Summary of SVCO Q1 2026 Earnings Call

1Key Financial Results and Metrics

Bookings:: $17.2 million, up 26% year-over-year.

Revenue:: $17.8 million, also up 26% year-over-year.

Gross Margin:: GAAP gross margin at 86.4% and non-GAAP gross margin at 87.9%, both showing significant year-over-year improvements.

Operating Loss:: GAAP operating loss improved to $5.7 million; non-GAAP operating loss was $471,000.

Net Loss:: GAAP net loss of $5.9 million; non-GAAP net loss of $574,000.

Cash Position:: Unrestricted cash grew to $10.9 million, marking the first sequential increase since the IPO.

Backlog:: Remaining performance obligations at approximately $46.6 million.

2Strategic Updates and Business Highlights

AI-Driven Manufacturing (FTCO):: Secured a new FTCO customer and expanded functionality for existing customers. The company sees growing interest from governments and semiconductor equipment companies.

TCAD Growth:: TCAD bookings grew 13% sequentially and 49% year-over-year, driven by FTCO milestones.

IP Business:: Despite a sequential decline in bookings and revenue, the IP business saw over 200% year-over-year growth, bolstered by the integration of Mixel's MIPI PHY IP.

Cost Management:: Successful implementation of a $20 million cost reduction initiative, with operating expenses declining for two consecutive quarters.

3Forward Guidance and Outlook

Q2 2026 Guidance::

Bookings expected at $19 million (±10%).

Revenue projected at $18 million (±10%).

Non-GAAP gross margin anticipated around 88%.

Non-GAAP operating expenses forecasted at $15.5 million (±5%).

Profitability:: Expected to achieve non-GAAP operating profitability for the first time since Q4 2024.

4Bad News, Challenges, or Points of Concern

Sequential Decline in IP Business:: IP bookings down 41% sequentially, attributed to timing delays in new customer wins.

EDA Business Weakness:: EDA bookings and revenue declined in Q1, with expectations of continued softness in the short term.

Cash Flow Usage:: Net cash used in operating activities increased to $11 million, impacted by litigation and severance payments, although underlying economics showed improvement.

5Notable Q&A Insights

FTCO Market Potential:: CEO Wally Rhines highlighted the diverse applicability of FTCO, indicating potential partnerships with equipment makers for broader market reach.

Sustainability of TCAD Growth:: Rhines noted that while TCAD growth is strong, the 50% year-over-year growth rate may not be sustainable, but solid growth is expected.

OpEx Management:: CFO Chris Zegarelli indicated ongoing efforts to reduce operating expenses, with expectations of continued downward pressure on spend while investing in growth drivers like AI tools.

IP Pipeline:: The IP business pipeline has doubled over the past year, indicating strong future growth potential despite recent sequential declines. Overall, Silvaco's Q1 2026 results reflect solid year-over-year growth and strategic advancements, particularly in AI-driven initiatives, while facing challenges in certain business segments that require ongoing management and adaptation.