Silvaco Group, Inc.

Previous wording

Our EDA software is used by semiconductor companies to design, simulate, and verify semiconductors. Our EDA products include SPICE modelling and simulation, parasitic extraction and reduction, standard cell generation and optical proximity correction.

Current wording

Our EDA software is used by semiconductor companies to design, simulate, and verify semiconductors. Our EDA products include SPICE modeling and simulation, parasitic extraction and reduction, standard cell generation and optical proximity correction.

Previous wording

Our customers include foundries, integrated device manufacturers and fabless semiconductor companies. Our go-to-market strategy centers on selling software solutions and associated maintenance and services. Our software solutions accounted for 65% and 71% of our revenue for the three months ended March 31, 2026, and 2025, respectively, and associated maintenance and services accounted for 35% and 29% of our revenue for the three months ended March 31, 2026, and 2025, respectively.

Current wording

Our customers include foundries, integrated device manufacturers and fabless semiconductor companies. Our go-to-market strategy centers on selling software solutions and associated maintenance and services. Our software solutions accounted for 66% of our revenue for both the three and six months ended June 30, 2026, as compared to 60% and 66% during the same periods in 2025. Revenue from associated maintenance and services accounted for 34% of our revenue for both the three and six months ended June 30, 2026, as compared to 40% and 34% during the same periods in 2025, respectively.

Previous wording

In October 2025, we began implementing targeted cost-savings initiatives intended to streamline our organizational structure, improve execution, and enhance stockholder value (the “Restructuring Plan”). The Restructuring Plan includes a voluntary early retirement program, a voluntary exit program, an involuntary reduction in force, and certain planned site closures. We expect to incur $5.0 million of costs in connection with the Restructuring Plan that primarily consists of severance costs for 68 terminated employees and other costs such as the site closures as part of our global site strategy. Of the total expected costs, $1.5 million and $1.3 million were incurred during the three months ended March 31, 2026 and year ended December 31, 2025, respectively. We expect to complete the Restructuring Plan in 2026. We anticipate these initiatives will result in significant annualized operating expense reductions. See Note 5 of our condensed consolidated financial statements for further discussion of the Restructuring Plan.

Current wording

In October 2025, we began implementing targeted cost-savings initiatives intended to streamline our organizational structure, improve execution, and enhance stockholder value (the “Restructuring Plan”). The Restructuring Plan includes a voluntary early retirement program, a voluntary exit program, an involuntary reduction in force, and certain planned site closures. We expect to incur $5.0 million of costs in connection with the Restructuring Plan that primarily consists of severance costs for 82 terminated employees and other costs such as the site closures as part of our global site strategy. Of the total expected costs, $0.9 million and $2.4 million were incurred during the three and six months ended June 30, 2026, respectively, and $1.3 million during the year ended December 31, 2025. We expect to complete the Restructuring Plan in 2026. We anticipate these initiatives will result in significant annualized operating expense reductions. See Note 5 of our condensed consolidated financial statements for further discussion of the Restructuring Plan.

Previous wording

When we renew contracts with our customers, we may increase our bookings by selling them additional or new software or SIP. Over time, we expect that existing customers will choose to upgrade and/or purchase additional products. Our ability to continue to generate sales from our existing customers and to expand those relationships is dependent on our ability to continue to offer software solutions that our existing customers demand. Any failure to continue to generate sales with our existing customers or expand our product and service offerings with our existing customers may have an adverse effect on our revenue and results of operations.

Current wording

When we renew contracts with our customers, we may increase our bookings by selling them additional or new software or SIP. Over time, we expect that existing customers will choose to upgrade and/or purchase additional products. Our ability to continue to generate sales from our existing customers and to expand those relationships depends on our ability to continue to offer software solutions that our existing customers demand. Any failure to continue to generate sales with our existing customers or expand our product and service offerings with our existing customers may have an adverse effect on our revenue and results of operations.

Previous wording

The following table sets forth our results of operations for the three months ended March 31, 2026, and 2025:

Current wording

The following table sets forth our results of operations for the three and six months ended June 30, 2026, and 2025:

Previous wording

The following table summarizes our results of operations as a percentage of total revenue for the three months ended March 31, 2026, and 2025:

Current wording

The following table summarizes our results of operations as a percentage of total revenue for the three and six months ended June 30, 2026, and 2025:

Previous wording

Comparison of the Three Months Ended March 31, 2026, and 2025

Current wording

Comparison of the Three and Six Months Ended June 30, 2026, and 2025

Previous wording

Total revenue increased by$3.7 million, or 26%, to$17.8 million for the three months ended March 31, 2026, from$14.1 million for the three months ended March 31, 2025. While revenue in the current period primarily benefited from our recent acquisitions, revenue in the prior period was impacted by lower demand in the Americas and economic challenges in Asia. TCAD revenue and IP revenue increased by $1.7 million and $2.9 million, respectively, while revenue associated with our EDA tools decreased by $1.0 million. Software license revenue increased by $1.6 million, or 16%, to $11.6 million for the three months ended March 31, 2026, from $10.0 million for the three months ended March 31, 2025. Maintenance and service revenue increased by $2.1 million, or 51%, to $6.1 million for the three months ended March 31, 2026, from $4.1 million for the three months ended March 31, 2025.

Current wording

Total revenue increased by $5.8 million, or 48%, to $17.8 million for the three months ended June 30, 2026, from $12.0 million for the three months ended June 30, 2025. Revenue in the current period benefited from our recent acquisitions. TCAD revenue, IP revenue, and revenue associated with our EDA tools increased by $1.1 million $4.2 million, and $0.5 million, respectively. Software license revenue increased by $4.6 million, or 64%, to $11.8 million for the three months ended June 30, 2026, from $7.2 million for the three months ended June 30, 2025. Maintenance and service revenue increased by $1.2 million, or 24%, to $6.0 million for the three months ended June 30, 2026, from $4.8 million for the three months ended June 30, 2025.

Previous wording

Gross profit increased by $4.3 million, or 38%, to $15.3 million for the three months ended March 31, 2026, from $11.1 million for the three months ended March 31, 2025, primarily due to a $3.7 million increase in revenue and a $0.6 million decrease in cost of revenue. Cost of revenue during the three months ended March 31, 2026, decreased primarily due to our cost reduction efforts and restructuring activities. Gross profit margin increased to 86% for the three months ended March 31, 2026, from 79% for the three months ended March 31, 2025, primarily reflecting the higher revenue volume.

Current wording

Gross profit increased by $6.6 million, or 77%, to $15.2 million for the three months ended June 30, 2026, from $8.5 million for the three months ended June 30, 2025, primarily due to a $5.8 million increase in revenue and a $0.9 million decrease in cost of revenue. Cost of revenue during the three months ended June 30, 2026, decreased primarily due to our cost reduction efforts and restructuring activities. We recognized $0.3 million and $0.4 million of stock-based compensation expense in cost of revenue during the three months ended June 30, 2026 and 2025, respectively. We also recognized $0.2 million of amortization associated with our acquired intangible assets in cost of revenue during each of the three months ended June 30, 2026 and 2025. Gross profit margin increased to 85% for the three months ended June 30, 2026, from 71% for the three months ended June 30, 2025, primarily due to higher revenue, which improved the absorption of fixed costs, and lower cost of revenue resulting from our cost-reduction efforts and restructuring activities.

Previous wording

Research and development expenses increased by $4.4 million, or 91%, to $9.2 million for the three months ended March 31, 2026, from $4.8 million for the three months ended March 31, 2025. This increase was primarily due to a $2.8 million increase in expenses associated with our acquisitions, a $0.8 million increase in employee compensation and benefits due to increased headcount, an increase of $0.7 million in stock-based compensation expense, additional contractor expenses of $0.2 million, and an increase of $0.1 million in depreciation and amortization, partially offset by a decrease of $0.5 million due to restructuring activities.

Current wording

Research and development expenses increased by $2.9 million, or 49%, to $8.8 million for the three months ended June 30, 2026, from $5.9 million for the three months ended June 30, 2025. This increase was primarily due to a $1.5 million increase in expenses associated with our acquisitions, an increase in allocated costs of $0.8 million, a $0.7 million increase in stock-based compensation expense primarily associated with our restructuring activities as well as increased headcount, an increase of $0.5 million in cash severance associated with our restructuring activities, and an increase of $0.1 million in consulting costs, partially offset by a $0.9 million reduction in employee compensation and benefits resulting from a decrease in headcount.

Previous wording

In May 2025, Silvaco and two of our principal stockholders and members of our board of directors (the “Co-Defendants”) agreed to a settlement (the “Settlement Agreement”) in connection with litigation brought by the former shareholders of Nangate, Inc. (“Nangate”) and a third cross-complainant (together, the “Nangate Parties”). The $32.5 million settlement (the “Settlement Payment”) consists of an initial $16.0 million paid on June 17, 2025, and four quarterly installment payments of $4.1 million each, payable on August 15, 2025, November 14, 2025, February 13, 2026, and May 15, 2026. In September 2025, the U.S. Court of Appeals for the Ninth Circuit reversed the fraud and breach of contract verdicts and the parties dismissed all claims, triggering an acceleration clause in the settlement agreement, resulting in the acceleration of the final installment of the Settlement Payment of $4.1 million from May 15, 2026, to February 13, 2026. Following the execution of the Settlement Agreement, Silvaco and the Co-Defendants also executed an apportionment agreement pursuant to which the Co-Defendants agreed to bear 25% of the Settlement Payment, with Silvaco bearing the remaining 75%. During the three months ended March 31, 2026, we made the remaining payment of $8.3 million. As of March 31, 2026, we had no remaining liability under the Settlement Agreement. See Note 7 and Note 13 of our condensed consolidated financial statements for further discussion.

Current wording

Litigation settlement was $13.1 million for the six months ended June 30, 2025. In May 2025, Silvaco and two of our principal stockholders and members of our board of directors (the “Co-Defendants”) agreed to a settlement (the “Settlement Agreement”) in connection with litigation brought by the former shareholders of Nangate, Inc. (“Nangate”) and a third cross-complainant (together, the “Nangate Parties”). The $32.5 million settlement (the “Settlement Payment”) consists of an initial $16.0 million paid on June 17, 2025, and four quarterly installment payments of $4.1 million each, payable on August 15, 2025, November 14, 2025, February 13, 2026, and May 15, 2026. In September 2025, the U.S. Court of Appeals for the Ninth Circuit reversed the fraud and breach of contract verdicts and the parties dismissed all claims, triggering an acceleration clause in the settlement agreement, resulting in the acceleration of the final installment of the Settlement Payment of $4.1 million from May 15, 2026, to February 13, 2026. Following the execution of the Settlement Agreement, Silvaco and the Co-Defendants also executed an apportionment agreement pursuant to which the Co-Defendants agreed to bear 25% of the Settlement Payment, with Silvaco bearing the remaining 75%. During the six months ended June 30, 2026, we made the remaining payment of $8.3 million. As of June 30, 2026, we had no remaining liability under the Settlement Agreement. See Note 7 and Note 13 of our condensed consolidated financial statements for further discussion.

Previous wording

Interest income reflects interest earned and accretion on our cash equivalents and marketable securities.

Current wording

Interest income reflects interest earned and accretion on our cash equivalents and marketable securities. Interest income decreased by$0.6 million or 96% for the three months ended June 30, 2026, from $0.7 million for the three months ended June 30, 2025. The decrease was driven by a lower balance of marketable securities held during the period.

Previous wording

Income tax provision was $0.1 million and $0.2 million for the three months ended March 31, 2026, and 2025, respectively. See Note 11 of our condensed consolidated financial statements for further discussion.

Current wording

Income tax benefit was $0.7 million and $0.5 million for the three and six months ended June 30, 2026, respectively, as compared to $0.5 million and $0.3 million for the same period in 2025, respectively. See Note 11 of our condensed consolidated financial statements for further discussion.

Previous wording

Since inception, we have financed operations primarily through proceeds received from payments from our customers, borrowings from a principal stockholder and other lenders, and the net proceeds from the sale of our common stock. Our primary sources of liquidity are cash and cash equivalents including cash generated from operations. As of March 31, 2026, we had $10.9 million in cash and cash equivalents, of which $4.7 million was held by our foreign subsidiaries.

Current wording

Since inception, we have financed operations primarily through proceeds received from payments from our customers, borrowings from a principal stockholder and other lenders, and the net proceeds from the sale of our common stock. Our primary sources of liquidity are cash and cash equivalents including cash generated from operations. As of June 30, 2026, we had $13.0 million in cash and cash equivalents, of which $5.3 million was held by our foreign subsidiaries.

Previous wording

On March 13, 2026, we entered into an Open Market Sale Agreement with Jefferies LLC, as sales agent, pursuant to which we may conduct registered offers and sales of shares of our common stock under our registration statement on Form S-3 (Registration No. 333-291212) and a prospectus supplement dated March 13, 2026, for an aggregate public offering amount of up to $15.0 million. During the three months ended March 31, 2026, we issued 752,744 shares of common stock at a weighted average price of $5.75 per share. We received gross proceeds of $4.3 million, with $4.0 million funded to us after deducting commissions and other related fees of $0.3 million. The commissions and related fees were recorded as a reduction to additional paid-in capital.

Current wording

On March 13, 2026, we entered into an Open Market Sale Agreement with Jefferies LLC, as sales agent, pursuant to which we may conduct registered offers and sales of shares of our common stock under our registration statement on Form S-3 (Registration No. 333-291212), a prospectus supplement dated March 13, 2026, and a prospectus supplement dated May 8, 2026, for an aggregate public offering amount of up to $35.0 million. During the three and six months ended June 30, 2026, we issued 707,993 and 1,460,737 shares, respectively, of common stock at a weighted average price of $10.35 and $7.98 per share, respectively. For the three and six months ended June 30, 2026, we received gross proceeds of $7.4 million and $11.7 million, respectively.

Previous wording

If our cash and cash equivalents, including cash generated from operating activities, are not sufficient to satisfy our liquidity requirements, we may be required to seek additional financing. If we raise additional funds by issuing equity securities or convertible debt securities, our stockholders will experience dilution. Debt financing, if available, may contain covenants that significantly restrict our operations or our ability to obtain additional debt financing in the future. Any additional financing that we raise may contain terms that are not favorable to us or our stockholders. We cannot assure you that we would be able to obtain additional financing on terms favorable to us or our existing stockholders, or at all. See “Risk Factors” in Item 1A in Part II in this Quarterly Report on Form 10-Q for further discussion.

Current wording

If our cash and cash equivalents, including cash generated from operating activities, are not sufficient to satisfy our liquidity requirements, we may be required to seek additional financing. If we raise additional funds by issuing equity securities or convertible debt securities, our stockholders will experience dilution. Debt financing, if available, may contain covenants that significantly restrict our operations or our ability to obtain additional debt financing in the future. Any additional financing that we raise may contain terms that are not favorable to us or our stockholders. We cannot assure you that we would be able to obtain additional financing on terms favorable to us or our existing stockholders, or at all. See “Risk Factors” in Part II, Item 1A in this Quarterly Report on Form 10-Q for further discussion.

Previous wording

As of March 31, 2026, $3.0 million, or 28%, of our cash and cash equivalents was maintained with one financial institution, where our current deposits are in excess of federally insured limits. Past macroeconomic conditions have resulted in the actual or perceived financial distress of many financial institutions, including the 2023 failures of Silicon Valley Bank, Signature Bank and First Republic Bank and the UBS takeover of Credit Suisse. If the financial institutions with whom we do business were to become distressed or placed into receivership, we may be unable to access the cash we have on deposit with such institutions. If we are unable to access our cash as needed, our financial position and ability to operate our business could be adversely affected.

Current wording

As of June 30, 2026, $5.5 million, or 43%, of our cash and cash equivalents was maintained with one financial institution, where our current deposits are in excess of federally insured limits. Past macroeconomic conditions have resulted in the actual or perceived financial distress of many financial institutions, including the 2023 failures of Silicon Valley Bank, Signature Bank and First Republic Bank and the UBS takeover of Credit Suisse. If the financial institutions with whom we do business were to become distressed or placed into receivership, we may be unable to access the cash we have on deposit with such institutions. If we are unable to access our cash as needed, our financial position and ability to operate our business could be adversely affected.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2026, was $1.0 million, as compared to $11.4 million net cash provided by investing activities for the three months ended March 31, 2025. Cash provided by investing activities during the three months ended March 31, 2026, included $1.0 million of maturities in marketable securities. During the three months ended March 31, 2025, cash provided by investing activities included $23.0 million of maturities in marketable securities partially offset by $11.5 million in cash used to acquire OPC and $0.1 million in purchases of property and equipment.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2026, was $1.0 million, as compared to $27.8 million net cash provided by investing activities for the six months ended June 30, 2025. Cash provided by investing activities during the six months ended June 30, 2026, included $1.0 million of maturities in marketable securities. During the six months ended June 30, 2025, cash provided by investing activities included $32.0 million of maturities in marketable securities and $10.3 million in sales of marketable securities, partially offset by $14.3 million in cash used to acquire the OPC Business and Tech-X and $0.2 million in purchases of property and equipment.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026, was $3.7 million, as compared to net cash used in financing activities of $0.5 million for the three months ended March 31, 2025. Net cash provided during the three months ended March 31, 2026, includes $4.0 million in net proceeds from the issuance of common stock, partially offset by payroll taxes related to shares withheld from employees of $0.3 million and payments of acquisition related earn-out of $43.0 thousand. Net cash used during the three months ended March 31, 2025, includes payroll taxes related to shares withheld from employees of $0.3 million and payments on our vendor financing obligation $0.2 million.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2026, was $11.3 million, as compared to net cash used in financing activities of $1.6 million for the six months ended June 30, 2025. Net cash provided during the six months ended June 30, 2026, includes $12.2 million in net proceeds from the issuance of common stock, partially offset by payments of payroll taxes related to shares withheld from employees of $0.3 million. Net cash used during the three months ended June 30, 2025, includes payments on our vendor financing obligation $1.3 million and payments of payroll taxes related to shares withheld from employees of $0.6 million. This use of cash was partially offset by $0.4 million in proceeds from the issuance of common stock.

Previous wording

The effects of exchange rate fluctuations on cash and cash equivalents were $1.0 thousand and $0.1 million for the three months ended March 31, 2026, and 2025, respectively.

Current wording

The effects of exchange rate fluctuations on cash and cash equivalents were $23.0 thousand and $0.4 million for the six months ended June 30, 2026, and 2025, respectively.

Previous wording

In May 2025, Silvaco and the Co-Defendants agreed to the Settlement Agreement in connection with litigation brought by the Nangate Parties. The Settlement Payment consists of an initial $16.0 million payment due on June 18, 2025, and four quarterly installment payments of $4.1 million each, payable on August 15, 2025, November 14, 2025, February 13, 2026, and May 15, 2026. In September 2025, the U.S. Court of Appeals for the Ninth Circuit reversed the fraud and breach of contract verdicts and the parties dismissed all claims, triggering an acceleration clause in the settlement agreement, resulting in the acceleration of the final installment of the Settlement Payment of $4.1 million from May 15, 2026, to February 13, 2026. Following the execution of the Settlement Agreement, Silvaco and the Co-Defendants also executed an apportionment agreement under which the Co-Defendants agreed to bear 25% of the Settlement Payment, with Silvaco bearing the remaining 75%. During the three months ended March 31, 2026, we made the remaining payment of $8.3 million. As of March 31, 2026, we had no remaining liability under the Settlement Agreement. See Note 7 and Note 13 of our condensed consolidated financial statements for further discussion.

Current wording

In May 2025, Silvaco and the Co-Defendants agreed to the Settlement Agreement in connection with litigation brought by the Nangate Parties. The Settlement Payment consists of an initial $16.0 million payment due on June 18, 2025, and four quarterly installment payments of $4.1 million each, payable on August 15, 2025, November 14, 2025, February 13, 2026, and May 15, 2026. In September 2025, the U.S. Court of Appeals for the Ninth Circuit reversed the fraud and breach of contract verdicts and the parties dismissed all claims, triggering an acceleration clause in the settlement agreement, resulting in the acceleration of the final installment of the Settlement Payment of $4.1 million from May 15, 2026, to February 13, 2026. Following the execution of the Settlement Agreement, Silvaco and the Co-Defendants also executed an apportionment agreement under which the Co-Defendants agreed to bear 25% of the Settlement Payment, with Silvaco bearing the remaining 75%. During the six months ended June 30, 2026, we made the remaining payment of $8.3 million. As of June 30, 2026, we had no remaining liability under the Settlement Agreement. See Note 7 and Note 13 of our condensed consolidated financial statements for further discussion.

Previous wording

As of March 31, 2026, we did not have any off-balance sheet arrangements. As of December 31, 2025, we maintained an irrevocable standby letter of credit issued in connection with the Settlement Agreement, which was terminated during the three months ended March 31, 2026.

Current wording

As of June 30, 2026, we did not have any off-balance sheet arrangements. As of December 31, 2025, we maintained an irrevocable standby letter of credit issued in connection with the Settlement Agreement, which was terminated during the six months ended June 30, 2026.

Previous wording

There have not been any material changes during the three months ended March 31, 2026, to the methodology applied by management for critical accounting policies previously disclosed in our audited financial statements set forth in our 2025 Form 10-K. For further discussion of our critical accounting policies and estimates, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our 2025 Form 10-K.

Current wording

There have not been any material changes during the six months ended June 30, 2026, to the methodology applied by management for critical accounting policies previously disclosed in our audited financial statements set forth in our 2025 Form 10-K. For further discussion of our critical accounting policies and estimates, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our 2025 Form 10-K.