Key Highlights

• Won a major new tier-1 FTCO customer, driving record Q3 TCAD bookings of $10.3 million, up 89% year-over-year

• GAAP gross Margin expanded to 84%, up 613 basis points year-over-year

• Q4 2026 expected to deliver record Revenue with 35% sequential growth

• Full-year 2026 revenue growth guided at 17% at midpoint, with mid-to-high teens growth projected for 2027

Silvaco Group, Inc.(NASDAQ:SVCO), a provider of TCAD, EDA software, and semiconductor intellectual property solutions, reported its third quarter 2026 results on November 4, 2026. The Santa Clara-based company, which enables semiconductor design and digital twin modeling through AI software and innovation, posted a mix of declining headline revenue alongside improving profitability metrics and a forward-looking growth trajectory.

Q3 Financial Performance

Revenue for the third quarter came in at $16.3 million, representing a 13% decline year-over-year. However, the revenue composition shifted meaningfully across Silvaco's three Business lines. TCAD revenue reached $7.6 million, up 16% year-over-year, while SIP revenue surged 141% to $4.1 million. EDA revenue of $4.6 million was down 56% from the prior-year period.

GAAP gross margin expanded to 84%, an improvement of 613 basis points compared to Q3 2025. GAAP operating loss narrowed to $4.3 million from $9.3 million in the year-ago quarter, and GAAP net loss improved to $4.6 million, or $0.14 per diluted share, from $5.3 million a year earlier. On a non-GAAP basis, operating loss was $1.0 million compared to $2.6 million in Q3 2025, and non-GAAP net loss per share was $0.04 versus $0.07.

Cash and cash equivalents totaled $22.0 million at quarter-end, which the company noted was the highest unrestricted cash balance since Q2 2025.

Business Wins and Strategic Progress

The quarter featured several noteworthy customer wins. Silvaco secured a major new tier-1 FTCO customer, propelling TCAD to record Q3 bookings of $10.3 million. The company also recorded record bookings for its Jivaro Pro RC parasitic reduction solution, driven by four tier-1 wins across multiple end markets. Additionally, Silvaco sold its first internally developed MIPI controller paired with its MIPI PHYs and delivered a fully functional 2nm MIPI C-PHY/D-PHY combo solution.

CEO Walden Rhines noted that the company engaged with two of the largest global technology companies regarding its Agentic AI offerings, signaling potential future revenue streams. The company also streamlined its organizational structure around two focused product teams: AI Manufacturing, encompassing TCAD multiphysics and FTCO technologies, and AI Design, covering semiconductor IP and complementary EDA solutions.

Outlook and Growth Trajectory

Silvaco guided for record revenue in Q4 2026, projecting 35% sequential growth from Q3 levels. This would drive full-year 2026 revenue growth of approximately 17% at the midpoint of the guided range. Looking further ahead, management indicated expectations for mid-to-high teens revenue growth in 2027.

CFO Chris Zegarelli highlighted the improving financial trajectory, noting meaningful progress in net cash used in operations during Q3 and the expectation that higher growth would continue expanding profitability and cash generation into 2027. The company strengthened its Leadership team during the quarter by appointing David Dutton, its former CEO, to lead sales operations.

What It All Means

Silvaco's Q3 results present a company in transition, with headline revenue declining but underlying business metrics pointing toward acceleration. The back-half weighted revenue profile, anchored by a projected record Q4, combined with expanding gross margins and narrowing losses, suggests the strategic changes implemented over the past year are beginning to translate into financial results. The key question remains whether the tier-1 customer wins and Agentic AI engagements will convert into sustained revenue growth matching management's 2027 projections.