Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 6, 2026 · Beat 3 of last 6 quarters
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Silvaco's partnerships with NVIDIA and Micron underscore the growing importance of AI-driven digital twin and virtual process development in semiconductor manufacturing, a key component of the AI infrastructure buildout. The $10M Micron investment and deepening FTCO collaboration signal that leading memory manufacturers are investing in virtual fab capabilities to accelerate process development, which could drive demand for Silvaco's simulation and IP offerings.
Silvaco reported Q2 FY2026 revenue of $17.8M (+48% YoY) and bookings of $16.2M (+25% YoY), with IP revenue growing 238% YoY to a record. The company achieved its first non-GAAP operating profit since late 2024 at $635K, driven by continued cost reductions (non-GAAP OpEx down 7.8% sequentially to $14.8M) and gross margin of 86.8%. Management announced three strategic partnerships: an NVIDIA collaboration for GPU-accelerated digital twins, a Dassault Systèmes SIMULIA interoperability partnership, and a $10M convertible note investment from Micron alongside deeper FTCO collaboration. Cash grew to $13M, and the company expects positive operating cash flow later in the year.
Management expects Q3 2026 bookings of $18M ±10%, revenue of $17M ±10%, non-GAAP gross margin around 88%, and non-GAAP operating expenses of $14.5M ±5%. They expect record revenue in Q4 2026 (exceeding the prior record of $18.7M) and full-year 2026 revenue above $70M. For 2027, they guide to double-digit revenue growth, continued non-GAAP operating profitability, and positive operating cash flow. The outlook is supported by a strong Q4 pipeline, record IP momentum, and new strategic partnerships (NVIDIA, Dassault Systèmes, Micron) that are expected to contribute to growth. Management emphasized continued cost discipline and targeted investments in AI and GPU infrastructure to support the FTCO and IP growth drivers.
“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.”
on Q2 performance and strategic transformation
“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.”
on Growth drivers: FTCO vs IP
“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 AI-driven internal productivity gains
With Micron and NVIDIA as partners, do you think FTCO can drive half the revenues as you previously stated, and what timeframe?
Wally Rhines: FTCO is a longer-term strategic growth driver that grows incrementally with new customers and expands within existing customers. The short-term driver is IP, which has seen remarkable growth and 4x pipeline growth. Expect slow, steady FTCO growth that accelerates over time as adoption spreads.
Can you clarify the Q3/Q4 revenue outlook and what 'double-digit growth' means for 2027?
Chris Zegarelli: Q3 is a bit below consensus, Q4 will be above, together roughly in line. We expect record revenue in Q4 (above $18.7M) and full-year 2026 above $70M. For 2027, double-digit growth implies at least 10%, which would put revenue in the high 70s to 80s. Pipeline strength and partnerships support this.
What is driving the expected double-digit growth in Q4?
Wally Rhines: Growth is across the business, with Q4 historically strong due to contract renewals. Chris Zegarelli: TCAD is growing nicely, IP is expected to double or more in 2026, and the pipeline is very strong for Q4. These trends continue into 2027.