Silicom Q4 Earnings Call Highlights

Silicom (NASDAQ:SILC) management told investors it exited 2025 with stronger-than-expected fourth-quarter revenue growth and what it described as increasing visibility into 2026, driven by new design wins and expansions at existing customers. On the company’s fourth-quarter 2025 earnings call, President and CEO Liron Eizenman said Silicom is also positioning for longer-term opportunities in AI inference networking, post-quantum cryptography, and white label switching, though he emphasized these newer areas are still early and not yet contributing meaningful revenue.

Fourth-quarter revenue beats guidance

Silicom reported fourth-quarter 2025 revenue of $16.9 million, up 17% from $14.5 million in the fourth quarter of 2024. Eizenman noted the result came in “well ahead” of the company’s guidance range of $15 million to $16 million and said it supported management’s view that demand for the company’s core products is “high, resilient, and strengthening.”

CFO Eran Gilad provided the company’s geographic revenue mix over the last 12 months as North America 74%, Europe and Israel 17%, and Far East and rest of the world 9%. He also said Silicom had one customer representing more than 10% of revenue in 2025, accounting for about 14% of annual revenue.

Margins, expenses, and non-GAAP results

Gilad said the financial results discussed on the call were primarily on a non-GAAP basis, excluding non-cash compensation expenses related to options and RSUs, taxes on amortization of acquired intangible assets, and lease liabilities financial expenses.

For the fourth quarter, non-GAAP gross profit was $5.1 million, representing a 30.2% gross margin, compared with $4.2 million and a 29.1% gross margin in the year-ago quarter. Gilad reiterated the company’s short-to-mid-term expected gross margin range of 27% to 32%.

Non-GAAP operating expenses were $7.5 million in the quarter, compared with $6.9 million in the fourth quarter of 2024. Gilad attributed higher-than-expected operating expenses to currency movements, citing the relative weakness of the U.S. dollar versus the Israeli shekel and Danish krone, where a large portion of the company’s expenses are generated.

Silicom reported a net loss of $1.9 million for the quarter, compared with a net loss of $5.1 million in the fourth quarter of 2024. Loss per share was $0.34, versus $0.87 in the year-ago period.

Design wins and customer expansion highlighted

Eizenman said 2025 included eight major new design wins across edge systems, SmartNIC, and FPGA solutions, involving both new customers and expanded engagements with existing Tier 1 customers. He said those wins provide “strong visibility into 2026 and beyond” and support expectations for double-digit revenue growth in the year ahead.

As an example of expansion activity, Eizenman pointed to a recently announced deployment increase with a “global networking and security as a service leader.” According to Eizenman, that customer expanded use of Silicom edge devices into multiple additional use cases, increasing expected annual revenue from $3 million–$4 million to $8 million–$10 million, with some incremental revenue expected “in the coming months.” He framed this as evidence of Silicom’s strategy to grow by expanding existing design wins alongside new wins.

Looking ahead, management said it is targeting 7 to 9 design wins in the current year across all product lines.

Three “venture-style” growth opportunities

Eizenman outlined three longer-term infrastructure shifts Silicom intends to pursue: AI inference, post-quantum cryptography (PQC), and white label switching. He described these as “venture-style upside” opportunities built on Silicom’s existing IP, engineering capabilities, and Tier 1 customer base.

• AI inference networking: Eizenman said infrastructure investment is shifting from AI training to “querying the models at scale,” calling inference latency-sensitive and distributed across edge, telco, and enterprise environments. He said Silicom has initial orders for an inference-optimized FPGA-based solution to be used in a proof of concept involving a hyperscaler end user, and is developing a dedicated AI NIC based on a leading high-performance networking chip for another AI inference leader. He also said follow-on POCs are underway and discussions are ongoing with additional AI inference chip vendors. He cited an expectation that the AI inference hardware market could approach $80 billion+ by the end of the decade.
• Post-quantum cryptography: Eizenman described PQC as a required security transition driven by concerns that quantum computers could eventually break current encryption, including “harvest-now-decrypt-later” risks. He said Silicom offers a hardware-based PQC accelerator and that two leading customers have selected the solution for early deployments. He characterized PQC spending as “not discretionary” and cited a market expectation of over $3 billion by 2030.
• White label switching: Eizenman said expanding into switching is a “natural extension” of Silicom’s existing work supplying white label edge, SD-WAN, and SASE platforms to Tier 1 customers. He said Silicom has shipped initial quantities of multiple switch platforms to a leading cybersecurity customer and is in discussions with others. He cited an expected market size of over $6 billion by 2030.

In the Q&A, Eizenman said all three new opportunity areas are “in the initial stages” and had “almost no meaningful revenue” in the quarter. He added that even for 2026, management is not expecting them to be “huge,” with core business growth expected to remain the primary driver. However, he said the company believes it can move faster than in the past in some cases by leveraging existing IP and modifying current products rather than starting from scratch.

On investment needs, Eizenman said management believes it has the right-sized teams across R&D, operations, and sales to pursue these opportunities. He said the company does not currently expect significant additional R&D spending, though it has the financial flexibility to invest if needed.

Balance sheet and first-quarter 2026 outlook

Gilad said that as of Dec. 31, 2025, Silicom had $111 million in working capital and marketable securities, including $74 million in cash, cash equivalents, bank deposits, and highly rated marketable securities, with no debt. The total also included $42 million in high-quality inventory. Eizenman said the balance equates to approximately $20 per share and described the company’s financial position as a “fortress” balance sheet.

For the first quarter of 2026, Silicom guided revenue to a range of $16.5 million to $17.5 million, which Eizenman said would represent 18% year-over-year growth at the midpoint. Management said the outlook supports its expectation for double-digit annual growth in 2026.

About Silicom (NASDAQ:SILC)

Silicom Ltd. is an Israel‐based provider of advanced networking infrastructure products designed to enhance data throughput, security, and functionality in enterprise, cloud, telecommunications, and edge‐computing environments. The company develops and manufactures a range of network interface cards (NICs), specialized adapters, and turnkey network appliances that support high‐performance packet processing, encryption, compression, and traffic optimization. Silicom’s solutions are engineered to offload complex network functions from central processing units, enabling customers to achieve greater efficiency, reliability, and scalability in their data centers.

Founded in 1987 and headquartered in Lod, Israel, Silicom has grown from a niche hardware developer into a global supplier of connectivity and networking solutions.