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Silvaco Reports First Quarter 2024 Financial Results

SANTA CLARA, Calif., June 20, 2024 (GLOBE NEWSWIRE) -- Silvaco Group, Inc. (Nasdaq: SVCO, “Silvaco” or the “Company”), a provider of TCAD, EDA software, and SIP solutions that enable semiconductor design and digital twin modeling through AI software and innovation, today announced its first quarter 2024 results.

“Having successfully completed our IPO on May 13th, we are excited to embark on our journey as a public company,” said Babak Taheri, Silvaco’s Chief Executive Officer. Dr. Taheri continued, “I am pleased with our first quarter results which were driven by strong demand for our TCAD and EDA products across various sectors. With our proven software platform, we continue to capitalize on organic growth opportunities and customer investments across multiple end markets.”

Commenting on the financial results and outlook, Ryan Benton, Silvaco’s Chief Financial Officer, added, “We achieved another quarter of stellar financial results including double-digit top-line growth and profitability. Based on our visibility and strong, predictable revenue model, we expect the momentum to continue into the second quarter. Moreover, following the completion of the IPO unaudited cash and cash equivalents was $104.2 million at the end of May 2024, allowing us to pursue our growth initiatives by means of both organic and inorganic opportunities.”

First Quarter 2024 Financial Highlights

First Quarter 2024 Financial Results

GAAP Financial Results

Key Operating Indicators and Non-GAAP Financial Results:

For a discussion of the non-GAAP metrics presented in this press release, as well as a reconciliation of non-GAAP metrics to the nearest comparable GAAP metric for Silvaco's first quarter 2024, fourth quarter 2023 and first quarter 2023 results, see “Discussion of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliation” in the accompanying tables below.

First Quarter 2024 and Recent Business Highlights

Supplementary materials to this press release, including our first quarter 2024 financial results, can be found at https://investors.silvaco.com/financial-information/quarterly-results.

Second Quarter and Full Year 2024 Financial Outlook

As of June 20, 2024, Silvaco is providing guidance for its second quarter of 2024 and its full-year 2024, which represents Silvaco’s current estimates on its operations and financial results. The financial information below represents forward-looking financial information and in some instances forward-looking, non-GAAP financial information, including estimates of non-GAAP gross margin and non- GAAP operating income. GAAP gross margin is the most comparable GAAP measure to non-GAAP gross margin, and GAAP operating income is the most comparable GAAP measure to non-GAAP operating income. Non-GAAP operating income differs from GAAP operating income in that it excludes items such as certain transaction-related costs, IPO preparation costs, acquisition-related litigation costs, stock-based compensation, amortization of acquired intangible assets, impairment charges and executive severance costs. Silvaco is unable to predict with reasonable certainty the ultimate outcome of these exclusions without unreasonable effort. Therefore, Silvaco has not provided guidance for GAAP gross margin or GAAP operating income or a reconciliation of the forward-looking non-GAAP gross margin or non-GAAP operating income guidance to GAAP gross margin or GAAP operating income, respectively. However, it is important to note that these excluded items could be material to our results computed in accordance with GAAP in future periods.

Based on current business trends and conditions, the Company expects for second quarter 2024 the following:

For full year 2024, the Company expects:

About Silvaco

Silvaco is a provider of TCAD, EDA software, and SIP solutions that enable semiconductor design and digital twin modeling through AI software and innovation. Silvaco’s solutions are used for semiconductor and photonics processes, devices, and systems development across display, power devices, automotive, memory, high performance compute, foundries, photonics, internet of things, and 5G/6G mobile markets for complex SoC design. Silvaco is headquartered in Santa Clara, California, and has a global presence with offices located in North America, Europe, Brazil, China, Japan, Korea, Singapore, and Taiwan.

Safe Harbor Statement

This press release contains forward-looking statements based on Silvaco's current expectations. The words “believe”, “estimate”, “expect”, “intend”, “anticipate”, “plan”, “project”, “will”, and similar phrases as they relate to Silvaco are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silvaco and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations.

These forward-looking statements include but are not limited to, statements regarding our future operating results, financial position, and guidance, our business strategy and plans, our objectives for future operations, our development or delivery of new or enhanced products, and anticipated results of those products for our customers, our competitive positioning, projected costs, technological capabilities, and plans, and macroeconomic trends.

A variety of risks and factors that are beyond our control could cause actual results to differ materially from those in the forward-looking statements including, without limitation, the following: (a) market conditions; (b) anticipated trends, challenges and growth in our business and the markets in which we operate; (c) our ability to appropriately respond to changing technologies on a timely and cost-effective basis; (d) the size and growth potential of the markets for our software solutions, and our ability to serve those markets; (e) our expectations regarding competition in our existing and new markets; (f) the level of demand in our customers’ end markets; (g) regulatory developments in the United States and foreign countries; (h) changes in trade policies, including the imposition of tariffs; (i) proposed new software solutions, services or developments; (j) our ability to attract and retain key management personnel; (k) our customer relationships and our ability to retain and expand our customer relationships; (l) our ability to diversify our customer base and develop relationships in new markets; (m) the strategies, prospects, plans, expectations, and objectives of management for future operations; (n) public health crises, pandemics, and epidemics and their effects on our business and our customers’ businesses; (o) the impact of the current conflicts between Ukraine and Russia and Israel and Hamas and the ongoing trade disputes among the United States and China on our business, financial condition or prospects, including extreme volatility in the global capital markets making debt or equity financing more difficult to obtain, more costly or more dilutive, delays and disruptions of the global supply chains and the business activities of our suppliers, distributors, customers and other business partners; (p) changes in general economic or business conditions or economic or demographic trends in the United States and foreign countries including changes in interest rates and inflation; (q) our ability to raise additional capital; (r) our ability to accurately forecast demand for our software solutions; (s) our expectations regarding the outcome of any ongoing litigation; (t) our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act and as a smaller reporting company under the Exchange Act; (u) our expectations regarding our ability to obtain, maintain, protect and enforce intellectual property protection for our technology; (v) our status as a controlled company; and (w) our use of the net proceeds from our initial public offering.

It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Accordingly, you should not rely on any of the forward-looking statements. Additional information relating to the uncertainty affecting the Silvaco’s business is contained in Silvaco's filings with the Securities and Exchange Commission. These documents are available on the SEC Filings section of the Investor Relations section of Silvaco's website at http://investors.silvaco.com/. These forward-looking statements represent Silvaco's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Silvaco disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

Discussion of Non-GAAP Financial Measures

We use certain non-GAAP financial measures to supplement the performance measures in our consolidated financial statements, which are presented in accordance with GAAP. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP net income (loss) per share. We use these non-GAAP financial measures for financial and operational decision- making and as a means to assist us in evaluating period-to-period comparisons.

We define non-GAAP operating expenses and non-GAAP operating income (loss) as our GAAP operating expenses and GAAP operating income (loss), in each case, adjusted to exclude certain costs, including certain transaction-related costs, IPO preparation costs, acquisition-related litigation costs, stock-based compensation, amortization of acquired intangible assets, impairment charges, and executive severance costs. We define non-GAAP net income (loss) as our GAAP net income (loss) adjusted to exclude certain costs, including certain transaction-related costs, IPO preparation costs, acquisition- related litigation costs, stock-based compensation, amortization of acquired intangible assets, impairment charges, executive severance costs, change in fair value of contingent consideration, foreign exchange (gain) loss, gain on extinguishment of debt, and the income tax effect on non-GAAP items. Our non-GAAP net income (loss) per share is calculated in the same way as our non-GAAP net income (loss), but on a per share basis. We monitor non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per share as non-GAAP financial measures to supplement the financial information we present in accordance with GAAP to provide investors with additional information regarding our financial results.

Certain items are excluded from our non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per share because these items are non-cash in nature or are not indicative of our core operating performance and render comparisons with prior periods and competitors less meaningful. We adjust GAAP operating income (loss) and net income (loss) for these items to arrive at non-GAAP operating income (loss) and non-GAAP net income (loss) because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structure and the method by which the assets were acquired. By excluding certain items that may not be indicative of our recurring core operating results, we believe that non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per share, provide meaningful supplemental information regarding our performance.

We believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze our financial performance and the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non- GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.

SILVACO GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except share and par value amounts)
   
   
 March 31, December 31,
  2024   2023 
    
ASSETS   
Current assets:   
Cash $5,739   $4,421 
Accounts receivable, net  5,562    4,006 
Contract assets, net  9,240    8,749 
Prepaid expenses and other current assets  1,748    2,549 
Deferred transaction costs  1,943    1,163 
Total current assets  24,232    20,888 
Long-term assets:   
Property and equipment, net  656  591 
Operating lease right-of-use assets, net  2,157  1,963 
Intangible assets, net  273  342 
Goodwill  9,026  9,026 
Long-term portion of contract assets, net  8,961  6,250 
Other assets  2,057  1,825 
Total long-term assets  23,130  19,997 
Total assets $47,362   $40,885 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:   
Accounts payable $3,332   $2,495 
Accrued expenses and other current liabilities  9,945  10,255 
Accrued income taxes  2,185  1,626 
Operating lease liabilities, current  817  735 
Deferred revenue, current  7,935  7,882 
Related party line of credit  2,016  2,000 
Total current liabilities  26,230    24,993 
Long-term liabilities:   
Deferred revenue, non-current  4,737  5,071 
Operating lease liabilities, non-current  1,320  1,198 
Long-term loan facility  4,283  — 
Other long-term liabilities  197  221 
Total liabilities  36,767    31,483 
Commitments and contingencies      
Stockholders' equity:
Common stock, $0.0001 par value; 25,000,000 shares authorized; 20,000,000 shares issued and outstanding  2  2 
Retained earnings  12,770  11,392 
Accumulated other comprehensive loss  (2,177) (1,992)
Total stockholders' equity  10,595    9,402 
Total liabilities and stockholders' equity $                    47,362   $40,885 
          



SILVACO GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands except share and per share amounts)
 Three Months Ended March 31,
  2024   2023
Revenue:  
Software license revenue $                    12,258  $                    10,665 
Maintenance and service  3,631   3,626 
Total revenue  15,889   14,291 
Cost of revenue  1,973   2,025 
Gross profit  13,916   12,266 
Operating expenses:  
Research and development  3,616   3,375 
Selling and marketing  3,312   2,805 
General and administrative  4,600   4,553 
Total operating expenses  11,528   10,733 
Operating income  2,388   1,533 
Interest and other expense, net  205   331 
Income before income tax provision  2,183   1,202 
Income tax provision  805   388 
Net income $1,378  $814 
Net income per share attributable to common stockholders:  
Basic and diluted $0.07  $ 0.04 
Weighted average shares used in computing per share amounts:         
Basic and diluted $20,000  $20,000 
         


SILVACO GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
  Three Months Ended March 31, 
  2024
 2023
Cash flows from operating activities:        
Net income $1,378  $814 
Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
 Depreciation and amortization  120  166 
 Gain on disposal of fixed assets  (10) — 
 Provision for credit losses  222  21 
 Change in fair value of contingent consideration  (8) 265 
 Changes in operating assets and liabilities:  
 Accounts receivable  (1,844) (3,718)
 Contract assets  (3,679) 889 
 Prepaid and other current assets  788  (232)
 Other assets  (274) — 
 Accounts payable  877  513 
 Accrued expenses  (670) (1,248)
 Accrued income taxes  574  242 
 Deferred revenue  (21) 2,888 
 Other current liabilities  (49) 146 
 Other long-term liabilities  24  (245)
 Net cash (used in) provided by operating activities:  (2,572) 501 
Cash flows from investing activities:  
Purchases of property and equipment  (10) (177)
 Net cash used in investing activities  (10) (177)
Cash flows from financing activities:
Proceeds from loan facility  4,250   — 
Contingent consideration  (13)  (582)
Deferred transaction costs  (364)  — 
 Net cash provided by (used in) financing activities  3,873   (582)
Effect of exchange rate fluctuations on cash  27   75 
Net increase (decrease) in cash  1,318   (183)
Cash, beginning of period  4,421   5,478 
Cash, end of period $ 5,739  $ 5,295
 
          


SILVACO GROUP, INC.
REVENUE
(Unaudited, in thousands) 
     2023     2024 
 Q1 Q2 Q3
 Q4
 Year
 Q1
 
Revenue by Region: 
Japan16%14%12%14%14%29%
United States34%28%28%28%30%26%
China19%29%17%30%23%11%
Korea8%11%25%9%14%7%
All other23%18%18%19%19%27%
Total revenue100%100%100%100%100%100%
       
Revenue by Product Line:      
TCAD62%62%52%62%59%66%
EDA29%20%31%22%26%30%
IP9%18%17%16%15%4%
Total revenue100%100%100%100%100%100%
       
Revenue Item Category:      
Software license revenue75%71%74%70%73%77%
Maintenance and service25%29%26%30%27%23%
Total revenue100%100%100%100%100%100%
             


SILVACO GROUP, INC.
GAAP to Non-GAAP Reconciliation
(Unaudited, in thousands except per share amounts)
 Three Months Ended
   3/31/2024   12/31/2023   3/31/2023 
             
GAAP Research and development $                  3,616  $                  3,337  $                  3,375 
Less: Amortization of acquired intangible assets  70   82   101 
Non-GAAP Research and development $                  3,546  $                  3,255  $                  3,274 
    
GAAP Sales and marketing $                  3,312  $                  3,833  $                  2,805 
Less: IPO preparation costs  127   —   — 
Non-GAAP Sales and marketing $                  3,185  $                  3,833  $                  2,805 
GAAP General and administrative $                  4,600  $                  4,570  $                  4,553 
Less: Acquisition-related litigation costs  594   515   236 
Less: IPO preparation costs  139   45   268 
Non-GAAP General and administrative $                  3,867  $                  4,010  $                  4,049 
    
GAAP Operating expenses $                11,528  $                11,740  $                10,733 
Less: Acquisition-related litigation costs  594   515   236 
Less: IPO preparation costs  266   45   268 
Less: Amortization of acquired intangible assets  70   82   101 
Non-GAAP Operating expenses $                10,598  $                11,098  $                10,128 
    
GAAP Income (loss) from operations $                  2,388  $                 (1,936) $                  1,533 
Plus: Acquisition-related litigation costs  594   515   236 
Plus: IPO preparation costs  266   45   268 
Plus: Amortization of acquired intangible assets  70   82   101 
Non-GAAP Income (loss) from operations $                  3,318  $                 (1,294) $                  2,138 
    
GAAP Net income (loss) $                  1,378  $                 (2,247) $                     814 
Plus: Amortization of acquired intangible assets  70   82   101 
Plus: Acquisition-related litigation costs  594   515   236 
Plus: IPO preparation costs  266   45   268 
Plus: Change in fair value of consideration  (8)  (7)  276 
Plus: Foreign exchange (gain) loss  130   (3)  247 
Plus: Income tax effect of non-GAAP adjustment  (33)  (27)  (23)
Non-GAAP Net income (loss) $                  2,397  $                 (1,642) $                  1,919 
GAAP Net income (loss) per share:   
Basic and diluted: $0.07  $(0.11) $0.04 
             


Non-GAAP Net income (loss) per share:
Basic and diluted: $0.12  $(0.08)  $0.10 
Weighted average shares used in GAAP and non-GAAP net income (loss) per share:            
Basic and diluted  20,000,000   20,000,000   20,000,000 
             

Investor Contact: Greg McNiff investors@silvaco.com

Media Contact: Tyler Weiland press@silvaco.com


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