Silvaco Group, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported Q3 2026 revenue of $16.3 million, a 13% decrease year-over-year.
• TCAD revenue was $7.6 million, up 16% year-over-year.
• EDA revenue was $4.6 million, down 56% year-over-year.
• SIP revenue was $4.1 million, up 141% year-over-year.
• GAAP gross margin was 84%, an increase of 613 basis points year-over-year.
• GAAP operating loss was $4.3 million, compared to a $9.3 million loss in Q3 2025.
• GAAP net loss was $4.6 million, compared to a $5.3 million loss in Q3 2025.
• GAAP net loss per share was $0.14, compared to $0.18 in Q3 2025.
• Gross bookings were $19.3 million, down 15% year-over-year.
• Non-GAAP gross margin was 85%, up 509 basis points year-over-year.
• Non-GAAP operating loss was $1.0 million, compared to a $2.6 million loss in Q3 2025.
• Non-GAAP net loss was $1.3 million, compared to a $2.1 million loss in Q3 2025.
• Non-GAAP net loss per share was $0.04, compared to $0.07 in Q3 2025.
• Cash and cash equivalents totaled $22.0 million as of quarter-end.
• Net cash used in operating activities improved significantly in Q3.

Guidance and Future Outlook:

• Expects Q4 2026 revenue of $22.0 million +/- 10%, representing approximately 35% sequential growth.
• Expects Q4 2026 bookings of $21.0 million +/- 10%.
• Expects Q4 2026 non-GAAP gross margin of around 88%.
• Expects Q4 2026 non-GAAP operating expenses of $16.0 million +/- 5%.
• Guides 2026 full-year revenue growth to 17% at the midpoint of the guided range.
• Expects similar revenue growth (mid-to-high teens) in 2027.
• Management expects higher growth expectations to continue expanding profitability and cash generation in 2027.

Business Segments and Product Lines:

• TCAD bookings reached a record $10.3 million in Q3, up 89% year-over-year, driven by a major new tier-1 FTCO customer.
• Secured record bookings for Jivaro Pro, driven by 4 tier-1 customer wins across multiple end markets.
• Sold the first internally developed MIPI controller with industry-leading MIPI PHYs.
• Delivered a fully functional 2nm MIPI C-PHY/D-PHY combo solution.
• Streamlined operations into two focused product teams: AI Manufacturing (TCAD multiphysics, FTCO, and related technologies) and AI Design (Semiconductor IP and complementary EDA solutions).
• Strengthened the leadership team by adding David Dutton, former CEO, to lead Sales.
• Engaged with two of the largest global technology companies regarding Agentic AI offerings.

Market and Competitive Landscape:

• Silvaco serves complex SoC design markets including display, power devices, automotive, memory, high-performance computing, foundries, photonics, IoT, and 5G/6G mobile.
• The company has a global presence with offices in North America, Europe, Brazil, China, Japan, Korea, Singapore, and Taiwan.
• Management attributes business acceleration to an inflection point rooted in operational streamlining, a focused roadmap, and deepening strategic customer relationships.

Risks and Challenges:

• Forward-looking statements are subject to risks including market conditions, anticipated trends, and growth in business and markets.
• Risks include the ability to respond to changing technologies, market size and growth potential, and competition.
• Potential impacts from regulatory developments, trade policies, tariffs, and geopolitical conflicts (Ukraine/Russia, Israel/Hamas, US/China).
• Risks related to supply chain disruptions, demand forecasting accuracy, and the ability to retain key personnel.
• Risks associated with raising additional capital, intellectual property protection, and the company's status as a controlled company.

Management Commentary and Tone:

• CEO Walden Rhines expressed pleasure with Q3 results and Q4 guidance, citing bookings strength from new tier-1 customer wins.
• CFO Chris Zegarelli highlighted meaningful financial milestones, including improved net cash used in operations and the highest unrestricted cash balance since Q2 2025.
• Management described the business as accelerating and highlighted a strategic transformation yielding results.

Other Key Points:

• Issued a convertible note payable of $10.0 million in the nine months ended September 30, 2026.
• Proceeds from the issuance of common stock totaled $12.193 million in the nine months ended September 30, 2026.
• Shares issued and outstanding increased to 34,073,072 as of September 30, 2026, from 30,948,403 as of December 31, 2025.
• Deferred revenue decreased from $15.9 million (current and non-current combined) at year-end 2025 to $11.7 million at quarter-end 2026.
• A litigation settlement expense of $13.069 million was recorded in the nine months ended September 30, 2025, but none in the current period.
• The company is unable to provide GAAP gross margin or GAAP operating expense guidance for Q4 2026 due to the inability to reasonably estimate adjustments for stock-based compensation, acquisition costs, and restructuring.