Patrizio Vinciarelli: I do expect that, that will happen. I don’t know if Phil wants to add some color to this.
Phil Davies: No, I would just say that, that’s the objective is to achieve that and to do it with the broad-based market, with our distribution channel on the broad-based level, but also the top 100 focus. And we’re making great progress across the 4 BUs with the top 100. And the new products that we’re introducing this year, not just the Gen 5 but new high-power front-end products are getting designed into these top 100 customers that we’re now focused on. So I’m confident that we’ll fill the path. And I think that some exciting times are ahead of us.
Don McKenna: Alright. Great. Thanks, guys.
Phil Davies: Thank you.
Operator: Thank you. [Operator Instructions] It comes from the line of Alan Hicks with Ainsley Capital. Please proceed.
Alan Hicks: Yes. Good afternoon. I think I heard you say 48% on BBU and 50% on advanced products. Was that correct?
Patrizio Vinciarelli: I’m sorry, could you repeat that? I’m a little bit handicap here with my audio today.
Alan Hicks: Okay. On the percentage of revenues, advanced products, I think, were a little over 50% and BBU was a little over 48%. Was that correct?
Patrizio Vinciarelli: That’s correct. For the first quarter, yes, the mix between advanced products and Brick products change.
Alan Hicks: Okay. So could we assume that royalties were that other 2%?
Patrizio Vinciarelli: I’m sorry, the royalties will?
Alan Hicks: Was the differential, so it added up to 98% roughly. So for the differential would be roughly 2%.
Patrizio Vinciarelli: I wouldn’t make that assumption. I don’t know that I can give you a quantitative measure here. I know as part of our reporting and maybe Jim can comment on that. You can point you to where you can find additional information.
Jim Schmidt: Yes. Alan, the better way to think about it is we said 51.6% advanced, 48.4% brick, which is 100%. And the realty income is associated with advanced products.
Alan Hicks: Okay. So last quarter, it was $7 million, I believe, did it grow significantly from last quarter?
Patrizio Vinciarelli: It grew.
Jim Schmidt: And yes, it did grow. It stepped up substantially from last quarter.
Alan Hicks: Okay. And is the factory – are the gross margins also improving on the factory?
Jim Schmidt: Sorry, go ahead for Patrizio.
Patrizio Vinciarelli: Okay. Well, so yes to say, capacity is actually in the factory is an issue – was in issues the last quarter, still going to be issued this quarter. And the fact that the revenues facility revenues took a step down last quarter, the DNL with respect to margins. But all the factors that Jim pointed to in his prepared remarks, including beyond licensing income, reduction in tariffs, change in mix, favorable mix, this contributed to a significant improvement in total gross margins. And that’s the trend line that we are satisfied with. I think we represented in the past that we have a goal to achieve substantially higher margins. And that goal is supported by the strategies that we’re implementing and executing with the mix of further advances with respect to our product capabilities as well as the complementary element of, in effect, monetizing some of the value or IP through selective licensing.
Alan Hicks: So I think those gross margins were easily the best you guys ever had. Bank was 53.6%. I think gross margins for the quarter, Jim, correct me if I’m wrong, about 53 and change, right?
Jim Schmidt: Yes. So I can comment on that, Alan, actually. So 53.8% was the result last quarter, and that was the highest for sure since I’ve been at Vicor.
Alan Hicks: I’ve got going back over 20 years. So that’s the highest I’ve ever seen. Do you expect that to continue to grow the rest of the year based on royalty increases?
Patrizio Vinciarelli: Again, we’re not going to be making detailed quarterly prediction in a year in which so much could happen. So I think we’re just going to add to the ones upon us that are investing in Vicor for the long-term are going to look at this. I think one of the analysts asked a question in the last call about 2024 being a transition year. I think at the time, I didn’t embrace the characterization, I think in hindsight, it’s probably the better way of looking at it. This is a year of transition, which, in effect, a lot of things are going to change and we expect for the better.
Alan Hicks: Okay. I was at the NVIDIA conference I think it was February or last month. And I stopped by the Delta Brush, and they showed – asked about the NBM product. And they showed it to me and said, we’re not infringing because we have a different process. I don’t know, that’s all said, they kind of shut up. But can you comment on that or?
Patrizio Vinciarelli: Yes. The leather B&S come to mind. The fact is that their copycat products, infringes three of our patents. And thus far, the proceedings corroborated that expectation. So let’s wait see what happens with what I expect to be an exclusion order against them.
Alan Hicks: Okay. And just a quick question on the – there was a product. I think it was showed at the WCX that had DCC converted, 150,000 lots, I think, is that for charging stations?
Patrizio Vinciarelli: Phil, could you answer that?
Phil Davies: Yes, that was the PSU Patrizio. The demo of the five paralleled NBMs in the PSU, the 150 kilowatt onboard 800 to 400-volt charger, that was on demo we had it in the case out WCS.
Alan Hicks: But is the application for charging stations?
Phil Davies: No, that’s…
Patrizio Vinciarelli: It’s not an application for fast charging. And it’s an application where we have a major weight advantage as well as a major efficiency advantage. So that system comprising at the moment, five of our modules. And in fact, we will be able to get to the 150 kilowatt capability with a reduced number of for. That system supports a peak efficiency of over 99%. And it has ethical power density, meaning its volume measured in liters and weight measured in kilograms is a small fraction of any competition.
