Silvaco Group, Inc.

Hello, everyone, and welcome to Silvaco's first quarter fiscal year 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 11 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 again. Please note, this event is being recorded. I would now like to turn the conference over to Greg McNiss, Investor Relations for Sivako. Please go ahead.

Thank you. Joining me on the call today are Babak Tahiri, Sivako's CEO, and Keith Tainsky, Sivako's interim CFO. As a reminder, a press release highlighting the company's results, along with supplemental financial results, and an earnings presentation are available on the company's IR site at investors.savaco.com. An archived replay of the conference 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, earnings presentation, and on this conference The risk factor section in Sivako's annual report on Form 10-K for the year ended December 31, 2024, and the most recent Form 10-Q filing with the Securities and Exchange Commission provide descriptions of these risks. With that, I'd like to turn the call over to Sivako's CEO, Babak Tahiri. Babak?

Hello, and welcome to Sivako's first quarter 2025 earnings call. I am Babak Tahiri, CEO of Sivako. Thank you for joining us today. I'm excited to update you on the strong momentum we've built since going public in May of last year. For fiscal year 2024, we delivered a 13% increase in bookings and achieved 10% organic revenue growth over fiscal year 2023. We also added over 46 new customer logos, underscoring the growing demand for our software platforms. A core objective of our IPO was to position Silvaco for strategic acquisitions that would meaningfully expand our serviceable addressable market, or SAM. We launched our acquisition strategy in Q1 of 2025 and have maintained that momentum into this quarter, targeting high-growth sectors such as AI, photonics, and IoT. Our two most recent acquisitions have added more than an estimated $600 million in incremental SAM, reinforcing our position in fast-expanding markets and further diversifying our growth engine. The market response to this strategy has been very encouraging. In Q1 2025, our sector encountered some short-term macroeconomic headwinds, resulting in the deferral of certain customer orders, representing less than 10% of our annual revenue into future quarters. Revenue for the quarter came in at $14.1 million below our guidance, primarily due to delays in closing two key bookings totaling $4.4 million. These delays reduced recognized revenue by approximately $2.2 million. Had these deals closed as expected, we would have reported bookings and revenue above the midpoint of our guidance. Despite these timing shifts, we remain highly confident in our updated Q2 and full year 2025 guidance, which has been intentionally set with a conservative approach given the current macronomic environment. We are equally confident in our long-term growth trajectory. Underpinned by strong market demand, strategic expansion, and the increasing value of our technology stack. To further enhance transparency around our revenue visibility, we will begin reporting annual contract value or ACV starting this quarter. This new metric will give investors greater insight into our recurring revenue base while also reinforcing the fact that quarterly ordered timing has limited impact on the underlying growth trend. Next, I will provide financial updates for Q1 actuals as well as Q2 and full year 2025 guidance. Next slide, please. I will now highlight our non-GAAP results for Q1 2025, guidance for Q2, and full year 2025, and our interim CFO, Keith Tenske, will discuss our detailed financial results and guidance later. For Q1 2025, we reported gross bookings of $13.7 million, revenue of $14.1 million, and non-GAAP gross margin of 82%. Non-GAAP operating loss was $2.5 billion and non-GAAP net loss was 7 cents per share. For Q2 2025 and full year 2025 guidance, we have intentionally set a conservative stance given the current macroeconomic uncertainty. For Q2 2025, we are guiding gross bookings in the range of $14 to $18 million, revenue in the range of $12 to $16 million, and non-GAAP gross margin in the range of 80 to 83%. As we stated in the past, our gross margin will increase as our revenue continues to pick up in the second half. For the full year 2025, we expect gross bookings in the range of $67 to $74 million, reflecting an increase of up to 13% year-over-year. Revenue in the range of $64 million to $70 million, reflecting an increase of up to 17% year-over-year. Non-GAAP gross margin in the range of 83% to 86% compared to 86% in 2024. Non-GAAP operating income in the range of minus $2 million loss to $1 million income compared to $5.5 million in 2024, non-GAAP net income per share of up to 3 cents compared to 25 cents in 2024. Please note that this guidance includes the acquisition of Cadence's PPC platform for the full year and TechX for Q2 through Q4, considering only initial revenue synergy. In the first quarter, we continue to build on the momentum we highlighted on our last earnings call. Despite the near-term macro uncertainty, we believe our focus on driving innovation through advanced R&D positions us well for long-term growth. We are strategically expanding our capabilities to meet the evolving needs of our customers, particularly in high-growth sectors such as AI, photonics, and advanced semiconductor manufacturing. At the same time, we are taking a disciplined approach to managing operating expenses, cash flow, and liquidity, reflecting a prudent posture in today's uncertain macroeconomic environment. This balance between targeted investment and financial discipline positions Silvaco to lead in some of the fast-growing segments of the technology market, while protecting shareholder value and ensuring long-term sustainability. Next, I'd like to discuss how Silvaco solves semiconductor and photonics challenges facing our customers. Next slide, please. Today, we face a rapidly changing market. New technologies are emerging. Product complexities are increasing. Customers are challenged. Their expectations are evolving, and we must lead in addressing and solving these challenges by doing what we do best, anticipating the next wave of technological breakthroughs, leading it through artificial intelligence, through advanced algorithms in multi-physics, through digital twin models, and guide customers through complex design and manufacturing. To stay ahead, we don't work alone. We partner with universities, with leading research labs, with our strategic customers, and through targeted strategic acquisitions, focused on AI, focused on photonics, focused on IoT connectivity. Strengthening our reach in power, memory, high-performance compute, IoT and beyond. Let's look closer at the challenges shaping our markets. First, design and manufacturing complexity. Transistors are getting smaller with more functionality packed inside. Complex multi-core architectures are being designed, all of it impacting memory, high performance computing, automotive and more. Second, new materials like gallium nitride, silicon carbide, and photonics integrated devices are pushing the boundaries of fabrication and design. Third, go-to-market challenges including rising costs and rising risk and cost of design, cost of tools, cost of wafers, and the pressure of time to market. This is the landscape we are navigating. This is the opportunity we are capturing with technology, with strategy and with vision. Next slide, please. We just announced the acquisition of TechX Corporation, which we believe expands our SAM by another $260 million with multi-physics modeling capabilities. And that's not all. We added approximately $348 million more to our SAM with the acquisition of the PPC product line. We already recognize $1.9 million of PPC revenue in Q1 alone. And we believe we are on track to deliver $3 to $5 million for the full year from this acquisition. Faraday Technology also selected Silvaco FlexScan IP for advanced automotive ASIC design. You may ask, how about our AI-based FTC platform? It's gaining serious traction. with major wins across power and advanced CMOS customers and R&D partnership on advanced photonics technologies. We recently announced that ExcellenceMOS adopts Silvaco DTCO flow for next-generation silicon carbide devices, as well as a partnership with Korean Gyeonggi University's Professor Jin Jang for next generation of display technology. And there is more coming. we expect to announce new customer wins in the second half of the year. In Q1 2025, we didn't just grow our customer base. We landed nine new customers for AI infrastructure in Q1 of 2025, which was 23% of the quarterly bookings, and expanded in existing customers, resulting in 38% of the quarterly bookings. two in power, two in memory, three in photonics, one in foundry, and one in IoT. On the next slide, I will walk you through how our recent acquisitions are accelerating our expansion into new high-growth markets. Next slide, please. On our last earnings call, I discussed the strategic rationale and opportunity behind the acquisition of cadences process proximity compensation product line, which expands Silvaco SAM by approximately $357 million. As I mentioned earlier today, we expect the PPC acquisition to contribute between $3 million to $5 million in revenue in 2025, with even greater contributions anticipated in 2026. Today, I'm excited to share an overview of our recently announced acquisition of TechX Corporation, including our technology integration plans and strategic rationale driving this move. We believe TechX expands our SAM by additional $260 million. We expect this acquisition to contribute approximately $1 million in revenue for the remainder of 2025 and more next year by delivering product synergies to our new and expanding existing customers. It's important to note that historically Silvaco's digestion period for acquisition of this size has been about six months. We have already integrated the initial revenue synergies for both acquisitions and are on track to complete the operational and tax synergies over the coming quarters. This year, Sylvaco's total SAML expanded by over $600 million, increasing it from $3.8 billion in 2024 to $4.4 billion in 2025, positioning us for stronger long-term growth. Next slide, please. TechX Strategic Rational. TechX provides advanced multi-physics simulation software that significantly enhances Silvaco's capabilities across design and manufacturing workflows. The acquisition advances our ongoing efforts to enable GPU and AI accelerated simulation, driving faster, more accurate results for complex use cases. A key highlight is the additional wafer-level digital twin modeling for advanced CMOS and photonics, further strengthening our technology leadership. TechX brings fundamental technical and competitive advantage compared to alternatives in the market. The acquisition also introduces a new base of high-value customers, enabling additional land and expand opportunities, while leveraging Silvaco's existing global channels to deepen engagement with current accounts and unlock cross-selling potentials. Overall, the acquisition strengthens our leadership in next-generation simulation technologies and expands our ability to serve the fast-growing design and manufacturing of photonics and semiconductors. Please turn to the next slide for specific examples of how this technology is changing the industry. TechX multi-physics simulation capabilities enabled a wide range of high-value applications across multiple industries. These include the simulation of antennas and optical waveguides. allowing for optimized communication, signal performance, and the light propagation simulation in an array waveguide, packaging and interconnect, supporting advancement in photonics integrated circuits. In the manufacturing domain, the technology supports modeling of plasma wafer etching, a critical process for advanced semiconductor fabrication at chamber and wafer Next slide, please. As I mentioned earlier, Silvaco leverages AI industry trends through our digital twin modeling capabilities, which allows customers to automate design manufacturing through creation of models, which reduce costs and improve time to market. There are four uses of artificial intelligence in EDA. The EDA EDIUS III has historically utilized AI to assist chip designers at three levels. First, optimizing the historical tool performance for chip designers. Second, aiding in design steps. And third, generating chip designs from specification. Silvaco has introduced a fourth level of AI, which is not in the design space, but rather in the manufacturing space. This is where Silvaco is expanding TAM by enabling operators in fabs to save time and reduce wafer production costs. Next slide, please. Growth strategies. As highlighted here, we believe our growth strategies position us well for long-term market expansion while addressing customer needs through agile R&D. We focus our land and expand strategies through both organic and inorganic growth, leveraging our sales channels and highly technical field application engineers to solve the next generation of customer challenges. We are committed to defining shareholder value through performance, transparency, and responsible capital management. We believe the fundamentals of Silvaco are strong, and we are taking clear, measurable steps to align our market presence with the long-term strengths of our business. With that, I'll turn it over to Keith to review the quarter and discuss our guidance. Thank you. Keith?