Silvaco Group
Software licensing (time-based licenses, subscriptions/renewals) plus semiconductor IP (SIP) licensing/royalties; recurring renewal-heavy revenue with bookings/backlog as leading indicators; growth partly via tuck-in acquisitions.
Earnings, margins, COGS & capex
Silvaco is a sub-$70M-revenue design-software company transitioning from a loss-heavy post-IPO period toward non-GAAP profitability. Q1 2026 revenue grew 26% YoY to $17.8M with record 86% GAAP gross margin; GAAP net loss narrowed sharply to $5.9M (from $19.3M) helped by the absence of a prior $13.1M litigation settlement, and non-GAAP net loss was just $0.6M (-$0.02 EPS). FY2025 revenue rose only 6% to $63.1M with a wide GAAP operating loss of $45.9M, so the growth reacceleration and margin expansion in early 2026 is the key story. Mix is shifting: SIP and EDA grew fast off small bases in FY2025 while TCAD (the core franchise) is lumpy, and the segment picture flipped in Q1 2026 (TCAD up, EDA down).
Income statement — where each revenue dollar goes
% of revenueOf every $1 of revenue, ~14¢ is cost of goods and ~85¢ operating expense, leaving ~1¢ of operating profit (~-65¢ net).
Revenue trend
Margins
up ~780 bps YoY, record
up ~790 bps YoY
loss narrowed vs $19.6M prior-year loss
loss widened slightly vs FY2024 ($39.4M)
COGS structure
Low cost of revenue for a software/IP model (~12-14% of revenue at recent gross margins); COGS is primarily support/hosting, third-party IP/royalty costs and delivery, not hardware.
Capex
Not disclosed as material; asset-light. Cash use has been driven by operating losses and acquisitions, not capex.
Latest earnings
Revenue beat consensus (~$17.8M vs an ~$16-17M estimate); non-GAAP loss of -$0.02 EPS improved from -$0.08 a year earlier; GAAP still a loss
Q2 2026: revenue $18.0M +/-10%, gross bookings $19.0M +/-10%, non-GAAP gross margin ~88%, non-GAAP opex $15.5M +/-5%. That guidance math (rev $18.0M at ~88% GM vs $15.5M opex) implies a return to roughly non-GAAP operating breakeven in Q2; management has stated a path to non-GAAP operating profitability and positive operating cash flow during the year, not an explicit profit guide.
- TCAD revenue (Q1 2026)
- $9.6M (+22% YoY)
- EDA revenue (Q1 2026)
- $4.1M (-20% YoY)
- SIP revenue (Q1 2026)
- $4.0M (+270% YoY)
- Gross bookings (Q1 2026)
- $17.2M (+26% YoY)
- TCAD bookings (Q1 2026)
- $10.5M (+50% YoY)
- GAAP net loss (Q1 2026)
- $5.9M (vs $19.3M prior year)
Growth drivers
- SiC/GaN and compound/power-semiconductor design demand (TCAD device/process simulation for EVs, industrial, datacenter power)
- AI/HPC chip design pulling TCAD, DTCO and analog/mixed-signal EDA usage
- Fast-growing SIP (semiconductor IP) segment (+270% YoY in Q1 2026 off a small base; +98% in FY2025)
- EDA growth from analog/mixed-signal, SPICE and custom-IC tools plus recent acquisitions (EDA +60% in FY2025, though -20% in Q1 2026)
- Display, memory (DRAM/3D-NAND) and photonics simulation workloads
- Bookings/backlog momentum (Q1 2026 gross bookings $17.2M, +26% YoY; TCAD bookings +50% YoY)
Reported financials — SEC EDGAR
Audited GAAP figures pulled from SEC filings · latest filing 2026-03-12. The audited primary-source spine — not financial advice.
Revenue — annual (GAAP)
Margins & balance sheet — FY’25
Bull & bear
A recovering niche EDA/IP name with record margins, reaccelerating bookings, a clean debt-free balance sheet, and a credible path to non-GAAP profitability in 2026 — leveraged to the SiC/GaN power and AI-chip design cycles where TCAD is indispensable.
- Q1 2026 revenue +26% YoY with record 86%/88% gross margins and non-GAAP loss down to just $0.6M — inflecting toward profitability
- Q2 2026 guidance (rev $18.0M at ~88% GM vs $15.5M opex) implies non-GAAP operating breakeven; management targets non-GAAP operating profitability and positive operating cash flow during 2026
- Bookings momentum (gross bookings +26%, TCAD bookings +50% YoY) signals demand ahead of reported revenue
- SIP (+270% in Q1; +98% in FY2025) and FY2025 EDA growth (+60%) show the portfolio can diversify beyond lumpy TCAD
- Debt-free with positive equity; asset-light 85%+ gross-margin model means incremental revenue drops through fast once opex is covered
- Direct beneficiary of secular SiC/GaN power-semi and AI/HPC design spend; analysts skew bullish (avg target ~$15)
A sub-scale, still-GAAP-unprofitable software company sandwiched between EDA giants, with lumpy core revenue, a thin cash balance, and a stock that has already tripled off its lows — pricing in an execution turnaround that isn't yet proven at the GAAP line.
- FY2025 grew only 6% with a $45.9M GAAP operating loss; the Q1 2026 acceleration is one quarter, not a trend
- Core TCAD revenue fell 25% in FY2025 and EDA fell 20% YoY in Q1 2026 — segment volatility undercuts the growth narrative
- Only $10.9M cash against ongoing losses (FY2025 non-GAAP net loss $11.1M) leaves little cushion if bookings slip
- Competes against Synopsys/Cadence/Siemens EDA, which have vastly larger R&D budgets and can bundle TCAD-adjacent tools
- Much of recent growth leans on acquisitions and small-base segments (SIP), raising integration and durability questions
- Stock at ~$11 (near the high end of its $3-$14 range) already embeds the recovery; GAAP profitability remains distant
What it is worth
Revenue multiple (P/S) vs. profitable EDA peers, cross-checked against growth and margin profile
If growth reverts to the mid-single-digits of FY2025 and losses persist against a thin cash balance, the multiple compresses back toward its post-IPO lows.
~5x sales roughly fair given one quarter of reacceleration but still-negative GAAP earnings; stock tracks bookings/profitability proof-points.
Sustained 20%+ growth + non-GAAP-to-GAAP profitability inflection supports a higher sales multiple (analyst avg target ~$15, ~35% above the ~$11 price).
At ~$363M market cap on ~$66.7M TTM revenue, SVCO trades around ~5x sales — a large discount to profitable majors Synopsys/Cadence (which carry premium double-digit sales multiples but are consistently GAAP-profitable and far larger). The discount reflects sub-scale, GAAP losses, and revenue lumpiness; the re-rating case rests on sustaining 20%+ growth, converting the record gross margin into GAAP profits, and scaling SIP. Not financial advice.
SWOT
Strengths
- Recognized niche leadership in TCAD (process/device simulation), a defensible corner of the design-software stack
- Very high, expanding gross margins (86% GAAP / 88% non-GAAP) typical of licensed software/IP
- Debt-free balance sheet with positive equity ($76.7M) and IPO-funded cash cushion
- Reaccelerating growth (+26% YoY in Q1 2026) and approaching non-GAAP breakeven
- Exposure to structurally growing end-markets: SiC/GaN power, AI/HPC, memory, display
Weaknesses
- Sub-scale (~$67M revenue) versus multi-billion-dollar EDA leaders; limited breadth of toolchain
- Still GAAP-unprofitable with large FY2025 operating loss ($45.9M) and history of losses
- Lumpy, license-timing-sensitive revenue; core TCAD fell 25% in FY2025 and EDA fell 20% in Q1 2026
- Low cash balance ($10.9M) relative to burn creates limited margin for error
- Post-IPO credibility overhang (stock fell to ~$3) and prior litigation settlement ($13.1M)
Opportunities
- Ride the SiC/GaN/compound-semi and AI-chip design boom where TCAD is mission-critical
- Scale the fast-growing SIP business into a larger recurring-royalty franchise
- Cross-sell EDA + TCAD + IP into existing foundry/IDM accounts; expand DTCO offerings
- Accretive tuck-in M&A to broaden the toolchain and add recurring revenue
- Geographic/vertical expansion (photonics, memory, display, automotive/power)
Threats
- Dominant, deep-pocketed competitors (Synopsys, Cadence, Siemens EDA) can bundle/undercut in adjacent tools
- Customer concentration in a cyclical semiconductor capex cycle
- Export-control / geopolitical restrictions on selling advanced design tools to certain regions (esp. China)
- Rising domestic EDA competition in China (e.g. Empyrean) eroding a growth market
- Execution risk on integrating acquisitions and reaching sustained profitability before cash pressure
Moats, dependencies & bottlenecks
Moats
Physics-based device/process simulation is technically deep and validated against fab data; switching risk for qualified flows is real, but the market is niche.
Tools embedded in customer design flows and tied to process design kits create stickiness and renewal-based revenue.
High gross margins and recurring renewals, but far smaller installed base than the EDA majors.
Fast-growing but early; durability depends on landing designs that ship in volume.
Dependencies
End-market demand Revenue tracks foundry/IDM/fabless design activity, which is cyclical.
Ecosystem/interoperability Tools must stay certified against leading process nodes and design kits.
A large share of the growth story depends on power/EV/AI-power demand sustaining.
Advanced design-tool sales are subject to US export controls; China exposure is regulated.
Deep-domain R&D talent is scarce and expensive; R&D headcount nearly doubled.
Recent growth and opex partly reflect acquired businesses that must be integrated profitably.
Advantages
- Best-in-class TCAD/device-simulation reputation in a specialized field
- 85%+ gross margins with an asset-light, debt-free model
- Direct leverage to SiC/GaN power and AI-chip design tailwinds
- Reaccelerating bookings and a concrete near-term path to non-GAAP profitability
- Nimble tuck-in M&A to expand into EDA and SIP adjacencies
Weaknesses
- Persistent GAAP losses and short profitability track record
- Segment revenue volatility (TCAD -25% FY2025; EDA -20% Q1 2026)
- Small cash cushion relative to burn
- Competitive and pricing pressure from far larger, bundling rivals
- Growth reliant on small-base segments and acquisitions
Bottlenecks
- Scale and R&D budget dwarfed by Synopsys/Cadence/Siemens EDA, limiting toolchain breadth
- Thin cash balance constrains aggressive investment/M&A ahead of sustained profitability
- Lumpy license-timing revenue makes quarter-to-quarter results volatile
- Narrow niche (TCAD-led) caps addressable market versus full-flow EDA vendors
Top signals & trends
Top signals
$17.8M topped consensus; 86%/88% GM (record).
Rev $18.0M at ~88% GM vs $15.5M opex; positive OCF targeted during 2026.
Leading indicator ahead of revenue.
Core segment lumpiness persists.
Limited buffer; watch burn vs. breakeven timing.
Recovery largely priced in; analyst avg target ~$15.
Trends
Core TCAD demand driver for EV/industrial/datacenter power.
Pulls TCAD, analog/mixed-signal EDA, and IP usage.
Steady expansion of Silvaco's core addressable market.
Raises the competitive bar but can leave niche gaps for specialists.
Erodes a growth market and pressures pricing amid export controls.
Upside in an up-cycle, downside risk if design activity slows.
Ecosystem & competitor graph
Suppliers feed the company; customers pull from it. Line thickness shows the strength of each tie (supply-chain dependency, customer earnings contribution). Hover to isolate a tie.
Cloud compute for simulation/hosted-tool workloads.
Scarce specialized R&D labor is a key input; not a vendor but a critical supply constraint.
Foundry/IDM user of TCAD and design tools (representative profile).
Leading foundry; PDK/process ecosystem relevant to Silvaco flows.
SiC power-semi maker; representative of Silvaco's compound-semi customer base.
Power/analog semi maker in the SiC/GaN design space (representative profile).
Power semiconductor leader; representative TCAD/EDA end-user profile.
Analog/power/automotive semi maker; representative customer profile.
EDA leader (~31% share); competes in TCAD and full design flow; acquired Ansys.
~30% EDA share; strong in analog/mixed-signal, custom IC and simulation — overlaps Silvaco's EDA.
~13% EDA share via Siemens AG; broad verification/design portfolio.
Device-modeling and design/simulation tools overlapping parts of Silvaco's stack.
Coventor's SEMulator3D competes in process/TCAD-adjacent modeling.
Leading Chinese EDA vendor; competes in the China market (named for context only, not a buy/own call).