Silvaco Group, Inc.(SVCO) - 2024 Q4 - Annual Report

Financial Performance - In 2024, the company generated $65.8 million in bookings and recognized$59.7 million in revenue, resulting in a net loss of $39.4 million and cash flows used in operating activities of$19.8 million[32]. - The company reported a GAAP operating loss of $40.3 million and a non-GAAP operating income of$5.5 million for 2024, compared to a GAAP operating income of $1.1 million and a non-GAAP operating income of$4.4 million in 2023[32]. - Strategic accounts contributed $40.3 million to total bookings in 2024, with a 37$0.4 million and 0.6 million in revenues from the Middle East in 2024 and 2023, respectively[149]. Market Trends and Opportunities - The semiconductor market is experiencing increased complexity due to the demand for advanced manufacturing processes and new materials, leading to higher development costs and longer time-to-market[39]. - The automotive market is rapidly evolving, with increasing semiconductor content driven by electrification and advanced electronic controls, necessitating the adoption of wide bandgap materials like SiC and GaN[53]. - The memory market is expected to grow significantly, driven by demand for dynamic random-access memory and flash memory products, with new technologies like MRAM being explored[48]. - The IoT market is anticipated to grow as it requires complex SoCs for data processing and connectivity, with a focus on ultra-low energy demands[56]. - The shift to 5G/6G mobile communications is expected to increase demand for sophisticated chip designs, with the company providing unique tools for parasitic reduction and analysis[57]. - High-performance computing applications are driving demand for specialized circuit and memory elements, with the company offering solutions to meet performance, power, and latency requirements[59]. - The company focuses on growth industries such as AI, automotive, and high-performance computing, enabling customers' memory and power devices to play crucial roles in these sectors[6]. - The company aims to expand its market share in the growing display, automotive semiconductor, memory device, and IoT markets, leveraging its established position[81]. Research and Development - The company plans to increase R&D expenditures to expand its presence in established market segments, including low-geometry CMOS technology and photonics, with revenue generated from beta customers in 2023 and 2024[81]. - The company plans to continue investing in research and development, focusing on TCAD, analog and custom design, circuit simulation, and SIP[89]. - The company emphasizes the importance of TCAD, EDA, and SIP solutions to accelerate time-to-market and reduce costs in semiconductor design and manufacturing[60]. - The company provides production-ready silicon-proven SIP solutions, which help customers lower development costs and reduce time to market compared to non-silicon-proven alternatives[64]. - The company's TCAD solutions are designed to reduce time and manufacturing cycles in semiconductor technology development, contributing to cost reductions[66]. - The company has delivered more than 50 standard cell libraries and 96 memory compilers, demonstrating maximal density and routing performance across process technology nodes from 0.35nm to 16nm[75]. Customer Base and Sales Strategy - As of December 31, 2024, the company had over 800 customers globally, including over 200 academic institutions, with revenue distribution of 53% from Asia, 38% from North America, and 9% from Europe[84]. - The company gained 13 new customers in the power end-market and eight new customers in the memory end-market in 2024[86]. - The company aims to expand its customer base by increasing marketing and sales resources, particularly in automotive and IoT segments[86]. - The company plans to continue expanding its sales force both domestically and internationally, requiring significant financial and other resource investments[132]. - The company’s sales and marketing team included 30 regional sales representatives as of December 31, 2024, with an average of over 25 years of sales experience[88]. Competitive Landscape - The company may face increased competition from larger firms with greater resources, impacting its ability to maintain market share and pricing[105]. - Consolidation among customers in the semiconductor and photonics industries could lead to reduced demand for the company's software solutions and services[127]. - The introduction of new software solutions is critical, as failure to innovate could materially adversely affect revenues[123]. - The interoperability of the company's software solutions with customers' use cases and competitors' products is essential for success, and any failure in this area could negatively impact market share and demand[180]. Regulatory and Compliance Risks - The company is subject to various regulatory challenges, including anti-corruption and data privacy laws, which could impact its operations and compliance obligations[97]. - The company faces evolving cybersecurity risks due to remote work and reliance on third-party service providers, which could introduce vulnerabilities into its systems[188]. - The company is subject to various data privacy and security laws, which could lead to regulatory investigations, litigation, and significant fines if not complied with[203]. - The California Consumer Privacy Act (CCPA) allows for fines of up to 7,500 per intentional violation, impacting the company's financial condition[206]. - The EU General Data Protection Regulation (GDPR) imposes fines of up to €20 million or 4% of annual global revenue for non-compliance, which could adversely affect the company[208]. Ownership and Governance - The Pesic Family collectively holds approximately 70.7% of the total outstanding common stock, equating to 20,173,590 shares[223]. - Following the IPO in May 2024, the company became a "controlled company" and is exempt from certain corporate governance requirements[222]. - The Pesic Family has the ability to control all matters affecting the company, including business plans, mergers, and financing activities[225]. - The concentration of ownership by the Pesic Family may delay or prevent changes in control that other stockholders might favor[229]. - The interests of the Pesic Family may conflict with those of other stockholders, potentially affecting decision-making[229].