Executive Summary

Record quarter: revenue $18.67M (+70% y/y), record gross bookings $22.8M; non-GAAP EPS loss of $0.07; GAAP EPS loss of $0.18 . Versus S&P Global consensus, revenue beat by ~$2.72M while non-GAAP EPS missed by ~$0.03 per share (see Estimates Context; S&P Global data)*.
Mix shift to EDA drove scale: EDA revenue $10.4M (+294% y/y) and Americas mix rose to 55% of revenue; TCAD $6.5M (+1% y/y), SIP $1.7M (-6% y/y) .
Cost actions underway: company initiated programs expected to reduce annualized non-GAAP OpEx by ≥$15M; Q4 guide: revenue $14–18M, non-GAAP GM 78–82%, non-GAAP OpEx $16–18M . Management aims to drive profitability at current revenue levels .
Call tone: candid reset under new CEO Wally Rhines—refocus on AI (FTCO), interconnect IP (Mixel), and power; acknowledges slower FTCO adoption and over-spend post-IPO; expects 2026 growth inflection as Mixel/Tech‑X contributions build .
Stock catalysts: visible operating discipline (OpEx step-down from Q1), EDA contract momentum, clarity on FTCO second customer, and Mixel distribution leverage; near-term headwind is sequential EDA step-down embedded in Q4 revenue guide .

What Went Well and What Went Wrong

What Went Well
- “Record” revenue ($18.7M) and bookings ($22.8M) on strong EDA deal activity; non-GAAP gross margin improved to 81.5% (+179 bps y/y), aided by revenue scale vs cost of sales .
- Strategic focus set by new CEO on AI (FTCO), interconnect IP (Mixel), and power; early proof-points include Jivaro adoption at Nvidia, Samsung, SK hynix and Micron partnership on FTCO .
- Cost program launched to remove ≥$15M annualized non-GAAP OpEx; CFO targets profitability at flat revenue and expects visible OpEx step-down in Q1 as most actions complete by year‑end .
What Went Wrong
- Despite records, company posted GAAP operating loss of $9.34M and GAAP net loss of $5.30M; non-GAAP operating loss was $2.33M (slightly better y/y) .
- FTCO adoption slower than anticipated; second engagement did not materialize in 2025 as expected, requiring heavy customer-specific integration resources .
- Q4 outlook implies sequential revenue step-down in EDA recognition while TCAD/IP grow; management flagged revenue recognition dynamics and a soft Q4 relative to seasonal hopes .

Financial Results

Headline quarterly trend (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$14.09	$12.05	$18.67
GAAP Gross Margin %	79.0%	71.0%	77.9%
Non-GAAP Gross Margin %	82.0%	76.0%	81.5%
GAAP Operating (Loss) ($M)	$(19.63)	$(10.14)	$(9.34)
GAAP EPS ($)	$(0.67)	$(0.32)	$(0.18)
Non-GAAP EPS ($)	$(0.07)	$(0.16)	$(0.07)

Versus S&P Global consensus (Q3 2025)

Metric	Actual	S&P Global Consensus*	Surprise
Revenue ($USD Millions)	$18.67	$15.95*	+$2.72M / approx +17%
Non-GAAP EPS ($)	$(0.07)	$(0.0367)*	-$0.033

Segment revenue mix and growth (Q3 2025)

Segment	Q3 2025 Revenue ($USD Millions)	YoY Change
TCAD	$6.50	+1% y/y
EDA	$10.40	+294% y/y
SIP	$1.70	-6% y/y

Revenue mix (Q3 2025)

Mix Cut	Americas	APAC	EMEA
By Region (% of Revenue)	55%	40%	5%

Mix Cut	TCAD	EDA	SIP
By Product Line (% of Revenue)	35%	56%	9%

Mix Cut	License	Maintenance & Service
By Item Category (% of Revenue)	74%	26%

KPIs and balance sheet (trend)

KPI / Balance Metric	Q1 2025	Q2 2025	Q3 2025
Gross Bookings ($USD Millions)	$13.7	$12.9	$22.8
Remaining Performance Obligation (RPO) ($USD Millions)	$33.7	$36.4	$48.0 (54% <12 months)
Cash, Mkt Sec & Restricted ($USD Millions)	$74.5	$55.5	$27.8 (incl. $12.4 restricted)
Non-GAAP Operating (Loss) ($USD Millions)	$(2.50)	$(5.66)	$(2.33)

Context and drivers

Revenue growth was driven by a “significant EDA contract with one of our core customers in the United States” and a mix shift toward the Americas (55%) in Q3 .
Non-GAAP gross margin expanded to 81.5% as revenue growth outpaced cost of sales; management expects further benefit from cost reductions .
Cash and investments declined as restricted cash rose to ~$12.4M, tied to litigation settlement; cash used in operating activities was ~$7.8M in Q3 per CFO commentary .

Guidance Changes

Q4 2025 guidance issued Nov 12, 2025

Metric	Period	Previous Guidance	Current Guidance	Change
Bookings ($M)	Q4 2025	n/a	$15–19	New
Revenue ($M)	Q4 2025	n/a	$14–18	New
Non-GAAP Gross Margin %	Q4 2025	n/a (Q3 guide was 81–85% for Q3)	78–82	Range set; sequentially lower vs prior quarter’s GM guide
Non-GAAP OpEx ($M)	Q4 2025	n/a	$16–18	New

Q3 2025: guidance vs actuals

Metric	Q3 Guidance (Aug 6)	Q3 Actual	Result
Bookings ($M)	$14.0–18.2	$22.8	Beat
Revenue ($M)	$14.0–18.0	$18.67	High end / slight beat
Non-GAAP GM %	81–85	81.5	In range
Non-GAAP Op Inc (Loss) ($M)	$(3.5) to $0.5	$(2.33)	In range
Non-GAAP EPS ($)	$(0.12) to $0.02	$(0.07)	In range

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
AI/FTCO platform	Q1: Highlighted FTCO momentum in power/photonics/CMOS; partnership examples (e.g., Excelliance MOS, Kyung Hee Univ.) . Q2: Discussed ACV growth and macro headwinds; no explicit FTCO customer win updates .	CEO: FTCO is a differentiated AI product with Micron as teacher-customer; adoption slower than expected due to integration effort; still a key growth driver .	Focused, but execution-dependent; timing pushed right.
Interconnect IP (Mixel)	Q2: Closed Mixel (Aug 1); SAM expansion; initial 2025 revenue contribution “nominal” .	High confidence in quality and customer feedback; leverage SVCO sales force; expect substantial growth in 2026 .	Positive trajectory; 2026 ramp.
Cost discipline/OpEx	Q1–Q2: Elevated OpEx; full-year guide showed lower profitability vs 2024 .	≥$15M annualized non-GAAP OpEx reduction; majority actions by year-end; visible Q1 step-down; targeting profitability at flat revenue .	Improving operating leverage into 2026.
Geography/mix	Q2 mix: Americas 36%, APAC 57% .	Q3 mix pivot: Americas 55%, APAC 40%, EMEA 5%; EDA-led .	US-centric EDA deals lifting margins/rev.
Forecasting/process	Q1–Q2: Broader guidance ranges in macro uncertainty .	CFO: Tools/pipeline robust; confidence in guide with further process improvements planned .	Credibility rebuild underway.

Management Commentary

CEO Wally Rhines on strategy: “Our success requires us to focus on key products… in AI, interconnect IP, and power… and to strengthen financial and operational discipline” .
On FTCO: “This single product enabled Silvaco to establish a partnership with Micron… one of our foundational growth drivers looking forward” .
On Mixel/IP: “Customers have nothing but praise for Mixel’s perfect quality… the rest of Silvaco’s IP business is learning from [their] world-class development processes” .
On execution: “We will drive the business to profitability at current revenue levels so that growth can produce incremental profit” .
CFO on levers: “Actions… are expected to reduce annualized non-GAAP operating expenses by at least $15 million… [and] drive an increase in gross margin” .

Q&A Highlights

OpEx reductions timing and magnitude: Majority of savings by year-end; Q1 should show step-down; remainder through 2026; target profitability at flat revenue .
FTCO commercialization: Opportunity remains large but second engagement took longer than expected given deep customer integration and resource intensity; optimism sustained .
Q4 guide shape: Sequential EDA step-down from Q3 due to revenue recognition; TCAD and IP expected to increase; Mixel larger contribution in 2026 .
Mixel go-to-market: Leverage SVCO’s salesforce to scale beyond single sales headcount; expectation of substantial growth with distribution .
Longer-term growth: Target double-digit top-line, gaining share; near-term focus on organic execution vs additional M&A .

Estimates Context

Q3 2025: Revenue $18.67M vs S&P Global consensus $15.95M (beat by ~$2.72M); non-GAAP EPS $(0.07) vs $(0.0367) consensus (miss by ~$0.033) . Values retrieved from S&P Global*.
Q4 2025: Company guides revenue $14–18M vs consensus ~$16.37M; guide brackets consensus; company did not provide EPS guidance while consensus is $(0.103) (S&P Global)* . Values retrieved from S&P Global*.

Implications for estimates

Revenue likely revises up on EDA deal momentum and high Q3 base; however, management’s Q4 EDA step-down and gross margin guide (78–82%) could temper EPS revisions until OpEx reductions flow through in Q1 .
2026 estimates may build in Mixel/Tech‑X acceleration and FTCO customer adds if execution milestones emerge in H1 2026 .

Key Takeaways for Investors

Execution reset under proven EDA operator (Rhines) with concentrated bets in AI/FTCO, interconnect IP, and power; watch for early proof (FTCO second customer, IP pipeline) over the next 2–3 quarters .
Operating discipline is the near-term catalyst: ≥$15M OpEx cuts with Q1 step-down can pivot non-GAAP profitability even at flat revenue, expanding operating leverage into any 2026 growth .
Q4 revenue guide brackets consensus and embeds EDA recognition step-down; mix shift to TCAD/IP in Q4 plus higher gross margin bands should partially offset .
EDA momentum is real (record bookings, large U.S. deal), but revenue linearity may remain lumpy; RPO rose to $48M with 54% next-12-mo visibility, aiding 2026 setup .
Cash/investments down to ~$27.8M with ~$12.4M restricted; watch cash burn vs OpEx savings cadence for balance-sheet comfort through 2026 .
Segment lens: outsized EDA growth (+294% y/y) is the earnings engine; sustaining this while stabilizing TCAD and ramping Mixel/IP is core to the bull case .
Risk checks: FTCO adoption pace, timing of Mixel scale-up, and any macro/export constraints in APAC (mix was 40% in Q3) .

Appendix: Non-GAAP adjustments and impact (Q3 2025)

Non-GAAP operating loss of $(2.33)M adds back stock-based comp ($3.07M), amortization of acquired intangibles ($0.98M), acquisition-related costs ($1.56M), executive severance ($1.39M), among others; non-GAAP net loss $(2.06)M and non-GAAP EPS $(0.07) reflect similar adjustments .

Footnote:

Values retrieved from S&P Global.

Silvaco Group, Inc. (SVCO)·Q3 2025 Earnings Summary