SVCO

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 5 p.m. ET Chief Financial Officer-Chris Zegarelli Chief Executive Officer-Walden Rhines Operator: Good afternoon and welcome to Silvaco's Second Quarter Fiscal Year 2026 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Chris Zegarelli, Silvaco's CFO. Please proceed. Chris Zegarelli: Thank you. Joining me on the call today is Wally Rhines, Silvaco's CEO and Director. As a reminder, a press release highlighting the company's results, along with supplemental financial results, are available on the company's IR site at investors.silvaco.com. An archived replay of the call will be available on this website for a limited time after the call. Please note that during this call, management will be making remarks regarding future events and the future financial performance of the company. These remarks constitute forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. It is important to also note that the company undertakes no obligation to update such statements except as required by law. The company cautions you to consider risk factors that could cause actual results to differ materially from those in the forward-looking statements contained in today's press release and on this conference call. The risk factors section in Silvaco's Annual Report on Form 10-K for the year ended 12-31-2025 and the most recent Quarterly Report on Form 10-Q provide descriptions of these risks. With that, I'd like to turn the call over to our CEO, Wally Rhines. Wally? Walden Rhines: Good afternoon and welcome. We appreciate your joining us on today's call. I'm pleased to report that in the second quarter, we made solid progress on our strategic transformation, highlighted by multiple new partnerships, strong year-over-year growth across all product areas, and the company's return to non-GAAP operating profitability for the first time in almost two years. For those of you who may be new or still coming up to speed on our story, I want to begin with a brief high-level summary of our ongoing strategic transformation. Over the last year, we've made significant progress on our plan to streamline operations, reduce costs and focus on strategic growth drivers. Our objective is clear. Drive to profitability and position the company for sustainable, profitable growth. Looking at Q2 results through this lens of transformation, we see meaningful progress. We delivered another sequential quarter of non-GAAP operating expense reductions. We saw our first non-GAAP operating profit since late 2024, almost two years ago. We also delivered 48% revenue growth year over year and saw record bookings and revenue in our IP products. We also announced multiple strategic partnerships that fundamentally strengthen our position in the emerging market of AI-enabled manufacturing and process development. Partnering with NVIDIA on GPU enablement and with Dassault Systemes on multi-physics and deepening our partnership with Micron highlights the value of our strategic focus on AI manufacturing. And now I'd like to talk about the three transformational partnerships. All three focus on Silvaco's leading multi-physics portfolio and give us more paths to market, more exposure to leading-edge AI assets and broader reach as part of a more complete solution for our customers. The first strategic partnership is a collaboration with NVIDIA. As was announced by NVIDIA at the Design Automation Conference, we've collaborated to integrate NVIDIA accelerated computing and AI with our physics-based simulation portfolio to enable next-generation digital twins. Through this partnership, Silvaco is combining decades of physics-based modeling expertise with NVIDIA's accelerated computing, CUDA-X platform and AI frameworks. Our combined technologies are expected to help customers reduce simulation cycles from weeks to days, improve accuracy and insight, and to scale engineering and collaboration. We're excited about what this partnership means for our customers and for the industry as a whole. Now the second strategic partnership is with Dassault Systemes' SIMULIA to develop interoperable workflows. This partnership is focused on developing connected workflows that help semiconductor manufacturers achieve first-time right process development, accelerate their yield ramps and make better manufacturing decisions before committing costly fab resources. The collaboration brings together complementary simulation technologies spanning reactor-scale plasma simulation, feature-scale semiconductor process modeling and structural stress analysis. By connecting these domains through integrated workflows, we aim to help semiconductor companies better understand how equipment conditions influence wafer-level outcomes, enabling more informed engineering decisions. By improving interoperability, customers can identify potential issues earlier in development and make decisions with greater confidence. Now the third strategic partnership builds upon our long-standing relationship with Micron. We announced today that Micron is investing $10 million in a Silvaco convertible note. More importantly, the two companies aligned on deeper strategic collaboration to continue building out the disruptive FTCO or Fab Technology Co-Optimization foundation that Micron and Silvaco had built together. Micron was early to see the potential of combining AI with physics-based simulation to create a truly virtual platform to accelerate time to market. I want to take a moment to thank our friends and partners at Micron. Now these three partnerships lay the foundation for accelerated growth. Given our strong pipeline into Q4, and with these new partnerships in place, we now expect to see record revenue in Q4 and to deliver double-digit revenue growth in 2027. Looking forward, we expect to continue benefiting from three significant growth drivers. First, FTCO. Silvaco has a strong foundation in multi-physics. Our investments in AI have created a disruptive FTCO workflow that broadens our user base well beyond traditional TCAD engineers and unlocks unique value propositions and use cases for our customers. The partnerships announced today reflect broad recognition of that differentiation and potential, and we remain focused on driving our advantage here in delivering above-average market growth in this area. We see outsized growth potential for this business driven by broadening the user base, adding AI functionality and integrating more assets from across Silvaco to deliver a truly unique and disruptive platform. The second growth driver is IP. With the market-leading assets acquired with Mixel, we see IP emerging as a solid growth driver. We delivered record IP bookings and revenue in Q2 and continue to see potential for this business to double year-on-year in 2026. This business grew revenue 238% year-on-year in second quarter. The market for our IP is vast at more than $1 billion. In this context, our expected $20 million of IP revenue in 2026 is just a drop in the bucket. We've also seen the most growth in our pipeline in the IP space, with the pipeline up more than 4x over the last year. Our focus on efficiency, AI integration, and redoubling sales efforts has a lot of room to run. We look forward to seeing our IP team continue to build a solid book of business with some of the largest players in the industry. Now the third growth driver is AI. Our view is that AI is a clear positive for Silvaco. We see significant increases in our capacity to innovate with our existing resources as we invest in usage of AI tools for internal development. For example, we've seen some forms of prototyping accelerating up to 30x, source code analysis up to 11x, scripting about 10x and debugging up to 5x. We expect these innovations to accelerate our roadmap, accelerate time to market and position us to deliver profitable growth. On the product side, we continue to develop AI-focused products, including our FTCO workflow, integrating AI into existing products, adding agentic offerings and using AI agents to further improve our customers' productivity. These innovations include an AI-enhanced version of our product called Utmost that reduces time to model by up to 50%. In our IP business, we're developing disruptive tools with AI that will accelerate the cadence and quality of our offerings. At EDA, three of the five largest chip companies turned to Silvaco for netlist reduction. With Jivaro Pro, we can reduce terabyte netlists to gigabytes and reduce simulation times by an average of 6x. In conclusion, our strategic transformation is progressing well, and our roadmap and partnerships set a solid foundation for growth. I'd now like to turn the call over to Chris, who will discuss our financial results and outlook in more detail. Chris Zegarelli: Thanks, Wally. Good afternoon, everyone. In Q2, we delivered $16.2 million in bookings and $17.8 million in revenue. Bookings grew 25% year over year and revenue grew 48% year over year. We saw solid revenue growth across all product areas, but most notably in IP, where we delivered record bookings and revenue. IP revenue grew 238% year over year in Q2. On the TCAD side, during the quarter, we won another new FTCO customer. Looking forward, we continue to see strong interest in FTCO and expect to secure more FTCO customers through year-end. From a geographic perspective, we saw the most growth in Q2 revenue from the EMEA region, which grew 30% sequentially and accounted for 10% of total revenue in the quarter. The Americas remains our largest region, representing 46% of revenue in the quarter. Our revenue in the Americas has grown 30% over the last two quarters. Looking down the P&L, GAAP gross margin in Q2 was 85.2% and non-GAAP gross margin was 86.8%. GAAP and non-GAAP gross margin sequentially decreased by 124 and 111 basis points respectively, which was driven by mix. GAAP and non-GAAP gross margin are up over 14 full percentage points and 12 full percentage points year over year, respectively. Both GAAP and non-GAAP gross margins have benefited from our restructuring activities. We believe gross margins will remain in the range of mid to upper 80s going forward. Operating expenses for the quarter reflect our commitment to focused and disciplined spending. As of the end of Q2, we have successfully executed on our targeted $20 million in annualized spending reductions. In the quarter, GAAP operating expenses were down 8.7% sequentially to $19.2 million. Non-GAAP operating expenses were down 7.8% sequentially to $14.8 million, below the midpoint of the guided range. From a total cost perspective, which combines operating expenses and cost of sales, GAAP total cost declined 6.9% sequentially, and non-GAAP total cost declined 5.8% sequentially. Q2 results are the first time since the IPO when total non-GAAP spending declined in three consecutive quarters. GAAP operating loss improved quarter over quarter to a $4 million loss. Non-GAAP operating profit was $635,000, well ahead of Q1 and ahead of prior expectations. This is the first quarter since late 2024 when the company delivered a non-GAAP operating profit. GAAP net loss in the quarter was $3.7 million and GAAP EPS was an $0.11 loss. Non-GAAP net income in the quarter was $315,000 and a non-GAAP EPS of $0.01. Next, turning to the balance sheet and cash flow. Cash and cash equivalents at quarter end was $13 million, up almost 20% sequentially. Q2 marks the second consecutive quarter of growth in unrestricted cash since the IPO. Cash balance at the end of the quarter did not include the $10 million from the Micron convertible note, which closed in Q3. Net cash used in operating activities in Q2 was $5.5 million, half of the $11 million used in Q1. Please note that this $5.5 million included approximately $1.8 million in one-time items, including severance-related payments. Net of these items, net cash used in operating cash flow would have been $3.7 million in Q2. We continue to expect positive operating cash flow later in the year. Now turning to guidance. For Q3 2026, we expect bookings of $18 million plus or minus 10%. Revenue of $17 million, plus or minus 10%. Non-GAAP gross margin around 88%. Non-GAAP operating expenses of $14.5 million, plus or minus 5%. Looking forward, we see a very strong pipeline for the fourth quarter. While Q3 has tended to be seasonally soft for TCAD, we have historically seen strong TCAD growth in Q4. The strong pipeline, combined with a history of Q4 strength, supports our expectation of record revenue and continuing operating profitability in Q4. As a result, we also expect full year 2026 revenue to be above $70 million. Looking into 2027, we expect double-digit revenue growth as well as non-GAAP operating profitability and positive cash flow from operations. In closing, we continue to see strong progress on our strategic transformation. We've seen our first non-GAAP operating profit since late 2024. We delivered record bookings and revenue in IP and announced multiple strategic partnerships that fundamentally strengthen our position in AI manufacturing. We also continue to improve customer productivity by leveraging AI. Wally and I want to thank the team for delivering these milestones. We look forward to continuing to deliver on our commitment to profitable growth. With that, operator, we will now take questions. Operator: [Operator Instructions] Our first question comes from the line of Krish Sankar of TD Cowen. Sreekrishnan Sankarnarayanan: Wally and Chris, congrats on getting NVIDIA as a customer and a Micron investment. Wally, my first question is, I remember when you took over in November last year, you kind of said that FTCO alone can drive half the revenues of the company. Micron has been a customer for a while for FTCO, and now you have NVIDIA. I'm just wondering, are these two enough? Because Micron has been around for a while, but doesn't scale up as much as I would have thought. And now with NVIDIA, do you think that, that statement is true? And if so, what kind of time frame where you think FTCO can really be meaningful for the company revenues? And then I have a follow-up. Walden Rhines: So the FTCO is a longer-term strategic growth that grows incrementally every quarter as we announce new customers. The existing customers will, of course, grow, but it's new customers that spur the increased growth. And then once adoption begins in a company, then it spreads to more and more applications in the manufacturing processes. Now the short-term driver for rapid growth is IP. As you saw in our numbers, while we had strong EDA growth as well, IP has had a remarkable growth in its backlog and, as was highlighted, 4x pipeline growth in the last year. So what you should expect is overall a slow, steady growth of the FTCO-driven TCAD part of the business, which we expect will accelerate over time as more and more users join in and the existing users expand the use across more and more of their manufacturing processes and design processes. Sreekrishnan Sankarnarayanan: Got it. Very helpful. And then the other one is, obviously, you delivered on your operating profit promise that you said you're going to turn, and that's kind of good to see. I was going to say that when I look at it, like the revenue and bookings numbers, both of June and September are like a touch below what I thought it would have been. And I think Chris mentioned Q4 can be a big quarter. I'm just trying to understand how big can Q4 be, and when you mean double digits next year, are we talking about low-teen kind of a growth or mid-teen kind of a growth, any color on that would be helpful. Walden Rhines: I'll let Chris amplify, but basically because of our approach to revenue recognition, there is lumpiness quarter by quarter. As Chris highlighted, fourth quarters tend to be strong renewal quarters and that tends to be the strongest quarter of the year, but the overall growth in any one quarter is not indicative of the longer-term growth. Chris? Chris Zegarelli: That's fair, Wally. Thanks, and good question. I would just point out, I mean, we just hit a record on LTM revenue for the last 12 months, revenue about $72.5 million. If you look back, our record revenue quarter was last year at about $18.7 million. So when we say we see confidence in hitting record revenue in Q4, it's obviously in excess of that. And those statements come from multiple sources. First, the pipeline looks really strong, very healthy and broad going into Q4. So we're really encouraged by that. And that's one of the big drivers of it as well. And the partnerships that we talked about on the call that Wally mentioned are also going to contribute to that growth in Q4, as well as the 4x growth in IP pipeline also. Looking at next year when we say double-digit growth, I mean, we haven't given more color on that, but you can expect, obviously, at least 10% growth or a little more. We said we'll be over $70 million in revenue in 2026, so plus 10% gets you closer to high 70s or 80 on the year in 2027. As we progress, we'll give more color on that. But again the pipeline strength gives us confidence there. And the pipeline growth also gives us confidence on record revenue in Q4. And I would also observe that does come with profitability as well. We did drive operating expenses on the non-GAAP side down to about $14.8 million in Q2, going to about $14.5 million in Q3. So as we keep tight control on operating expenses, that kind of sequential growth in Q4 should come with some nice leverage. Operator: Our next question comes from the line of Charles Shi of Needham & Company. Yu Shi: So Chris, maybe let me just clarify. So you guided the September revenue, I think, $17.8 million, right? And the December has to be higher than $18.7 million. And I think at least relative to what I have modeled, the two quarters combined, the outlook hasn't really changed. It's probably just a few thousand bucks shifting around here and there. And is that the message you're trying to convey, your answer to your last question? Chris Zegarelli: No, it's fair. We printed $17.8 million with Q2, guided to $17 million in Q3 with a record in Q4. So yes, if you take a step back and look at what consensus was going into this call, yes, Q3 a little bit below consensus, Q4 would be above. Put them together, I think you're right. We're also giving more color on growth into next year. I think the message is longer-range visibility, continued growth, record LTM revenue here in Q2. All of these things pointing to what Wally was talking about on the IP side with 4x pipeline growth, record revenue there in the quarter, seeing a path to about $20 million in revenue there in '26 and then kind of growing from there in '27. And I think another point to make is all three partnerships we talked about today are all really focused on the AI manufacturing side. So the FTCO message does resonate broadly. You're seeing some pretty big names coming in to engage on what is going to be a big opportunity. So to Wally's point, it's going to be a steady growth on that front. We haven't really hit that inflection in the S-curve, if you will, in FTCO, but these kind of leading indicators of large companies recognizing it and stepping in and participating in the ecosystem, I think, is a good sign of momentum still to come. But Wally, did you want to give any more color on that? Walden Rhines: No, I think you covered it fine. Its -- and I think Charles has it well. It's steady as you go, but it's a very positive outlook. The long term, much greater growth comes from FTCO, but in the short term, the IP business is surprisingly healthy. It surprised even us with the strength of customer interest in the products we have and the good execution we've had in improving our efficiency of developing and supporting that IP. Yu Shi: Maybe Wally, a second question for you. I want to zoom out a little bit on the topic of AI. I didn't go to DAC. I saw you were there at the time of the NVIDIA announcement. But I think, in general, especially for LLM, I know AI has like reinforcement learning, all those classic AI stuff going on. But LLM-wise, people are in general, among the investment community, pretty worried about the disruption risk for the overall EDA industry. But I think specifically for you guys, are you worried about that? Do you think LLM maybe -- could be applied somewhere in a part of the workflow that the Silvaco tools are participating in? And especially for TCAD, do you see opportunity where LLM can be applied, not just reinforcement learning? Walden Rhines: Yes, as was brought out at DAC, all the indicators are that for a company like Silvaco, AI is a net positive and a significant one at that. TCAD's a fairly mature business, been around for many years. Silvaco's been in it for 40 years, and so it needs its next growth spurt. And just in time, AI has come along with the ability to generate digital twins or surrogate models. But that requires a lot more simulation to generate synthetic data. The announcement that NVIDIA made at the Design Automation Conference was indicative of how companies like NVIDIA are helping us to take that capability to customers. They add yet another platform where we can, in fact, host our physics-based models. In the NVIDIA announcement, they pointed out that they can provide the compute and the infrastructure, but what they lack are the physics-based models that generate the synthetic data. That's what Silvaco has been developing and using for the last 40 years. We have a wealth of those models, a wealth of customer experience with applying those models. And so adding an additional platform is great. Working with a company like NVIDIA and taking advantage of their increased compute capability with the CUDA-X libraries, we can generate a lot more data a lot faster and then host it both on our own platforms as well as their PhysicsNeMo platform. And I think it's going to be a major plus for us. And you might say, well, OK, it's a plus in FTCO and in TCAD, but what about the IP business? And the reality we're seeing is that it's a help for us too. The productivity gains have been enormous. Our ability to develop and support IP is accelerating. The fear that AI will do away with the need for the electronic design automation industry was refuted quite well at the Design Automation Conference. And for one reason, a large share of our IP requires qualification for standards, automotive standards and other networking standards. And so individual designers can't short-circuit that. They have to buy their IP from third parties. And we are a third party that has a portfolio and that portfolio is growing as is the customer base. Yu Shi: Thanks, Wally. And maybe last question. The announcement of NVIDIA partnership, obviously, we don't really understand what exactly is required from your cost side or investment side from that perspective. But using GPU-accelerated computing to enable some of the traditional chip design workflows, in many cases, I would imagine probably require you to invest in GPU infrastructure, or maybe you do not have to. But any additional CapEx is going to be required to enable all the work covered by that platform? Walden Rhines: Thank you. Yes. Well, we've been increasing our CapEx to support the amount of GPU capacity. And so the long-term roadmap, that will continue to grow. But it's not a big disruption. Chris can cover the basics, growth rate, but I think the connection with NVIDIA gives us an opportunity for cooperative development. It allows us to generate much more data. And really, FTCO is enabled only by the ability to generate a large amount of data in these digital twins or surrogate models. And if you do it all with traditional computing, it's much slower. If you do it with GPUs, it can be accelerated dramatically. It's been demonstrated that certainly up to 10x in specific cases. And the faster you can generate that data, the more digital twin models that will be available. Better customers can then use those models to do rapid queries to ask simple process questions, where the model, instead of doing a 10-hour simulation, now gives you an instantaneous answer. That's the goal. That's the early result that's been achieved by our leading customers, and we expect that will spread across the industry. Chris Zegarelli: And just to add to that, Wally, I think that's exactly right. So while operating expenses have come down quite meaningfully from Q3, where it peaked last year, to what we just reported for Q2, with OpEx at $14.8 million, even within that time, we have been investing incrementally in things like AI tools that we referenced earlier in the call and seeing some pretty dramatic impacts on the development side. We've also been investing in things like GPU hardware to set up that infrastructure. We do plan to continue to invest in that. And I would just point out, we turned profitable here in Q2 from a non-GAAP operating income perspective. That continues in Q3 based on the guides. Record revenue in Q4 means it continues again in Q4 and guided to it again for the full year of 2027. So the business has definitely turned the corner on profitability. Positive cash flow follows. So we have been investing targeted amounts in things like AI tools and infrastructure. Expect us to continue to do that to fully engage on this NVIDIA partnership for one, and it's just that balance of prioritized investments and ensuring we deliver the right results for investors while investing in the right assets to accelerate growth for the medium and longer term. Operator: Our next question comes from the line of Craig Ellis of B. Riley Securities. Rebecca Zamsky: This is Rebecca Zamsky on for Craig Ellis. My first question for you is on TCAD. How you -- could you provide some color on how you're looking at the trajectory in 3Q and 4Q and heading into 2027? Walden Rhines: Well, sure. The adoption continues at a steady rate, and our number of actual engagements continues to increase. The companies that we engage in cover a wide range of industries, but as has been noted, we are dealing with mainstream semiconductor companies. While we started with Micron and spent almost five years working with them to work out the kinks and get a smooth process going, we're now in a position where we can take this capability to a much broader base of customers. It's been about one new announcement per quarter. We would expect that to accelerate some in coming quarters. And then the thing to dig into at that time will be, how quickly does the increase in license usage occur? So beyond services that might be part of the early part of an engagement, how many additional licenses are required to generate the data to build the models? And I think the answer is the more people use it, the more data they will need, the more licenses they will need. And it's something that while it starts with a single feasibility demonstration, it then quickly proceeds to additional types of process steps, additional simulation. And as we mentioned, it's not just LLMs, it's agentic AI. That is the ability for agents to go in and query our models and come up with answers to basic questions, in many cases in natural language, that answer the analysis of optimum process capabilities and optimum parameter settings to achieve the best process and the best manufacturing yield. Rebecca Zamsky: That was super helpful. And I believe you mentioned you're expecting double-digit growth in 4Q. What would be driving that growth? Like, would it be EDA, TCAD, IP? Like what do you see driving most of that growth? Walden Rhines: Well, I'll let Chris amplify, but it is pretty much across the business. And the reason that fourth quarters are strong is a disproportionate share of customers renew their contracts at that time. Our contracts are typically multi-year, and they tend to coincide with the calendar when people, as they come to the end of the year, they now are putting their plans together. They know their needs for the coming year. And so historically, it's been a stronger quarter than the others, and we don't see any reason for that to change. Chris Zegarelli: And just to add to that, Wally, I mean, we do see some good growth even in 2026. TCAD, for one, is growing nicely year over year. Our IP business is delivering really strong growth. It looks like it's going to double or a little bit more year over year in 2026. And so Wally's right, the strength in Q4 is really across those main drivers, and those trends do continue into 2027 as well. I'll just reiterate the pipeline, very strong for Q4 supporting that strong outlook. And also as we've dug into seasonality, there are indications that Q4 tends to be strong, particularly on the TCAD side. So we expect that trend to be no different going into Q4 of this year as well. Operator: Our next question comes from the line of Blair Abernethy of Rosenblatt Securities. Blair Abernethy: A couple of questions. I guess -- and apologize, I missed the first part of your call, but I just wanted to dig into a couple of things on the announcements here. So the FTCO win that you had this quarter, did you indicate, was there revenue associated with that in Q2, or is there a ramp period to that to revenue? Walden Rhines: There was some revenue associated with it. We expect that over time, of course, as the implementation continues, there can be more revenue, but this was more a traditional one where there was upfront license revenue. Blair Abernethy: Okay, great. And Wally, did you give a sort of what end market this went into? Walden Rhines: This one was more a traditional semiconductor manufacturing. Blair Abernethy: Okay, OK, OK. And then as you look at your pipeline -- good growth in the pipeline opportunities, how should we think about that $292 million split between TCAD, EDA and IP, which this quarter obviously IP continued to do well. Does it reflect that or is it weighted toward, say, the TCAD side? Walden Rhines: The pipeline growth that we talked about is driven predominantly by the IP business. It's just really taken off. It's much healthier than even we anticipated. And as Chris indicated, we're looking at more than doubling IP growth year to year. So once again, IP, short-term driver of very significant growth, TCAD and FTCO, the long-term driver of major transformation of the company. Chris Zegarelli: And just to add a little more color. Absolutely right, the strongest sequential -- the strongest growth over the last year in the pipeline for sure has been IP on a percentage basis. But the TCAD and FTCO pipeline does remain strong as well. I'd just say those are the two strongest pieces of it. Both have grown nicely. IP just on a percentage basis has grown more. Blair Abernethy: Okay, OK. And then the EDA segment, which I know we've talked in the past about how you're looking at focusing investments on the growing areas. Overall, should we look at EDA as keeping up the company growth rate going forward, or is it going to shrink relative to the TCAD and IP percentages? Walden Rhines: Well, we haven't forecast that. I think we came through a transition as part of the overall transformation that Chris talked about, where we focused our EDA business in a smaller number of products where we have high leverage. And we mentioned a couple of those, Jivaro's a particularly outstanding start. So we'll see growth in specific products, but we'll also see growth in solutions that are tied to our other two businesses. We have, in most cases, both the FTCO and the IP business provide opportunities for combinations of selling the EDA products along with the TCAD and IP solutions. And so as far as the long-term growth outlook for EDA, it's less of a major driver than the other two, but it still offers the potential for ongoing growth. Blair Abernethy: Okay, that's great. And I apologize if you covered this in your prepared remarks, but the Dassault SIMULIA partnership, what does that involve from a standpoint of what does Silvaco have to do? And I'm somewhat familiar with Dassault's simulation portfolio, but I guess what exactly -- how are you guys going to leverage their obviously much bigger installed base? Walden Rhines: Yes, so they provide a real resource for us in terms of taking us to a lot of customers we haven't traditionally been in. But the partnership is to develop interoperable digital twin workflows for semiconductor manufacturing. And it turns out that we have somewhat complementary simulation technologies. And so the real objective is for manufacturing operations to understand how their equipment conditions influence wafer-level outcomes. And that requires very broad simulation if you cover all the aspects of manufacturing. You need to do detailed structural analysis that goes beyond just the manufacturing process, but the end result in terms of stress and deformation and manufacturability. And by working together with Dassault and comparing what we have and what they have, it became clear that we were stronger together than separately. And we get the benefit of Dassault being a much larger company, has many engagements that we don't have, and it brings a lot of strength, and we really don't give up anything as a result of this. So it's a very positive relationship. Blair Abernethy: Okay, great. And then just, Chris, if I could, just two quick ones for you. When you use the term record revenues in Q4, are you referring to the highest Q4 ever or the highest quarter ever? Chris Zegarelli: The highest quarter ever. Blair Abernethy: Okay, OK. Great. And then just the Micron convertible note, I'm assuming -- is that -- when did that close? Walden Rhines: That closed in third quarter. Oh, sorry, go ahead, Chris. Chris Zegarelli: No, no. Wally, you've got that exactly right. It closed in Q3 before the call, after the end of the quarter, so pretty recently. Walden Rhines: But I should note, this is much more than just an investment by Micron in the company. This involves an affirmation and roadmap for going on with further developments, taking advantage of the impact that we've been able to provide with the FTCO technology, which was developed cooperatively with Micron, and reaffirming our future direction in enhancing that and adding new capabilities. Operator: Our next question comes from the line of Christian Schwab of Craig-Hallum. Christian Schwab: My only question is a follow-up, Wally, on the Micron investment. It's -- you seemingly discussed it for a second there for further development to add new capabilities, but is that how that deal came together? Can you give us the details of how the Micron note investment came together? Was it to give you the capital to make future investments and create new capabilities that they wanted, or is there other details you could share? Walden Rhines: Well, absolutely. This was driven by strategic leverage or commonality of interests, and so it was the strategic group within the company that wanted to continue to grow and cement our relationship. From our point of view, Micron is a much more attractive source of funding than simply borrowing from disinterested parties. You're working with a partner, the partner invests in you, and then a part of it, as highlighted in the quotes that Micron provided, is to help them develop their next-generation processes. And Dr. Gurtej Sandhu is in charge of that long-range process development, and he has worked out a roadmap, and he's given a number of public speeches. He's also featured on our site describing what is unique about what Silvaco provides, what is the future of process development, how do we move from what has been a TCAD-only capability in the past and the use of numerous physical wafers to verify processes to the future, which will be done more and more virtually simply because pilot wafers are not going to be feasible. The processes are too complex. You can't look at that many variables. You can't handle the long cycle times. It has to go virtual. Micron has been a leader in defining the path, and we've been very proud to work with them to demonstrate that, in fact, it does work, and it will be an engine of growth for the future. Operator: Thank you. I am showing no further questions at this time. I'd like to thank you all for your participation in today's conference. This does conclude the program, and you may now disconnect. Before you buy stock in Silvaco Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Silvaco Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,943!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,382,819!* Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 14, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Dassault Systèmes Se, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy. Silvaco (SVCO) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved first non-GAAP operating profit in nearly two years, driven by a $20 million annualized spending reduction and 48% year-over-year revenue growth. Secured three major partnerships with NVIDIA, Dassault Systèmes, and Micron to integrate physics-based simulation with AI, targeting the emerging AI-enabled manufacturing market. The NVIDIA collaboration focuses on reducing simulation cycles from weeks to days by combining Silvaco's physics models with NVIDIA's accelerated computing and AI frameworks. IP products emerged as a primary short-term growth engine, with revenue increasing 238% year-over-year and a pipeline that has expanded fourfold over the last year. Internal adoption of AI tools has significantly accelerated operational efficiency, with management reporting up to 30x faster prototyping and 11x faster source code analysis. Strategic focus in EDA has shifted toward high-leverage products like Jivaro Pro, which reduces terabyte-scale netlists to gigabytes to shorten simulation times. Management expects record quarterly revenue in Q4 2026, supported by a strong pipeline and historical seasonal strength in TCAD renewals. Full-year 2026 revenue is projected to exceed $70 million, with a commitment to maintaining non-GAAP operating profitability and achieving positive operating cash flow by year-end. The company anticipates double-digit revenue growth in 2027, underpinned by the scaling of Fab Technology Co-Optimization (FTCO) and a projected $20 million contribution from IP revenue. FTCO is positioned as a long-term strategic driver that expands the user base beyond traditional engineers by creating virtual platforms for process development. Future gross margins are expected to remain in the mid-to-upper 80% range, benefiting from completed restructuring activities and product mix. Micron invested $10 million via a convertible note in Q3 to deepen strategic collaboration on virtual process development and next-generation manufacturing roadmaps. Unrestricted cash grew for the second consecutive quarter, reaching $13 million at the end of Q2, excluding the subsequent $10 million Micron investment. Operating cash flow usage halved sequentially to $5.5 million, which included $1.8 million in one-time severance-related payments from restructuring. The company is increasing CapEx to support GPU infrastructure requirements necessary for generating the synthetic data used in AI digital twin models. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that while IP drives rapid short-term growth, FTCO is a long-term play that grows incrementally as new customers join and existing ones expand usage across more processes. The transition to virtual process development is viewed as a necessity because physical pilot wafers are becoming infeasible due to complexity and long cycle times. Management views AI as a net positive rather than a threat, noting that LLMs and AI agents require the physics-based synthetic data that Silvaco has developed over 40 years. Third-party IP remains essential because AI-generated designs still require qualification for rigorous industry standards like automotive and networking. The expectation for record revenue in Q4 (exceeding $18.7 million) is supported by a broad pipeline and the tendency for multi-year contracts to renew at calendar year-end. Management noted that while Q3 may appear softer due to TCAD seasonality, the combined H2 outlook remains consistent with previous growth expectations. The partnership provides Silvaco access to a much larger installed base and complementary technologies for structural stress analysis. The goal is to help manufacturers understand how equipment conditions influence wafer-level outcomes through interoperable digital twin workflows.

Interested in Silvaco Group, Inc.? Here are five stocks we like better. Strong growth and profitability: Silvaco’s fiscal Q2 2026 revenue rose 48% year over year to $17.8 million, while bookings increased 25% to $16.2 million. The company returned to non-GAAP operating profitability with $635,000 in profit after completing $20 million in annualized cost reductions. IP business drives expansion: IP revenue surged 238% year over year to a record level, and management expects it to reach approximately $20 million in fiscal 2026. The company’s IP pipeline has grown more than fourfold, while FTCO represents a longer-term AI-enabled manufacturing opportunity. Partnerships support the outlook: Collaborations with NVIDIA and Dassault Systèmes target AI-powered semiconductor simulation and digital twins, while Micron invested $10 million through a convertible note. Silvaco expects fiscal 2026 revenue to exceed $70 million and forecasts double-digit growth, operating profitability and positive operating cash flow in fiscal 2027. Silvaco Stock: Consider Early Investment in New Semiconductor Silvaco Group (NASDAQ:SVCO) reported second-quarter fiscal 2026 revenue growth of 48% year over year and returned to non-GAAP operating profitability, as the semiconductor software company highlighted expanding intellectual property sales, cost reductions and new partnerships focused on AI-enabled manufacturing. Revenue totaled $17.8 million for the quarter, while bookings reached $16.2 million, up 48% and 25%, respectively, from a year earlier. Chief Financial Officer Chris Zegarelli said revenue increased across all product areas, with particularly strong performance in the company’s IP business. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth “We delivered another sequential quarter of non-GAAP operating expense reductions,” CEO and Director Wally Rhines said. “We saw our first non-GAAP operating profit since late 2024” and delivered record bookings and revenue in IP products. Silvaco’s IP revenue rose 238% year over year in the second quarter, reaching a record level for the business. Rhines said the company expects IP revenue to double year over year in fiscal 2026, to approximately $20 million, supported by an IP pipeline that has increased more than fourfold over the past year. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High The company attributed part of the IP business momentum to assets acquired through Mixel, as well as its efforts to improve development efficiency, add AI capabilities and increase sales activity. Rhines said the addressable market for the company’s IP products exceeds $1 billion. Management described IP as the company’s principal near-term growth driver, while identifying its Fab Technology Co-optimization, or FTCO, offering as a longer-term opportunity. FTCO combines AI with physics-based simulation to help semiconductor manufacturers develop and optimize processes virtually. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Silvaco won another new FTCO customer during the quarter, according to Zegarelli. Rhines said the engagement generated some upfront license revenue and involved a traditional semiconductor manufacturer. He added that FTCO adoption is expected to expand as customers use the technology across more process and design applications. Silvaco announced three strategic partnerships that management said strengthen its position in AI-enabled manufacturing and process development. NVIDIA: Silvaco is collaborating with NVIDIA to integrate accelerated computing, CUDA-X and AI frameworks with Silvaco’s physics-based simulation portfolio. The companies aim to support digital twins that could reduce simulation cycles from weeks to days. Dassault Systèmes: The company is working with Dassault Systèmes’ SIMULIA unit on interoperable simulation workflows spanning reactor-scale plasma simulation, semiconductor process modeling and structural stress analysis. Rhines said the relationship could provide access to customers that Silvaco has not traditionally served. Micron: Micron invested $10 million in a Silvaco convertible note that closed during the third quarter. The companies also agreed to deepen their collaboration on FTCO technology and future process-development capabilities. Rhines said NVIDIA provides computing infrastructure, while Silvaco contributes physics-based models that can generate synthetic data for digital twins and surrogate models. He said accelerated GPU computing can allow the company to generate more data more quickly, supporting virtual manufacturing models that can provide rapid answers to process-development questions. Management also said AI is improving internal productivity. Rhines cited examples including prototyping that has accelerated by as much as 30 times, source-code analysis by up to 11 times, scripting by about 10 times and debugging by up to five times. The company is also developing AI-enabled products, including an enhanced version of Utmost that it said can reduce time to model by up to 50%. Silvaco reported a GAAP gross margin of 85.2% and a non-GAAP gross margin of 86.8%. Both measures declined sequentially because of revenue mix but improved substantially from the prior year, aided by restructuring actions, Zegarelli said. The company expects gross margins to remain in the mid-to-upper 80% range going forward. GAAP operating expenses fell 8.7% sequentially to $19.2 million, while non-GAAP operating expenses declined 7.8% to $14.8 million, below the midpoint of management’s guidance. Zegarelli said Silvaco has completed its targeted $20 million in annualized spending reductions. The company posted a GAAP operating loss of $4 million, an improvement from the prior quarter. Non-GAAP operating profit was $635,000, compared with a loss in the prior quarter. GAAP net loss was $3.7 million, or $0.11 per share, while non-GAAP net income was $315,000, or $0.01 per share. Cash and cash equivalents totaled $13 million at quarter-end, up nearly 20% sequentially. The balance did not include the $10 million Micron convertible note, which closed after the quarter ended. Operating cash use was $5.5 million, including roughly $1.8 million of one-time items such as severance payments. Excluding those items, cash used in operations would have been $3.7 million, Zegarelli said. For the third quarter, Silvaco forecast bookings of $18 million, plus or minus 10%; revenue of $17 million, plus or minus 10%; non-GAAP gross margin of about 88%; and non-GAAP operating expenses of $14.5 million, plus or minus 5%. Management said the third quarter is typically seasonally softer for the TCAD business, while the fourth quarter has historically been stronger because of customer renewals. Zegarelli said the company expects fourth-quarter revenue to exceed its prior record quarterly revenue of about $18.7 million. Silvaco expects fiscal 2026 revenue to exceed $70 million. For fiscal 2027, management forecast double-digit revenue growth, continued non-GAAP operating profitability and positive cash flow from operations. Zegarelli said the company’s pipeline and expected fourth-quarter performance provide confidence in that outlook, while Rhines said IP is expected to drive near-term expansion and FTCO could become a larger contributor over time. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Silvaco Group Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

-- Profitability: Delivered better-than-expected operating results driven by continued tight management of operating expenses -- -- Partnerships: Announced new strategic partnerships with NVIDIA and Dassault Systemes SIMULIA, and deepened relationship with Micron Technologies with a $10 million convertible note, to accelerate Fab Technology Co-Optimization (FTCO™) adoption globally – -- AI Acceleration: Introducing Agentic AI offerings with engagements with key strategic customers expected by yearend – SANTA CLARA, Calif., Aug. 06, 2026 (GLOBE NEWSWIRE) -- Silvaco Group, Inc. (Nasdaq: SVCO) (“Silvaco” or the “Company”), a provider of TCAD, EDA software, and SIP solutions that enable innovative semiconductor design and digital twin modeling through AI software and innovation, today announced its second quarter 2026 results. “Silvaco made solid progress on its strategic transformation in Q2,” said Walden Rhines, Silvaco’s Chief Executive Officer. “We launched new partnerships with industry leaders, Nvidia and Dassault Systemes. We deepened our relationship with Micron Technologies. We won another FTCO customer and expanded our AI offerings to include Agentic solutions. We delivered on our commitment to drive to non-GAAP profitability in Q2 and saw record pipeline growth and revenue in IP. Looking forward, we expect more FTCO wins, more AI offerings, and more progress on profitable growth. These developments, coupled with our strengthening pipeline, give us confidence in expecting record revenue in Q4 and double-digit revenue growth again in 2027.” Chris Zegarelli, Silvaco’s Chief Financial Officer, added, “Silvaco’s record IP revenue in the quarter, combined with reduced spending, enabled us to deliver non-GAAP operating profitability in Q2 for the first time in almost two years. We also recently took steps to strengthen the balance sheet, including closing a $10 million investment from Micron Technologies. We are excited about our momentum and strengthening fundamentals and look forward to building on them in the quarters ahead.” Micron Technologies’ investment in Silvaco is part of an expanded relationship between the two companies. At the core of this collaboration is Silvaco’s FTCO platform, an AI-powered solution to create real-time Surrogate Models empowered by multiphysics-based simulations. These surrogate models abstract the complexity of full physics-based simulations and deliver real-time predictive insights. “Real-time, AI-driven modeling is becoming a strategic advantage in advanced memory development, enabling our engineers to make faster, better-informed process decisions,” said Gurtej Sandhu, Principal Fellow & CVP, Micron Technologies. “Silvaco’s FTCO platform has been instrumental in helping us achieve that, and we look forward to continuing to push the boundaries of what’s possible in next generation memory development.” Second Quarter 2026 and Recent Business Highlights Secured new AI FTCO customer in Q2’26 and working to close new AI FTCO wins in 2H’26. IP bookings up 81% sequentially and 70% year-on-year to $5.4 million. IP revenue up 48% sequentially and 238% year-on-year to $6.0 million. IP strength driven by foundational IP and Mixel offerings. Drove record pipeline creation during the quarter, with $64M in new opportunities added. Identified pipeline opportunities grew to over $292M by quarter end. Announced partnership with NVIDIA to accelerate next-generation digital twins for semiconductor design and manufacturing. The partnership combines GPU-accelerated computing, physics-based simulation, and AI to enable digital twins. Launched partnership with Dassault Systemes SIMULIA to develop interoperable digital twin workflows that help semiconductor manufacturers achieve first-time-right process development, accelerate yield ramps, and make better manufacturing decisions before committing costly fab resources. Second Quarter 2026 Financial Results GAAP Financial Results: Revenue of $17.8 million, up 48% year-over-year. GAAP gross margin of 85%, up 1423 basis points year-over-year. GAAP operating loss of $4.0 million, compared to $10.1 million operating loss in Q2 2025. GAAP net loss of $3.7 million, compared to $9.4 million net loss in Q2 2025. GAAP basic and diluted net loss per share of $0.11, compared to basic and diluted net loss per share of $0.32 in Q2 2025. As of quarter-end, cash and cash equivalents totaled $13.0 million. Key Operating Indicators and Non-GAAP Financial Results: Gross bookings were $16.2 million, up 25% year-over-year. Non-GAAP gross margin of 87%, up 1246 basis points year-over-year. Non-GAAP operating income of $0.6 million, compared to $6.0 million operating loss in Q2 2025. Non-GAAP net income of $0.3 million, compared to $5.8 million net loss in Q2 2025. Non-GAAP basic and diluted net income per share of $0.01, compared to basic and diluted net loss per share of $0.20 in Q2 2025. 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, see “Discussion of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliation” in the accompanying tables below. Supplementary materials to this press release, including second quarter 2026 financial results, can be found at https://investors.silvaco.com/financial-information/quarterly-results. Third Quarter Financial Outlook As of August 6, 2026, Silvaco is providing guidance for its third quarter of 2026, which represents Silvaco’s current estimates of 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 Bookings, non-GAAP gross margin and non-GAAP operating expenses. GAAP gross margin is the most comparable GAAP measure to non-GAAP gross margin and GAAP operating expenses are the most comparable GAAP measures to non-GAAP operating expenses. Non-GAAP gross margin differs from GAAP gross margin in that it excludes items such as stock-based compensation expense, acquisition related costs and restructuring, executive severance and other related costs. Non-GAAP operating expenses differ from GAAP operating expenses in that they exclude items such as acquisition related costs, stock-based compensation expense, amortization of acquired intangible assets, and restructuring, executive severance and other related 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 expenses or a reconciliation of the forward-looking non-GAAP gross margin or non-GAAP operating expenses to GAAP gross margin or GAAP operating expenses, 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 2026 the following: Bookings of $18.0 million +/- 10%. Revenue of $17.0 million +/- 10%. Non-GAAP gross margin of around 88%. Non-GAAP operating expenses of $14.5 million +/- 5%. Second Quarter 2026 Conference Call Details A press release highlighting the Company's results along with supplemental financial results will be available at https://investors.silvaco.com/. An archived replay of the conference call will be available on this website for a limited time after the call. Participants who want to join the call and ask a question may register for the call here to receive the dial-in numbers and unique PIN. Date: Thursday, August 6, 2026 Time: 5:00 p.m. Eastern time Webcast: Here (live and replay) 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, Egypt, Brazil, China, Japan, Korea, Singapore, Vietnam, 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, Israel and Hamas, and the United States and Israel on the one hand and Iran and other regional adversaries on the other, 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 tariffs, interest rates and inflation; (q) our ability to raise additional capital; (r) our ability to accurately forecast demand for our software solutions; (s) our ability to successfully retain key personnel, integrate and realize the benefits of acquisitions; (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; and (v) our status as a controlled company. 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 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 obligation 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 and Other Key Business Metrics We use certain non-GAAP financial measures and key business metrics 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 income (loss), non-GAAP net income (loss), and non-GAAP basic and diluted net income (loss) per share. Key business metrics include bookings. We use these non-GAAP financial measures and key business metrics 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 as our GAAP gross profit adjusted to exclude certain costs, including stock-based compensation expense, acquisition related costs, and restructuring, executive severance and other related costs. We define non-GAAP gross margin as the ratio of non-GAAP gross profit to revenue. We define non-GAAP operating income (loss), as our GAAP operating income (loss) adjusted to exclude certain costs, including acquisition related costs, stock-based compensation expense, amortization of acquired intangible assets, and restructuring, executive severance and other related costs. We define non-GAAP net income (loss) as our GAAP net income (loss) adjusted to exclude certain costs, including acquisition related costs, stock-based compensation expense, amortization of acquired intangible assets, restructuring, executive severance and other related costs, and the income tax effect on non-GAAP items. Our non-GAAP basic and diluted 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 income (loss), non-GAAP net income (loss) and non-GAAP basic and diluted 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 income (loss), non-GAAP net income (loss) and non-GAAP basic and diluted 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 income (loss), GAAP net income (loss), and GAAP basic and diluted net income (loss) per share for these items to arrive at non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP basic and diluted net income (loss) per share 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 income (loss), non-GAAP net income (loss) and non-GAAP basic and diluted 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. We define a booking as a signed contract and related purchase commitment from a customer, based on the value set forth in a purchase order. We believe bookings are a useful metric to measure whether we are successful in our sales efforts with new and existing customers and provide an indication of trends in our operating results that are not necessarily reflected in our revenue. Reported bookings may be subject to adjustments and potential cancellations prior to the satisfaction of our customer obligations. Investor Contact:Greg [email protected] Media Contact:Tiffany [email protected]

Sono-Tek Corporation (SOTK) came out with quarterly earnings of $0.05 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $0.03 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this company would post earnings of $0.02 per share when it actually produced earnings of $0.03, delivering a surprise of +50%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. SonoTek, which belongs to the Zacks Electronics - Semiconductors industry, posted revenues of $5.66 million for the quarter ended May 2026, missing the Zacks Consensus Estimate by 0.68%. This compares to year-ago revenues of $5.13 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. SonoTek shares have added about 24.7% since the beginning of the year versus the S&P 500's gain of 9.6%. While SonoTek has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for SonoTek was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.05 on $5.66 million in revenues for the coming quarter and $0.11 on $21.45 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Semiconductors is currently in the top 19% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Silvaco Group, Inc. (SVCO), is yet to report results for the quarter ended June 2026. This company is expected to post break-even quarterly earnings per share in its upcoming report, which represents a year-over-year change of +100%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Silvaco Group, Inc.'s revenues are expected to be $18 million, up 49.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sono-Tek Corporation (SOTK) : Free Stock Analysis Report Silvaco Group, Inc. (SVCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Silvaco Group, Inc.? Here are five stocks we like better. Silvaco’s Q1 results improved sharply, with bookings and revenue both rising 26% year over year to $17.2 million and $17.8 million, respectively, while the company said it is on track to return to non-GAAP operating profitability in Q2. Margins and cash flow strengthened as gross margins expanded into the high-80% range, operating expenses declined for a second straight quarter, and unrestricted cash rose nearly 10% sequentially for the first time since the IPO. TCAD and FTCO were key growth drivers, while the semiconductor IP business remained strong on a year-over-year basis despite a sequential dip; management also highlighted growing interest in FTCO from governments, power applications and semiconductor equipment companies. Silvaco Stock: Consider Early Investment in New Semiconductor Silvaco Group (NASDAQ:SVCO) reported first-quarter fiscal 2026 results that management said showed improving momentum across bookings, revenue, margins and cash, while the company guided for a return to non-GAAP operating profitability in the second quarter. Chief Executive Officer and Director Wally Rhines said the company delivered bookings, revenue and gross margin above the midpoint of its guidance range in the quarter, helping cut its non-GAAP operating loss in half sequentially. Revenue rose 26% year over year, and Rhines said the company recorded its first sequential increase in unrestricted cash since its May 2024 initial public offering. → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% “Our focus on financial discipline and predictability is delivering tangible results,” Rhines said. “Our team has rallied around this cause and is delivering solid results and important milestones.” Chief Financial Officer Chris Zegarelli said Silvaco delivered $17.2 million in bookings and $17.8 million in revenue in the first quarter, both above consensus and above the midpoint of guidance. Bookings and revenue each increased 26% from the prior-year period. → Light Speed Returns: Corning Cashes In on NVIDIA Growth TCAD was the main source of strength. Rhines said TCAD bookings grew 13% sequentially and 49% year over year to $10.5 million. TCAD revenue rose 10% sequentially and 22% year over year to $9.6 million. The semiconductor IP business softened sequentially after a strong fourth quarter, but remained sharply higher from the prior year. Rhines said IP bookings were $3 million, down 41% sequentially but up more than 200% year over year. IP revenue was $4 million, down 21% sequentially but up 270% year over year. He attributed the sequential decline to the timing of new customer wins, saying a few key designs were pushed out by about one quarter. → Years in the Making, AMD’s Upside Movement Has Just Begun Rhines said the year-over-year performance in IP reflects a “new baseline” following the integration of Mixel’s MIPI PHY IP. He added that the IP sales pipeline has roughly doubled over the past year, with particular strength in automotive soft IP and Mixel PRO, a production-ready set of products introduced in the first quarter. EDA bookings and revenue declined in the quarter, with bookings of $3.8 million and revenue of $4.1 million. Rhines said the company is focusing on a smaller group of core products that it believes can drive future growth, including Jivaro and UTMOST, a database-driven platform for device characterization and SPICE model extraction. Management highlighted continued momentum for FTCO, Silvaco’s AI-driven manufacturing offering, which is reported within TCAD. Rhines said the company secured a new FTCO customer engagement for the second consecutive quarter and also received an order from an existing FTCO customer for new functionality. Zegarelli said the company expects to close one more new FTCO customer in the second quarter. Rhines said Silvaco is seeing interest in FTCO from governments, power applications and semiconductor equipment companies. In response to analyst questions, he said the breadth of potential users has been “surprising,” noting that the technology can be applied beyond its initial work with Micron. For semiconductor equipment companies, Rhines said FTCO can be used both for equipment design and development and for work with end customers. He described applications including digital twin modeling to help tune equipment, develop process recipes and accelerate equipment setup time. “By having a reliable model, they can in fact tune in what the ultimate result should be from the process step, and therefore drive how the setup should be done,” Rhines said. Silvaco reported GAAP gross margin of 86.4% and non-GAAP gross margin of 87.9% in the first quarter. Zegarelli said GAAP and non-GAAP gross margins increased sequentially by 305 and 235 basis points, respectively, and rose 779 and 788 basis points year over year. He said the improvement benefited from restructuring activities and that the company expects gross margins to remain in the mid- to upper-80% range. GAAP operating expenses declined 4.5% sequentially to $21 million, while non-GAAP operating expenses declined 3.6% to $16.1 million. Zegarelli said total non-GAAP spending declined for two consecutive quarters for the first time since the IPO and is expected to decline again in the second quarter. The company reported a GAAP operating loss of $5.7 million, an improvement from the prior quarter. Non-GAAP operating loss was $471,000. GAAP net loss was $5.9 million, or $0.19 per share, while non-GAAP net loss was $574,000, or $0.02 per share. Zegarelli said Silvaco’s $20 million cost reduction initiative is largely behind it, though some additional reductions, particularly internationally, are still expected to flow through over time. He said operating expenses are likely to trend “down to flattish” from current levels, while the company continues targeted investments, including in AI tools. Silvaco ended the quarter with $10.9 million in cash and cash equivalents and no restricted cash on the balance sheet. Zegarelli said unrestricted cash increased nearly 10% sequentially, marking the first such increase since the IPO. Net cash used in operating activities was $11 million, which included an $8.3 million final litigation settlement payment and $1 million in severance payments. Excluding those items, net cash used in operating cash flow would have been $1.7 million, compared with $7.4 million in the fourth quarter on the same adjusted basis. “The improvement from $7.4 million to $1.7 million speaks to the meaningful improvement in our underlying economics,” Zegarelli said, adding that the company expects positive operating cash flow by the third quarter. Silvaco also signed a non-binding term sheet with its banking partner for a $10 million revolving line of credit, which it expects to close during the second quarter. For the second quarter of fiscal 2026, Silvaco guided for bookings of $19 million, plus or minus 10%, and revenue of $18 million, plus or minus 10%. The company expects non-GAAP gross margin of about 88% and non-GAAP operating expenses of $15.5 million, plus or minus 5%. Zegarelli said the guidance indicates Silvaco expects to deliver positive non-GAAP operating income in the second quarter. Rhines said that would be the company’s first quarter of non-GAAP operating profitability since the fourth quarter of 2024. During the question-and-answer session, Zegarelli said IP is expected to grow sequentially in the second quarter, EDA could be flat to slightly down, and TCAD could be flat to slightly up. He also disclosed that remaining performance obligations, or backlog, were about $46.6 million, down slightly from the fourth quarter but still in what he described as an elevated high-$40 million range. Rhines said TCAD should remain a solid core business, though he cautioned that its roughly 50% year-over-year bookings growth rate is not expected to continue. He said FTCO’s inclusion in TCAD provides an additional growth driver as the company continues to add customers and identify new applications. “We’ve made great strides in stabilizing the business, enhancing liquidity, and streamlining operations,” Rhines said. “We all continue to believe that the best is yet to come.” 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. The article "Silvaco Group Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

– Financial performance: bookings, revenue, gross margin and profitability exceeded consensus – – AI FTCO™ traction: New customer win, new functionality, and broadening customer interest – – Strategic pivot: AI increasingly embedded into products to accelerate customers’ time to market – SANTA CLARA, Calif., May 07, 2026 (GLOBE NEWSWIRE) -- Silvaco Group, Inc. (Nasdaq: SVCO) (“Silvaco” or the “Company”), a provider of TCAD, EDA software, and SIP solutions that enable innovative semiconductor design and digital twin modeling through AI software and innovation, today announced its first quarter 2026 results. “Silvaco got off to a great start in 2026,” said Walden Rhines, Silvaco’s Chief Executive Officer. “Financially, we delivered results ahead of expectations, delivered solid 26% year-over-year growth in revenue and are guiding to profitability in Q2. We saw continued momentum with AI FTCO™, with a new customer, new functionality, and strong interest from multiple potential new customers. We also accelerated our strategic pivot with a focus on AI across products and the company. The newly energized Silvaco is excited to accelerate AI adoption and deployments and to partner with customers.” Chris Zegarelli, Silvaco’s Chief Financial Officer, added, “Silvaco delivered solid results in Q1, with bookings, revenue, gross margin and profitability all ahead of expectations. We saw unrestricted cash grow sequentially for the first time since the IPO and signed a non-binding term sheet with our banking partner for a $10 million revolving line of credit. Looking forward, we see a path to profitability in Q2 and positive operating cash flow later in the year. We are excited about our momentum and look forward to continuing to deliver on our commitment to profitable growth.” First Quarter 2026 and Recent Business Highlights Secured new AI FTCO customer in Q1’26 and expect another new AI FTCO customer win in Q2’26. Broadened AI FTCO product offering to include new functionality and received order from an existing AI FTCO customer for that new offering. Broadening interest in fully adopting AI FTCO from governments, power applications and semiconductor equipment companies. TCAD bookings up 13% sequentially and almost 50% year-on-year to $10.5 million, driven by AI FTCO and Power Semiconductor end applications. Released more than 160 PRO IP parts including 80 Mixel MIPI PHYs and multiple PRO Memory Compilers and Soft IP. Launched AI-driven version of Utmost, which now delivers up to 10x performance improvements, a machine learning optimizer, and other runtime enhancements. Announced partnership with ITRI to support MCU development and startup innovation. First Quarter 2026 Financial Results GAAP Financial Results: Revenue of $17.8 million, up 26% year-over-year. TCAD revenue of $9.6 million, up 22% year-over-year. EDA revenue of $4.1 million, down 20% year-over-year. SIP revenue of $4.0 million, up 270% year-over-year. GAAP gross margin of 86%, up 779 basis points year-over-year. GAAP operating loss of $5.7 million, compared to $19.6 million operating loss in Q1 2025. GAAP net loss of $5.9 million, compared to $19.3 million net loss in Q1 2025. GAAP basic and diluted net loss per share of $0.19, compared to basic and diluted net loss per share of $0.67 in Q1 2025. As of quarter-end, cash and cash equivalents totaled $10.9 million. Key Operating Indicators and Non-GAAP Financial Results: Gross bookings were $17.2 million, up 26% year-over-year. Non-GAAP gross margin of 88%, up 788 basis points year-over-year. Non-GAAP operating loss of $0.5 million, compared to $2.8 million operating loss in Q1 2025. Non-GAAP net loss of $0.6 million, compared to $2.4 million net loss in Q1 2025. Non-GAAP basic and diluted net loss per share of $0.02, compared to basic and diluted net loss per share of $0.08 in Q1 2025. 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, see “Discussion of Non-GAAP Financial Measures” and “GAAP to Non-GAAP Reconciliation” in the accompanying tables below. Supplementary materials to this press release, including first quarter 2026 financial results, can be found at https://investors.silvaco.com/financial-information/quarterly-results. Second Quarter Financial Outlook As of May 7, 2026, Silvaco is providing guidance for its second quarter of 2026, which represents Silvaco’s current estimates of 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 Bookings, non-GAAP gross margin and non-GAAP operating expenses. GAAP gross margin is the most comparable GAAP measure to non-GAAP gross margin and GAAP operating expenses are the most comparable GAAP measures to non-GAAP operating expenses. Non-GAAP gross margin differs from GAAP gross margin in that it excludes items such as stock-based compensation expense, acquisition related costs and restructuring, executive severance and other related costs. Non-GAAP operating expenses differ from GAAP operating expenses in that they exclude items such as acquisition related costs, stock-based compensation expense, amortization of acquired intangible assets, and restructuring, executive severance and other related 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 expenses or a reconciliation of the forward-looking non-GAAP gross margin or non-GAAP operating expenses to GAAP gross margin or GAAP operating expenses, 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 2026 the following: Bookings of $19.0 million +/- 10%. Revenue of $18.0 million +/- 10%. Non-GAAP gross margin of around 88%. Non-GAAP operating expenses of $15.5 million +/- 5%. First Quarter 2026 Conference Call Details A press release highlighting the Company's results along with supplemental financial results will be available at https://investors.silvaco.com/. An archived replay of the conference call will be available on this website for a limited time after the call. Participants who want to join the call and ask a question may register for the call here to receive the dial-in numbers and unique PIN. Date: Thursday, May 7, 2026 Time: 5:00 p.m. Eastern time Webcast: Here (live and replay) 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, Egypt, Brazil, China, Japan, Korea, Singapore, Vietnam, 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, Israel and Hamas, and the United States and Israel on the one hand and Iran and other regional adversaries on the other, 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 tariffs, interest rates and inflation; (q) our ability to raise additional capital; (r) our ability to accurately forecast demand for our software solutions; (s) our ability to successfully retain key personnel, integrate and realize the benefits of acquisitions; (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; and (v) our status as a controlled company. 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 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 obligation 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 and Other Key Business Metrics We use certain non-GAAP financial measures and key business metrics 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 income (loss), non-GAAP net income (loss), and non-GAAP basic and diluted net income (loss) per share. Key business metrics include bookings. We use these non-GAAP financial measures and key business metrics 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 as our GAAP gross profit adjusted to exclude certain costs, including stock-based compensation expense, acquisition related costs, and restructuring, executive severance and other related costs. We define non-GAAP gross margin as the ratio of non-GAAP gross profit to revenue. We define non-GAAP operating income (loss), as our GAAP operating income (loss) adjusted to exclude certain costs, including acquisition related costs, stock-based compensation expense, amortization of acquired intangible assets, and restructuring, executive severance and other related costs. We define non-GAAP net income (loss) as our GAAP net income (loss) adjusted to exclude certain costs, including acquisition related costs, stock-based compensation expense, amortization of acquired intangible assets, restructuring, executive severance and other related costs, and the income tax effect on non-GAAP items. Our non-GAAP basic and diluted 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 operating income (loss), non-GAAP net income (loss) and non-GAAP basic and diluted 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 income (loss), non-GAAP net income (loss) and non-GAAP basic and diluted 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 income (loss), GAAP net income (loss), and GAAP basic and diluted net income (loss) per share for these items to arrive at non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP net income (loss), and non-GAAP basic and diluted net income (loss) per share 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 income (loss), non-GAAP net income (loss) and non-GAAP basic and diluted 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. We define a booking as a signed contract and related purchase commitment from a customer, based on the value set forth in a purchase order. We believe bookings are a useful metric to measure whether we are successful in our sales efforts with new and existing customers and provide an indication of trends in our operating results that are not necessarily reflected in our revenue. Reported bookings may be subject to adjustments and potential cancellations prior to the satisfaction of our customer obligations. Investor Contact: Greg McNiff [email protected] Media Contact: [email protected]

FormFactor (FORM) came out with quarterly earnings of $0.56 per share, beating the Zacks Consensus Estimate of $0.45 per share. This compares to earnings of $0.23 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +25.00%. A quarter ago, it was expected that this integrated circuits diagnostic company would post earnings of $0.35 per share when it actually produced earnings of $0.46, delivering a surprise of +31.43%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. FormFactor, which belongs to the Zacks Electronics - Semiconductors industry, posted revenues of $226.14 million for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 0.23%. This compares to year-ago revenues of $171.36 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. FormFactor shares have added about 140.6% since the beginning of the year versus the S&P 500's gain of 4.3%. While FormFactor has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for FormFactor was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.43 on $227.88 million in revenues for the coming quarter and $1.80 on $921.37 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Semiconductors is currently in the top 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Silvaco Group, Inc. (SVCO), another stock in the same industry, has yet to report results for the quarter ended March 2026. The results are expected to be released on May 7. This company is expected to post quarterly loss of $0.05 per share in its upcoming report, which represents a year-over-year change of +28.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Silvaco Group, Inc.'s revenues are expected to be $17.04 million, up 20.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report FormFactor, Inc. (FORM) : Free Stock Analysis Report Silvaco Group, Inc. (SVCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research