Q3 revenue guidance seems a bit low; how big can Q4 be, and what does 'double-digit growth' for FY27 imply (low-teen vs. mid-teen)?

Q3 is a bit below consensus, but Q4 is expected to be a record quarter, exceeding the previous high of $18.7 million, driven by a strong pipeline and partnerships. For FY27, double-digit growth means at least 10%, pushing revenue into the high $70s or $80s, with profitability continuing. “We printed 17.8 million with Q2, guided to 17 in Q3 with a record in Q4. So yes, if you take a step back and look at what consensus was going into this call, yes, Q3 a little bit below consensus, Q4 would be above.”

Is there a concern about LLM disruption for the EDA industry, and how can LLMs be applied to Silvaco's workflow, especially in TCAD?

AI is a net positive for Silvaco. TCAD needs a growth spurt, and AI provides it through digital twins and surrogate models, requiring more simulation and synthetic data. NVIDIA's platform helps host physics-based models. AI also boosts IP development productivity. The fear of AI eliminating EDA was refuted at DAC. “As was brought out at DAC, all the indicators are that for a company like Silvaco, AI is a net positive and a significant one at that.”

Will the NVIDIA partnership and GPU-accelerated computing require significant additional CapEx for GPU infrastructure?

The company has been increasing CapEx to support GPU capacity and will continue to invest in AI tools and GPU hardware. This is balanced with profitability, as the company turned non-GAAP profitable in Q2 and expects it to continue. The NVIDIA partnership is not a major disruption to CapEx. “We do plan to continue to invest in that. And I would just point out, you know, we turned profitable here in Q2 from a non-GAAP operating income perspective that continues in Q3 based on the guides.”

SVCO

Silvaco Group (SVCO) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 6, 2026

Source: earnings call transcript

Executive summary

Silvaco Group Q2 FY26 — Solid Growth, Return to Non-GAAP Profitability, and Strategic Partnerships

Silvaco Group reported a strong Q2 FY26, marking a significant step in its strategic transformation with a return to non-GAAP operating profitability and robust revenue growth. The company highlighted key partnerships with NVIDIA, Dassault Systems, and Micron, which are expected to strengthen its position in AI-enabled manufacturing. While Q3 guidance was slightly below expectations, management expressed confidence in a record Q4 and double-digit revenue growth for FY27, driven by the IP business and the long-term potential of FTCO.

Highlights

Achieved non-GAAP operating profit of $635,000 for the first time since late 2024.
Delivered 48% year-over-year revenue growth, reaching $17.8 million.
Recorded record bookings of $16.2 million (up 25% YoY) and revenue in IP products, with IP revenue growing 238% year-over-year.
Announced multiple strategic partnerships with NVIDIA, Dassault Systems, and a $10 million investment from Micron.

Concerns

Q3 FY26 revenue guidance of $17 million is slightly below consensus expectations.
GAAP gross margin decreased sequentially by 124 basis points to 85.2% due to product mix.
Net cash used in operating activities was $5.5 million in Q2, including $1.8 million in one-time severance-related payments.

Guidance & targets

Category	Target	Timeline	Confidence
Bookings	$18M +/- 10% medium materiality	Q3 · FY26	High
Revenue	$17M +/- 10% high materiality	Q3 · FY26	High
Non-GAAP gross margin	around 88% medium materiality	Q3 · FY26	High
Non-GAAP operating expenses	$14.5M +/- 5% medium materiality	Q3 · FY26	High
Full-year revenue	above $70M high materiality	FY26	High
Revenue growth	double-digit growth high materiality	FY27	High
Non-GAAP operating profitability	profitable high materiality	FY27	High
Cash flow from operations	positive high materiality	FY27	High
Gross margins	mid to upper 80s medium materiality	going forward	High
Record revenue	record revenue high materiality	Q4 · FY26	High
IP revenue growth	double year-on-year high materiality	FY26	High
Operating cash flow	positive high materiality	later in the year · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
IP Delivered record bookings and revenue in Q2, with revenue growing 238% year-over-year. Expected to double year-on-year in 2026. Pipeline up 4x over the last year. Bookings: recordRevenue: recordPipeline growth: 4x over last year	$17.8M	238%	—	—
TCAD Won another new FTCO customer during the quarter. Strong interest in FTCO, expecting more customers through year-end. Q3 is seasonally soft for TCAD, but historically strong in Q4. New FTCO customers: 1	—	—	—	—
Americas Remains the largest region, representing 46% of revenue in Q2. Revenue has grown 30% over the last two quarters. Revenue as % of total: 46%	—	30%	—	—
IMMEA Saw the most growth in Q2 revenue, growing 30% sequentially and accounting for 10% of total revenue. Revenue as % of total: 10%	—	—	30%	—

Orderbook & backlog

Bookings $16.2M Q2 FY26 end

up 25% YoY

IP pipeline 4x Q2 FY26 end

up 4x over last year

Product announcements

Product	Type	Timeline	Details
Utmost (AI-enhanced version)	update	—
Javaro Pro	update	—

Deals & partnerships

NVIDIA Collaboration to integrate NVIDIA accelerated computing and AI with Silvaco's physics-based simulation portfolio.

Focuses on enabling next-generation digital twins by combining Silvaco's modeling expertise with NVIDIA's accelerated computing, CUDAx platform, and AI frameworks.

Dassault Systems Simulia Collaboration to develop interoperable workflows for semiconductor manufacturing.

Brings together complementary simulation technologies spanning reactor-scale plasma simulation, feature-scale semiconductor process modeling, and structural stress analysis.

Micron Strategic investment and deeper collaboration on FAB Technology Co-Optimization (FTCO). $10M

Micron was an early adopter of combining AI with physics-based simulation for a virtual platform. The investment closed in Q3 FY26.

Capital programs

Annualized spending reductions completed $20M

Spent to date: $20M

Benefit:Cost savings

Successfully executed on targeted $20 million in annualized spending reductions by the end of Q2.

Risks & headwinds

Seasonal softness in TCAD business Q3 FY26

Q3 has tended to be seasonally soft for TCAD

Mitigation:Strong pipeline for Q4 and historical Q4 strength are expected to offset this.

Sequential decrease in gross margin due to mix Q2 FY26

GAAP gross margin decreased 124 bps sequentially; non-GAAP gross margin decreased 111 bps sequentially

Mitigation:Management believes gross margins will remain in the range of mid to upper 80s going forward, benefiting from restructuring activities.

Net cash used in operating activities Q2 FY26

$5.5M used in Q2 FY26, including $1.8M in one-time items

Mitigation:Company expects positive operating cash flow later in FY26 and for full year FY27.

What to watch in Q3 FY26

FTCO customer acquisition

through year end

Current 1 new customer in Q2 FY26

Target more customers

Why it matters

FTCO is a long-term strategic growth driver, and new customer adoption is key to its acceleration and broader market penetration.

Looking forward, we continue to see strong interest in FTCO and expect to secure more FTCO customers through year end.

Find out whether SVCO delivers this. Inve re-checks your case every morning.

Q&A highlights

Are the Micron and NVIDIA partnerships sufficient to drive significant FTCO revenue, and what is the timeframe for FTCO to become a meaningful revenue contributor?

FTCO is a longer-term strategic growth driver, growing incrementally with new customers and expanding adoption. The IP business is the short-term rapid growth driver. FTCO's growth will accelerate over time as more users join and expand its use.

“So the FDCO is a longer-term strategic growth that grows incrementally every quarter as we announce new customers. The existing customers will, of course, grow, but it's new customers that spur the increased growth.”

asked by Sreekrishnan Sankarnarayanan · answered by Unknown Speaker

2 min read 6 chapters

Detailed narrative

Strategic Transformation and Return to Profitability

Silvaco has made significant progress on its strategic transformation plan, focusing on streamlining operations, reducing costs, and driving profitable growth. This quarter marked the first non-GAAP operating profit since late 2024, demonstrating the effectiveness of these initiatives. The company successfully executed $20 million in annualized spending reductions by the end of Q2, contributing to improved financial performance.

Key Partnerships for AI Manufacturing

The company announced three strategic partnerships that strengthen its position in AI-enabled manufacturing. A collaboration with NVIDIA integrates accelerated computing and AI with Silvaco's physics-based simulation for next-generation digital twins. A partnership with Dassault Systems Simulia aims to develop interoperable workflows for semiconductor manufacturing. Additionally, Micron invested $10 million in a convertible note, deepening their strategic collaboration on the disruptive FTCO (FAB Technology Co-Optimization) foundation.

FTCO as a Long-Term Growth Driver

Silvaco's FTCO workflow, built on its multi-physics foundation and AI investments, is identified as a key long-term growth driver. This disruptive technology broadens the user base beyond traditional TCAD engineers and unlocks unique value propositions. Management expects FTCO to drive above-average market growth, with adoption accelerating over time as more users join and existing users expand its application across manufacturing processes.

IP Business Momentum and Growth

The IP business emerged as a strong short-term growth driver, delivering record bookings and revenue in Q2, with IP revenue growing 238% year-over-year. The pipeline for IP has grown more than 4x over the last year, and the company expects IP revenue to double year-on-year in 2026. This growth is attributed to strong customer interest, improved efficiency in development, and redoubled sales efforts.

AI's Positive Impact on Innovation and Productivity

AI is viewed as a clear positive for Silvaco, significantly increasing internal capacity to innovate. The company reported prototyping acceleration up to 30x, code analysis up to 11x, scripting up to 10x, and debugging up to 5x through AI tools.

These innovations are expected to accelerate the product roadmap and time to market. On the product side, AI is integrated into existing offerings, such as an AI-enhanced Utmost that reduces time to model by up to 50%, and Javaro Pro, which reduces netlist size and simulation times.

Q4 Outlook and Seasonality

Despite Q3 historically being seasonally soft for TCAD, Silvaco anticipates a very strong pipeline for Q4, which is typically a strong renewal quarter. This, combined with historical Q4 strength, supports expectations of record revenue and continued operating profitability in Q4. The company also projects full-year 2026 revenue to be above $70 million and double-digit revenue growth for FY27.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.