Silvaco Q1 2025 slides: Revenue drops 11%, maintains positive full-year outlook

Introduction & Market Context

Silvaco Group Inc (NASDAQ:SVCO) reported a challenging first quarter for fiscal year 2025, with revenue declining 11% year-over-year to $14.1 million. The semiconductor design software company, which went public in May 2024, saw its stock fall 5.28% in aftermarket trading to $5.02 following the May 7, 2025 earnings presentation.

Despite the disappointing quarterly results, Silvaco maintained a positive outlook for the full fiscal year, projecting revenue growth of 7% to 17%. The company attributed the Q1 weakness to macroeconomic headwinds that caused customer order delays, with approximately $2.2 million in revenue pushed to later quarters.

Quarterly Performance Highlights

Silvaco reported Q1 2025 gross bookings of $13.7 million, down 15% year-over-year, alongside revenue of $14.1 million, representing an 11% decline from the same period last year. The company posted a non-GAAP operating loss of $2.5 million and a non-GAAP net loss per diluted share of $0.07.

As shown in the following chart detailing Q1 financial performance:

The quarterly results breakdown by product category reveals that TCAD (Technology Computer-Aided Design) remains Silvaco’s largest segment, accounting for 52% of Q1 bookings, followed by EDA (Electronic Design Automation) at 41% and SIP (Semiconductor Intellectual Property) at 7%.

The company’s bookings performance over recent quarters illustrates the current challenges:

Strategic Initiatives

Silvaco highlighted several strategic developments during the quarter, including the acquisition of Tech-X Corporation, announced on April 29, 2025. This acquisition is expected to strengthen Silvaco’s multi-physics simulation capabilities and expand its addressable market.

The company’s growth strategy centers on AI-driven semiconductor design and digital twin modeling, particularly through its Fab Technology Co-Optimization (FTCO) platform. Silvaco estimates that these initiatives have expanded its serviceable addressable market (SAM) by $600 million.

As illustrated in this market opportunity diagram:

The Tech-X acquisition aligns with Silvaco’s focus on AI applications in the semiconductor industry, which the company categorizes into four key areas:

New Performance Metrics

A significant development in Silvaco’s financial reporting is the introduction of Annual Contract Value (ACV) as a new metric. ACV estimates the annualized value of term-based software licenses and provides insight into revenue expansion and retention patterns.

The company explained the ACV concept with the following illustration:

Despite the quarterly fluctuations in bookings and revenue, Silvaco’s ACV has shown steady growth, increasing from $43.3 million to $52.3 million on a trailing twelve-month basis:

Forward-Looking Statements

For the second quarter of fiscal 2025, Silvaco provided guidance for gross bookings between $14 million and $18 million, representing a year-over-year decrease of 8% to 28%. Revenue is expected to be between $12 million and $16 million, ranging from a 20% decrease to a 7% increase compared to Q2 2024.

For the full fiscal year 2025, the company projects:

• Gross bookings of $67 million to $74 million (2% to 13% YoY growth)
• Revenue of $64 million to $70 million (7% to 17% YoY growth)
• Non-GAAP gross margin of 83% to 86%
• Non-GAAP operating income (loss) of ($2 million) to $1 million
• Non-GAAP net income (loss) per diluted share of ($0.07) to $0.03

The company’s comprehensive financial guidance is detailed in this slide:

Financial Analysis

Despite the revenue decline, Silvaco maintained strong gross margins at 82% in Q1 2025, reflecting the company’s software-centric business model. The company ended the quarter with $74.5 million in cash, cash equivalents, and marketable securities, providing substantial financial flexibility.

Silvaco’s long-term financial strategy aims to balance growth investments with profitability:

Executive Commentary

While specific executive quotes were not provided in the presentation materials, the company emphasized that it remains "well positioned and focused on growth markets" despite the challenging macroeconomic environment. Management expressed confidence that recent acquisitions will help accelerate growth and that the company expects to "return to full recovery of target growth rate" in the coming quarters.

The presentation highlighted that Silvaco landed nine new customers for AI and Photonics applications in Q1, representing 23% of bookings, while expanded business with existing customers accounted for 38% of Q1 bookings.

Conclusion

Silvaco’s Q1 2025 results reflect the challenges of the current semiconductor industry environment, with macroeconomic headwinds impacting short-term performance. However, the company’s strategic focus on AI-driven applications, recent acquisitions, and the introduction of the ACV metric suggest management is positioning for longer-term growth. Investors will be watching closely to see if Silvaco can deliver on its optimistic full-year guidance despite the slow start to fiscal 2025.

Full presentation:

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