Q1 2025 Silvaco Group Inc Earnings Call
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Robert Mertens, Craig Ellis, Blair Abernethy
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Speaker Change: At this time, all participants are in a listen only mode. After this speaker's presentation, there will be a question and answer session. To participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised.
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Speaker Change: Please note, this event is being recorded. I would now like to turn the conference over to Greg McNiff, Investor Relations for Silvaco. Please go ahead.
Greg McNiff: Thank you. Joining me on the call today are Robert Mertensky, Silvaco's CEO and Keith Tansky, Silvaco's Interim CFO .
Greg McNiff: An Archive replay of the conference call will be available on this website for a limited time after the call.
Greg McNiff: Please note that during this call, management will be making remarks regarding future events and the future financial performance of the company.
Greg McNiff: These remarks constitute forward-looking statements for purposes of the safe harbor provisions of the Private Security's litigation reform act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to different materially from those expressed in the forward-looking statements.
Greg McNiff: It is important to also know that the company undertakes no obligation to update such statements.
Greg McNiff: except that's required by law. The company cautioned you to consider risk factors that could cause actual results to differ materially from those in the forward looking statements contained in today's press release earnings presentation and on this conference call.
Greg McNiff: The risk factor section in Silvaco's annual report on Form 10K for the year ended December 31st, 2024.
Greg McNiff: and the most recent form, 10Q, following with the Securities and Exchange Commission, provide descriptions of these risks. With that, I'd like to turn the call over to Savaco's CEO , Babak Taheri. Babak?
[inaudible]
Hello, and welcome to Silvaco's first quarter 2025 earnings call.
Greg McNiff: I am Bobak Taheri, CEO of Silvaco. Thank you for joining us today.
Greg McNiff: I'm excited to update you on the strong momentum we've built since going public in May of last year.
Greg McNiff: For Fiscal Year 2024, we delivered a 13% increase in bookings and achieved 10% organic revenue growth over Fiscal Year 2023.
We also added over 46 new customer logos.
Under scoring, they're growing demand for our software platforms.
Robert Mertens, Christian Schwab.
Greg McNiff: A core objective of our IPO was to position Silvaco for strategic acquisitions that would meaningfully expand our serviceable address of road market or SAM.
Greg McNiff: We launched our acquisition strategy in Q1 of 2025 and have maintained that momentum into this quarter, targeting high growth sectors such as AI, photonics and IoT.
Greg McNiff: Our two most recent acquisitions have added more than an estimated $600 million in incremental time. Reinforcing our position in fast-expanding markets and further diversifying our growth engine.
Their market response to this strategy has been very encouraging.
In Q1 2025, our sector encountered some short-term macroeconomic headwinds.
Greg McNiff: resulting in a deferral of certain customer orders representing less than 10% of our annual revenue.
into future quarters.
Greg McNiff: Revenue for the quarter came in at $14.1 million below our guidance, primarily due to delays
Is the late, reduced, recognized revenue by approximately $2.2 million.
Greg McNiff: As these deals closed, as expected, we would have reported bookings and revenue about the midpoint of our guidance.
Greg McNiff: Despite these timing shifts, we remain highly confident in our updated Q2 and full year 2025 guidance.
Greg McNiff: which has been intentionally set with a conservative approach given the current macroeconomic environment.
We are equally confident in our long-term growth trajectory.
For more information visit www.FEMA.gov
Greg McNiff: Underpinned by strong market demand, strategic expansion and the increasing value of our technology stack.
Greg McNiff: To further enhance transparency around our revenue visibility, we will begin reporting annual contract value or ACV starting this quarter.
Greg McNiff: This new metric will give investors greater insight into our recurring revenue base while also reinforcing the fact that quarterly ordered timing has limited impact on the underlying growth trend.
Greg McNiff: Next, I will provide financial updates for Q1 Actuals as well as Q2 and full year 2025 guidance.
Next slide please.
Speaker Change: I will now highlight our non-GAAP results for Q1 2025, Guidance for Q2, and Fulia 2025, and our interim CFO Keith Tenski will discuss our detailed financial results and guidance later.
4Q-120-25, we reported gross bookings of 13.7 million dollars.
Speaker Change: Revenue on $14.1 million and non-GAAP goes margin of 82%.
Speaker Change: non-GAAP operating loss was $2.5 billion, and non-GAAP net loss was $0.7 per share.
For more information visit www.FEMA.gov
Speaker Change: For Q2 2025 and full year 2025 guidance, we have intentionally set a conservative stance given the current macroeconomic uncertainty.
Speaker Change: For Q2 2025, we are guiding ghost bookings in the range of $14 to $18 million, revenue in the range of $12 to $16 million, and non-GAAP ghost margin in the range of 80 to 83%.
Speaker Change: As we stated in the past, our gross margin will increase as our revenue continues to pick up in the second half.
Speaker Change: For the full year 2025, we expect close booking in the range of $67-74 million, reflecting an increase of up to 13% year-over-year.
Speaker Change: Revenue in the range of $64 million to $70 million, reflecting and increasing them up to 17% year-over-year.
Speaker Change: non-GAAP gross margin in the range of 83 to 86%, compared to 86% in 2024. non-GAAP operating
Speaker Change: to $1 million in income compared to $5.5 million in 2024, Narngab Mettinge Compersher, of up to $3 cents compared to $0.25 in 2024.
Speaker Change: Please note that this guidance includes the acquisition of Cadence's PPC platform for the full year and TechX for Q2 through Q4 considering only initial revenue synergies.
Speaker Change: In the first quarter, we continue to build on the momentum we highlighted on our last earnings calls. Despite the near-term macro uncertainty, we believe our focus on driving innovation through advanced R&D positions us well for long-term growth.
[inaudible]
Speaker Change: We are strategically expanding our capabilities to meet the evolving needs of our customers, particularly in high growth sectors such as AI, photonics, and advanced semiconductor manufacturing.
Speaker Change: At the same time, we are taking a discipline approach to managing operating expenses, cash flow and liquidity, reflecting a prudent posture in today's uncertainty macroeconomic environment.
Speaker Change: This balance between targeted investment and financial discipline positions Silvaco to lead in some of the fast growing segments of the technology market.
while protecting shareholder value and enjoying long-term sustainability.
Speaker Change: Next, I'd like to discuss how Silvaco solves semi-conductor and photonics challenges facing our customers.
Next slide please.
Speaker Change: Today we face a rapidly changing market, new technologies are emerging, product complexities are increasing.
Customers are challenged.
Speaker Change: Their expectations are evolving. And we must lead in addressing and solving these challenges by doing what we do best.
anticipating the next wave of technological breakthroughs.
Speaker Change: leading it through artificial intelligence through advanced algorithms in multi-physics through digital twin models and guide customers through complex design and manufacturing.
to stay ahead.
Speaker Change: We don't work alone. We partner with universities, with leading research labs, with our strategic customers and through targeted strategic acquisitions.
Focus on AI, focus on photonics, focus on IoT connectivity.
Speaker Change: Strengthening our reaching power, memory, high-performance compute, IoT and BLMT.
Speaker Change: Let's look closer at the challenges shaping our markets. First, design and manufacture and complexity.
Transistors are getting smaller with more functionality packed inside.
Speaker Change: Complex multi-core architectures are being designed. All of it impacting memory, high performance computing, automotive and more.
Speaker Change: Second, new materials like gallium nitrite, silicon carbide, and photonics integrated devices are pushing the boundaries of fabrication and design.
Speaker Change: Third, go to market challenges including rising cost and rising risk and cost of design, cost of tools, cost of vapors and the pressure of time to market.
Speaker Change: This is a landscape we are navigating. This is the opportunity we are capturing with technology, with strategy and with vision.
Next slide please.
Speaker Change: We just announced the acquisition of TechX Corporation, which we believe expands our sand by another $260 million with both the physics modeling capabilities. And that's not all.
Speaker Change: We added approximately $348 million more to our SAM with the acquisition of the PPC product line.
Speaker Change: We are already recognized $1.9 million of PPC revenue in Q1 alone.
Speaker Change: and we believe we are on track to deliver three to five million dollars for the full year from this acquisition.
Speaker Change: Faraday Technology also selected to lack of flex-can-IP for advanced automotive-asic
Speaker Change: You may ask how about our AI-based FTC platform. It's gaining serious traction.
Speaker Change: With major wins across power and advanced CMOS customers and R&D partnership on advanced
Speaker Change: The residency announced that excellence masks adopt Silvaco DTCO flow for next generation silicon carbide devices, as well as a partnership with Koryan Keon-Kee University's professor, Jin Jiang, for next generation of display technology.
and there is more coming.
Speaker Change: We expect to announce new customer rooms in the second half of the year. In Q1 2025 we didn't just grow our customer base.
Speaker Change: We landed nine new customers for AI infrastructure in Q1 of 2025, which was 23% of the quarterly
Speaker Change: An expanded, in existing customers, resulting in 38% of the quarterly bookings.
For more information visit www.FEMA.gov
Speaker Change: Two in power, two in memory, three in photonics, one in foundry, and one in IoT.
Speaker Change: On the next slide, I will walk you through how our recent acquisitions are accelerating our expansion into new high growth markets.
Next slide please.
Speaker Change: On our last earnings call, I discussed the strategic rationale and opportunity behind acquisition of Cadence's Process, Proximity, Consensation, Product Light.
which expands Silvaco's arm by approximately $357 million.
Speaker Change: As I mentioned earlier today, we expect the PPC acquisition to contribute between $3 million to $5 million in revenue in 2025.
with Eman Greater Contributions anticipated in 2026.
Thank you.
[inaudible]
Speaker Change: Today, I'm excited to share an overview of our recently announced acquisition of Tech X Corporation, including our technology integration plans and strategic rational driving
Speaker Change: We believe TechX expands our SAM by additional $260 million.
Speaker Change: The expected acquisition to contribute approximately $1 million in revenue for the remainder of 2025.
and more next year by delivering products and energies.
to our new and expanding existing customers.
For more information visit www.FEMA.gov
Speaker Change: It's important to note that historically Silvaco's digestion period for acquisition of this size has been about six months. We have already integrated the initial revenue synergies for both acquisitions and are on track to complete the operational and tax synergies over the coming quarters.
This year Silvaco's total time and expanded by over 600 million dollars.
Speaker Change: Increasing it from $3.8 billion in 2024 to $4.4 billion in 2025, positioning us for stronger and a very long-term growth.
Next slide please.
. . . . . .
Speaker Change: TechX Strategic Rational TechX provides advanced multi-physics simulation software that significantly enhances Silvaco's capabilities across design and manufacturing workflows.
Speaker Change: The acquisition advances are on-going efforts to enable GPU and AI accelerated simulation, driving faster, more accurate results for complex use cases.
Speaker Change: A key highlight is the addition of wafer-level digital twin modeling for advanced smoothness and photonics.
Further strengthening our technology leadership.
Speaker Change: TechX brings from the mental technical and competitive advantage compared to alternatives in the market.
Speaker Change: The acquisition also introduces a new space of high-value customers enabling additional land and expand opportunities.
Speaker Change: while leveraging Silvaco's existing global channels to deepen engagement with current accounts and unlock cross-selling potentials.
Speaker Change: Overall, the acquisition strengthens our leadership in next generation simulation technologies and expands our ability to serve the fast-going design and manufacturing of photonics and semi-conductors.
Speaker Change: Please turn to the next slide for specific examples of how this technology is changing the industry.
Speaker Change: Tech X-Mortic Physics simulation capabilities enabled a wide range of high-value applications across multiple industries.
These include the simulation of antennas and optical waveguide.
Speaker Change: allowing for optimized communication, signal performance, and delight propagation simulation in an array-wave guide, packaging and interconnect, supporting advancement in photonics-integrated circuits.
Speaker Change: In the manufacturing domain, the technology supports modeling of plasma wafer etching, a critical process for advanced semiconductor fabrication at chamber and wafer level.
Next slide, please.
Speaker Change: which allows customers to automate design, manufacturing through creation of models which reduce costs and improve time to market.
There are four uses of artificial intelligence in EDA.
Speaker Change: The ADA 3 has historically utilized AI to assist chip designers at three levels.
First, optimizing the historical tool performance for cheap designers.
Speaker Change: Second, Aiding in Design Steps and Third, Generating Chip Designs from Specification
Speaker Change: Silvaco has introduced a four level of AI which is not in its design space, but rather in the manufacturing space.
Speaker Change: This is very Silvaco's expanding term by enabling operators in fabs to save time and reduce wafer production costs.
Next slide, please.
Speaker Change: Growth Strategies As highlighted here, we believe our growth strategies position as well for long-term market expansion while addressing customer needs through IGEL R&D.
Speaker Change: We focus our land and expand strategies through both organic and inorganic growth, leveraging ourselves channels.
Speaker Change: and highly technical field application engineers to solve the next generation of customer challenges.
We are committed to defining shareholder value through performance.
Transparency and Responsible Capital Management.
We believe the fundamentals of Silvaco are strong.
Speaker Change: We are taking clear, measurable steps to align our market presence with the long-term strengths of our business.
Speaker Change: With that, I'll turn it over to Keith to review the quarter and discuss our guidance.
Thank you, Keith.
Speaker Change: Robert Mertens, Craig Ellis, Blair Abernethy
Keith Tainsky: Thanks, Babak, and thank you all for joining us today. My name is Keith Tansky, Silvaco's Interim Chief Financial Officer.
Keith Tainsky: Today, I will be reviewing our financial results for the first quarter of 2025 and providing guidance for the second quarter and full year.
Keith Tainsky: Please note that I will be discussing non-dap results from going forward.
Keith Tainsky: As a reminder, our GAAP financial results, along with a reconciliation between our GAP and non-GAAP results can be found in our earnings press release in the appendix of the presentation and within the supplemental financials on our website.
Moving to the next slide.
Keith Tainsky: I'd first like to start the financial overview by saying that despite the market had wins our long-term target model remains intact and we remain confident in our ability to achieve our strategic and financial objectives.
as far as 2-1 results.
While we are disappointed, these specific order delays
Keith Tainsky: Totaling 2.2 million in revenue caused us to miss our quarterly guidance range.
Keith Tainsky: We are fully expecting that we will be able to get those POs later this year.
Keith Tainsky: We exited the March quarter with 74.5 million in cash, cash equivalence, and marketable securities.
Keith Tainsky: This is down from 87.5 million from the end of last year, primarily due to the acquisition of PPC during the first quarter.
Keith Tainsky: Thank you one. I will also note that based on recent updates and conversations with our legal counsel,
Keith Tainsky: We have recognized an incremental $13.1 million charge relating to the ongoing NAND gate litigation.
Further details are available in our 10Q.
Keith Tainsky: Other expenses this quarter have also increased as a result of both organic R&D investments as well as recent acquisitions.
Keith Tainsky: Impacting both our Gross Margin and operating expense forecasts in the short term.
We are actively working to minimize these effects.
Keith Tainsky: Similar to last quarter with PPC acquisition, the ink is still wet here on our acquisition of TechX
Keith Tainsky: and we are now focused on integrating and realizing the synergies.
Next, I am excited to introduce annual contract value.
Keith Tainsky: or ACV is a meaningful metric for measuring Silvaco's underlying performance as it normalizes for multi-year deals as well as minimizes the impact of ASC 606 revenue accounting rules.
Lastly,
Keith Tainsky: Let's turn to the next slide to begin our review of Q1 results in more detail.
Keith Tainsky: Gross booking for our software and semiconductor IP products in the first quarter were 13.7 million down 15% year over year.
Keith Tainsky: Revenue was 14.1 million down 11% year over year and included a $2 million contribution from our recent PPC acquisition due to a successful early renewal with the key customer.
Keith Tainsky: The Q1 decline was primarily driven by the timing of renewal cycles in Q1 2024, as well as temporary order delays stemming from the short-term macroeconomic uncertainty.
Keith Tainsky: Our non-GAAP operating expenses were 14 million, up from 10.6 million last year, breaking down our cost rupture, R&D was 32% of revenue, sales and marketing was 31%.
and General Administrative was 37 percent.
Keith Tainsky: The increase in operating expenses was primarily driven by a higher head count related costs and research and development, as well as sales and marketing, which also included commissions.
Keith Tainsky: non-GAAP Operating Loss was 2.5 million down from non-GAAP Operating Income of 3.3 million in Q1 2024.
Keith Tainsky: Our non-GAAP net loss to the quarter was 1.9 million compared to a non-GAAP net income of 2.4 million in the same period last year.
Keith Tainsky: non-GAAP net loss per share came in at $0.7 compared to non-GAAP net income per share of $0.12 and Q1 2024.
Keith Tainsky: Our weighted average diluted share count for the first quarter was 28.7 million shares.
Keith Tainsky: Turning to the next slide on our booking performance trend. As Babak mentioned, and I've already highlighted, we did have some delays in the customer POs in Q1. However, we are proud to still add in my new customer wins for the quarter.
Keith Tainsky: In terms of product breakouts, T-CAD bookings were down 42% year-over-year due to the timing of our new rules that happened last year and the EVA bookings were up 48% year-over-year, primarily due to the addition of PTC.
Keith Tainsky: We are also pleased that bookings for our SIP product increased by approximately 900,000 year over year, and we expect continued growth from this product line.
Keith Tainsky: Remaining performance obligations or RPO at quarter-end stood at 33.7 million with 45% expected to be recognized as revenue within the next 12 months.
Next slide, moving to revenue.
Keith Tainsky: Despite being down 11% year-over-year, trailing 12-month basis, Q1 revenue was up 4% year-over-year.
Keith Tainsky: For the quarter, our software license is accounted for 71% of our total revenue, while maintenance and services accounted for 29%.
Consistent with historical levels.
Keith Tainsky: Looking by product, T-CAD was down 26% year over year, once again due to the timing of renewals.
Keith Tainsky: EDA revenue was up 8% year over year, again driven by a key renewal for our recently acquired PPC product line.
Keith Tainsky: Revenue for our SIT product increased by 89% year over year due to a low bar from Q1 last year which was due to a key agreement that had expired in Q4 of 2023 but renewed in Q2-24.
Robert Mertens, Craig Ellis, Blair Abernethy,
Turning to our split between geographic regions.
Keith Tainsky: Revenue from the Americas was down 34% year-over-year due to lower revenue from our T-CAD product.
These are specifically about 5% year over year for the same reason.
Keith Tainsky: Amia was up a percent year over a year supported by increased T-CAD sales in this region.
I will again reiterate that despite the current macro headwinds,
Keith Tainsky: As we continue to work towards closing some of the delayed customer orders and introducing our new products acquired to existing new customer base.
Keith Tainsky: The company's well-positioned for higher growth rates moving forward.
Moving to the next slide.
Keith Tainsky: Our non-GAAP gross margin for the quarter came in at 82%, down from 88% in Q1 2024.
Keith Tainsky: The year over your decline was driven mostly by lower revenue due to the temporary order pushouts.
Keith Tainsky: You can see in this chart that historically our cost of goods sold is relatively fixed and therefore gross margin closely correlates with revenue.
Keith Tainsky: This quarter we also experienced an increase in our cost of goods sold due to higher head count related costs.
Keith Tainsky: in part from a cost structure that also now includes the BPC.
Acquisition.
Keith Tainsky: With both of these acquisitions now in our rearview mirror, we are focused on optimizing costs as part of integrating the operations.
Keith Tainsky: As we continue the scale, we still expect non-GAT gross margins to expand towards our long-term target of 90% plus.
Moving to the next slide.
Keith Tainsky: Beginning with this quarter, I am excited to introduce a new performance metric, annual contract value or ACV.
Keith Tainsky: We believe that ACV will be a more meaningful metric for measuring the underlying performance in health of the business, particularly in light of the quarterly volatility and revenue.
Keith Tainsky: that results from ASC 606 revenue accounting rules, as well as large and multi-year deals and the impact from the timing of renewals.
Keith Tainsky: Our ACV calculation includes all of our software licenses from EDA and TKAD as well as maintenance and services.
Keith Tainsky: Please note that the definition exclude semiconductor IP product sales as they are generally not recurring in nature.
Keith Tainsky: We believe this new metric reflects a more stable, normalized growth by accounting for all contract types over 12 month period.
Keith Tainsky: Further details around the definition of ACB can be found and are provided in the earnings release as well as the investor presentation.
Moving to the next line.
Keith Tainsky: You can see the quarterly fluctuations in bookings and revenue which is specifically why we will be providing ACV as an additional metric now starting with 2025.
Keith Tainsky: On a trailing 12-month PTM basis, ACV was 52.3 million for the first quarter, up 21% year-over-year.
Keith Tainsky: The increase was driven by organic growth in term-based licenses and renewals as well as the acquisition of PPC.
Keith Tainsky: While quarterly revenue may fluctuate, core recurring revenue from new bookings has shown consistent annual growth.
Keith Tainsky: Moving on to the next slide, I will now cover our Q2 in full year 2025 guidance.
Keith Tainsky: For Q2, our updated forecast is gross bookings between 14 and 18 million.
Revenue in the range of 12 to 16 million.
non-GAAP Gross Margin between 80 and 83%.
Non-GAF operating loss between 4 million and 2 million.
Keith Tainsky: non-GAAP net loss per share between 10 cents and 3 cents.
For our full year 2025 guidance, our updated forecast.
is gross bookings between 67 and 74 million.
Revenue in the range of 64 to 70 million.
Keith Tainsky: non-GAAP operating loss between $2 million and income of $1 million.
and Non-Gat Netloss per share of seven cents.
to net income per share of three cents.
Keith Tainsky: Given the recency of the acquisitions, this forecast does include assumptions of initial revenue synergies, but does not include costs or tax synergies.
Keith Tainsky: More specifically, as Babak already mentioned, for the full year 2025 outlook, the forecast includes a $3 to $5 million contribution for the recent PPC acquisition.
Keith Tainsky: and a $1 million contribution from TechX for the remainder of the year.
For more information, visit www.fema.gov
Moving on to my final slide.
Keith Tainsky: While our near-term outlook remains uncertain due to macro headwinds, we are confident in our ability to regain momentum and execute on our long-term strategy.
Keith Tainsky: With the acquisition of TechX, we continue to execute on our goals to drive revenue growth through expansion of our SAM through M&A, which was a key goal from going public.
Keith Tainsky: We expect to return to 15% top-line growth once macroeconomic conditions stabilize and continue to target 15 to 25% top-line growth, 90% plus non-GAAP growth margin, and 25% plus non-GAAP operating margin.
Keith Tainsky: We expect to achieve these targets by expanding our presence in key end markets and continuing to pursue the right strategic and organic opportunities.
Keith Tainsky: With that, Babak and I would be happy to take your questions.
Speaker Change: Operator? Thank you so much. And as a reminder, to ask a question, simply press star 1-1 on your telephone and wait for your name to be announced. To remove yourself, press star 1-1 again. Please stand by for our first question.
Speaker Change: and he comes from the line of Craig Ellis, with B. Riley Securities, please proceed.
Craig Ellis: Yeah, thank you for taking the questions, guys. And I'll roll to...
Craig Ellis: and clarifications into one. So with the acquisitions, we now included in our 67 million calendar 25 or Avenue Guidance Hub.
Craig Ellis: and related to that as we think about the order delay that you talked about that was, I think,
Craig Ellis: 10% of annual revenues. How much of recapturing that is included in two two guidance and annual revenue guidance?
Bobak Kemm: Thanks, Craig. This is what I came. Keith, I'll take this first and then say that um...
Anything you feel I missed? So, um...
Bobak Kemm: Just to be clear, on a couple of points. We did say the order was less than 10% of the revenue. We specifically said that the revenue portion, not their bookings, but gave two numbers. The bookings was roughly 4.4 million, which would have been recognized.
Bobak Kemm: at about 2.2 million revenue that got delayed, so that was their amount.
Bobak Kemm: and then in terms of acquisitions, we set OPP or PPCOR OPC adds between $3.5 million dollars for the year.
Bobak Kemm: and then the CACS had another million dollars to the full year. If you add those numbers, the range is now between 4 and 6 million just to get the record straight.
Bobak Kemm: So 4.6 million due to acquisitions. Having included a portion of these things in Q2 revenue, yes.
Bobak Kemm: Incremental to TechXRever, I know that will be contributed throughout the year, as well as OPC, so, or PPC. Did I answer a question?
Yeah, that's how to cut that. Thank you.
Bobak Kemm: and then the follow-up question, the company was quite explicit about...
introducing
Bobak Kemm: an additional degree of conservatism in its guidance, just given the...
Speaker Change: The very unusual macro that exists out there. Is it possible to quantify the degree to which that's impacting bookings or revenues or other wine items for your calendar 25 guidance?
Yes, Greg, of course.
Bobak Kemm: What we've said already, the impact to Q1, the main impact, if you think about it for us
Bobak Kemm: has been hysterically and was also delay of orders due to uncertainty.
of tariffs and macro.
Bobak Kemm: customer tend to want to take more time in justifying what they order.
Bobak Kemm: and what they get. In cases of some other companies, they tend to worry about supply chain, so they order more products. In cases of some other companies, at least we fall under in this case, put a Q1, they push orders out.
Bobak Kemm: We know for a fact that we don't have cancellations that orders are pushed out, so we know we can close those within the upcoming quarters.
That's one fact, and the second, secondly, to get your answer to you.
Bobak Kemm: where we quickly, the impact for us, we estimate these delays would be, again, in the order of 10% of the revenue total and those are already accounted for in our new guidance.
Keith, do you want to add anything to that?
No, I would just basically reiterate the same.
Speaker Change: and then last sleep, Babak, it's nice to see you get such significant Sam expansion off of two renowned steels with...
Speaker Change: to now going through integration, generating revenue. How should we think about the timing with which you would think additional deals would be appropriate for the business? Thanks, guys.
You bet, Greg. As usual, great question.
Speaker Change: So some expansion is one of our main strategies. We tend to not compete directly but expand our presence in the market. And the timing for, frankly for TPC, we had iterated last.
Call that their timing rate would be actually in 2026.
and that's what we expected, however.
Speaker Change: When we approached the customers of the aircraft, the PPC, there was a very welcoming response from them to a point that, as we mentioned, told them already, we knew the order we did, and that's how we did recorders 1.1, 2 million-ish cars, PPC rubber, and new in Q1.
Speaker Change: So, as we get to meet the customers more for both acquisitions, and as we also, you know, we always have had this expansion strategy with accounts for roughly, you know, for Q1 was about, I believe it was about 35%.
Speaker Change: and the timing for that I believe as we said for the year will be
such that it will be, you're actually estimating you to be linear.
for faster than a linear approach to...
Estimation of a revenue coming from these two opportunities and
Speaker Change: and what we acquired in Tic-X. There's a lot of expansion in terms of venue-do products and energies and how you combine.
certain capabilities to make the platform
Speaker Change: Larger and be able to address and handle a lot more computing.
and Capable Juice Plus.
Speaker Change: as I mentioned also in our TechX acquisition. These guys are world class in
Speaker Change: Mapping software algorithms of R kind into what we call AI, GPUs, and...
Speaker Change: and being able to do these things faster and cheaper and quicker or so.
Speaker Change: We tend to show those capabilities to the customers and that's how we plan to get the timing sooner than linear. But for now we're coming into linear revenue for them.
. . . . .
Thanks, Cass.
The moment for our next question, please.
Speaker Change: Any concern the line of Blair Abernethy with rotten blood securities, please proceed.
Blair Abernethy: Hi, thanks guys for taking the call. Questions here. Yeah, I just wanted to touch on a couple of things back if we could. You could provide some color around the FTCO pipeline. Maybe how that's progressing with new potential customers and with some of your existing with the existing customer.
Blair Abernethy: Yeah, absolutely. That's always a great question since it's one of our focus areas.
Blair Abernethy: Then as you can see, we have said this in the past that we already have.
Blair Abernethy: We already have a big customer in memory. That's going to expand more. We expect that to happen in the second half. We already have a customer in advance.
Blair Abernethy: for R&D purposes. And as soon as the R&D phase evaluation is done, then they will go into production. And then I expect again, that to happen in second half. We also already have a customer for power.
in terms of power semiconductors that are in their...
Blair Abernethy: R&D phase of FTCR evaluation and that also we are pushing to get that across to production in the also second half.
Blair Abernethy: The other two things that we announced, of course, we never talked about this before. One of the interesting and nice things that we said in the past, that we will do after power and advance CMOS penetration into KEEP.
Blair Abernethy: It came here in University, which is one of the top rated universities for R&D in the world. Dr. Jing probably is one of the leading researchers in advanced display technologies in Korea.
and that by itself the fact that he's...
getting us and working with us to take that.
Blair Abernethy: If you really can take on any forms of small geometry displays...
and all the way to large panel displays.
Blair Abernethy: is the progress we've made. We're very happy with the progress, of course, to get committed for a large orders and timing of these things is relevant and that's why we are committed to the second half of this year for...
Blair Abernethy: Adan Sima Technology, Power Technology, and some display customers to come on board on FTCL, so.
Speaker Change: Okay, great. Thank you for that color. And then just on the slipped deals in Q1 or the push out.
Speaker Change: Was there anything that you would call out to say, you know, whether it was more geographically based customers or was it, you know, T-CAD versus EDA versus IP, any other sort of color on where they were the closing where things got pushed out.
Speaker Change: Yeah, I would say mostly Asia, as a matter of fact, all of them Asia, and then geographically if you want, if you will, and then it was a combination of T-Cat and IP, it was in just, AEDA was not impacted.
Speaker Change: And some of these, it was a matter of getting more signature and more confidence in their customer about their, their forecast of where they're taking their products.
Speaker Change: and the fact that how tariffs could impact them and those we've already resolved as a matter of fact that was...
Speaker Change: Traveling most of last month to those customers in order to understand their concerns and we are pretty confident that those orders will close. We had one instance of this thing again last.
Impacts are quarterly results and that's why I'm most...
Speaker Change: and a metric that captures the essence of how the health of business is.
Thank you.
Okay, great. Thanks very much.
Thank you, one moment for our next question.
Speaker Change: and he comes from the line of Robert Mertens with TD Cowan, please proceed.
Speaker Change: Hi, this is Robert Mertens on the line, behalf of Christian Hart. Thanks for taking my question.
Speaker Change: You've given a lot of color on the order, pushouts and recent acquisitions, so I just had maybe a quick housekeeping item. I might have missed this on the call, but what was the expected pop-backs into the June quarter and how should I transfer out the year with the integration of those recent acquisitions?
Just think I heard that it would be helpful.
Speaker Change: Yeah, I think I'll let you take the first fab at the dinner. Yeah, I was going to say I'll answer that and I'll let go back at any color if he wants to. So, when we closed PPC, we basically said the expense forecast was roughly 3 million for the rest of the year.
Speaker Change: for that acquisition and the color I'll give on TechX is roughly two.
for the rest of the year.
Speaker Change: You know, we obviously announce the tech ex at the end of April , so there will be two months.
Speaker Change: It will be a full quarter of PPC. Again, from a cost synergy standpoint, we have not included any cost synergies in this guidance outlook at this point. We are working on...
Ultimately, figuring out what the rate and-
Speaker Change: Suffice to say, we've got roughly five plus nine in there for the two acquisitions combined.
Okay, got it. Thank you. That's helpful.
Speaker Change: Thank you, and as a reminder, if you do have a question, simply press star 1-1 to get in the queue.
Speaker Change: One moment for our next question, and he's coming from Christian Schwab with Craig Harlem Capital. Please proceed.
Christian Schwab: Good evening, guys. So I was just wondering, I understand the macroeconomic environment and the tariffs and numerous companies, in particular being impacted in Asia, but you know, last quarter you expressed confidence and growing 15 to 25% annually.
Speaker Change: You know, obviously if we exclude the 5 million of acquisitions to your versus last year, this is a challenging year versus growth expectations. Is there anything that's changed in your business?
Speaker Change: You know, besides, since we can't control such as tariffs that change your long-term growth
Speaker Change: Hey Christian, nice to see you again. No, absolutely. That's a good question. So, besides the acquisition, the fundamental aspects of our business is strong. You know, we are number two in the world in terms of T-CAD presence.
Speaker Change: We are showing that we are going to IP business and also EDA. Organic and in this case we showed that Q1 for EDA was in organic growth through PPC.
Speaker Change: We don't, unless there are delays in the orders due to macro and tariffs, we don't see any barrier in hitting bigger numbers.
Speaker Change: But as Keith mentioned and we've mentioned for the full year
Speaker Change: You know, we're expecting an up to 17% growth in revenue, right? Between 64 and so, if you hit $70 million revenue, that's 17% growth.
Speaker Change: and would fall within the numbers of 15-20% or above that that you're discussing, or you mentioned. So I think for us...
Speaker Change: Coming up with the estimates that are conservative in terms of taking macro impact into our estimate, that's all we are doing in the question. So, however, our fundamental business...
Gliding in the street and providing guidance
Speaker Change: is part of our learning process of going through IPO as a matter of fact this month will be within few days of your anniversary for having gone public.
Speaker Change: and that's all we're doing. I think the business is sound, we feel very good about the business, I feel.
Speaker Change: We have quite a bit of more markets to be able to address quite a few more customers than you.
Keith Tainsky: I acquired through acquisitions and through organic growth. So that's how I would say it. Keith, do you want to add anything to that?
Keith Tainsky: I think that covers it fairly well. I mean, again, I think at a high level, we're a small cap, you know, we're between $64 and $70 million dollars. There's...
Keith Tainsky: You know, customer specific deals that are, you know, sizable and the FTCO ones we've alluded to before that, you know, it comes down to deal by deal, you know, working through the pipeline. I think, you know, the sales team is excited because
Keith Tainsky: With the two recent acquisitions, we've got a customer base of 800-plus customers.
Keith Tainsky: with very small overlap with these two companies that we can now go sell these products to. So, just a matter of going through the traditional Pareto, which ones are the other ones that we want to go after first and prioritizing, and that's effectively the process Babak's highlighted that we've started.
That's great. Thank you. No other questions?
Speaker Change: Thank you, and this concludes our Q&A session for today. I will turn it back to Dr. Babak Taheri for closing remarks.
Speaker Change: Thank you everyone for attending our call and I think great questions, very direct and we wanted to make sure that BRS transparent.
Speaker Change: as you want us to be as much as possible. And as I mentioned before, we are...
Speaker Change: I'm going through this journey together. We are learning being a public company and how conservative we estimate our earnings, including some of the factors that we don't have direct control over.
and Paula, I just wanted to re-emphasize that we have...
Speaker Change: Very good confidence in our business process, business plan, and we have a learning organization and we keep improving and getting better at how we go about giving our estimates and our projects.
Speaker Change: With that, I wanted to thank again everyone on the call and look forward to talking to you again.
and thank you all for participating. You may now disconnect.