Silvaco Group (NasdaqGS:SVCO) FY Conference Summary Company Overview - **Company**: Silvaco Group - **Founded**: 1984 - **Industry**: Electronic Design Automation (EDA) - **Core Product Lines**: - TCAD (Technology Computer-Aided Design): Approximately 50% of revenue, a core business with a strong customer retention rate - IP (Intellectual Property): About 10% of revenue, identified as a significant growth area - Traditional EDA: Comprises the remaining revenue, focusing on niche markets to compete against larger companies like Synopsys and Cadence [3][4] Key Insights - **AI Integration**: Silvaco sees AI as a major long-term growth driver, particularly in manufacturing processes. The company aims to leverage AI to create new markets rather than just improve existing processes [5][6][7] - **Digital Twins**: The transition to virtual prototyping using AI and digital twins is essential for the semiconductor industry, allowing for more efficient process development [7][8] - **Customer Engagement**: The process of acquiring new customers for AI-driven solutions is described as a gradual engagement rather than a traditional sales approach, requiring significant collaboration and commitment from both parties [10][11] Financial Performance and Strategy - **Current Financial Status**: The company is focused on achieving profitability after experiencing losses. Plans include reducing expenses by at least $15 million annually and modest revenue growth in 2026 [19][20] - **Growth Projections**: Modest growth is anticipated due to a significant revenue spike from a major renewal in 2025 that will not recur. The company aims to overcome this loss and achieve growth [23] - **Long-term Goals**: The strategy includes building a strong AI franchise while focusing on short-term revenue growth primarily from the IP business [21][22] Market Position and Competitive Landscape - **Market Dynamics**: Silvaco operates in a highly consolidated EDA market dominated by a few large players. The company focuses on niche markets where it can maintain a competitive edge [12][16] - **Niche Specialization**: Silvaco has established itself as a leader in specific areas, such as TCAD for display manufacturing, holding over 80% market share in that segment [16][17] M&A Strategy - **Acquisition Focus**: The company has successfully acquired several firms, including Mixel, which is expected to significantly enhance Silvaco's product offerings and market position. Future acquisitions will target smaller companies with strong technology that can be integrated into Silvaco's existing framework [36][37][38] - **Cash Management**: Currently, Silvaco is focused on replenishing its cash reserves before pursuing further acquisitions [42] Challenges and Considerations - **Revenue Recognition Issues**: Silvaco faces challenges with revenue recognition due to its accounting practices, which can lead to volatility in reported earnings [45][46] - **Competitive Pricing Dynamics**: The EDA market is characterized by complex pricing strategies, where larger companies often offer discounts or free licenses to retain customers, complicating Silvaco's competitive positioning [49][50] Conclusion Silvaco Group is navigating a challenging EDA landscape with a focus on AI integration, niche market specialization, and strategic acquisitions. The company aims to achieve profitability while laying the groundwork for long-term growth through innovative technologies and customer engagement strategies.

Core Insights - Silvaco Group, Inc. will participate in the Needham Growth Conference on January 14, 2026, with CEO Walden Rhines as the speaker [1] - A live webcast and replay of the presentation will be available on the company's investor relations website [2] Company Overview - Silvaco is a provider of TCAD, EDA software, and SIP solutions that facilitate semiconductor design and digital twin modeling through AI software and innovation [3] - The company's solutions are utilized in semiconductor and photonics processes, devices, and systems development across various markets including display, power devices, automotive, memory, high performance compute, foundries, photonics, IoT, and 5G/6G mobile markets for complex SoC design [3] - Silvaco is headquartered in Santa Clara, California, and has a global presence with offices in North America, Europe, Egypt, Brazil, China, Japan, Korea, Singapore, Vietnam, and Taiwan [3]

Core Insights - Mixel's MIPI IP has been successfully integrated into indie's automotive radar processor and MMIC products, enhancing their capabilities in advanced driver-assistance systems (ADAS) [1][2] - The partnership between Mixel and indie focuses on developing high-performance automotive solutions, particularly in radar technology, which is crucial for safety features in vehicles [2][4] Company Overview - Mixel is a leading provider of mixed-signal IPs, offering a wide portfolio that includes MIPI D-PHY, MIPI M-PHY, and automotive SerDes solutions, with a strong emphasis on automotive applications [8] - Silvaco, the parent company of Mixel, specializes in TCAD, EDA software, and silicon IP solutions, supporting semiconductor design and digital twin modeling across various markets [7] - indie is an innovator in automotive solutions, focusing on high-performance mixed-signal SoCs for ADAS and other industrial applications, with a strong presence among Tier 1 automotive partners [9] Product and Technology Highlights - Mixel provided indie with ASIL-B compliant MIPI D-PHY CSI-2 TX and RX IPs, along with certified automotive functional safety deliverables, ensuring compliance with stringent automotive standards [3][4] - The integration of Mixel's IPs supports a range of automotive applications, including collision detection and automated emergency braking, which are essential for modern vehicle safety [2][3] Strategic Collaboration - The long-standing partnership between Mixel and indie is characterized by mutual confidence in engineering capabilities, aiming to expand their collaboration in MIPI technology and beyond [4][5] - Mixel's extensive automotive experience and ISO 26262 certifications enhance its reliability as a partner for indie in developing advanced automotive solutions [4][5]

分组1 - Silvaco Group, Inc. reported a quarterly loss of $0.07 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.06, marking an earnings surprise of -16.67% [1] - The company posted revenues of $18.67 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 16.19%, compared to $10.97 million in the same quarter last year [2] - Silvaco Group, Inc. shares have declined approximately 39.9% year-to-date, contrasting with the S&P 500's gain of 16.4% [3] 分组2 - The earnings outlook for Silvaco Group, Inc. is uncertain, and future stock performance will depend on management's commentary during the earnings call [4] - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $24.8 million, while for the current fiscal year, it is -$0.02 on revenues of $67.01 million [7] - The Electronics - Semiconductors industry, to which Silvaco belongs, is currently ranked in the top 33% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Silvaco reported record quarterly revenue of $18.7 million, up 70% year over year, with bookings increasing 131% to $22.8 million [17][18] - GAAP gross margin improved to 77.9%, up 326 basis points year over year, while non-GAAP gross margin was 81.5%, up 179 basis points [17][18] - GAAP net loss was $5.3 million, an improvement from a $6.6 million loss in the same period last year [18] Business Line Data and Key Metrics Changes - EDA business saw the most growth sequentially in Q3, while TCAD and IP trended down slightly [17] - 74% of revenue came from license revenue, with the remaining 26% from maintenance and service [17] Market Data and Key Metrics Changes - The Americas contributed 55% of total revenue, while APAC represented 40% and EMEA remained flat at 5% [17] Company Strategy and Development Direction - The company aims to focus on key products that are differentiated and to reduce attention on mature products [5][6] - Silvaco plans to strengthen financials by reversing the trend of expenses growing faster than revenue [6][11] - The acquisition of Mixel is expected to drive rapid growth in the IP business, leveraging synergies with Silvaco's existing sales force [8][9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that financial performance has been disappointing since the IPO, with a focus on achieving profitability at current revenue levels [11][15] - There is optimism regarding the contributions of recent acquisitions, particularly Mixel and Tech-X, expected to drive growth in 2026 [13][20] Other Important Information - A significant cost reduction program has been initiated, targeting an annualized reduction of at least $15 million [19][20] - The company expects to see improvements in gross margins and a flat to down trend in operating expenses [15][20] Q&A Session Summary Question: Transition from board to CEO role and revenue mix-out - Management confirmed that there is substantial opportunity ahead and that they will focus on freeing up resources for key growth areas [22][23] Question: Timeline for cost reductions and forecasting reliability - Most cost reductions are expected to be realized by the end of the fiscal year, with benefits seen in Q1 2026 [25][26] Question: Potential for Silvaco products to become industry standards - Management highlighted the importance of focused markets and customer bases to develop industry-leading products [29][30] Question: Performance of Mixel and its impact - Mixel is praised for its high-quality products and execution, with expectations for substantial growth due to the integration with Silvaco's sales force [33][34] Question: Pipeline and FTCO opportunity - The FTCO product is seen as a significant opportunity, although its adoption has been slower than expected [38][39] Question: Revenue guidance and future growth prospects - Management indicated that while Q4 revenue guidance appears lighter, they expect stronger contributions from acquisitions in 2026 [43][44] - Long-term growth targets are set at double-digit rates, with a focus on stabilizing and growing the existing business [52][53]

Revenue and Bookings - Software solutions accounted for 74% and 69% of revenue for the three and nine months ended September 30, 2025, respectively, compared to 62% and 72% for the same periods in 2024[114]. - Bookings for the three and nine months ended September 30, 2025, were $22.8 million and $49.4 million, respectively, compared to $9.9 million and $45.5 million for the same periods in 2024[115]. - Revenue for the three and nine months ended September 30, 2025, was $18.7 million and $44.8 million, respectively, compared to $11.0 million and $41.8 million for the corresponding periods in 2024[115]. - Approximately 96% and 84% of bookings were attributable to existing customers for the three and nine months ended September 30, 2025, respectively, compared to 88% and 90% for the same periods in 2024[114]. - Total revenue increased by $7.7 million, or 70%, to $18.7 million for the three months ended September 30, 2025, compared to $10.97 million for the same period in 2024[148]. - For the nine months ended September 30, 2025, total revenue increased by $3.0 million, or 7%, to $44.8 million from $41.8 million for the same period in 2024[149]. Expenses - Research and development expenses were $8.7 million and $19.4 million for the three and nine months ended September 30, 2025, respectively, compared to $4.1 million and $15.5 million for the same periods in 2024[125]. - Research and development expenses increased by 111% to $8.7 million for the three months ended September 30, 2025, compared to $4.1 million for the same period in 2024[145]. - General and administrative expenses increased by 53% to $10.9 million for the three months ended September 30, 2025, compared to $7.1 million for the same period in 2024[145]. - Total operating expenses for the three months ended September 30, 2025, were $23.9 million, up from $15.5 million in the same period of 2024[152]. - Selling and marketing expenses for the three months ended September 30, 2025, increased by $0.4 million, or 11%, to $4.3 million, primarily due to higher employee compensation[155]. Profit and Loss - Operating loss for the three months ended September 30, 2025, was $9.3 million, compared to a loss of $7.3 million for the same period in 2024, representing a 28% increase in loss[145]. - Net loss for the three months ended September 30, 2025, was $5.3 million, a 19% decrease compared to a net loss of $6.6 million for the same period in 2024[145]. - For the three months ended September 30, 2025, the net loss was $5.3 million, an improvement from a net loss of $6.6 million in the same period of 2024, while for the nine months ended September 30, 2025, the net loss was $34.0 million compared to $43.6 million in 2024[173]. - Non-GAAP net loss for the nine months ended September 30, 2025, was $9.1 million, a significant decrease from a non-GAAP net income of $2.4 million in the same period of 2024[173]. Acquisitions - The company acquired Cadence's Process Proximity Compensation product line for $11.5 million in cash on March 4, 2025[116]. - The acquisition of Tech-X Corporation was completed for an aggregate purchase price of $8.2 million, including $4.1 million in cash and contingent consideration[117]. - The acquisition of Mixel Group, Inc. was completed for an aggregate purchase price of $22.5 million, including $19.7 million in cash[118]. Cash Flow and Liquidity - As of September 30, 2025, the company had $24.3 million in cash and cash equivalents, with $7.2 million held by foreign subsidiaries and $3.5 million in short-term marketable securities[177]. - The company reported cash used in operating activities of $24.4 million for the nine months ended September 30, 2025, compared to $10.7 million for the same period in 2024, reflecting a $13.8 million increase in cash outflows[188]. - Net cash provided by investing activities for the nine months ended September 30, 2025, was $31.2 million, a turnaround from $73.0 million used in investing activities in the same period of 2024[189]. - The company raised $114.0 million in gross proceeds from its IPO by selling 6,000,000 shares at $19.00 per share, with $106.0 million net proceeds after underwriting discounts[181]. - As of September 30, 2025, 61% of the company's cash and cash equivalents were maintained with one financial institution, exceeding federally insured limits, posing a potential liquidity risk[184]. Litigation and Settlements - The company recorded a charge of $13.1 million related to a litigation settlement for the nine months ended September 30, 2025[140]. - The company has a remaining liability of $10.3 million under the Settlement Payment related to the litigation settlement, which is included in accrued expenses and other current liabilities[193]. - A contingent settlement payment obligation of up to $2.1 million may become payable if Co-Defendants fail to fulfill their portion of the Settlement Payment, but this amount is not recognized as a liability as of September 30, 2025[196].

Financial Performance - Achieved record revenue of $18.7 million, up 70% year-over-year, with gross bookings of $22.8 million, up 131% year-over-year[7] - Total revenue for Q3 2025 reached $18,672,000, a 70% increase from $10,972,000 in Q3 2024[22] - Gross profit for Q3 2025 was $14,539,000, up from $8,186,000 in Q3 2024, indicating a 77% increase[22] - Software license revenue for the nine months ended September 30, 2025, was $30,983,000, compared to $30,121,000 for the same period in 2024, reflecting a 3% increase[22] - Operating loss for the nine months ended September 30, 2025, was $(39,117,000), an improvement from $(42,703,000) in the same period of 2024[22] - Net loss for the nine months ended September 30, 2025, was $(33,981,000), compared to $(43,561,000) for the same period in 2024, showing a 22% reduction in losses[24] Cost Management - Implemented a cost-reduction program expected to lower annualized non-GAAP operating expenses by at least $15 million[2][3] - Non-GAAP operating loss was $2.3 million, an improvement from $2.6 million in Q3 2024[7] - Non-GAAP Operating expenses for Q3 2025 totaled $17,554 million, up from $11,313 million in Q3 2024, indicating a 55.1% increase[28] Research and Development - Research and development expenses for the nine months ended September 30, 2025, were $19,446,000, up from $15,457,000 in the same period of 2024, reflecting a 26% increase[22] - GAAP Research and development expenses for Q3 2025 were $8,739 million, an increase from $4,134 million in Q3 2024, marking a 111.5% rise[28] Acquisitions and Product Development - Closed acquisition of Mixel Group, Inc. early in Q3, enhancing product offerings and market position[3] - Jivaro parasitics reduction tool and Victory TCAD™ 3D Simulation Solution are gaining traction among leading semiconductor companies[3] Leadership and Guidance - Guidance for Q4 2025 includes expected revenue in the range of $14 million to $18 million and bookings between $15 million and $19 million[11] - Leadership changes include the appointment of CEO Walden Rhines and CFO Chris Zegarelli, focusing on core growth drivers[3] Financial Position - As of Q3 end, cash and cash equivalents totaled $27.8 million, providing a solid financial foundation for future growth[7] - Cash and cash equivalents at the end of Q3 2025 totaled $11,945,000, down from $19,606,000 at the end of Q4 2024[24] - Total current assets decreased to $53,001,000 as of September 30, 2025, from $107,280,000 as of December 31, 2024[24] - Total liabilities increased to $51,493,000 as of September 30, 2025, compared to $42,262,000 as of December 31, 2024[24] Loss Metrics - GAAP operating loss was $9.3 million, compared to a loss of $7.3 million in Q3 2024, while GAAP net loss improved to $5.3 million from $6.6 million[7] - GAAP Net loss for Q3 2025 was $5,299 million, compared to a net loss of $6,551 million in Q3 2024, showing a 19.1% improvement[28] - Non-GAAP Net loss for Q3 2025 was $2,062 million, slightly worse than a loss of $1,829 million in Q3 2024[28] - GAAP Cost of revenue for Q3 2025 was $4,133 million, up from $2,786 million in Q3 2024, representing a 48.5% increase[28]

Financial Performance - Q3'25 revenue increased by 70% year-over-year and 55% quarter-over-quarter[19] - Q3'25 bookings increased by 131% year-over-year and 77% quarter-over-quarter, reaching $22.8 million[19, 24] - Non-GAAP gross margin increased by 179 basis points year-over-year and 507 basis points quarter-over-quarter, reaching 81.5%[19] - Non-GAAP operating expenses increased by 55% year-over-year and 18% quarter-over-quarter[19] - Non-GAAP operating loss improved by $0.3 million year-over-year and $3.3 million quarter-over-quarter, resulting in a loss of $2.3 million[19] - Annual Contract Value (ACV) reached $65 million, a 29% increase year-over-year[19, 33] Bookings and Revenue Breakdown - EDA bookings increased by 513% year-over-year, contributing $16.3 million, which is 71% of total bookings[28, 26] - EDA revenue increased by 294% year-over-year, contributing $10.4 million, which is 56% of total revenue[30] Guidance - Q4 FY25 revenue is projected to be in the range of $14.0 to $18.0 million[36]

Core Insights - Silvaco Group, Inc. achieved record gross bookings of $22.8 million and record revenue of $18.7 million in Q3 2025, marking a 131% increase in bookings and a 70% increase in revenue year-over-year [1][6][4] - Despite the record revenue, the company reported an operating loss of $9.3 million due to high operating expenses, prompting the initiation of a cost-reduction program expected to lower annualized non-GAAP operating expenses by at least $15 million [2][6] - The company is focusing on core growth drivers and enhancing financial discipline to improve future results [2] Financial Performance - Revenue for Q3 2025 was $18.7 million, up 70% from $10.97 million in Q3 2024 [6][26] - TCAD revenue was $6.5 million (up 1%), EDA revenue was $10.4 million (up 294%), and SIP revenue was $1.7 million (down 6%) [6] - GAAP gross margin improved to 77.9%, up 326 basis points year-over-year, while non-GAAP gross margin reached 81.5%, up 179 basis points [6] - The company reported a GAAP net loss of $5.3 million, compared to a net loss of $6.6 million in Q3 2024, with a basic and diluted net loss per share of $0.18 [6][26] Business Developments - The acquisition of Mixel Group, Inc. was completed early in Q3 2025, contributing to the company's growth strategy [6] - The Jivaro parasitics reduction tool is gaining traction among leading semiconductor companies, and Analog Power Conversion LLC has adopted Silvaco's Design Technology Co-Optimization Flow for next-generation power devices [6] - Vicor has also adopted Silvaco's Victory TCAD™ 3D Simulation Solution for accurate power device modeling and simulation [6] Future Outlook - For Q4 2025, Silvaco expects bookings in the range of $15 million to $19 million and revenue between $14 million and $18 million [12] - Non-GAAP gross margin is anticipated to be between 78% and 82%, with non-GAAP operating expenses projected at $16 million to $18 million [12]

Core Viewpoint - Silvaco Group, Inc. has reached a settlement regarding its litigation with former Nangate shareholders, with the Court of Appeal reversing previous fraud and breach of contract verdicts, leading to the dismissal of all claims [1][2]. Company Overview - Silvaco is a provider of TCAD, EDA software, and SIP solutions that facilitate semiconductor design and digital twin modeling through AI software and innovation [3]. - The company's solutions are utilized in semiconductor and photonics processes, devices, and systems development across various markets, including display, power devices, automotive, memory, high-performance computing, foundries, photonics, IoT, and 5G/6G mobile markets for complex SoC design [3]. - Silvaco is headquartered in Santa Clara, California, and has a global presence with offices in North America, Europe, Egypt, Brazil, China, Japan, Korea, Singapore, Vietnam, and Taiwan [3].