Silvaco Group Q3 Earnings Call Highlights

Key Points

• Silvaco expects a strong fourth quarter, forecasting revenue of $22 million, plus or minus 10%, and bookings of $21 million. The revenue midpoint implies 35% sequential growth and 21% year-over-year growth.
• A major tier-one customer win helped lift TCAD bookings 89% year over year to $10.3 million, while four tier-one Jivaro Pro customers drove record bookings for that product. Management said the new FTCO customer could become as large as or larger than Micron as its use expands.
• Silvaco reported a third-quarter GAAP net loss of $4.6 million, but cash rose to $22 million and operating cash use narrowed to $0.8 million. Management expects mid-to-high teens revenue growth in 2027, with revenue growing faster than operating expenses.

Silvaco Group NASDAQ: SVCO forecast record fourth-quarter revenue and mid-to-high teens revenue growth in 2027, as a major customer win helped drive third-quarter bookings for its technology computer-aided design products to a quarterly record.

The company reported third-quarter revenue of $16.3 million, slightly below the midpoint of its guidance, after certain intellectual property milestones moved into the fourth quarter. Bookings totaled $19.3 million, above the midpoint of guidance and the company’s strongest quarterly bookings so far this year, Chief Financial Officer Chris Zegarelli said.

Silvaco expects fourth-quarter revenue of $22 million, plus or minus 10%. At the midpoint, that would be up 35% sequentially and 21% from a year earlier, while implying full-year revenue growth of 17%, CEO Wally Rhines said.

Major Customer Win Boosts Bookings

Third-quarter TCAD bookings rose 89% year over year to $10.3 million, driven by a new tier-one customer for Silvaco’s fabrication technology co-optimization, or FTCO, workflow. Rhines said the customer also purchased multiple licenses for Jivaro Pro, an electronic design automation tool.

Silvaco won four tier-one customers for Jivaro Pro during the quarter, producing record bookings for the product, Rhines said. He attributed its momentum partly to sales efforts under Dave Dutton, a former Silvaco CEO who recently took over sales operations.

Rhines said the new FTCO engagement had been in development for some time, but its size increased substantially following customer testing. He said the customer has the potential to become as large as or larger than Micron, an existing FTCO customer, and could expand its use through additional licenses and renewals.

Intellectual property bookings grew 193% year over year, driven by Mixel, Zegarelli said. Rhines said Silvaco is on track for nearly $20 million in IP revenue this year, compared with $5.5 million over the four quarters ended in the third quarter of 2025.

Losses and Cash Use

Silvaco posted a third-quarter GAAP net loss of $4.6 million, or 14 cents per share. On a non-GAAP basis, the net loss was $1.3 million, or 4 cents per share.

GAAP operating expenses fell 6% from the preceding quarter to $18 million, while non-GAAP operating expenses increased slightly to $14.9 million. Zegarelli said operating expenses were slightly above the midpoint of guidance, primarily because of a higher-than-expected incentive accrual.

Cash and cash equivalents increased to $22 million from $13 million at the end of the second quarter, driven by a $10 million Micron convertible note. Net cash used in operating activities narrowed to $0.8 million from $5.5 million in the second quarter and $11 million in the first quarter.

Outlook for Growth and Profitability

For the fourth quarter, Silvaco expects bookings of $21 million, plus or minus 10%; non-GAAP gross margin of about 88%; and non-GAAP operating expenses of $16 million, plus or minus 5%.

Zegarelli said the expected sequential increase in operating expenses reflects incentive and commission costs as well as expenses associated with IP milestones that shifted into the fourth quarter. He said Silvaco should be profitable for the full year on a non-GAAP basis.

For 2027, management expects revenue growth to outpace operating expense growth. Zegarelli agreed with an analyst that expense growth at one-third to one-half the rate of revenue growth was a reasonable starting point.

Rhines said TCAD and IP are expected to support growth next year, while EDA is improving after management had expected it to remain relatively flat. He also said two large technology companies are evaluating Silvaco’s agentic AI offerings at beta sites. The company expects those offerings to make its FTCO workflow easier to use and potentially increase demand for licenses.

About Silvaco Group (NASDAQ:SVCO)

Silvaco Group, Inc is a semiconductor design software and intellectual property company that provides electronic design automation (EDA) and technology computer-aided design (TCAD) solutions. Its products help semiconductor manufacturers and electronics companies develop, simulate, verify and optimize integrated circuits, semiconductor devices and related technologies.

The company's offerings support multiple stages of the chip-development process, including process and device modeling, circuit simulation, physical design, layout automation and design-rule verification.

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