Silvaco (SVCO) Q2 Revenue Drops 19%

Globe and Mail

3 days ago

Key Points
GAAP revenue dropped 19% year-over-year to $12.05 million in Q2 2025, GAAP revenue missed estimates by 15.3%.
Non-GAAP earnings per share fell to $(0.16).
Shift in business mix: TCAD segment GAAP revenue declined 34% year-over-year. while EDA and SIP segments grew, signaling a transition for the company.
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Silvaco Group (NASDAQ:SVCO), a provider of design software and Silicon Intellectual Property (SIP) for semiconductor companies, released its Q2 2025 results on August 6, 2025. The company reported GAAP revenue of $12.05 million, missing analyst estimates by $2.18 million (GAAP). Non-GAAP earnings per share came in at $(0.16). These results reflect both a sharper-than-anticipated drop in the core Technology Computer-Aided Design (TCAD) segment, with TCAD revenue down 34% year-over-year, and continued investment in new areas, with meaningful execution risk but also clear signs of progress in customer wins and technology integration.
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Recent Focus
Silvaco Group's business centers on providing advanced software tools and silicon intellectual property components for semiconductor design and manufacturing. Its core offerings include technology computer-aided design (TCAD) software, used to simulate manufacturing processes, and electronic design automation (EDA) software, which helps automate chip and system-level design. The company also provides silicon intellectual property (SIP), which are reusable design blocks licensed to semiconductor makers.
The company has recently pursued growth by expanding its suite of EDA tools and SIP libraries, integrating machine learning and artificial intelligence into its solutions. A critical area of focus is diversifying its business mix, both geographically and across product lines. Key success factors include technological innovation, cultivating strategic partnerships, growing its presence in high-growth verticals like automotive and photonics, and prudent cost and margin management while sustaining investment in product development.
Details of the Quarter: Financial and Operational Developments
The results underscored a challenging period, with GAAP revenue dropping 19% year-over-year. The miss versus consensus was driven largely by a steep decline in TCAD revenue (GAAP), which fell 34% year-over-year to $6.8 million (GAAP) and now accounts for just 56% of GAAP revenue, down from 69% in Q2 2024. The EDA segment, which provides software for chip design automation, saw GAAP revenue rise 15% year-over-year to $3.4 million and now makes up 29% of the total. The SIP segment grew 11% year-over-year to $1.8 million, representing 15% of total revenue (GAAP).
Regionally, there was a significant pivot toward the Asia-Pacific, with this geography delivering 57% of revenue compared to 41% in Q2 2024. The Americas revenue share fell to 36% from 51%, and EMEA (Europe, Middle East, and Africa) accounted for 7% of revenue. About 14% of revenue came from new customer 'logos,' with an additional 6% from customers added in the previous two quarters, showing traction in landing new accounts. However, Gross bookings fell sharply, down 34% year-over-year, highlighting volatility as the company integrates new acquisitions and waits for delayed orders to close.
Gross margin on a non-GAAP basis declined to 76%, a 10 percentage point drop from the prior year. The company reported a GAAP net loss of $9.4 million, an improvement from a $38.4 million GAAP net loss in Q2 2024, when results included a litigation settlement. However, on a non-GAAP basis, the company reported a net loss of $4.6 million, compared to a GAAP net profit in Q1 2024.
The company cited several operational milestones, including the launch of new EDA and SIP products and securing 10 new major customers across photonics, automotive, military, foundry, and power verticals—critical end markets for semiconductor suppliers. About 40% of revenue came from customer renewals; 40% from expansion among existing customers, indicating the company's 'land and expand' strategy is gaining some traction. A major acquisition, Mixel Group, Inc, closed just after the quarter, increasing the serviceable addressable market by $110 million and bringing the year-to-date total to $710 million added via acquisitions. This effort supports the company's plan to further diversify its revenue base and target design segments with higher growth potential.
Looking Forward: Guidance and Investor Considerations
For Q3 2025, management guided for revenue in a range of $14.0 to $18.0 million, projecting a minimum of 28% year-over-year growth. The target for non-GAAP gross margin is 81–85%, still trailing historical highs. Non-GAAP net income (or loss) per diluted share is expected to land between $(0.12) and $0.02. Bookings are also expected to rebound, with a $14.0–$18.2 million range, up at least 42% from the prior year's quarter.
For FY2025, Silvaco projects revenue of $64.0 to $70.0 million and a non-GAAP net income (or loss) per share between $(0.07) and $0.03, significantly lower than the previous year's net income.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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