Silvaco Group, Inc. Common Stock

Silvaco reported Q2 bookings of $16.2 million and revenue of $17.8 million, with bookings up 25% year over year and revenue up 48% year over year. GAAP gross margin was 85.2% and non-GAAP gross margin was 86.8%, both up over 14 and 12 full percentage points year over year, respectively, though down sequentially by 124 and 111 basis points due to mix. GAAP operating loss improved to $4 million, non-GAAP operating profit was $635,000, GAAP net loss was $3.7 million, GAAP EPS was a $0.11 loss, and non-GAAP EPS was $0.01. Cash and cash equivalents were $13 million at quarter end, up almost 20% sequentially, and net cash used in operating activities was $5.5 million, or $3.7 million excluding about $1.8 million of one-time items. For Q3 2026, the company guided to bookings of $18 million plus or minus 10%, revenue of $17 million plus or minus 10%, non-GAAP gross margin around 88%, and non-GAAP operating expenses of $14.5 million plus or minus 5%. Management also said full-year 2026 revenue should be above $70 million, with record revenue expected in Q4 and double-digit revenue growth plus non-GAAP operating profitability and positive operating cash flow in 2027.

Wally Rhines framed the quarter as evidence that Silvaco’s strategic transformation is working, emphasizing cost discipline, profitability, and growth in AI-enabled manufacturing. He highlighted three partnerships — NVIDIA, Dassault Systèmes, and Micron — as reinforcing Silvaco’s multi-physics and FTCO strategy, and said AI is a net positive that accelerates both product development and customer workflows. His tone was upbeat but measured, repeatedly describing FTCO as a longer-term growth driver while saying IP is the short-term engine.

Chris Zegarelli focused on the financial turnaround: Q2 revenue of $17.8 million, bookings of $16.2 million, non-GAAP gross margin of 86.8%, and non-GAAP operating profit of $635,000. He said operating expenses are being tightly controlled, with GAAP operating expenses down 8.7% sequentially to $19.2 million and non-GAAP operating expenses down 7.8% sequentially to $14.8 million, and noted the company has achieved its targeted $20 million in annualized spending reductions. He also pointed to $13 million in cash and cash equivalents, the $10 million Micron note that closed in Q3, and said the company expects positive operating cash flow later in the year and in 2027.

Analysts pressed on whether FTCO can become a major revenue driver, and management answered that FTCO is a longer-term, steady-growth opportunity that expands customer by customer, while IP is the near-term growth driver. Questions also focused on how big Q4 can be and whether the quarter mix implies real acceleration; management said Q4 is historically strong because of renewals, that the pipeline is very healthy, and that record revenue in Q4 means the highest quarter ever, not just the highest Q4 ever. Analysts asked about AI/LLM disruption risk and capex needs for the NVIDIA partnership; management said AI is a net positive for Silvaco, that GPU infrastructure investment will continue but is not a major disruption, and that faster GPU-based data generation is key to FTCO. There were also questions about the Micron convertible note and Dassault partnership, with management describing both as strategic collaborations rather than simple financing or sales arrangements.