Summary of SVCO Q2 2026 Earnings Call

1Key Financial Results and Metrics

Bookings: $16.2 million, up 25% year-over-year.

Revenue: $17.8 million, up 48% year-over-year.

IP Revenue: Grew 238% year-over-year, with record bookings and revenue.

GAAP Gross Margin: 85.2%; Non-GAAP Gross Margin: 86.8%.

Operating Expenses: GAAP operating expenses decreased by 8.7% sequentially to $19.2 million; Non-GAAP operating expenses down 7.8% to $14.8 million.

Operating Profit: Non-GAAP operating profit of $635,000; first non-GAAP operating profit since late 2024.

Net Loss: GAAP net loss of $3.7 million; Non-GAAP net income of $315,000.

Cash Position: Cash and cash equivalents at $13 million, up nearly 20% sequentially.

2Strategic Updates and Business Highlights

Partnerships: Announced collaborations with NVIDIA, Dassault Systèmes, and Micron to enhance capabilities in AI-enabled manufacturing and process development.

NVIDIA: Integration of accelerated computing with Silvaco's simulation portfolio.

Dassault Systèmes: Development of interoperable workflows for semiconductor manufacturing.

Micron: $10 million investment in a convertible note, reinforcing strategic collaboration on Fab Technology Co-Optimization (FTCO).

Growth Drivers: Focus on FTCO, IP, and AI as key areas for future growth, with expectations for significant revenue contributions from these segments.

3Forward Guidance and Outlook

Q3 2026 Guidance: Expected bookings of $18 million (±10%) and revenue of $17 million (±10%).

Q4 2026 Outlook: Anticipates record revenue, driven by a strong pipeline and historical seasonal strength in TCAD.

2026 Revenue Projection: Expected to exceed $70 million.

2027 Outlook: Anticipates double-digit revenue growth and continued non-GAAP operating profitability.

4Bad News, Challenges, or Points of Concern

Revenue Recognition: Noted lumpiness in revenue recognition may lead to variability in quarterly results.

Market Competition: Concerns regarding the impact of AI on the EDA industry, particularly with the rise of large language models (LLMs) and their potential to disrupt traditional workflows.

Dependency on Key Partnerships: Growth heavily reliant on the success of new partnerships and the adoption of FTCO, which may take time to materialize fully.

5Notable Q&A Insights

FTCO Growth: CEO Wally Rhines emphasized that while FTCO is a long-term growth driver, the immediate growth is expected to come from the IP business, which has shown remarkable strength.

Q4 Revenue Expectations: Management expressed confidence in achieving record revenue in Q4, supported by a strong pipeline and historical trends.

AI Integration: Rhines noted that AI is a net positive for Silvaco, enhancing productivity and accelerating development timelines.

Micron Investment: The partnership with Micron is seen as strategic, providing not just capital but also a roadmap for future developments in process optimization. This summary encapsulates the key points from the earnings call, providing a clear overview of Silvaco's financial performance, strategic direction, and future outlook while addressing potential challenges and insights from the Q&A session.