129,000, or $0.14 per diluted share, for the year ended December 31, 2024. Liquidity and Capital Resources At December 31, 2025, we had $402,805,000 in cash and cash equivalents.
See Note 2 – Significant Accounting Policies – Impact of recently issued accounting standards , to the Consolidated Financial Statements for a description of recently issued and adopted accounting pronouncements, including the dates of adoption and expected impact on our financial position and results of operations. 25 Table of Contents Other new pronouncements issued but not effective until after December 31, 2024 are not expected to have a material impact on our consolidated financial statements.
See Note 2 – Significant Accounting Policies – Impact of newly adopted and recently issued but not adopted accounting standards , to the Consolidated Financial Statements for a description of newly adopted and recently issued but not adopted accounting pronouncements, including the dates of adoption and expected impact on our financial position and results of operations.
See Note 15 to the Consolidated Financial Statements for disclosure regarding our current assessment of the valuation allowance against all net domestic deferred tax assets, and the possible release (i.e., reduction) of the allowance in the future.
See Note 15 to the Consolidated Financial Statements for disclosure regarding our current assessment of the release of a significant portion of the valuation allowance against net domestic deferred tax assets.
The primary working capital changes were due to the following (in thousands): 28 Table of Contents Increase (decrease) Cash and cash equivalents $ 35,054 Accounts receivable 317 Inventories (547 ) Other current assets 7,844 Accounts payable 3,363 Accrued compensation and benefits 366 Accrued litigation (20,388 ) Accrued expenses (1,487 ) Sales allowances 1,815 Short-term lease liabilities 148 Income taxes payable 687 Short-term deferred revenue and customer prepayments (2,155 ) $ 25,017 The primary sources of cash for the year ended December 31, 2024 were $50,842,000 of cash generated from operations and $8,490,000 of cash received in connection with the exercise of options to purchase our Common Stock awarded under our stock option plans and the issuance of Common Stock under our 2017 Employee Stock Purchase Plan.
Net working capital increased $120,828,000 to $522,042,000 at December 31, 2025 from $401,214,000 at December 31, 2024. 28 Table of Contents The primary working capital changes were due to the following (in thousands): Increase (decrease) Cash and cash equivalents $ 125,532 Accounts receivable 7,768 Inventories (14,692 ) Other current assets 5,721 Accounts payable (3,553 ) Accrued compensation and benefits (1,076 ) Accrued litigation (1,387 ) Accrued expenses 2,795 Sales allowances (1,469 ) Short-term lease liabilities 148 Income taxes payable (845 ) Short-term deferred revenue and customer prepayments 1,886 $ 120,828 The primary sources of cash for the year ended December 31, 2025 were $139,548,000 generated from operations and $41,495,000 received in connection with the exercise of options to purchase our Common Stock awarded under our stock option plans and the issuance of Common Stock under our 2017 Employee Stock Purchase Plan.
The decrease in net revenues for Brick Products was primarily due to reduced market demand. • Export sales, as a percentage of total revenues, represented approximately 48.2% in 2024 and 63.1% in 2023. • Gross margin decreased to $183,998,000 for 2024, from $204,929,000 for 2023.
The decrease in net revenues for Brick Products was primarily due to reduced market demand. • Export sales, as a percentage of total net revenues, represented approximately 50.8% in 2025 and 48.2% in 2024. • Gross margin for the year ended December 31, 2025 increased $75,431,000, or 41.0%, to $259,429,000 from $183,998,000 for the year ended December 31, 2024.
The primary use of cash during the year ended December 31, 2024 was $23,602,000 for the purchase of machinery and equipment and internal-use software. In November 2000, our Board of Directors authorized the repurchase of up to $30,000,000 of our Common Stock (the “November 2000 Plan”).
The primary uses of cash during the year ended December 31, 2025 were $35,175,000 used for repurchases of Common Stock and $20,318,000 used for purchases of property and equipment. In November 2000, our Board of Directors authorized the repurchase of up to $30,000,000 of our Common Stock (the “November 2000 Plan”).
The significant changes in the components of "Other income (expense), net" for the years ended December 31 were as follows (in thousands): 27 Table of Contents Increase 2024 2023 (decrease) Interest income, net $ 11,468 $ 8,217 $ 3,251 Rental income, net 992 792 200 Foreign currency losses, net (622 ) (161 ) (461 ) Other, net (41 ) 38 (79 ) $ 11,797 $ 8,886 $ 2,911 Our exposure to market risk fluctuations in foreign currency exchange rates relates to the operations of Vicor Japan Company, Ltd.
The significant changes in the components of "Other income (expense), net" for the years ended December 31 were as follows (in thousands): Increase 2025 2024 (decrease) Interest income, net $ 12,130 $ 11,468 $ 662 Rental income, net 1,135 992 143 Foreign currency gains (losses), net 312 (622 ) 934 Loss on disposal of equipment (851 ) (27 ) (824 ) Other, net 17 (14 ) 31 $ 12,743 $ 11,797 $ 946 Our exposure to market risk fluctuations in foreign currency exchange rates relates to the operations of Vicor Japan Company, Ltd.
Gross margin, as a percentage of net revenues, increased to 51.2% for the twelve-month period ended December 31, 2024, as compared to 50.6% for the twelve-month period ended December 31, 2023.
Gross margin, as a percentage of total net revenues and patent litigation settlement, increased to 57.3% for the year ended December 31, 2025, as compared to 51.2% for the year ended December 31, 2024.
The ratio of current assets to current liabilities was 7.5:1 at December 31, 2024, as compared to 9.5:1 at December 31, 2023. Net working capital increased $25,017,000 to $401,214,000 at December 31, 2024 from $376,197,000 at December 31, 2023.
The ratio of current assets to current liabilities was 9.0:1 at December 31, 2025, as compared to 7.5:1 at December 31, 2024.
The amount of any such tax benefit associated with release of our valuation allowance in a particular quarter may be material. New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that we adopt as of the specified effective date.
If and when management determines the remaining valuation allowance should be released, the adjustment would result in a tax benefit in the Consolidated Statements of Operations and may be material. 25 Table of Contents New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that we adopt as of the specified effective date.
The following table sets forth certain items of selected consolidated financial information as a percentage of net revenues for the years ended December 31, 2024, 2023, and 2022. This table and the subsequent discussion should be read in conjunction with the Consolidated Financial Statements and related notes contained elsewhere in this report.
The following table sets forth certain items of selected consolidated financial information as a percentage of total net revenues and patent litigation settlement for the years ended December 31, 2025, 2024, and 2023.
Research and development expenses increased $1,065,000, or 1.6%, to $68,922,000 in 2024 from $67,857,000 in 2023. As a percentage of net revenues, research and development expenses increased to 19.2% in 2024 from 16.8% in 2023.
As a percentage of total net revenues, research and development expenses increased to 19.3% in 2025 from 19.2% in 2024.
(5) Increase attributable to net additions of furniture and fixtures and capitalization of building improvements. (6) Decrease in engineering supplies. (7) Decrease primarily attributable to decreased prototype development costs for Advanced Products. Litigation-contingency expense was $19,500,000 for 2024, which related to the SynQor litigation, as compared to $0 for 2023.
(7) Increase attributable to net additions of furniture and fixtures and capitalization of building improvements. 27 Table of Contents Litigation-contingency expense was $0 for 2025, as compared to $19,500,000 for 2024, which related to the SynQor litigation. See Note 16 to the Consolidated Financial Statements for additional information regarding the SynQor litigation-contingency expense.
Selling, general, and administrative expenses were $96,886,000 for 2024, an increase of $11,172,000, or 13.0%, as compared to $85,714,000 for 2023. As a percentage of net revenues, selling, general, and administrative expenses increased to 27.0% in 2024 from 21.2% in 2023.
Selling, general, and administrative expenses were $99,031,000 for 2025, an increase of $2,145,000, or 2.2%, as compared to $96,886,000 for 2024.
The decrease in gross margin dollars was primarily the result of lower sales volume in 2024, with the increase in gross margin percentage primarily attributable to higher royalty revenue and improved production efficiencies compared to 2023 along with certain reductions in supply chain costs, including a reduction of $1,958,000 in outsourced manufacturing costs partially offset by incremental costs of bringing production in-house for certain Advanced Products, offset by slightly unfavorable sales mix and an increase in freight-in and tariff spending of $953,000 (net of approximately $1,669,000 in duty drawback recovery in 2024 and $6,954,000 in duty drawback recovery in 2023 of previously paid tariffs).
The increase in gross margin dollars and gross margin percentage was primarily attributable to the $45,000,000 patent litigation settlement payment received by the Company in the second quarter of 2025 and the favorable impact from higher sales volume and improved sales mix on that revenue, including royalty revenue, when compared to 2024, offset by the unfavorable impact of production inefficiencies including an increase in freight-in and tariff spending of $3,949,000 (net of approximately $907,000 in duty drawback recovery in 2025 and $1,669,000 in duty drawback recovery in 2024 of previously paid tariffs).
Net revenues, by product line, for the years ended December 31 were as follows (dollars in thousands): Decrease 2024 2023 $ % Advanced Products including Royalty Revenue $ 197,329 $ 223,893 $ (26,564 ) (11.9 )% Brick Products 161,729 181,166 (19,437 ) (10.7 )% Total $ 359,058 $ 405,059 $ (46,001 ) (11.4 )% The decrease in net revenues for Advanced Products was primarily due to continued softness in underpenetrated markets, partially offset by increased royalty revenue.
Total net revenues, by product line, for the years ended December 31 were as follows (dollars in thousands): Increase (decrease) 2025 2024 $ % Advanced Products including Royalty Revenue $ 248,562 $ 197,329 $ 51,233 26.0 % Brick Products 159,139 161,729 (2,590 ) (1.6 )% Total net revenues $ 407,701 $ 359,058 $ 48,643 13.5 % The increase in net revenues for Advanced Products was primarily due to improved market demand and higher royalty revenue.
(5) Increase primarily attributable to an increase in audit and tax fees. (6) Increase primarily attributable to an increase in the use of consultants and outside services relating to new internal-use software implementation. (7) Decrease primarily attributable to the fact that the Company no longer uses outside sales representatives.
(2) Increase primarily attributable to an increase in computer software services relating to new internal-use software implementation. (3) Increase primarily attributable to an increase in audit and tax fees. (4) Increase attributable to net additions of furniture and fixtures and capitalization of building improvements.
The components of the $1,065,000 increase in research and development expenses were as follows (dollars in thousands): Increase (decrease) Compensation $ 1,417 3.3 % (1 ) Overhead absorption 1,194 56.2 % (2 ) Waste disposal 871 100.0 % (3 ) Facilities allocations 366 11.9 % (4 ) Depreciation and amortization 366 13.1 % (5 ) Supplies (1,091 ) (41.9 )% (6 ) Project and pre-production materials (2,175 ) (17.8 )% (7 ) Other, net 117 2.0 % $ 1,065 1.6 % (1) Increase primarily attributable to annual compensation adjustments in May 2024 and higher stock-based compensation expense associated with stock options awarded in May 2024.
As a percentage of total net revenues, selling, general, and administrative expenses decreased to 24.3% in 2025 from 27.0% in 2024. 26 Table of Contents The components of the $2,145,000 increase in selling, general, and administrative expenses were as follows (dollars in thousands): Increase (decrease) Compensation $ 4,111 8.1 % (1 ) Information technology expense 1,277 35.7 % (2 ) Professional services fees 687 27.0 % (3 ) Depreciation and amortization 554 12.4 % (4 ) Litigation, other 550 55.4 % (5 ) Advertising expense (643 ) (12.8 )% (6 ) Legal fees (4,720 ) (24.6 )% (7 ) Other, net 329 3.2 % $ 2,145 2.2 % (1) Increase primarily attributable to annual compensation adjustments in May 2025 and higher stock-based compensation expense associated with stock options awarded in May 2025.
(2) Increase primarily attributable to annual compensation adjustments in May 2024 and higher stock-based compensation expense associated with stock options awarded in May 2024. (3) Increase primarily attributable to an increase in post-judgment interest relating to the SynQor litigation-contingency accrual. (4) Increase primarily attributable to an increase in computer software services relating to new internal-use software implementation.
(2) Increase primarily attributable to annual compensation adjustments in May 2025 and higher stock-based compensation expense associated with stock options awarded in May 2025. (3) Increase in the consumption of materials and supplies used in the engineering process. (4) Increase primarily attributable to equipment set-up and calibration for Advanced Products production.
Net revenues for Advanced Products for 2024 decreased compared to 2023, primarily due to continued softness in underpenetrated markets, partially offset by increased royalty revenue associated with intellectual property licensing.
Net revenues for Advanced Products for 2025 increased compared to 2024, primarily due to improved market demand and higher royalty revenue.
Gross margin, as a percentage of net revenues increased to 51.2% for 2024 from 50.6% for 2023.
Gross margin for the year ended December 31, 2025 increased $75,431,000, or 41.0%, to $259,429,000 from $183,998,000 for the year ended December 31, 2024. Gross margin, as a percentage of total net revenues and patent litigation settlement, increased to 57.3% for the year ended December 31, 2025, as compared to 51.2% for the year ended December 31, 2024.
Removed
As a result, management has concluded, as of December 31, 2024, it is more likely than not our net domestic deferred tax assets will not be realized, and a full valuation allowance against all net domestic deferred tax assets is still warranted as of December 31, 2024.
Added
Prior to December 31, 2025, the Company maintained a valuation allowance against a significant portion of its deferred tax assets, consisting of net operating loss carryforwards, tax credit carryforwards, and deductible temporary differences.
Removed
The valuation allowance against these deferred tax assets may require adjustment in the future based on changes in the mix of temporary differences, changes in tax laws, and operating performance.
Added
Based on the Company's history of cumulative earnings before taxes for financial reporting purposes over a 12-quarter period and expected future taxable income, management determined it was more likely than not a significant portion of the deferred tax assets would be realized.
Removed
If the positive operating results continue, and our concerns about the unpredictability of customer orders in certain markets, product transitions, new program introductions and adoption times of new technology offerings are resolved, and we believe future taxable income can be more reliably forecasted, we may release all or a portion of the valuation allowance in the near-term.
Added
As a result, at December 31, 2025, the Company reversed $43,648,000 of its valuation allowance related to certain deductible temporary differences expected to be realized in future periods. This tax benefit was partially offset by estimated federal, state, and foreign income taxes.
Removed
Certain state tax credits, though, will likely never be released by the valuation allowance. If and when we determine the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s Consolidated Statements of Operations, the effect of which would be an increase in reported net income.
Added
As of December 31, 2025, the Company has a remaining valuation allowance of approximately $17,931,000 against certain deferred tax assets, for which realization cannot be considered more likely than not at this time.
Removed
Year ended December 31, 2024 compared to Year ended December 31, 2023 Consolidated net revenues for 2024 were $359,058,000, a decrease of $46,001,000, or 11.4%, as compared to $405,059,000 for 2023.
Added
Such deferred tax assets principally relate to tax credit carryforwards in certain state jurisdictions for which sufficient taxable income for utilization cannot be projected at this time, or the credits may expire without being utilized.
Removed
The decrease in net revenues for Brick Products was primarily due to reduced market demand. Gross margin for the twelve months ended December 31, 2024 decreased $20,931,000, or 10.2%, to $183,998,000 from $204,929,000 for the twelve months ended December 31, 2023.
Added
Other new pronouncements issued but not effective until after December 31, 2025 are not expected to have a material impact on our consolidated financial statements. Year ended December 31, 2025 compared to Year ended December 31, 2024 Consolidated total net revenues for 2025 were $407,701,000, an increase of $48,643,000, or 13.5%, as compared to $359,058,000 for 2024.
Removed
The components of the $11,172,000 increase in selling, general, and administrative expenses were as follows (dollars in thousands): Increase (decrease) Legal fees $ 10,854 130.3 % (1 ) Compensation 1,575 3.2 % (2 ) Litigation, other 992 100.0 % (3 ) Information technology expense 289 11.3 % (4 ) Professional services fees 285 10.7 % (5 ) Consultants 220 5.5 % (6 ) Commissions (3,483 ) (94.5 )% (7 ) Other, net 440 2.9 % $ 11,172 13.0 % 26 Table of Contents (1) Increase primarily attributable to an increase in activity related to corporate legal matters, including the assertion of our intellectual property rights.
Added
The decrease in net revenues for Brick Products was primarily due to reduced market demand. During the year ended December 31, 2025, the Company received a patent litigation settlement payment of $45,000,000 (as described in more detail in Note 16 to the Consolidated Financial Statements).
Removed
(2) Increase primarily attributable to a decrease in research and development personnel incurring time on production activities, compared to research and development activities. (3) Increase primarily attributable to an increase in waste disposal activities of Advanced Products related to improving production process capabilities. (4) Increase primarily attributable to an increase in utilities and building maintenance expenses.
Added
(5) Increase primarily attributable to an increase in post-judgment interest and other costs relating to the litigation-contingency accrual with respect to our litigation with SynQor. (6) Decrease primarily attributable to decreases in sales support and marketing expenses.
Removed
See Note 16 to the Consolidated Financial Statements for additional information regarding the SynQor litigation-contingency expense.
Added
(7) Decrease primarily attributable to a decrease in activity related to our litigation with SynQor and other corporate legal matters, including the assertion of our intellectual property rights. Research and development expenses increased $9,648,000, or 14.0%, to $78,570,000 in 2025 from $68,922,000 in 2024.
Removed
The provision for income taxes for the years ended December 31, 2024 and 2023 included estimated federal, state, and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes.
Added
The components of the $9,648,000 increase in research and development expenses were as follows (dollars in thousands): Increase Outside services $ 3,519 345.1 % (1 ) Compensation 2,375 5.3 % (2 ) Supplies 1,424 92.1 % (3 ) Equipment set-up and calibration 959 88.5 % (4 ) Deferred costs 444 71.8 % (5 ) Waste disposal 388 44.6 % (6 ) Depreciation and amortization 290 9.2 % (7 ) Other, net 249 1.5 % $ 9,648 14.0 % (1) Increase primarily attributable to an increase in the use of outside service providers for our manufacturing facility.
Removed
The Company's tax expense and the rate for the year ended December 31, 2024 continues to be negatively impacted by the capitalization of research and development expenses under Section 174 in the U.S., which given the Company's performance, is having an outsized impact on the rate by increasing the taxable income position, which causes a significant tax expense.
Added
(5) Increase primarily attributable to lower deferred costs capitalized for certain non-recurring engineering projects for which the related revenues had been deferred. (6) Increase primarily attributable to an increase in waste disposal activities related to improving production process capabilities for our Advanced Products.
Removed
This is further compounded by the Company not getting a deferred tax benefit from temporary differences due to the full valuation allowance on net domestic deferred tax assets.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed5 unchanged
Biggest changeShould we conclude a decline in 29 Table of Contents the fair value of the Failed Auction Security is other than temporary, such losses would be recorded through earnings as a component of “Other income (expense), net”. We do not believe there was an “other-than-temporary” decline in value in this security as of December 31, 2024.
Biggest changeShould we conclude a decline in the fair value of the Failed Auction Security is other than temporary, such losses would be recorded through earnings as a component of “Other income (expense), net”. We do not believe there was an “other-than-temporary” decline in value in this security as of December 31, 2025.
While we believe risk to fluctuations in foreign currency rates for these subsidiaries is generally not significant, they can be subject to substantial currency changes, and therefore foreign exchange exposures. 30 Table of Contents
While we believe the risk of fluctuations in foreign currency exchange rates for these subsidiaries is generally not significant, they can be subject to substantial currency changes, and therefore foreign exchange exposures. 30 Table of Contents
As of December 31, 2024, our long-term investment portfolio, recorded on our Consolidated Balance Sheet as “Long-term investment, net”, consisted of a single auction rate security with a par value of $3,000,000, purchased through and held in custody by a broker-dealer affiliate of Bank of America, N.A., that has experienced failed auctions (the “Failed Auction Security”) since February 2008.
As of December 31, 2025, our long-term investment portfolio, recorded on our Consolidated Balance Sheet as “Long-term investment, net”, consisted of a single auction rate security with a par value of $3,000,000, purchased through and held in custody by a broker-dealer affiliate of Bank of America, N.A., that has experienced failed auctions (the “Failed Auction Security”) since February 2008.
Department of Education under the Federal Family Education Loan Program, continued failure to sell at its periodic auction dates (i.e., reset dates) could negatively impact the carrying value of the investment, in turn leading to impairment charges in future periods.
Department of Education under the Federal 29 Table of Contents Family Education Loan Program, continued failure to sell at its periodic auction dates (i.e., reset dates) could negatively impact the carrying value of the investment, in turn leading to impairment charges in future periods.
We estimate our annual interest income would change by approximately $30,000 in 2024 for each 100 basis point increase or decrease in interest rates.
We estimate our annual interest income would change by approximately $30,000 in 2025 for each 100 basis point increase or decrease in interest rates.
Relative to our Yen exposure as of December 31, 2024, we estimate a 10% unfavorable movement in the value of the Yen relative to the U.S. Dollar would increase our foreign currency loss by approximately $49,000. The functional currency of all other subsidiaries in Europe and other subsidiaries in Asia is the U.S. Dollar.
Relative to our Yen exposure as of December 31, 2025, we estimate a 10% unfavorable movement in the value of the Yen relative to the U.S. Dollar would decrease our foreign currency gain by approximately $18,000. The functional currency of all other subsidiaries in Europe and other subsidiaries in Asia is the U.S. Dollar.

Other VICR 10-K year-over-year comparisons