SVCO 10-K & 10-Q changes, risk factors and insider trading
Silvaco Group, Inc. · Nasdaq · Services-Prepackaged Software · CIK 1943289 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to Our Business and Industry”
New heading “Risks Related to Our Technology, Intellectual Property and Information Technology Systems”
New heading “Risks Related to Data Privacy and Security”
New heading “Risks Related to Our Status as a Controlled Company”
New heading “Risks Related to Legal, Regulatory, Accounting and Tax Matters”
New heading “Risks Related to the Ownership of Our Common Stock”
New heading “General Risk Factors”
New heading “We operate in highly competitive industries, and if we do not continue to meet our customers' demand for innovative technology at competitive prices, our products may not remain competitive.”
New heading “The growth of our business depends primarily on the semiconductor and electronics systems industries.”
New heading “Our success depends on sustaining or growing our software license revenue and our maintenance and service revenue, and the failure to increase such revenue could negatively affect our results of operations.”
New heading “Our operating results and revenue could be adversely affected by customer payment delays, customer bankruptcies and defaults, or modifications of license terms.”
New heading “The global nature of our operations exposes us to increased risks and compliance obligations.”
New heading “The effect of foreign exchange rate fluctuations may adversely impact our revenue, expenses, cash flows and financial condition.”
New heading “Periodic reorganizations and adjustments to our employee base, including our recent headcount reduction, could temporarily impact productivity and adversely disrupt our sales.”
New heading “If we fail to timely recruit or retain senior management and key employees globally, our business may be harmed.”
New heading “Risks Related to Our Technology, Intellectual Property and Information Technology Systems”
New heading “If we fail to protect our proprietary technology, our business will be harmed.”
New heading “We may not be able to continue to obtain licenses to third-party software and intellectual property on reasonable terms, if at all.”
New heading “We may be subject to intellectual property litigation, regardless of success or merit, that could cause us to incur substantial expenses, reduce our sales, and divert the efforts of our management and other personnel.”
New heading “Product errors or defects could expose us to liability and harm our reputation, and we could lose market share.”
New heading “We may not be successful in our artificial intelligence (“AI”) initiatives, which could adversely affect our business, operating results or financial condition.”
New heading “Cybersecurity threats or other security breaches could compromise sensitive information belonging to us or our customers and could harm our business and our reputation.”
New heading “Any actual or perceived failure to comply with new or existing laws, regulations and other requirements relating to the privacy, security, processing and cross-border transfer of personal information could adversely affect our business, financial condition and results of operations.”
New heading “The Stockholders Agreement grants the Pesic Family significant rights that may limit your ability to influence matters requiring stockholder approval.”
New heading “We or our directors or officers may be subject to litigation proceedings, which are expensive, could divert management attention, and harm our business.”
New heading “Our stock price has been and may continue to be subject to fluctuations.”
New heading “We have experienced a material weakness in our internal control over financial reporting in the past, and any future material weakness or failure to maintain effective internal controls could impair our ability to report our financial condition or results of operations accurately and on a timely basis, which may adversely affect investor confidence and the value of our common stock.”
New heading “General Risk Factors”
New heading “Catastrophic events and the effects of climate change, pandemics or other unexpected events may disrupt our business and harm our operating results.”
New heading “Uncertainty in the global macroeconomic environment may negatively affect our business, operating results and financial condition.”
Removed heading “Risk Factor Summary”
Removed heading “We face significant competition from larger companies as well as from third-party providers who may deploy their resources to develop IP solutions internally.”
Removed heading “Our interim results of operations may be difficult to predict as a result of seasonality.”
Removed heading “Substantial, prolonged economic downturns in key industrial sectors and in major economic regions in which we operate, including China, may result in reduced software solution sales and lower revenue growth.”
Removed heading “The success of our business depends on sustaining or growing our software license revenue and our maintenance and service revenue and the failure to increase such revenue would lead to a material decline in our results of operations.”
Removed heading “The cyclical nature of the semiconductor and photonics industries may limit our ability to maintain or improve our revenue.”
Removed heading “We depend on growth in the semiconductor and photonics industries and in the end markets that use our products. Any slowdown in the growth of these industries and end markets could harm our business.”
Removed heading “If we are unable to deliver new and innovative software solutions or software license enhancements ahead of rapid technological changes in the market, our revenues could be materially adversely affected.”
Removed heading “Our international sales and operations constitute a substantial portion of our revenue and business operations and could be negatively affected by disruptions in international geographies caused by government actions, trade disputes, direct or indirect acts of war or terrorism, international political or economic instability or other similar events.”
Removed heading “Downturns or volatility in general economic conditions could harm our business.”
Removed heading “Our customers may fail to pay us in accordance with the terms of their agreements.”
Removed heading “A substantial portion of our revenue comes from our international sales channels, and we have significant operations in numerous international geographies. As such, any adverse fluctuations in exchange rates could adversely affect our performance.”
Removed heading “Adverse developments affecting the financial services industry could adversely affect our liquidity, financial condition and results of operations, either directly or through adverse impacts on certain of our vendors and customers.”
Removed heading “Software bugs or defects could expose us to liability and harm our reputation and we could lose market share.”
Removed heading “If we lose the services of our senior executives or key technical personnel who possess specialized industry knowledge and technical skills, or are unable to hire additional key personnel, it could reduce our ability to compete, to manage our operations effectively, or to develop new software solutions and services.”
Removed heading “We may not be able to effectively manage our growth, and we may need to incur significant expenditures to address the additional operational and control requirements of our growth, either of which could harm our business and operating results.”
Removed heading “Risks Related to Intellectual Property, Information Technology and Data Privacy and Security”
Removed heading “If we are unable to protect our proprietary technology and inventions through patents and other intellectual property rights, our ability to compete successfully and our financial results could be adversely impacted.”
Removed heading “If our information technology systems, or those of third parties upon which we rely, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to, regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse consequences.”
Removed heading “We may not be able to continue to obtain licenses to third-party software and intellectual property on reasonable terms or at all, which may disrupt our business and harm our financial results.”
Removed heading “We are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation (including class claims) and mass arbitration demands, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse business consequences.”
Removed heading “We may be subject to litigation, regardless of success or merit, that could cause us to incur substantial expenses, reduce our sales, and divert the efforts of our management and other personnel.”
Removed heading “Our ability to compete successfully depends in part on our ability to commercialize our intellectual property solutions without infringing the patent, trade secret, trademark, copyright, or other intellectual property rights of others.”
Removed heading “Any dispute regarding our intellectual property may require us to indemnify customers, the cost of which could harm our business.”
Removed heading “As long as we are a controlled company, your ability to influence matters requiring stockholder approval will be limited, and the interests of our controlling stockholder may conflict with or differ from your interests as a stockholder”
Removed heading “The price of our common stock could be volatile and you may not be able to resell your shares at or above the price at which you bought them, including the IPO price. Declines in the price of our common stock could subject us to litigation.”
Removed heading “We have not previously operated as a public company, which will require us to incur substantial costs and will require substantial management attention, and we may not be able to manage our transition to a public company effectively or efficiently.”
Removed heading “We are subject to significant regulatory compliance and internal governance requirements, and the failure to comply with such regulatory and governance requirements could result in a loss of sales or the loss of investor confidence in our financial reports, which could have an adverse effect on our stock price.”
Removed heading “We have broad discretion in the use of the net proceeds to us from the IPO and may not apply the proceeds in ways that increase our market value or improve our operating results.”
Removed heading “General Risk Factors and Risks Related to Being a Public Company”
Removed heading “We have experienced a material weakness in our internal control over financial reporting in the past. If we experience material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to report our financial condition or results of operations accurately or on a timely basis, prevent fraud or file our periodic reports in a timely manner and may incur additional costs to remediate, all of which may adversely affect investor confidence in us and our reported financial information and, as a result, impact the value of our common stock.”
Largest changes
“On June 3, 2021, President Biden issued Executive Order 14032 (Addressing the Threat from Securities Investments that Finance Certain Companies of the People’s Republic of China) targeting entities that are deemed part of the Chinese military-industrial complex. Additionally, on October 7, 2022, the Bureau of Industry and Security of the U.S. Department of Commerce (“BIS”), issued new export controls related to the Chinese semiconductor manufacturing, advanced computing and supercomputer industries. …”see in full comparison
“We are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation (including class claims) and mass arbitration demands, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse business consequences.”see in full comparison
“We have been a private company and, as such, we have not been subject to the internal control and financial reporting requirements applicable to a publicly traded company. As a public company, we are subject to Section 404 of the Sarbanes-Oxley Act, or Section 404, which requires that we maintain effective internal control over financial reporting and disclosure controls and procedures. …”see in full comparison
“If our information technology systems, or those of third parties upon which we rely, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to, regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse consequences.”see in full comparison
“Our global operations are subject to numerous U.S. and foreign laws and regulations such as those related to anti-corruption, tax, corporate governance, imports and exports, government contracts, economic sanctions, financial and other disclosures, privacy and labor relations. These laws and regulations are complex and may have differing or conflicting legal standards, making compliance difficult and costly. In addition, there is uncertainty regarding how proposed, contemplated or future changes to these complex laws and regulations could affect our business. …”see in full comparison
see in full comparisonOurInboardaddition, in response to Russia’s invasion ofdirectors is responsible for overseeingUkraine, therisksUnited States and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected toourRussianbusiness,orincludingBelarusianriskspolitical,related to the ongoing conflict between Israelbusiness anditsfinancialadversaries and between Russia and Ukraine. Such risks include an increased risk of cybersecurity attacks, sanctions, risks related to our employees, service-providers and operations in the affected regions and supply chain disruptions that may affect our customers globally. During the years ended December 31, 2024 and 2023, we generated $0.4 million an $0.6 million in revenues from the Middle East, respectively, including Israel. During the year ended December 31, 2024 we had no employees in the Middle East, and during the year ended December 31, 2023 we had only one employee located in the Middle East.organizations. While none of our revenue is derived from Russia or Ukraine, we have employees based inboth countriesUkraine and had, prior to the beginning of the conflict, offices in both countries. In response to the ongoing conflict, werecentlyclosed our office in Moscow, Russia, and our office in Kyiv, Ukraine, has been temporarily closed. Our board of directors has received periodic reports from management regarding the impact of the conflict on us and considered whether such events have had, or are reasonably likely to have, a material impact on us. Unless and until the conflict in Ukraine is stabilized, we do not intend to reopen office locations in either country.
Full comparison: every changed paragraph (476)
IAA description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes. Our business, results of operations, financial condition, and prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe to be material. If any of the risks actually occur, our business, results of operations, financial condition and prospects could be harmed. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.
Risks Related to Our Business and Industry
•We operate in highly competitive industries, and if we do not continue to meet our customers' demand for innovative technology at competitive prices, our products may not remain competitive.
Risk Factor Summary
•We face significant competition from larger companies as well as from third-party providers who may deploy their resources to develop IP solutions internally.
•The growth of our business depends primarily on the semiconductor and electronics systems industries.
•Our interim results of operations may be difficult to predict as a result of seasonality.
•Substantial, prolonged economic downturns in key industrial sectors and in major economic regions in which we operate, including China, may result in reduced software solutions sales and lower revenue growth.
•TheOur success of our business depends on sustaining or growing our software license revenue and our maintenance and service revenuerevenue, and the failure to increase such revenue wouldcould leadnegatively to a material decline inaffect our results of operations.
•We also depend on growth in the semiconductor and photonics industries and in the end markets that use our products. Any slowdown in the growth of these industries and end markets could harm our business.
•If we are unable to deliver new and innovative software solutions or software license enhancements ahead of rapid technological changes in the market, our revenues could be materially adversely affected.
•Our operating results and revenue could be adversely affected by customer payment delays, customer bankruptcies and defaults, or modifications of license terms.
•The global nature of our operations exposes us to increased risks and compliance obligations.
•We face risks associated with doing business in China.
•Our operations could be disrupted by political and social instability, acts of war, terrorist activity or other similar events, which could adversely affect our business, financial condition, and results of operations.
•Our employees have in the past, and our employees, consultants and third-party providers may in the future engage in misconduct that materially adversely affects us.
•Periodic reorganizations and adjustments to our employee base, including our recent headcount reduction, could temporarily impact productivity and adversely disrupt our sales, and may not.
•Our international sales and operations constitute a substantial portion of our revenue and business operations and could be negatively affected by disruptions in international geographies caused by government actions, trade disputes, direct or indirect acts of war or terrorism, international political or economic instability or other similar events.
•A substantial portion of our revenue comes from our international sales channels, and we have significant operations in numerous international geographies. As such, any adverse fluctuations in exchange rates could adversely affect our performance.
•If we are unable to protect our proprietary technology and inventions through patents and other intellectual property rights, our ability to compete successfully and our financial results could be adversely impacted.
•If our information technology systems, or those of third parties upon which we rely, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to, regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse consequences.
•AdverseVariations developmentsin affectingactual thesales financialactivity servicesfrom industrysales forecasts could adversely affect our liquidity,business, financial condition and results of operations, either directly or through adverse impacts on certain of our vendors and customers.operations.
•We may not realize the anticipated benefits of our acquisitions or investments, our business could be disrupted because of acquisitions or investments and, depending on how we finance or fund such acquisitions,acquisitions or investments, we could use significant amounts of cash.cash or incur substantial debt.
Risks Related to Our Technology, Intellectual Property and Information Technology Systems
•If we fail to protect our proprietary technology, our business will be harmed.
•We may not be able to continue to obtain licenses to third-party software and intellectual property on reasonable termsterms, orif at all, which may disrupt our business and harm our financial results.all.
•We may be subject to intellectual property litigation, regardless of success or merit, that could cause us to incur substantial expenses, reduce our sales, and divert the efforts of our management and other personnel.
•If we are unable to protect our proprietary technology and inventions through trade secrets, our competitive position and financial results could be adversely affected.
•Our software licenses contain third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to deliver our software licenses or subject us to litigation or other actions.
•We may not be successful in our artificial intelligence (“AI”) initiatives, which could adversely affect our business, operating results or financial condition.
Risks Related to Data Privacy and Security
•Cybersecurity threats or other security breaches could compromise sensitive information belonging to us or our customers and could harm our business and our reputation.
•Any actual or perceived failure to comply with new or existing laws, regulations and other requirements relating to the privacy, security, processing and cross-border transfer of personal information could adversely affect our business, financial condition and results of operations.
Risks Related to Our Status as a Controlled Company
•We are a “controlled company” within the meaning of the rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements.
•The Stockholders Agreement grants the Pesic Family significant rights that may limit your ability to influence matters requiring stockholder approval.
Risks Related to Legal, Regulatory, Accounting and Tax Matters
•Any dispute regarding our intellectual property may require us to indemnify customers, the cost of which could harm our business.
•As long as we are a controlled company, your ability to influence matters requiring stockholder approval will be limited, and the interests of our controlling shareholder may conflict with or differ from your interests as a stockholder.
•PendingLitigation, or futuregovernment investigations or litigationregulatory proceedings could have a material adverse effect on our financial position, results of operations and our stock price.
•We or our directors or officers may be subject to litigation proceedings, which are expensive, could divert management attention, and harm our business.
•Changes in tax laws could adversely affect our business, financial position and results of operations.
Risks Related to the Ownership of Our Common Stock
•Our stock price has been and may continue to be subject to fluctuations.
•We have experienced a material weakness in our internal control over financial reporting in the past.past, Ifand weany experiencefuture material weaknesses in the futureweakness or otherwise failfailure to maintain an effective system of internal controls incould theimpair future,our we may not be ableability to report our financial condition or results of operations accurately orand on a timely basis, prevent fraud or file our periodic reports in a timely manner and may incur additional costs to remediate, all of which may adversely affect investor confidence in us and our reported financial information and, as a result, the value of our common stock.
•Future sales or issuances of our common stock could cause the price of our common stock to decline.
•If securities analysts or industry analysts downgrade our common stock, publish negative research or reports, or fail to publish reports about our business, our stock price and trading volume could decline.
•We do not intend to pay dividends on our common stock.
General Risk Factors
•Catastrophic events and the effects of climate change, pandemics or other unexpected events may disrupt our business and harm our operating results.
•Uncertainty in the global macroeconomic environment may negatively affect our business, operating results and financial condition.
•We are an “emerging growth company” and a “smaller reporting company” and any decision on our part to comply with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
We operate in highly competitive industries, and if we do not continue to meet our customers' demand for innovative technology at competitive prices, our products may not remain competitive.
We compete against larger companies in the global semiconductor industry, as well as other smaller TCAD, EDA and IP vendors and our customers' internally developed solutions. Many of these competitors have greater name recognition and substantially greater financial, technical, and engineering resources than us. The industries in which we operate are highly competitive, with new competitors entering these markets both domestically and internationally. For example, China has implemented national policies favoring Chinese companies and has formed government-backed investment funds as it seeks to build independent EDA capabilities and compete internationally in the semiconductor industry. The demand for our products and services is dynamic and depends on a number of factors, including our customers’ budgetary constraints.
Technology in these industries evolves rapidly and is characterized by frequent product introductions and improvements as well as changes in industry standards and customer requirements. The adoption of AI technologies has brought new demands and also challenges in terms of disruption to both our business models and existing technology offerings.
In addition, AI-native companies and large technology companies with significant AI capabilities have increasingly sought to enter adjacent software markets, including markets in which we compete, and may be able to leverage their AI expertise, substantial resources and large datasets to develop competing solutions rapidly and at lower cost. Such companies may offer AI-driven alternatives to traditional software solutions that could displace or reduce demand for our products and services. At the same time, our customers and potential customers continue to demand a lower total cost of design, which can lead to the consolidation of their purchases from one vendor or displacement of their purchases by internal development. In order to succeed in this environment, we must successfully meet our customers’ technology requirements and increase the value of our products, while also striving to reduce their overall costs and our own operating costs.
We compete principally on the basis of technology, solution quality and features, license terms, compatibility, reliability, interoperability among products and price and payment terms. Specifically, we believe the following competitive factors affect our success:
We face significant competition from larger companies as well as from third-party providers who may deploy their resources to develop IP solutions internally.
We are engaged in a competitive segment of the global semiconductor and photonics industries. Our competitive landscape is characterized by competition from companies that have significantly greater resources than us. A variety of factors could adversely impact our ability to compete, including rapid technological change in our software solution design, customers that make purchase decisions based on a mix of factors of varying importance and continuous declines in average selling prices of our software solutions. We compete principally on the basis of technology, license quality and features, license terms, compatibility, reliability, interoperability among products and price and payment terms.
We compete against larger companies including Synopsys, Inc., Ansys, Inc., Coventor, Inc., a Lam Research company, Cadence Design Systems, Inc., Siemens EDA, Arm Limited, and CEVA, Inc. Such companies have greater name recognition than us and possess substantial financial, technical, research and development and engineering resources that can be deployed so they can develop competing TCAD, EDA and SIP solutions. Varying combinations of these resources provide advantages to these competitors that enable them to influence industry trends and the pace at which industries adapt to these trends. A strong competitive response from one or more of our competitors to our marketplace efforts, or a shift in customer preferences to competitors’ products, could result in increased pressure to lower our prices more rapidly than anticipated, increased selling and marketing expense, and/or market share loss. The consolidation of our competitors or collaboration among our competitors to deliver more comprehensive offerings than they could prior to consolidation may also impact our ability to compete effectively. In addition, new market entrants with novel technology could change the competitive landscape, potentially resulting in reduced market share, additional pressure to lower prices, or further increases in selling and marketing expense. To the extent our revenue is negatively impacted by competitive pressures and reduced pricing, our business could be harmed.
Management's Discussion & Analysis (MD&A)
New heading “Recent Acquisitions”
New heading “Current Economic Conditions”
New heading “Cost Reduction Initiatives”
New heading “Restructuring Expense”
New heading “Restructuring expense”
New heading “Business Combination”
Removed heading “Key Operating Indicators and Non-GAAP Financial Measures”
Removed heading “Non-GAAP Operating Income and Non-GAAP Net Income”
Largest changes
“Estimated litigation claim expense consists of legal costs that became probable and reasonably estimable associated with our obligations with respect to the earnout payment due to the selling shareholders of Nangate, Inc. (“Nangate”), along with a third cross complainant (collectively, the “Nangate Parties”). …”see in full comparison
“Our TCAD solutions are used in the semiconductor industry to model and optimize manufacturing processes and device performance. This includes foundational TCAD software and more advanced artificial intelligence (“AI”) machine learning (“ML”) for process development, called Fab Technology Co-Optimization (“FTCOTM”). We are a pioneer in the leverage of AI to redefine manufacturing process development in partnership with customers.”see in full comparison
“We define non-GAAP operating income as our GAAP operating (loss) income adjusted to exclude certain costs, including IPO preparation costs, acquisition-related estimated litigation claim and legal costs, stock-based compensation expense, amortization of acquired intangible assets, payroll taxes from the restricted stock unit (“RSU”) lockup release, and executive severance costs. …”see in full comparison
“In May 2025, the parties entered into the Settlement Agreement pursuant to which the Company and the Co-Defendants agreed to pay the Nangate Parties’ an aggregate amount of $32.5 million in full resolution of all claims. 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. In connection with the litigation, the Company recorded a litigation settlement expense of $13.1 million and $11.3 million during the years ended December 31, 2025 and 2024, respectively. …”see in full comparison
“Estimated litigation claim was $11.3 million for the year ended December 31, 2024. The estimated litigation claim for the year ended December 31, 2024 consists of a $11.3 million charge recorded due to a jury’s verdict to award the Nangate Parties damages under breach of contract related claims (the “Nangate Litigation”). We and the Co-Defendants may appeal the judgement, which will require us to collateralize and post an appellate bond of up to $35.4 million on or before March 24, 2025. …”see in full comparison
Full comparison: every changed paragraph (121)
You should read theThe following discussion and analysis of financial condition and results of operations togethershould be read in conjunction with our audited consolidated financial statements and the related notes included in Part II, Item 8 of this Annual Report on Form 10-K. This discussion and other parts of this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks, uncertainties and assumptions. Our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K. Forward-looking statements may be identified by words including, but not limited to, “may,” “will,” “could,” “would,” “can,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project,” “continue,” “forecast,” "likely," "potential," "seek," or the negatives of such terms and similar expressions. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
We are a provider of technology computer aided design software (“TCAD”), electronic data automation software (“EDA”), and semiconductor intellectual property (“SIP”). Our solutions are used by engineers to optimize semiconductor manufacturing processes and efficiently bring semiconductor products to market. Our differentiated solutions enable our customers to increase productivity, accelerate time-to-market and reduce development and manufacturing costs. Our customers include semiconductor manufacturers and systems companies that design and manufacture products containing semiconductors. Semiconductors are at the heart of innovation in many industries, including AI, display, power devices, automotive, memory, hyperscale and cloud computing, Internet of Things (“IoT”), telecommunications and many more.
Our TCAD solutions are used in the semiconductor industry to model and optimize manufacturing processes and device performance. This includes foundational TCAD software and more advanced artificial intelligence (“AI”) machine learning (“ML”) for process development, called Fab Technology Co-Optimization (“FTCOTM”). We are a pioneer in the leverage of AI to redefine manufacturing process development in partnership with customers.
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.
Our SIP portfolio includes a range of products, including foundation technology, such as standard cells and memory compilers, as well as a suite of interface technologies. Our SIP portfolio benefited from recent acquisitions, most notably Mixel Group, Inc. (“Mixel”), which is positioned for growth as we roll out Mixel’s quality processes to the rest of the organization.
We are a provider of technology computer aided design (“TCAD”) software, electronic data automation (“EDA”) software and semiconductor intellectual property (“SIP”). TCAD, EDA and SIP solutions enable semiconductor and photonics companies to increase productivity, accelerate their products’ time-to-market and reduce their development and manufacturing costs. We have decades of expertise developing the “technology behind the chip” and providing solutions that span from atoms to systems, starting with providing software for the atomic level simulation of semiconductor and photonics material for devices, to providing software and SIP for the design and analysis of circuits and system level solutions. We provide SIP for system-on-a-chip (“SoC”) and integrated circuits (“ICs”), and SIP management tools to enable team collaborations on complex SoC designs. Our customers include semiconductor manufacturers, original equipment manufacturers (“OEMs”) and design teams who deploy our solutions in production flows across our target markets, including display, power devices, automotive, memory, high performance computing (“HPC”), internet of things (“IoT”) and 5G/6G mobile markets.
EDA offerings, including our solutions, enable companies to streamline their IC design workflows, develop complex IC designs in a cost-efficient manner, and maintain acceptable IC manufacturing yield, by providing interoperable tools that capture and simulate designs from concept to analysis. Our TCAD device and process simulation tools provide compatible data structures that can be used with our EDA modeling, analysis, simulation, verification and yield enhancement tools. Further, our EDA tools are used for designing SIP and IC designs that can be managed and validated by our SIP management tools.
Our customers include foundries, integrated device manufacturers (“IDMs”) and fabless semiconductor companies. Our go-to-market strategy centers on selling software solutions and associated maintenance and services. Our software solutions accounted for 74%68% and 73%74% of our revenue for the years ended December 31, 20242025 and 2023,2024, respectively, and associated maintenance and services accounted for 26%32% and 27%26% of our revenue for the years ended December 31, 20242025 and 2023,2024, respectively. For the years ended December 31, 2024 and 2023, approximately 90% and 81% of our bookings came from existing customers and 10% and 19% came from new customers, respectively. See “—Key Operating Indicators and Non-GAAP Financial Measures—Bookings” for a description of how we define bookings.
Recent Acquisitions
On March 4, 2025, we consummated an asset purchase agreement with Cadence Design Systems, Inc. (“Cadence”), pursuant to which, among other things, we agreed to acquire certain assets and assume certain liabilities comprising Cadence’s Process Proximity Compensation product line, an optical proximity correction suite of tools (the “OPC Business”), in exchange for $11.5 million in cash.
On April 29, 2025, we consummated a stock purchase agreement with the shareholders of Tech-X Corporation (“Tech-X”), pursuant to which we acquired all of the outstanding shares of Tech-X for an aggregate purchase price of $8.2 million. The purchase consideration consisted of (i) $4.1 million in cash, (ii) 457,666 shares of the Company’s common stock with a fair value of $2.4 million on the closing date, and (iii) contingent consideration, with a maximum payout of $2.0 million, and with an estimated fair value of $1.7 million, payable in cash upon the achievement of specified technical milestones through December 2026. In February 2026, the Company amended the form of payment of the contingent consideration and post-closing net working capital adjustments to be payable in shares of the Company’s common stock. The Company also extended the date through which contingent consideration can be earned to July 2027.
On August 1, 2025, we consummated a stock purchase agreement with the shareholders of Mixel Group, Inc. (“Mixel”), pursuant to which we agreed to acquire all of the outstanding shares of Mixel for an aggregate purchase price of $22.5 million, which includes (i) $19.7 million in cash and (ii) 643,617 shares of the Company’s common stock with a fair value of $2.8 million on the closing date.
Similar to trends observed across the semiconductor industry, we saw a decline in orders from Asia during the year ended December 31, 2024 primarily driven by economic challenges and the ongoing strain in U.S.-China trade relations. Despite these challenges, fiscal year 2024 includes record results for bookings and revenue, driven by sustained demand for our digital twin modeling platform and growth in key semiconductor markets. During the year ended December 31, 2024, our bookings were $65.8 million as compared to $58.1 million for the year ended December 31, 2023. Our revenue was $59.7 million for the year ended December 31, 2024 as compared to $54.2 million for the year ended December 31, 2023.
Current Economic Conditions
Because of our global operations, our business is subject to economic downturns in the countries in which we do business, volatility in exchange rates, changes in interest rates, evolving trade control regulations and geopolitical conflicts.
We have been impacted by the expansion of trade control laws and regulations, including the broadening of the list of Chinese technology companies on the U.S. Department of Commerce Bureau of Industry and Security “entity list.” We expect the impact of these expanded trade controls on our business to be limited.
We also monitor geopolitical conflicts around the world, including the conflict in Ukraine and conflicts in the Middle East. To date, these conflicts have not materially impacted our business.
For additional information on the potential impact of macroeconomic conditions on our business, see Part I, Item 1A, “Risk Factors.”
Cost Reduction Initiatives
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. During the year ended December 31, 2025, we incurred pre-tax charges of $1.3 million for severance, termination benefits, and site closures. The majority of impacted employees were affected in the year ended December 31, 2025. We anticipate these initiatives will result in significant annualized operating expense reductions.
We believe that the growth of our business and our future success are dependent upon many factors including those described below. While each of these factors presents significant opportunities for us, these factors also pose challenges that we must successfully address to sustain the growth of our business and enhance our results of operations. The growth of our business and our future success are also subject to uncertainties and risks as described in Part I, Item 1A., Risk Factors of this Annual Report on Form 10-K.
Building long-term relationships with our existing customer base is critical in driving renewals for our licenses and overall revenue growth. We have a global sales force selling to semiconductor companies and engineering universities that also instructadvises fabrication facility managers and the next generation of chip designers on the use and benefits of our design tools. Most of our customers enter into multi-year software license agreements for a fixed price including a multi-year software license and maintenance and services.
When we renew expiring 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, particularly as we de-emphasize our lower margin products, which we expect will over the long term drive margin expansion.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.
We enter into standard software licensing agreements with each of our customers. Pursuant to these agreements, we grant our customers a non-exclusive, non-transferablenon-transferable, limited license, without the right to sublicense, to execute, use and operate certain software. Each party has the right to terminate the software license agreement under certain circumstances, in which event the customer will be required to remove, delete and return all software, related documentation and confidential information furnished under the license agreement.
To meet the increasing complexity of semiconductor designs, the introduction of new advanced materials, and the increased costs associated with more advanced semiconductor technology nodes, we will need to continually enhance our product offerings through our own in-house research and development efforts, acquisitions, or strategic partnerships with third parties. The in-house development of new product offerings or enhancements to our existing product offerings requires significant research and development activities and time and may or may not result in offerings we can successfully market and sell to customers. For example, we have developed an artificial intelligence (“AI”), -basedAI-based solution named fabFab technologyTechnology co-optimizationCo-Optimization or FTCOTM for wafer level fabrication facilities. FTCO utilizes manufacturing data to perform statistical and physics-based machine learning software simulations to create a computer model of a wafer, which we call the “digital twin” of the wafer, in order to simulate the fabrication of wafers. We may also seek to acquire companies or assets for products or solutions which we believe are complementary to our existing products or solutions. Additionally, we currently, and have in the past, and may in the future, partner with third parties to expand our product offerings to our customers. If in the future, we enter into additional licensing agreements with other third parties and are unable to extend the term of those licensing arrangements, we will experience an associated decline in revenue relating to those products.
We believe that trends in the global EDA software market, including growth in the integrated circuits and electronics manufacturing markets, growing complexity of semiconductor and photonics designs, and increasing challenges associated with advanced materials and shrinking process technology nodes across the EDA market, will increase the demand for our software solutions over time, which will have a direct impact on our future revenues and results of operations. In response to this increase in complexity and new challenges facing designers, we have increased investments in our research and development for new software product offerings. For example, our research and development expenseexpenses waswere 35%47% and 24%35% of revenue for the years ended December 31, 20242025 and 2023,2024, respectively. We plan to continue to invest in our software solutions to establish and expand a leadership position in our target markets. We also plan to use our research and development efforts to continue to cater to strategic customer needs.
Our revenue is derived principally from software licensinglicensing, customization and maintenance and services. Our customer agreements include combinations of licensed software andrelated maintenance and services, which are generally accounted for as separate performance obligations with differing revenue recognition patterns. Arrangements with both software licenses and customization services are accounted for as a combined performance obligation.
Revenue from software licenses is classified as software license revenue. Software license revenue is recognized upfront upon delivery of the licensed software. Revenue associated with the license of the Company’s SIP is classified as software license revenue and recognized as revenue (i) upfront upon delivery of the standard SIP license, or (ii) over time, when customization services are combined with the SIP license, as specific contractual milestones are met and incremental functionality is delivered to the customer.
Revenue from our software licenses is classified as software license revenue. Software license revenue is recognized upfront upon delivery of the licensed product. We also offer licenses of our standard SIP developed in house, and we offer licenses developed in partnership with NXP Semiconductors Netherlands B.V. (“NXP”) (the “NXP IP”). Our SIP licenses provide customers with access to SoC design SIP which meet established industry standards, thus saving customers the time and resources required to develop similar design methodologies. Our standard SIPs are generally ready to use upon delivery, meaning no customization is required for our customers to obtain value from the use of our SIP in their IC designs. We recognize revenue associated with licenses of our SIP at the commencement of the contract upon delivery of the licensed SIP. With respect to the NXP IP, we generally act as a principal to the transaction because we have a license to sell, and therefore control the NXP IP that we deliver to the customer. Consistent with our role as the principal, we recognize SIP revenue of the NXP IP on a gross basis. Any royalty fees based upon unit sales, revenue or flat fees which were paid to NXP were reported in cost of revenue upon delivery pursuant to the terms and conditions of our contractual obligations with the customers.
Under certain SIP license agreements, we can also derive revenue through royalties from customers who agree to pay usage-based fees to embed our SIP into their own software offerings. Revenue under SIP royalty agreements is generally recognized during the period in which the customer sells its solutions which incorporate our SIP.
Maintenance and service revenue, which consists of both post-contract support ("PCS") for software licenses and support services for SIP licenses, is recognized ratably over the term of the contract period. Professional services revenue, which is classified as maintenance and service revenue, is recognized based on when the Company delivers the related service pursuant to the terms of the arrangement.
Typically, our software solutions are sold with post-contract support (“PCS”), which includes unspecified technical enhancements and customer support. PCS is classified as maintenance and service revenue and is recognized ratably over the term of the contract, as we satisfy the PCS performance obligation over time.
Cost of revenue consists of personnel costs comprised of salaries and benefits for employees directly involved in our customer support function, such as customer support engineering salary and benefits, costs of our other customer services, allocation of overhead and facility costs, amortization of acquired intangible assets, and royalties related to the recognized revenue.royalties. Historically, we have not recognized stock-based compensation expense, but after the consummation of the IPO during the year ended December 31, 2024, we recognized $3.0 million of stock-based compensation expense in cost of revenue. We recognized $1.3 million of stock-based compensation expense in cost of revenue during the year ended December 31, 2025. We also recognized $1.0 million and $0.7 million of amortization associated with our acquired intangible assets in cost of revenue during the yearyears ended December 31, 2024.2025 and 2024, respectively. See Note 1113 and Note 68 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion. Gross profit represents revenue less cost of revenue.
Our operating expenses consist of research and development, selling and marketing, general and administrative, and estimated litigation claim.settlement. Related personnel costs are the most significant component of our operating expenses and consist of salaries, benefits, stock-based compensation expense, bonuses and commissions. Our operating expenses also include consulting costs, costs of facilities, information technology, depreciation and amortization. We expect our operating expenses to fluctuate as a percentage of revenue over time. Historically, we have not recognized stock-based compensation expense, but after the consummation of the IPO during the year ended December 31, 2024, we recognized an aggregate of $23.9 million of stock-based compensation expense in operating expenses. Of the aggregate stock-based compensation expense recorded, we recognized $14.5 million, $5.1 million, and $4.3 million in general and administrative expense, research and development expense, and selling and marketing expense, respectively, duringDuring the year ended December 31, 2024.2025, we recognized $9.5 million in total stock-based compensation expense. The year over year decrease was primarily due to stock-based compensation expense recorded during 2024 in connection with our IPO. See Note 1113 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion.
The following table summarizes stock-based compensation expense:
Estimated Litigation ClaimSettlement
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 $16.0 million payable on June 18, 2025, $4.1 million payable on August 15, 2025, $4.1 million payable on November 14, 2025 and a final payment of $8.3 million payable on 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 year ended December 31, 2025, we made the payments of $24.3 million on behalf of Silvaco and the Co-Defendants, which included $8.1 million contributed by the Co-Defendants in accordance with the apportionment agreement. We recorded a litigation settlement expense of $13.1 million and $11.3 million during the years ended December 31, 2025 and 2024, respectively, related to the Settlement Agreement. As of December 31, 2025, our remaining liability under the Settlement Agreement was $8.3 million, which is included in accrued expenses and other current liabilities on the consolidated balance sheet. See Note 10 and Note 16 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion.
Restructuring Expense
Restructuring expense consists of severance and other personnel costs, including stock-based compensation expense, facility closures and other costs associated with exit and disposal activities.
Estimated litigation claim expense consists of legal costs that became probable and reasonably estimable associated with our obligations with respect to the earnout payment due to the selling shareholders of Nangate, Inc. (“Nangate”), along with a third cross complainant (collectively, the “Nangate Parties”). On July 23, 2024, a jury awarded the Nangate Parties $11.3 million in damages under breach of contract related claims, including breach of contract and breach of covenant of good faith and fair dealing, and court and litigation related costs and certain expert expenses subject to the Nangate Parties establishing the legal right to them and to be determined by the court (the “Contract Damages”). The jury also awarded damages for certain of the fraudulent and negligent misrepresentation claims of $6.6 million to the Nangate Parties and incremental punitive damages, including $17.0 million payable by the Company (the “Fraud Damages”). The Nangate Parties will have the option to choose either the Contract Damages or the Fraud Damages, but in no circumstances will the Nangate Parties receive both remedies. We and the Co-Defendants may appeal the judgement, which will require us to collateralize and post an appellate bond of up to $35.4 million on or before March 24, 2025. We recorded a charge to estimated litigation claim and accrued expenses and other current liabilities of $11.3 million during the year ended December 31, 2024. See Note 14 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion.
Loss on debt extinguishment includes losses incurred related to the extinguishment of our note purchase agreement with Micron Technology Inc. (the “Micron Note”) and our loan facility with East West Bank.Bank (the “East West Bank Loan”). See Note 12 of our consolidated financial statements for further discussion.
Interest Expense and Other Expense,Income (Expense), Net
Interest expense and other expense,income (expense), net includes interest expense associated with cost of borrowings, leases or interest-bearing agreements, foreign exchange gains and losses and changes in the fair value of contingent consideration associated with legacy acquisitions.
Income Tax (Benefit) Provision
Income tax (benefit) provision is our estimate of current tax benefit or expense incurred from the consolidated results of operations globally.
The following table sets forth our results of operations for the years ended December 31, 2024 and 2023:
The following table summarizes our results of operations as a percentage of total revenue for the years ended December 31, 2024 and 2023:
In March, April, and August 2025, we acquired the OPC Business, Tech-X, and Mixel, respectively. Accordingly, the results of operations of the OPC Business, Tech-X, and Mixel have been included in our consolidated financial statements since their respective acquisition dates.
Total revenue increased by $3.4 million, or 6%, to $63.1 million for the year ended December 31, 2025 from $59.7 million for the year ended December 31, 2024. Revenue associated with our EDA tools and IP sales increased by $8.8 million and $4.8 million, respectively. This increase was partially offset by revenue associated with our TCAD tools which decreased by $10.2 million. Software license revenue decreased by $1.1 million, or 3%, to $42.9 million for the year ended December 31, 2025 from $44.0 million for the year ended December 31, 2024. Maintenance and service revenue increased by $4.5 million, or 29%, to $20.2 million for the year ended December, 2025 from $15.7 million for the year ended December 31, 2024.
Despite economic challenges in Asia including the impact of the ongoing strain in U.S.-China trade relations, total revenue increased by $5.4 million, or 10%, to $59.7 million for the year ended December 31, 2024 from $54.2 million for the year ended December 31, 2023. Revenue associated with our TCAD and EDA tools increased by $8.1 million and $0.6 million, respectively, and revenue derived from IP sales decreased by $3.2 million. Software license revenue increased by $4.7 million, or 12%, to $44.0 million for the year ended December 31, 2024 from $39.3 million for the year ended December 31, 2023. Maintenance and service revenue increased by $0.8 million, or 5%, to $15.7 million for the year ended December, 2024 from $14.9 million for the year ended December 31, 2023.
The increase in gross profit of $1.7 million, or 4%, for the year ended December 31, 2025 compared to the year ended December 31,2024, was primarily due to a $3.4 million increase in revenue, partially offset by a $1.7 million increase in cost of revenue. Cost of revenue during the year ended December 31, 2025 reflects a $2.7 million increase in employee compensation and benefits resulting from increased headcount and a $0.2 million increase in amortization expense associated with our license agreement to sell SIP developed in partnership with NXP Semiconductors Netherlands B.V. (“NXP”), partially offset by a $1.7 million decrease in stock-based compensation expense. Gross profit margin decreased to 78% for the year ended December 31, 2025 from 80% for the year ended December 31, 2024 primarily due to an increase in employee compensation and benefits resulting from increased headcount and an increase in amortization expense.
Gross profit increased by $2.7 million, or 6%, to $47.6 million for the year ended December 31, 2024 from $44.9 million for the year ended December 31, 2023. Gross profit margin decreased to 80% for the year ended December 31, 2024 from 83% for the year ended December 31, 2023. The decrease was attributable to $3.0 million in stock-based compensation expense recorded upon the consummation of the IPO and $0.7 million of amortization associated with our acquired intangible assets.
The increase in research and development expenses of $9.1 million, or 44%, for the year ended December 31, 2025 compared to the year ended December 31,2024, was primarily due to a $7.5 million increase in employee compensation and benefits driven by increased headcount, merit increases, and the related payroll taxes, a $1.1 million increase in software maintenance, a $1.5 million increase in professional services, a $0.5 million increase in facility expenses due to recent acquisitions and a $0.2 million increase in amortization expense of acquired intangible assets, which was partially offset by a decrease in stock-based compensation expense of $2.4 million.
Research and development expenses were $20.7 million and $13.2 million for the years ended December 31, 2024 and 2023, respectively. The increase of $7.6 million, or 57%, was primarily due to $5.1 million of stock-based compensation expense recorded as a result of the consummation of the IPO, $1.0 million increase in salary and benefits expenses, primarily related to increased headcount and merit increases, a $0.9 million increase in software maintenance expense, and a $0.6 million increase in engineering support expenses.
Selling and marketing expenses remained flat for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to a $2.7 million increase in employee compensation and benefits in the current year, resulting from increased headcount, merit increases, and the related payroll taxes, offset by a $2.6 million decrease in stock-based compensation expense and a $0.1 million decrease in travel and marketing expense.
Selling and marketing expenses were $18.3 million and $12.7 million for the years ended December 31, 2024 and 2023, respectively. The increase of $5.6 million, or 44%, was primarily due to $4.3 million of stock-based compensation expense recorded as a result of the consummation of the IPO, a $1.0 million increase in salary and benefits expenses, primarily related to increased headcount and merit increases, and a $0.3 million increase in sales and marketing related travel, conferences, trade shows and advertising.
The decrease in general and administrative expenses of $3.5 million, or 9% for the year ended December 31, 2025 compared to the year ended December 31, 2024, was primarily due to a decrease in stock-based compensation expense of $9.5 million, partially offset by a $1.7 million increase in employee compensation from increased headcount, merit increases, severance and the related payroll taxes, a $1.6 million increase in amortization expense of acquired intangible assets, a $1.0 million increase in legal and professional fees, $0.6 million of executive severance costs, a $0.5 million increase in software maintenance expense, and a $0.1 million increase in facility expenses.
General and administrative expenses were $37.6 million and $17.9 million for the years ended December 31, 2024 and 2023, respectively. The increase of $19.7 million, or 110%, was primarily due to $14.5 million of stock-based compensation expense recorded as a result of the consummation of the IPO, a $3.5 million increase in legal, professional and audit fees, a $0.6 million increase in corporate insurance, a $0.5 million increase in salary and benefits expenses, primarily related to increased headcount and merit increases, and $0.6 million of severance expenses.
Estimated Litigation ClaimSettlement
Litigation settlement was $13.1 million and $11.3 million for the years ended December 31, 2025 and 2024, respectively. See Note 10 and Note 16 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion.
What changed in the latest 10-Q
Risk Factors
Largest changes
During the three and six months endedsee in full comparisonMarchJune31,30, 2026, 21% and 18% of our revenue was derived from customers in China, respectively. For the same period in 2025,15%28% and14%21% of our revenue was derived from customers in China, respectively. Our operating expenses in China were$1.1$1.0 million and$0.9$2.1 million, respectively, for the three and six months endedMarchJune31,30, 2026, and2025.$0.9 million and $1.7 million for the comparable period 2025, respectively. As a result, the economic, political, legal and social conditions in China could harm our business. Various factors may in the future cause the Chinese government to impose controls on credit or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products. In addition, the legal system in China has inherent uncertainties that may limit the legal protections available in the event of any claims or disputes that we have with third parties, including our ability to protect the IP we develop or license in China or elsewhere. As China’s legal system is still evolving, the interpretation of many laws, regulations and rules is not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit the remedies available in the event of any claims or disputes with third parties. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. Some of the other risks related to doing business in China include:
For example, the United States and Israel, on the one hand, and Iran and other regional adversaries, including Hezbollah, on the other hand, have engaged in direct military hostilities. While we do not currently consider the regional conflict between the United States and Israel and their adversaries to have had a material impact on our business, the ongoing regional conflict could have a negative impact on the economy and business activity globally, and therefore could adversely affect our results of operations, financial condition and cash flow. During the three and six months endedsee in full comparisonMarchJune31,30, 2026, we generated $0.2 million and $0.3 million in revenues from customers in the Middle East, respectively. During the three and six months ended June 30, 2025, we generated$36.6$0.3thousandmillion and$0.2$0.5 million in revenues from customers in the Middle East, respectively. As ofMarchJune31,30, 2026, we had104107 employees in Egypt.
“Such leadership transitions can be inherently difficult to manage, and an inadequate transition could cause disruption to our business, including our relationships with our employees, customers, suppliers, and business partners, and fluctuations in the price of our stock.”see in full comparison
We are highly dependent upon the ability and experience of our senior executives and our key technical and other management employees, and we do not maintain key person insurance for any of our employees. Although we have employment agreements with certain employees, the loss of these employees, or any of our other key employees, could adversely affect our ability to conduct our operations. In 2025, we experienced a CEO and CFO transition and made, and in the future could make, additional executive leadership changes as part of overall succession plans. Such leadership transitions can be inherently difficult to manage, and an inadequate transition could cause disruption to our business, including our relationships with our employees, customers, suppliers, and business partners, and fluctuations in the price of our stock.see in full comparison
A significant portion of our revenue comes from outside the United States. During the three and six months endedsee in full comparisonMarchJune31,30, 2026,and 2025, 56%52% and80%,55%, respectively, of our revenue was from international customers. For the same period in 2025, 70% and 76% of our revenue was from international customers, respectively. In addition, we have significant non-U.S. operations. This requires us to recruit and retain qualified technical and managerial employees, manage multiple remote locations performing complex software development projects, and ensure intellectual property protection outside of the U.S. Our international operations and sales subject us to a number of increased risks, including:
We lease several office facilities from entities controlled by Ms. Ngai-Pesic, pursuant to which we recorded a rent expense of $0.1 million and $0.3 million forsee in full comparisonboththe three and six months endedMarchJune31,30, 2026, respectively, and $0.1 million and $0.3 million for the same period in 2025. Because we are controlled by the Pesic Family, we may not have the leverage to negotiate extensions or amendments to our agreements on terms as favorable to us compared to those we would negotiate with an unaffiliated third party. See Note 7 to our condensed consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
Full comparison: every changed paragraph (8)
A significant portion of our revenue comes from outside the United States. During the three and six months ended MarchJune 31,30, 2026, and 2025, 56%52% and 80%,55%, respectively, of our revenue was from international customers. For the same period in 2025, 70% and 76% of our revenue was from international customers, respectively. In addition, we have significant non-U.S. operations. This requires us to recruit and retain qualified technical and managerial employees, manage multiple remote locations performing complex software development projects, and ensure intellectual property protection outside of the U.S. Our international operations and sales subject us to a number of increased risks, including:
During the three and six months ended MarchJune 31,30, 2026, 21% and 18% of our revenue was derived from customers in China, respectively. For the same period in 2025, 15%28% and 14%21% of our revenue was derived from customers in China, respectively. Our operating expenses in China were $1.1$1.0 million and $0.9$2.1 million, respectively, for the three and six months ended MarchJune 31,30, 2026, and 2025.$0.9 million and $1.7 million for the comparable period 2025, respectively. As a result, the economic, political, legal and social conditions in China could harm our business. Various factors may in the future cause the Chinese government to impose controls on credit or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products. In addition, the legal system in China has inherent uncertainties that may limit the legal protections available in the event of any claims or disputes that we have with third parties, including our ability to protect the IP we develop or license in China or elsewhere. As China’s legal system is still evolving, the interpretation of many laws, regulations and rules is not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit the remedies available in the event of any claims or disputes with third parties. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. Some of the other risks related to doing business in China include:
For example, the United States and Israel, on the one hand, and Iran and other regional adversaries, including Hezbollah, on the other hand, have engaged in direct military hostilities. While we do not currently consider the regional conflict between the United States and Israel and their adversaries to have had a material impact on our business, the ongoing regional conflict could have a negative impact on the economy and business activity globally, and therefore could adversely affect our results of operations, financial condition and cash flow. During the three and six months ended MarchJune 31,30, 2026, we generated $0.2 million and $0.3 million in revenues from customers in the Middle East, respectively. During the three and six months ended June 30, 2025, we generated $36.6$0.3 thousandmillion and $0.2$0.5 million in revenues from customers in the Middle East, respectively. As of MarchJune 31,30, 2026, we had 104107 employees in Egypt.
As of MarchJune 31,30, 2026, we had 1315 employees, 9 contractors, and 4 internsemployees in Ukraine, all of whom were working remotely. If our employees in Ukraine become subject to a military draft or are unable to work due to the ongoing conflict, the development of our next generation software could be delayed, which could negatively impact our business.
We are highly dependent upon the ability and experience of our senior executives and our key technical and other management employees, and we do not maintain key person insurance for any of our employees. Although we have employment agreements with certain employees, the loss of these employees, or any of our other key employees, could adversely affect our ability to conduct our operations. In 2025, we experienced a CEO and CFO transition and made, and in the future could make, additional executive leadership changes as part of overall succession plans. Such leadership transitions can be inherently difficult to manage, and an inadequate transition could cause disruption to our business, including our relationships with our employees, customers, suppliers, and business partners, and fluctuations in the price of our stock.
Such leadership transitions can be inherently difficult to manage, and an inadequate transition could cause disruption to our business, including our relationships with our employees, customers, suppliers, and business partners, and fluctuations in the price of our stock.
As of MarchJune 31,30, 2026, Ms. Ngai-Pesic and the members of her immediate family (the “Pesic Family”) collectively own more than 56.7%53.9% of our total outstanding common stock. As a result of the Pesic Family collectively holding more than 50% of the voting power of our company, we are a “controlled company” within the meaning of the Nasdaq listing rules. Therefore, we are not required to comply with certain corporate governance rules that would otherwise apply to us as a listed company on Nasdaq, including the requirements that (i) we have a majority of independent directors on our board of directors; (ii) the compensation of our executive officers be determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; and (iii) director nominees selected or recommended for our board be approved either by a majority of the independent directors or a nominating committee comprised solely of independent directors.
We lease several office facilities from entities controlled by Ms. Ngai-Pesic, pursuant to which we recorded a rent expense of $0.1 million and $0.3 million for both the three and six months ended MarchJune 31,30, 2026, respectively, and $0.1 million and $0.3 million for the same period in 2025. Because we are controlled by the Pesic Family, we may not have the leverage to negotiate extensions or amendments to our agreements on terms as favorable to us compared to those we would negotiate with an unaffiliated third party. See Note 7 to our condensed consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
Management's Discussion & Analysis (MD&A)
Removed heading “Components of Results of Operations”
Removed heading “Software License Revenue”
Removed heading “Maintenance and Service Revenue”
Removed heading “Cost of Revenue and Gross Profit”
Removed heading “Operating Expenses”
Removed heading “Research and Development”
Removed heading “Selling and Marketing”
Removed heading “General and Administrative”
Removed heading “Litigation settlement”
Removed heading “Restructuring Expense”
Removed heading “Interest Income”
Removed heading “Interest and other expense, net”
Removed heading “Income tax provision”
Largest changes
“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”). …”see in full comparison
“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. …”see in full comparison
General and administrative expenses decreased bysee in full comparison$1.1$1.6 million, or14%,20%, to$7.0$6.5 million for the three months endedMarchJune31,30, 2026, from $8.1 million for the three months endedMarchJune31,30, 2025. The decrease was driven by a$0.7$2.0 milliondecreasereduction in legalfeesandrelatedprofessionaltofees,theandNangatealitigation, $0.6$0.3 milliondecreasereduction in employee compensation and benefitsdueresultingtofromrestructuringaactivities,decreaseandin headcount, partially offset by a $0.4 milliondecrease in acquisition-related legal fees, partially offset by anincreaseof $0.7 millionin depreciation andamortization asamortization, aresult$0.3ofmillionrecentincreaseacquisitions.in expenses associated with our acquisitions, and a $0.2 million increase in stock-based compensation expense.
Net cash used in operating activities for thesee in full comparisonthreesix months endedMarchJune31,30, 2026, was$11.0$16.5 million compared to$1.1$16.6 million of net cash used in operating activities for thethreesix months endedMarchJune31,30, 2025. The$9.9$0.1 millionincreasedecrease in net cash used in operating activities primarily reflects adecrease of $12.2 million in net working capital, primarily driven by $8.3 million of cash paid under the Settlement Agreement, and a decrease of $11.1 million in the non-cash effects of stock-based compensation expense, provision for credit losses, change in fair value of contingent consideration, depreciation and amortization, and the accretion of discount on marketable securities. This use of cash was partially offset by a $13.4$19.1 million decrease in netloss.loss, a $1.4 million increase in non-cash stock based compensation expense, and a $1.3 million increase in non-cash depreciation and amortization expense, offset by the non-recurrence of a $13.1 million charge to litigation settlement (see Note 7 and Note 13 of our condensed consolidated financial statements for further discussion) and an $9.4 million increase in cash used related to changes in operating assets and liabilities.
Full comparison: every changed paragraph (72)
Our EDA software is used by semiconductor companies to design, simulate, and verify semiconductors. Our EDA products include SPICE modellingmodeling and simulation, parasitic extraction and reduction, standard cell generation and optical proximity correction.
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%66% of our revenue for both the three and six months ended MarchJune 31,30, 2026, as compared to 60% and 2025,66% respectively,during andthe same periods in 2025. Revenue from associated maintenance and services accounted for 35% and 29%34% of our revenue for both the three and six months ended MarchJune 31,30, 2026, as compared to 40% and 34% during the same periods in 2025, respectively.
During the six months ended June 30, 2025, we completed two acquisitions: (i) Cadence Design System's (“Cadence”) Process Proximity Compensation product line (the “OPC Business”) for $11.5 million in March 2025; and (ii) Tech-X Corporation (“Tech-X”) for $8.2 million in April 2025.
On March 4, 2025, we consummated an asset purchase agreement with Cadence Design Systems, Inc. (“Cadence”), pursuant to which, among other things, we agreed to acquire certain assets and assume certain liabilities comprising Cadence’s Process Proximity Compensation product line, an optical proximity correction suite of tools (the “OPC Business”), in exchange for $11.5 million in cash.
On April 29, 2025, we consummated a stock purchase agreement with the shareholders of Tech-X Corporation (“Tech-X”), pursuant to which we acquired all of the outstanding shares of Tech-X for an aggregate purchase price of $8.2 million. The purchase consideration consisted of (i) $4.1 million in cash, (ii) 457,666 shares of the Company’s common stock with a fair value of $2.4 million on the closing date, and (iii) contingent consideration, with a maximum payout of $2.0 million, and with an estimated fair value of $1.7 million, payable in cash upon the achievement of specified technical milestones through December 2026. In February 2026, the Company amended the form of payment of a portion of the contingent consideration and post-closing net working capital adjustments to be payable in shares of the Company’s common stock. The Company also extended the date through which contingent consideration can be earned to July 2027.
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 6882 terminated employees and other costs such as the site closures as part of our global site strategy. Of the total expected costs, $1.5$0.9 million and $1.3$2.4 million were incurred during the three and six months ended MarchJune 31,30, 20262026, respectively, and $1.3 million during the year ended December 31, 2025, respectively.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.
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 dependentdepends 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.
Components of Results of Operations
Revenue
Our revenue is derived principally from software licensing, customization and related maintenance and services, which are generally accounted for as separate performance obligations with differing revenue recognition patterns. Arrangements with both software licenses and customization services are accounted for as a combined performance obligation.
Software License Revenue
Revenue from software licenses is classified as software license revenue. Software license revenue is recognized upfront upon delivery of the licensed software. Revenue associated with the license of the Company’s SIP is classified as software license revenue and recognized as revenue (i) upfront upon delivery of the standard SIP license, or (ii) over time, when customization services are combined with the SIP license, as specific contractual milestones are met and incremental functionality is delivered to the customer.
Maintenance and Service Revenue
Maintenance and service revenue, which consists of both post-contract support ("PCS") for software licenses and support services for SIP licenses, is recognized ratably over the term of the contract period. Professional services revenue, which is classified as maintenance and service revenue, is recognized based on when the Company delivers the related service pursuant to the terms of the arrangement.
We also recognized an immaterial portion of our revenue from device characterization and modeling services for the three months ended March 31, 2026, and 2025. Revenue is recognized upon the completion of the requested services and, as applicable, satisfaction of customer acceptance terms. Revenue from these services is classified as maintenance and service revenue.
Cost of Revenue and Gross Profit
Cost of revenue consists of personnel costs comprised of salaries and benefits for employees directly involved in our customer support function, such as customer support engineering salary and benefits, costs of our other customer services, allocation of overhead and facility costs, amortization of acquired intangible assets, and royalties. We recognized $0.3 million and $0.2 million of stock-based compensation expense in cost of revenue during the three months ended March 31, 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 March 31, 2026, and 2025. Gross profit represents revenue less cost of revenue.
Operating Expenses
Our operating expenses consist of research and development, selling and marketing, general and administrative expenses, and litigation settlement. Related personnel costs are the most significant component of our operating expenses and consist of salaries, benefits, stock-based compensation expense, bonuses and commissions. Our operating expenses also include consulting costs, facilities, information technology, depreciation and amortization. We expect our operating expenses to fluctuate as a percentage of revenue over time. During the three months ended March 31, 2026, and 2025, we recognized $2.7 million and $2.1 million in total stock-based compensation expense, respectively.
The following table summarizes stock-based compensation expense by function for the three months ended March 31, 2026, and 2025:
Research and Development
Our research and development expense consists primarily of personnel costs comprised of salaries, stock-based compensation expense, and benefits for employees directly involved in our research and development efforts, as well as engineering, quality assessment, other related costs associated with the development of new products, enhancements to existing products, quality assurance and testing and allocated overhead costs. We expense research and development costs as incurred. We believe that continued investment in our software solutions and services is important for our future growth and acquisition of new customers and, as a result, we expect our research and development expenses to continue to increase, although it may fluctuate as a percentage of revenue from period to period depending on the timing of these expenses.
Selling and Marketing
Selling and marketing expense consists of personnel costs comprised of salaries, stock-based compensation expense, benefits, sales commissions, travel costs, and field application engineering directly involved in our selling and marketing efforts, as well as professional and consulting fees, advertising expenses, and allocated overhead costs. We expect selling and marketing expense to continue to increase as we increase our sales and marketing personnel and grow our international operations, although it may fluctuate as a percentage of revenue from period to period depending on the timing of these expenses.
General and Administrative
General and administrative expense consists of personnel costs associated with our executive, legal, finance, human resources, information technology and other administrative functions, including salaries, stock-based compensation expense, benefits and bonuses. General and administrative expense also includes professional and consulting fees, accounting fees, legal costs, and allocated overhead costs. We expect general and administrative expense to remain consistent, although it may fluctuate as a percentage of revenue from period to period depending on the timing of these expenses.
Litigation settlement
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.
Restructuring Expense
Restructuring expense consists of severance and other personnel costs, including stock-based compensation expense, facility closures and other costs associated with exit and disposal activities.
Interest Income
Interest income includes interest income earned on our cash and cash equivalents and marketable securities balances and accretion of the purchase discounts on our marketable securities balances.
Interest and other expense, net
Interest and other expense, net includes interest expense associated with cost of borrowings, leases or interest-bearing agreements, foreign exchange gains and losses and changes in the fair value of contingent consideration associated with legacy acquisitions.
Income tax provision
Income tax provision is our estimate of current tax expense incurred from the condensed consolidated results of operations globally.
The following table sets forth our results of operations for the three and six months ended MarchJune 31,30, 2026, and 2025:
The following table summarizes our results of operations as a percentage of total revenue for the three and six months ended MarchJune 31,30, 2026, and 2025:
Comparison of the Three and Six Months Ended MarchJune 31,30, 2026, and 2025
Total revenue increased by $3.7$5.8 million, or 26%,48%, to $17.8 million for the three months ended MarchJune 31,30, 2026, from $14.1$12.0 million for the three months ended MarchJune 31,30, 2025. While revenueRevenue 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.acquisitions. TCAD revenue andrevenue, IP revenue increased by $1.7 millionrevenue, and $2.9 million, respectively, while revenue associated with our EDA tools decreasedincreased by $1.0$1.1 million.million $4.2 million, and $0.5 million, respectively. Software license revenue increased by $1.6$4.6 million, or 16%,64%, to $11.6$11.8 million for the three months ended MarchJune 31,30, 2026, from $10.0$7.2 million for the three months ended MarchJune 31,30, 2025. Maintenance and service revenue increased by $2.1$1.2 million, or 51%,24%, to $6.1$6.0 million for the three months ended MarchJune 31,30, 2026, from $4.1$4.8 million for the three months ended MarchJune 31,30, 2025.
For the six months ended June 30, 2026, total revenue increased by $9.4 million, or 36% to $35.6 million from $26.1 million for the six months ended June 30, 2025. IP revenue and TCAD revenue increased by $7.1 million and $2.8 million, partially offset by a decline in revenue associated with our EDA tools of $0.5 million, respectively. Software license revenue increased by $6.2 million, or 36%, to $23.4 million for the six months ended June 30, 2026 from $17.2 million for the six months ended June 30, 2025. Maintenance and service revenue increased by $3.2 million, or 36%, to $12.1 million for the six months ended June 30, 2026 from $8.9 million for the six months ended June 30, 2025.
Gross profit increased by $4.3$6.6 million, or 38%,77%, to $15.3$15.2 million for the three months ended MarchJune 31,30, 2026, from $11.1$8.5 million for the three months ended MarchJune 31,30, 2025, primarily due to a $3.7$5.8 million increase in revenue and a $0.6$0.9 million decrease in cost of revenue. Cost of revenue during the three months ended MarchJune 31,30, 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 86%85% for the three months ended MarchJune 31,30, 2026, from 79%71% for the three months ended MarchJune 31,30, 2025, primarily reflectingdue to higher revenue, which improved the higherabsorption of fixed costs, and lower cost of revenue volume.resulting from our cost-reduction efforts and restructuring activities.
For the six months ended June 30, 2026, gross profit increased by $10.9 million, or 55%, to $30.5 million from $19.6 million for the six months ended June 30, 2025, primarily due to a $9.4 million increase in revenue and a $1.5 million decrease in cost of revenue. Cost of revenue during the six months ended June 30, 2026, decreased primarily due to our cost reduction efforts and restructuring activities. We recognized $0.6 million and $0.5 million of stock-based compensation expense in cost of revenue during the six months ended June 30, 2026 and 2025. We also recognized $0.5 million of amortization associated with our acquired intangible assets in cost of revenue during each of the six months ended June 30, 2026 and 2025. Gross profit margin increased to 86% for the six months ended June 30, 2026 from 75% for the six 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.
Research and development expenses increased by $4.4$2.9 million, or 91%,49%, to $9.2$8.8 million for the three months ended MarchJune 31,30, 2026, from $4.8$5.9 million for the three months ended MarchJune 31,30, 2025. This increase was primarily due to a $2.8$1.5 million increase in expenses associated with our acquisitions, an increase in allocated costs of $0.8 million, a $0.8$0.7 million increase in employeestock-based compensation andexpense benefitsprimarily dueassociated towith our restructuring activities as well as increased headcount, an increase of $0.7$0.5 million in stock-basedcash compensationseverance expense,associated additionalwith contractorour expensesrestructuring of $0.2 million,activities, and an increase of $0.1 million in depreciationconsulting and amortization,costs, partially offset by a decrease of $0.5$0.9 million duereduction toin restructuringemployee activities.compensation and benefits resulting from a decrease in headcount.
For the six months ended June 30, 2026, research and developments expenses increased by $7.3 million, or 68%, to $18.0 million from $10.7 million for the six months ended June 30, 2025. The increase was primarily attributable to a $4.3 million increase in expenses associated with our acquisitions, an increase in allocated costs of $1.5 million, a $1.3 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, an increase of $0.4 million in consulting costs, and an increase of $0.2 million in software expenses, partially offset by a $1.3 million reduction in employee compensation and benefits resulting from a decrease in headcount.
Selling and marketing expenses decreased by $0.8 million, or 18%, to $3.9 million for the three months ended June 30, 2026, from $4.7 million for the three months ended June 30, 2025. This decrease was primarily due to a $1.4 million reduction in employee compensation and benefits resulting from a decrease in headcount, and a $0.2 million reduction in marketing expense, partially offset by an increase in allocated costs of $0.8 million.
For the six months ended June 30, 2026, selling and marketing expenses decreased by $0.7 million, or 8%, to $8.7 million from $9.4 million for the six months ended June 30, 2025. This decrease was primarily due to a $2.3 million reduction in employee compensation and benefits resulting from a decrease in headcount, and a decrease of $0.2 million in marketing expenses. This was partially offset by an increase in allocated costs of $1.4 million, a $0.3 million increase in cash severance expense associated with our restructuring activities, and a $0.1 million increase in stock-based compensation expenses.
Selling and marketing expenses were $4.8 million during the three months ended March 31, 2026, which was relatively flat compared to $4.7 million during the three months ended March 31, 2025.
General and administrative expenses decreased by $1.1$1.6 million, or 14%,20%, to $7.0$6.5 million for the three months ended MarchJune 31,30, 2026, from $8.1 million for the three months ended MarchJune 31,30, 2025. The decrease was driven by a $0.7$2.0 million decreasereduction in legal feesand relatedprofessional tofees, theand Nangatea litigation, $0.6$0.3 million decreasereduction in employee compensation and benefits dueresulting tofrom restructuringa activities,decrease andin headcount, partially offset by a $0.4 million decrease in acquisition-related legal fees, partially offset by an increase of $0.7 million in depreciation and amortization asamortization, a result$0.3 ofmillion recentincrease acquisitions.in expenses associated with our acquisitions, and a $0.2 million increase in stock-based compensation expense.
For the six months ended June 30, 2026, general and administrative expenses decreased by $2.7 million, or 17%, to $13.5 million from $16.2 million for the six months ended June 30, 2025. This decrease was primarily due to a $3.6 million reduction in legal and professional fees, and a $0.9 million reduction in employee compensation and benefits resulting from a decrease in headcount, partially offset by a $1.0 million increase in depreciation and amortization, a $1.0 million increase in software expense, and a $0.4 million increase in expenses associated with our acquisitions.
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.
Litigation settlement was $0 and $13.1 million for the three months ended March 31, 2026, and March 31, 2025, respectively. See Note 7 and Note 13 of our condensed consolidated financial statements for further discussion.
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.
Interest income decreased by $1.4 million or 95% for the six months ended June 30, 2026, from $1.5 million for the six months ended June 30, 2025 The decrease was driven by a lower balance in marketable securities held during the period.
Interest income reflects interest earned and accretion on our cash equivalents and marketable securities.
Interest and other expense, net, was $0.4 million for the three months ended June 30, 2026, and 2025, and $0.5 million and $0.7 million for the six months ended June 30, 2026 and 2025, respectively. The decrease in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily driven by a $0.2 million decrease in foreign currency fluctuations and a $0.1 million change in the fair value of contingent consideration.
Interest and other expense, net, was $0.1 million and $0.3 million for the three months ended March 31, 2026, and 2025, respectively.
Income tax provisionbenefit
Income tax provisionbenefit was $0.1$0.7 million and $0.2$0.5 million for the three and six months ended MarchJune 31,30, 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.
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 MarchJune 31,30, 2026, we had $10.9$13.0 million in cash and cash equivalents, of which $4.7$5.3 million was held by our foreign subsidiaries.
SVCO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 3 Form 4 filings (1 insider, 3 trade dates, 2,250 shares, about $24.8K) and open-market sales in 8 filings (6 insiders, 6 trade dates, 216,607 shares, about $2.4M; 2 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -214,357 (purchases minus sales); net value about -$2.4M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-29 | Rhines Walden C |
Grant/award | 250,376 | — | — |
| 2026-08-25 | Jackson Candace |
Open-market sale | 3,500 | $7.00 | $24.5K |
| 2026-08-12 | Zegarelli Christopher John |
Open-market sale | 2,257 | $7.55 | $17.0K |
| 2026-08-12 | Jackson Candace |
Open-market sale | 1,570 | $7.55 | $11.9K |
| 2026-08-11 | Ngai-Pesic Katherine S. |
Grant/award | 2,504 | — | — |
| 2026-08-11 | Ngai Anthony K.k. |
Grant/award | 2,746 | — | — |
| 2026-08-11 | Ngai Anthony K.k. |
Open-market purchase | 750 | $7.37 | $5.5K |
| 2026-08-11 | Ganti Anita |
Grant/award | 1,721 | — | — |
| 2026-08-11 | Tewksbury Ted L Iii |
Grant/award |
1,159 | — | — |
| 2026-08-11 | Tewksbury Ted L Iii |
Open-market sale |
580 | $7.28 | $4.2K |
| 2026-08-11 | Bo-Linn Cheemin |
Grant/award |
1,400 | — | — |
| 2026-08-11 | Bo-Linn Cheemin |
Open-market sale |
700 | $7.28 | $5.1K |
| 2026-08-11 | Pesic Illiya I. |
Grant/award | 1,409 | — | — |
| 2026-06-16 | Ngai Anthony K.k. |
Open-market purchase | 500 | $12.50 | $6.2K |
| 2026-06-11 | Ngai-Pesic Katherine S. |
Open-market sale | 200,000 | $11.27 | $2.3M |
| 2026-06-05 | Ngai Anthony K.k. |
Open-market purchase | 1,000 | $13.07 | $13.1K |
| 2026-06-03 | Pesic Illiya I. |
Open-market sale | 6,000 | $12.96 | $77.8K |
| 2026-05-22 | Rhines Walden C |
Grant/award | 154,745 | — | — |
| 2026-05-14 | Jackson Candace |
Open-market sale | 2,000 | $11.00 | $22.0K |
| 2026-05-12 | Pesic Illiya I. |
Grant/award | 953 | — | — |
| 2026-05-12 | Ganti Anita |
Grant/award | 1,165 | — | — |
| 2026-05-12 | Ngai Anthony K.k. |
Grant/award | 1,376 | — | — |
| 2026-05-12 | Ngai-Pesic Katherine S. |
Grant/award | 1,694 | — | — |
| 2026-04-22 | Bo-Linn Cheemin |
Grant/award | 17,564 | — | — |
| 2026-04-22 | Shelton Jodi Lynn |
Grant/award | 1,817 | — | — |
| 2026-04-22 | Lee Hau L. |
Grant/award | 2,726 | — | — |
| 2026-04-22 | Molloie William H. Jr. |
Grant/award | 1,999 | — | — |
| 2026-04-22 | Ngai-Pesic Katherine S. |
Grant/award | 17,564 | — | — |
| 2026-04-22 | Ganti Anita |
Grant/award | 17,564 | — | — |
| 2026-04-22 | Ngai Anthony K.k. |
Grant/award | 17,564 | — | — |
| 2026-04-22 | Pesic Illiya I. |
Grant/award | 17,564 | — | — |
| 2026-04-22 | Tewksbury Ted L Iii |
Grant/award | 17,564 | — | — |
Well-known investors holding SVCO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Two Sigma Investments | 2026-06-30 | 337,172 | $4.6M | 0.0% | Added 704% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 179,075 | $2.5M | 0.0% | Added 38% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 152,451 | $2.1M | 0.0% | New position |
| D. E. Shaw & Co. | 2026-06-30 | 127,858 | $1.8M | 0.0% | New position |
| Renaissance Technologies | 2026-06-30 | 37,600 | $266.2K | — | Sold out |
| Millennium Management (Israel Englander) | 2026-06-30 | 14,168 | $195.4K | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 12,344 | $170.2K | 0.0% | Reduced 92% |