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Silvaco Reports Second Quarter 2024 Financial Results

Quarterly revenue of $15.0 million, up 19% year-over-year at the high end of guidance

Quarterly bookings of $19.5 million, up 36% year-over-year exceeding guidance

SANTA CLARA, Calif., Aug. 07, 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 second quarter 2024 results.

“I am thrilled to announce that Silvaco reported strong financial results for its first quarter as a public company,” said Babak Taheri, Silvaco’s Chief Executive Officer. Dr. Taheri continued, “Our revenue came in at the high end of our guidance, driven by strong demand for our products across various sectors. We believe this momentum will continue into the second half of the year. Moreover, we are seeing growing customer interest in our digital twin product, which is a good sign for our future growth.”

Commenting on the financial results and outlook, Ryan Benton, Silvaco’s Chief Financial Officer, added, “Our strong bookings for the second quarter exceeded our expectations, and revenue came in at the high end of our guidance range, driven by strong demand from our customers. For quarterly bookings, we are raising guidance for the full-year and maintaining our revenue guidance for the full-year.”

Second 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 second quarter 2024, first quarter 2024 and second quarter 2023 results, see “Discussion of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliation” in the accompanying tables below.

Second Quarter 2024 Business Highlights

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

Third Quarter and Full Year 2024 Financial Outlook

As of August 7, 2024, Silvaco is providing guidance for its third 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, estimated acquisition-related litigation claims and 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 third 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 operating margin, 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 gross profit and non-GAAP gross margin as our GAAP gross profit and GAAP gross margin adjusted to exclude certain costs, including stock-based compensation and amortization of acquired intangible assets. We define non-GAAP operating expenses, non-GAAP operating income (loss), and non-GAAP operating margin as our GAAP operating expenses, GAAP operating income (loss), and GAAP operating margin, in each case, adjusted to exclude certain costs, including certain transaction-related costs, IPO preparation costs, estimated acquisition-related litigation claims and 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, estimated acquisition-related litigation claims and 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, loss 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 profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, 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 gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, 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 gross profit, GAAP gross margin, GAAP operating expenses, GAAP operating income (loss), GAAP operating margin, and net income (loss) for these items to arrive at non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, 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 gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, 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)
 June 30, December 31,
  2024   2023 
    
ASSETS   
Current assets:   
Cash and cash equivalents$34,274  $4,421 
Short-term marketable securities 54,611   — 
Accounts receivable, net 6,781   4,006 
Contract assets, net 9,175   8,749 
Prepaid expenses and other current assets 3,369   2,549 
Deferred transaction costs —   1,163 
Total current assets 108,210   20,888 
Long-term assets:   
Long-term marketable securities 13,392   — 
Property and equipment, net 742   591 
Operating lease right-of-use assets, net 2,144   1,963 
Intangible assets, net 4,956   342 
Goodwill 9,026   9,026 
Long-term portion of contract assets, net 9,096   6,250 
Other assets 1,845   1,825 
Total long-term assets 41,201   19,997 
Total assets$149,411  $40,885 
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$2,572  $2,495 
Accrued expenses and other current liabilities 23,748   10,255 
Accrued income taxes 2,288   1,626 
Deferred revenue, current 8,519   7,882 
Operating lease liabilities, current 863   735 
Related party line of credit —   2,000 
Vendor financing obligation, current 2,049   — 
Total current liabilities 40,039   24,993 
Long-term liabilities:   
Deferred revenue, non-current 3,337   5,071 
Operating lease liabilities, non-current 1,266   1,198 
Vendor financing obligation, non-current 2,738   — 
Other long-term liabilities 185   221 
Total liabilities 47,565   31,483 
Commitments and contingencies   
Stockholders' equity:   
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024; no shares authorized as of December 31, 2023 —   — 
Common stock, $0.0001 par value; 500,000,000 shares authorized; 26,294,217 shares issued and outstanding as of June 30, 2024; 25,000,000 shares authorized; 20,000,000 shares issued and outstanding as of December 31, 2023 3   2 
Additional paid-in capital 129,837   — 
(Accumulated deficit) Retained earnings (25,618)  11,392 
Accumulated other comprehensive loss (2,376)  (1,992)
Total stockholders' equity 101,846   9,402 
Total liabilities and stockholders' equity$149,411  $40,885 
    


SILVACO GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Unaudited, in thousands except share and per share amounts)
        
 Three Months Ended June 30, Six Months Ended June 30,
  2024   2023   2024   2023 
Revenue:       
Software license revenue$11,023  $8,845  $23,281  $19,510 
Maintenance and service 3,937   3,680   7,568   7,306 
Total revenue 14,960   12,525   30,849   26,816 
Cost of revenue 4,861   2,373   6,834   4,398 
Gross profit 10,099   10,152   24,015   22,418 
Operating expenses:       
Research and development 7,707   3,169   11,323   6,544 
Selling and marketing 7,171   2,930   10,483   5,735 
General and administrative 18,314   4,258   22,914   8,811 
Estimated litigation claim 14,696   —   14,696   — 
Total operating expenses 47,888   10,357   59,416   21,090 
Operating (loss) income (37,789)  (205)  (35,401)  1,328 
Loss on debt extinguishment (718)  —   (718)  — 
Interest income 682   2   682   3 
Interest and other expense, net (349)  (240)  (554)  (572)
(Loss) income before income tax provision (38,174)  (443)  (35,991)  759 
Income tax provision (benefit) 214   (112)  1,019   276 
Net (loss) income$(38,388) $(331) $(37,010) $483 
(Loss) earnings per share attributable to common stockholders:       
Basic and diluted$(1.55) $(0.02) $(1.66) $0.02 
Weighted average shares used in computing per share amounts:       
Basic and diluted 24,811,112   20,000,000   22,405,557   20,000,000 
        


SILVACO GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 Six Months Ended June 30,
  2024   2023 
Cash flows from operating activities:   
Net (loss) income$(37,010) $483 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:   
Depreciation and amortization 475   309 
Stock-based compensation expense 21,829   — 
Provision for credit losses 143   43 
Estimated litigation claim 14,696   — 
Loss on debt extinguishment 718   — 
Accretion of discount on marketable securities, net (194)  — 
Change in fair value of contingent consideration (18)  341 
Changes in operating assets and liabilities:   
Accounts receivable (3,102)  759 
Contract assets (4,081)  290 
Prepaid and other current assets (882)  (13)
Other assets (84)  — 
Accounts payable (2)  (1,068)
Accrued expenses (1,321)  (652)
Accrued income taxes 687   (107)
Deferred revenue (673)  1,368 
Other current liabilities 34   830 
Other long-term liabilities (9)  (417)
Net cash (used in) provided by operating activities (8,794)  2,166 
Cash flows from investing activities:   
Purchases of marketable securities (67,809)  — 
Purchases of property and equipment (56)  (202)
Net cash used in investing activities (67,865)  (202)
Cash flows from financing activities:   
Proceeds from initial public offering, net of underwriting fees 106,020   — 
Proceeds from issuance of convertible note, net of debt issuance costs 4,852   — 
Proceeds from loan facility 4,250   — 
Repayment of loan facility (4,250)  — 
Repayment of 2022 line of credit (2,000)  — 
Deferred transaction costs (2,126)  — 
Contingent consideration (22)  (921)
Payments of vendor financing obligation (300)  — 
Net cash provided by (used in) financing activities 106,424   (921)
Effect of exchange rate fluctuations on cash and cash equivalents 88   (173)
Net increase in cash and cash equivalents 29,853   870 
Cash and cash equivalents, beginning of period 4,421   5,478 
Cash and cash equivalents, end of period$34,274  $6,348 
    


SILVACO GROUP, INC.
REVENUE
(Unaudited, in thousands)
          
  2023 2024
  Q1Q2Q3Q4Year Q1Q2
Revenue by Product Line:         
TCAD 62%62%52%62%59% 66%69%
EDA 29%20%31%22%26% 30%20%
IP 9%18%17%16%15% 4%11%
Total revenue 100%100%100%100%100% 100%100%
          
Revenue Item Category:         
Software license revenue 75%71%74%70%73% 77%74%
Maintenance and service 25%29%26%30%27% 23%26%
Total revenue 100%100%100%100%100% 100%100%
          


SILVACO GROUP, INC.
GAAP to Non-GAAP Reconciliation
(Unaudited, in thousands except per share amounts)
         
  Three Months Ended Six Months Ended
Reconciliation GAAP to Non-GAAP 6/30/2024 6/30/2023 6/30/2024 6/30/2023
         
GAAP Gross profit $10,099  $10,152  $24,015  $22,418 
Add: Stock-based compensation  2,467   —   2,467   — 
Add: Amortization of acquired intangible assets  249   —   249   — 
Non-GAAP Gross profit $12,815  $10,152  $26,731  $22,418 
         
         
GAAP Research and development $7,707  $3,169  $11,323  $6,544 
Less: Stock-based compensation  (4,065)  —   (4,065)  — 
Less: Amortization of acquired intangible assets  (47)  (74)  (117)  (175)
Non-GAAP Research and Development $3,595  $3,095  $7,141  $6,369 
         
GAAP Sales and marketing $7,171  $2,930  $10,483  $5,735 
Less: Stock-based compensation  (3,552)  —   (3,552)  — 
Less: Amortization of acquired intangible assets  (39)  —   (178)  — 
Non-GAAP Sales and marketing $3,580  $2,930  $6,753  $5,735 
         
GAAP General and administrative $18,314  $4,258  $22,914  $8,811 
Less: Stock-based compensation  (11,745)  —   (11,745)  — 
Less: Acquisition-related estimated litigation claim and legal costs  (2,021)  (233)  (2,615)  (469)
Less: Amortization of acquired intangible assets  (568)  (711)  (695)  (979)
Non-GAAP General and administrative $3,980  $3,314  $7,859  $7,363 
         
GAAP Estimated litigation claim $14,696  $—  $14,696  $— 
Less: Acquisition-related estimated litigation claim and legal costs  (14,696)  —   (14,696)  — 
Non-GAAP Estimated litigation claim  —   —   —   — 
         
GAAP Operating expenses $47,888  $10,357  $59,416  $21,090 
Less: Stock-based compensation  (19,362)  —   (19,362)  — 
Less: Acquisition related estimated litigation claim and legal costs  (16,717)  (233)  (17,311)  (469)
Less: IPO preparation costs  (607)  (711)  (873)  (979)
Less: Amortization of acquired intangible assets  (47)  (74)  (117)  (175)
Non-GAAP Operating expenses $11,155  $9,339  $21,753  $19,467 
         
GAAP Income (loss) from operations $(37,789) $(205) $(35,401) $1,328 
Add: Stock-based compensation  21,829   —   21,829   — 
Add: Acquisition related estimated litigation claim and legal costs  16,717   233   17,311   469 
Add: IPO preparation costs  607   711   873   979 
Add: Amortization of acquired intangible assets  296   74   366   175 
Non-GAAP Income (loss) from operations $1,660  $813  $4,978  $2,951 
         
GAAP Net income (loss) $(38,388) $(331) $(37,010) $483 
Add: Stock-based compensation  21,829   —   21,829   — 
Add: Acquisition related estimated litigation claim and legal costs  16,717   233   17,311   469 
Add: IPO preparation costs  607   711   873   979 
Add: Amortization of acquired intangible assets  296   74   366   175 
Add: Loss on debt extinguishment  718   —   718   — 
Add: Change in fair value of contingent consideration  (10)  65   (18)  341 
Add: Foreign exchange loss  114   168   244   415 
Add: Income tax effect of non-GAAP adjustments  (43)  (81)  (76)  (104)
Non-GAAP Net income (loss) $1,840  $839  $4,237  $2,758 
         
GAAP Net income (loss) per share:        
Basic and diluted: $(1.55) $(0.02) $(1.65) $0.02 
         
Non-GAAP Net income (loss) per share:        
Basic: $0.07  $0.04  $0.19  $0.14 
Diluted: $0.07  $0.04  $0.18  $0.14 
         
Weighted average shares used in GAAP and non-GAAP net income (loss) per share:        
Basic:  24,811,112   20,000,000   22,405,557   20,000,000 
Diluted:  25,408,465   20,000,000   23,052,554   20,000,000 


Investor Contact:
Greg McNiff
investors@silvaco.com

Media Contact:
Tyler Weiland
press@silvaco.com


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