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    SVCO
    Earnings call· Jun 2026(Q2 FY26)

    Silvaco Group Q2 FY26 earnings call SVCO

    Aug 6, 2026 Source

    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

    4

    • 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

    3

    • 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

    12
    CategoryTargetConfidence
    Bookings
    $18M +/- 10%
    medium materiality
    High
    Revenue
    $17M +/- 10%
    high materiality
    High
    Non-GAAP gross margin
    around 88%
    medium materiality
    High
    Non-GAAP operating expenses
    $14.5M +/- 5%
    medium materiality
    High
    Full-year revenue
    above $70M
    high materiality
    High
    Revenue growth
    double-digit growth
    high materiality
    High
    Non-GAAP operating profitability
    profitable
    high materiality
    High
    Cash flow from operations
    positive
    high materiality
    High
    Gross margins
    mid to upper 80s
    medium materiality
    High
    Record revenue
    record revenue
    high materiality
    High
    IP revenue growth
    double year-on-year
    high materiality
    High
    Operating cash flow
    positive
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    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
    		$17.8M238%——
    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%—

    Operational metrics

    16
    Non-GAAP operating profit
    $635,000
    Q2 FY26

    First non-GAAP operating profit since late 2024.

    Non-GAAP net income
    $315,000
    Q2 FY26
    Non-GAAP EPS
    $0.01
    Q2 FY26
    Cash and cash equivalents balance
    $13Mup almost 20% sequentially
    Q2 FY26 end

    Second consecutive quarter of growth in unrestricted cash since IPO. Excludes $10M from Micron convertible note which closed in Q3.

    Net cash used in operating activities
    $5.5Mhalf of $11M used in Q1
    Q2 FY26

    Included approximately $1.8M in one-time items, primarily severance-related payments.

    Annualized spending reductions
    $20M
    FY26

    Successfully executed on targeted annualized spending reductions.

    GAAP gross margin
    85.2%decreased 124 bps sequentially
    Q2 FY26

    Sequentially decreased due to mix, but up significantly year-over-year due to restructuring.

    GAAP operating expenses
    $19.2Mdown 8.7% sequentially
    Q2 FY26
    Non-GAAP operating expenses
    $14.8Mdown 7.8% sequentially
    Q2 FY26

    Below the midpoint of the guided range.

    LTM revenue
    $72.5M
    LTM Q2 FY26

    Record for the last 12 months.

    Prototyping acceleration with AI
    up to 30x
    Q2 FY26

    Seen with AI tools for internal development.

    Code analysis acceleration with AI
    up to 11x
    Q2 FY26

    Seen with AI tools for internal development.

    Scripting acceleration with AI
    up to 10x
    Q2 FY26

    Seen with AI tools for internal development.

    Debugging acceleration with AI
    up to 5x
    Q2 FY26

    Seen with AI tools for internal development.

    Javaro Pro netlist reduction
    terabytes to gigabytes
    Q2 FY26

    Ability to reduce terabyte netlist to gigabytes.

    Javaro Pro simulation time reduction
    average 6x
    Q2 FY26

    Average reduction in simulation times.

    Industry KPIs

    7
    MetricValueDetails
    Capacity CAPEXinvesting
    Revenue growth$17.8MUSD
    Arr net new arr4xmultiple
    Bookings billings$16.2MUSD
    Customer account count1customer
    Operating FCF margin rule of 4086.8%%
    Ai product adoption monetizationup to 30xmultiple

    Orderbook & backlog

    2
    Bookings$16.2MQ2 FY26 end

    up 25% YoY

    IP pipeline4xQ2 FY26 end

    up 4x over last year

    Product announcements

    2
    ProductTypeDetails
    Utmost (AI-enhanced version)update
    Javaro Proupdate

    Deals & partnerships

    3
    NVIDIACollaboration 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 SimuliaCollaboration 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.

    MicronStrategic 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

    1
    Annualized spending reductionscompleted$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

    3
    Seasonal softness in TCAD businessQ3 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 mixQ2 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 activitiesQ2 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

    5

    FTCO customer acquisition

    through year end
    Current1 new customer in Q2 FY26
    Targetmore 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.

    Q&A highlights

    6

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.