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]

Core Viewpoint - The recent export controls imposed by the U.S. government on the EDA industry have significant implications for Synopsys Inc., particularly affecting its operations and revenue in China, which previously experienced a growth rate of approximately 25% but has now seen a decline of 28% in the most recent quarter [4][9]. Group 1: Impact of Export Controls - The U.S. Department of Commerce issued a "stop and notify" letter to Synopsys, requiring the company to cease sales and shipments of software, hardware, and chips to China, with existing customer software licenses expiring within 355 days [2][6]. - The export controls have been described as unusual due to the lack of a customary consultation period, which typically ranges from 4 to 12 weeks, leaving companies to react post-factum [3][4]. - The export restrictions have led to a significant operational challenge, as existing customers can use their software until their licenses expire, but will not receive any updates or support during that time [6][23]. Group 2: Industry Response and Collaboration - The EDA industry has shown rare unity in response to the government regulations, with legal and government relations teams from various companies collaborating to navigate the complexities of the new rules [3][4]. - The historical context of U.S. restrictions on technology exports has evolved from targeting specific companies to broader technology restrictions, impacting advanced nodes crucial for AI and high-performance computing [4][17]. Group 3: Financial Implications and Market Dynamics - The revenue structure of Synopsys is heavily reliant on advanced nodes, which are more profitable compared to older technology nodes, making the impact of the export controls particularly severe [4][5]. - Despite the challenges, the company is exploring opportunities in automotive, IoT, and industrial applications, although these markets do not match the revenue potential of the AI sector [5][6]. - The uncertainty surrounding the export controls has raised questions about the future of Synopsys's planned acquisition of Ansys, as the company aims to maintain access to the Chinese market, which is critical for growth [9][20]. Group 4: Operational Challenges - The company faces difficulties in adjusting operational expenditures in response to declining revenues, as fixed costs related to R&D and core tool development remain unchanged despite reduced sales [6][22]. - The ambiguity of the export controls has led to numerous unresolved questions regarding their scope and applicability, complicating compliance efforts [6][25]. Group 5: Future Outlook - The company is actively seeking clarification from the U.S. government regarding the specifics of the export controls, including whether they apply to subsidiaries of Chinese companies located in other countries [6][25]. - The potential for a resolution through trade negotiations remains a possibility, with the company expressing a desire to retain access to the growing Chinese market [9][20].