Silvaco Group, Inc.

Good afternoon and welcome to ZILVACO's second quarter fiscal year 2025 conference call. 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 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 1-1 again. Please note, this event is being recorded. I would now like to turn the conference over to Greg McNiff, Investor Relations for ZILVACO. Please proceed.

Thank you. Joining me on the call today are Babak Tahiri, ZILVACO's CEO, and Dan Shaw, ZILVACO's Director of FP&A. 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 .zilvaco.com. An archive 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 call. The risk factors section in ZILVACO'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 ZILVACO CEO Babak Tahari. Babak.

Thank you, Greg. Hello and welcome to ZILVACO's second quarter 2025 earnings call. I am Babak Tahari, CEO of ZILVACO. Thank you for joining us today. As we report on our financial performance and strategic direction, I want to pause and acknowledge something that doesn't always appear in the numbers. It is our people and investors. I'm not just any people or investors. The ones who remain through our product cycles that stretch into years, the ones who choose to be here when the market shifts, when uncertainty arises, and then the outcomes are not yet realized. The ones who commit to the mission even when the short-term picture is difficult. In the ADA space, where innovation is deep tech and long horizon, progress often demands patience. It's not always easy to stay the course, yet time and again our team does. Not because it's easy or glamorous or immediately rewarding, but because they believe in what we are building. Their loyalty and resilience form a competitive advantage that isn't easily replicated. Now moving to our results, 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 Silver Echoes 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 high performance compute for edge and data centers. Our first 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 the strategy has been very encouraging. Our new acquisition from Excel has another $110 million of SAM for us. Revenue for the Q2 came at $12.05 million within our guidance. Likewise, we are maintaining our fiscal year 2025 guidance in the range of $64 to $70 million, representing 7 to 17% year over year growth, which we intentionally set with a conservative approach given the current macroeconomic environment. We are taking a conservative approach on this guidance and did not include the mix of potential upside revenue for the year. We are equally confident in our long term growth trajectory underpinned by strong market demand for organic growth, strategic expansion, and increasing value for our technology stack. Next slide, please. I will now highlight our non-GAAP results for Q2 2025 guidance for Q3 and full year 2025, and our Director of FP&A Dan Schell will discuss our detailed financial results and guidance in his remarks. For Q2 2025, 14% of revenue from 10 new customer purchases in Q2, equivalent of $4.18 million in bookings. 6% of our revenue came from new customer purchases in previous quarters, totaling 20% of land and land expansion in new customers. We had also 40% of revenue from expansion in existing customers. 40% of revenue from renewals, totaling 100% for Q2 2025. For Q3, we are providing the following guidance. Q3 booking guidance of $14 to $18.2 million. Revenue guidance of $14 to $18 million. Non-GAAP GM of 81 to 85%. Non-GAAP OI or loss of minus 3.5 to plus half a million dollars. Non-GAAP net income or loss of minus 12 cents to plus 2 cents per diluted shares. For the full year 2025, we are maintaining our existing guidance. 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 $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. Please note that this guidance includes the acquisition of Cadence's TBC platform for the full year and TechX for Q2 through Q4. Considering only initial revenue synergies, not including potential land and expand for these acquisitions, nor have they included, makes sell potential revenue at this time. We are strategically expanding our capabilities to meet the evolving needs of our customers, particularly in high growth sectors for design and manufacturing of semiconductors and photonics. At the same time, we are taking disciplining approach to managing operating expenses, cash flow, and liquidity, reflecting a prudent posture in today's macroeconomic environment. This balance between targeted investment and financial discipline positions still lack of to lead in some of the fast growing segments such as AI, high performance compute, memory, power, and photonics while protecting shareholder value and ensuring long term sustainability. Next, I'd like to discuss how to lack of solve semiconductor and photonics challenges facing our customers. Acquisitions expand solutions in key AI markets. Today, we face numerous design and manufacturing challenges, and we believe SILZACO is well positioned to address key AI markets with our organic strategies and our recent acquisitions. I have highlighted the key AI markets with dashed orange boxes that we are expanding into. These include memory, high performance compute, photonics, automotive data centers, and edge compute to augment and enable AI democratization. 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 big technological breakthroughs, leading it through artificial intelligence, through advanced algorithms in multi-physics, through digital twin models that 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. We are focused on AI, we are focused on photonics, we are focused on high performance computing and connectivity. 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 such as gallium nitrite, silicon carbide, and photonics integrated devices are pushing the boundaries of fabrication and design. Third, -to-market challenges, including rising costs and rising risks, costs of design, costs of tools, costs of wafers, and 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. Executive summary for the quarter. We just announced the acquisition of Mixcel Incorporated, which we believe expands our SAM by another $110 million with silicon proven MixCycNL IP in the world's leading foundries, many of which are ISO 26262 and ISO 9001 certified. Representing the high quality of the products for automotive and other markets. And that's not all. We announced the addition of three new executives, which I will give more details in the next slide. We also announced some of our recent customer successes. Al Salpine adopted Silvaco's Jivaro Pro to accelerate spice post layout simulations. Fraunhofer ISIT, one of the top leading R&D companies in the world, to advance next generation gallium nitride with Silvaco's DTCO flow. WaveTech deployed Silvaco's Victory TCAT to drive innovation in GAN-based connectivity solution, helping our lead position in power electronics. And there is more coming. We expect to announce new customer wins in the second half of the year. In Q2 2025, we didn't just grow our customer base. We landed 10 new customers in photonics, automotive, mill arrow, foundry, and power markets. Three in photonics, one in foundry, two in power, and others in markets such as mill and arrow. Furthermore, we achieved ACV of 26% TTM, ending in Q2 versus 21% ending in Q1. Next slide, please. We've added three new executives to our team. Andrew Wright, a senior vice president and general manager of semiconductor IP group BU, Gazzwinder Singh, a senior vice president and general manager of EDA group BU, John Burke, as vice president of business development. Collectively, they bring decades of experience in semiconductor design and software development to Silvaco and will play pivotal roles in accelerating innovation and operational excellence. Adding these accomplished leaders strengthens our ability to innovate and scale Silvaco's organic growth. This will be our main focus for the remainder of 2025. Their insight and proven track records will help advance and accelerate the next phase of our growth. With their expertise, we are well positioned to broaden our market presence and deliver even greater value to our customers all-white. On the next slide, I will walk you through our recent acquisitions that are accelerating our expansion into new high-growth markets. Next slide. Expanding market opportunities using AI based visual twin modeling. On our last earnings call, I discussed the strategic rational and opportunity behind the acquisition of cadences, process, proximity compensation, or PPC product line, which combined with our acquisition of TechX, we believe has increased our SAM to $4.4 billion. Today, I'm excited to share an overview of our recently announced acquisition of Mixcel MixSignal IP, including our technology integration plan and the strategic rational driving this move. We believe Mixcel expands our SAM by an additional $110 million. It is important to note that historically, Silvaco's digestion period for acquisitions of this size has been about six months. We have already integrated the initial revenue synergies for the two previous acquisitions and are on track to complete the operation and tax synergies over the coming quarters. This year, Silvaco's total SAM has expanded by over $710 million through both organic growth and strategic acquisitions. The increase is from $3.8 billion in 2024 to $4.5 billion in 2025. Positioning us for stronger long-term growth. Next slide, please. Expanding market in silicon photonics integrated circuits. For the first time, we are excited to share our strategic expansion and roadmap for photonics, which builds on our strong momentum in the market. As I mentioned, our total SAM now stands at $4.5 billion, which includes $260 million from the TechX acquisition. This includes $150 million from photonics design software and $145 million from wafer fabrication solutions, covering advanced capabilities such as Plasma H at the tool level and packaging impact on photonics integrated circuits. This new segment represents a compelling growth engine for the coming year and beyond, expanding our reach into high growth, high value markets. Next slide, please. Mixcel MixSignal IP strategic rationale. Silvaco's acquisition of Mixcel brings in a portfolio of silicon proven MixSignal IP that is already deployed in the world's leading foundry. Mixcel has a -plus-year track record of delivering successful silicon solutions and is widely recognized for its low-power, high-performance IP. Strategically, Silvaco expects to land new customers through Mixcel's base while driving revenue synergies with existing accounts. Leveraging Silvaco's global channel is projected to accelerate revenue growth. Please turn to the next slide for specific examples of how this technology is changing the industry. Mixcel's MIPI-5 cores stand out in the market due to their comprehensive support across entire MIPI multimedia ecosystems, including automotive, camera, display, and storage. Mixcel is the number two company in terms of MIPI revenue. The diagram highlights Mixcel's broad coverage of multi-protocol layers such as CSI-2, DSI-2, and UFS, all supported by versatile PHY implementations including D-PHY, C-PHY, M-PHY, and other combinations. This flexibility enables associate designers to integrate a single, interoperable physical layer IP across a wide range of used cases, reducing time to market and validation complexity. Additionally, Mixcel's long-standing track record of first-pass silicon success and compliance with MIPI Alliance standards position it as a trusted supplier. These technical strengths, coupled with seamless support for emerging standards and multi-plug protocol convergence, differentiate Mixcel in a crowded space and position the company to capture significant market shares as demand grow for high-speed, low-power interfaces in mobile, automotive, and other applications. Strategic focus for the remainder of 2025 and 2026. Silvaco is positioned for significant growth by capitalizing on immediate revenue synergies from recent acquisitions, unlocking access to over 30 new customers, and enabling expanded cross-selling and landing of new logos in high-demand sectors such as AI, photonics, and advanced semiconductors. Leveraging acquired technologies and established channels, the company is well positioned to deliver multi-physics simulation solutions across semiconductor and display applications. Strategic next steps include defending AI-based FTCL engagements with memory, advanced CMOS, power, and photonics R&D customers. Broadening semiconductor IP portfolio and driving expansion in the high-growth market of silicon-based photonics integrated circuits for HPC, automotive, and sensing applications that play a large role in AI development and infrastructure. With a sharp focus on enhancing customers' time to market and costs, we are able to command higher margins and go through new product development and recent acquisitions. To summarize, strategic next steps include deepening engagement with R&D customers, broadening semiconductor IP portfolio, and driving expansion in high-growth market of silicon-based photonics to enable, enhance, and support AI infrastructure, AI architecture, AI power management, and compute resources for both static and autonomous applications. Together, these strategic priorities position to lack of to accelerate growth, strengthen margins, and deliver sustained profitability through the remainder of 2025 and into 2026. With that, I'll turn it over to Dan to review details of quarter financials and our guidance for Q3 and fiscal year 2025. Thank you. Dan?