Silvaco Group (NASDAQ:SVCO) reported fourth-quarter fiscal 2025 results that management said showed faster-than-expected progress on its turnaround plan, driven by strength in TCAD and semiconductor IP. On the company’s earnings call, CEO Wally Rhines and CFO Chris Zegarelli highlighted bookings at the high end of guidance, revenue and gross margin above the high end, and non-GAAP operating expenses at the low end, which together produced a smaller operating loss than anticipated. Management also issued what it described as a strong outlook for the first quarter of 2026.
AI-driven FTCO gains a second customer
Rhines emphasized momentum in the company’s AI-driven manufacturing process development solution, FTCO, saying Silvaco reached an adoption milestone ahead of prior expectations. During the quarter, a second customer adopted FTCO, which Rhines said was a win in Asia and outside the memory segment.
In the TCAD business overall, Silvaco reported a 70% sequential increase in bookings to $9.2 million and a 34% sequential increase in revenue to $8.7 million, which management attributed to the new FTCO customer adoption.
In the Q&A session, Rhines said he expects the time from initial FTCO engagement to “real revenue” to decrease as the company improves its messaging and as customers better understand the benefits of applying AI to process development. He also said the FTCO pipeline is increasing.
Semiconductor IP posts record quarter as Mixel contributes
Silvaco also pointed to an inflection in semiconductor IP. Rhines said the company delivered record IP revenue and bookings of over $5 million in the quarter, driven by its first full quarter of Mixel revenue following the acquisition.
Rhines described Mixel’s MIPI PHY IP as having a strong global following based on quality and said Silvaco is leveraging its broader sales force to expand Mixel growth. He also said the company is broadening offerings from custom solutions to production-ready “Pro” products, with a portfolio that is “silicon proven in nine different foundries and 12 different manufacturing nodes.” Rhines added that Mixel IP has enabled up to a 35% reduction in die area and up to a 50% reduction in leakage power, and he cited the MIPI PHY market as being over $300 million per year, with Silvaco holding what he called a “relatively modest share.”
Beyond Mixel, Rhines said Silvaco has been increasing capacity for foundational IP such as memory compilers and standard cells and sees opportunity to grow these areas later in 2026 and into 2027. He said IP was nearly 30% of the business exiting 2025 and that management expects IP to be the company’s fastest grower in 2026.
EDA cools after Q3 record, with focus on core products
In EDA, Silvaco reported a significant decline in fourth-quarter bookings and revenue following all-time records in the third quarter. Rhines said fourth-quarter bookings were just under $4 million and revenue was $4.4 million.
Management said it is shifting priority toward a smaller number of core EDA products it believes can deliver meaningful growth. Rhines highlighted Jivaro, saying it continues to see customer interest and has a strong pipeline. He said Jivaro can accelerate post-layout SPICE simulations by up to 10x “with sign-off accuracy,” and later in the Q&A described it as a “category killer,” noting adoption by at least one major company and additional leading semiconductor firms. Near term, management expects stability in EDA, followed by a return to growth later in the year as the new priorities take hold.
Margin expansion and spending reductions drive narrower losses
Zegarelli said fourth-quarter bookings totaled $18.3 million, near the high end of guidance, with strength from IP products and TCAD solutions. He noted IP delivered more bookings in the fourth quarter than in all of 2024 and said IP bookings grew almost five times sequentially as Mixel “started to meaningfully contribute.”
Revenue was $18.3 million, above the high end of guidance, with TCAD revenue up 34% sequentially and IP revenue up almost three times sequentially. Zegarelli said EDA declined sequentially after its record third quarter. He also said 65% of quarterly revenue came from license revenue, with the remaining 35% from maintenance and service.
Geographically, Zegarelli said APAC spiked to 57% of total revenue, driven by FTCO.
On profitability, Zegarelli reported GAAP gross margin of 83.3% and non-GAAP gross margin of 85.6%, up roughly five full points sequentially and ahead of guidance. He tied the improvement to restructuring actions that shifted customer support work toward field application teams while keeping R&D focused on product development, saying the trend is sustainable.
GAAP operating expenses fell nearly 8% sequentially to $22 million. Non-GAAP operating expenses declined 5% sequentially to $16.7 million, below the midpoint of guidance. Zegarelli also framed total non-GAAP spending as cost of sales plus operating expenses, saying it declined to $19.3 million in the fourth quarter from $21.3 million in the third quarter, a sequential reduction of just over 9%. He said the company’s guidance implies a similar sequential reduction in the first quarter, with further reductions expected in the second quarter.
Silvaco had previously targeted at least $15 million in annualized non-GAAP operating expense reductions, but Zegarelli said the company now expects $20 million in “gross annualized non-GAAP spending reductions.” In the Q&A, he cited opportunities in streamlining support organizations and SG&A as part of that improvement.
For the fourth quarter, Silvaco reported a GAAP operating loss of $6.8 million and a non-GAAP operating loss of just over $1 million. GAAP net loss was $7.2 million, or $(0.24) per share, while non-GAAP net loss was $0.8 million, or $(0.03) per share.
Liquidity and Q1 outlook
Silvaco ended the quarter with $18.3 million in cash and marketable securities, including $8.3 million of restricted cash tied to the NanGate settlement. Zegarelli said the company’s underlying burn rate, net of one-time items, declined significantly in the first quarter due to cost reductions and strength in bookings and revenue. He said the company expects the $10 million of unrestricted cash at year-end to support operations as it targets positive operating cash flow later in the year, with operating cash flow breakeven expected in the second quarter and positive operating cash flow expected in the third quarter.
For the first quarter of 2026, Silvaco guided to:
- Bookings: $15 million to $19 million
- Revenue: $15 million to $19 million
- Non-GAAP gross margin: around 85%
- Non-GAAP operating expenses: $14.5 million to $16.5 million
On segment mix for bookings, Zegarelli said he expects continued strength in TCAD in the first quarter, IP “in the same range” but potentially down slightly from the fourth quarter, and EDA “flattish” sequentially.
Looking further ahead, management said IP is expected to be the fastest-growing segment in 2026, TCAD is expected to grow with renewals and AI-driven offerings, and EDA is expected to be stable near term with growth potential later as focus areas develop.
About Silvaco Group (NASDAQ:SVCO)
Silvaco Group, Inc is a provider of electronic design automation (EDA) software and semiconductor intellectual property (IP) solutions. Founded in 1984 and headquartered in Santa Clara, California, the company offers a suite of tools for process and device simulation, circuit design, verification, and physical implementation. Silvaco’s core product lines include technology computer-aided design (TCAD) for process modeling, SPICE circuit simulators for analog and digital analysis, and layout and parasitic extraction tools for physical verification.
In addition to its EDA software, Silvaco delivers semiconductor IP in areas such as memory compilers, interface IP (including USB, PCI Express and DDR), and embedded analog/mixed-signal cores.
