Silvaco Group, Inc. (SVCO) stock intrinsic value fair value estimate & owner earnings analysis

Silvaco sells electronic design automation (EDA) software, semiconductor process and device simulation (TCAD) tools, and licensable chip design building blocks (semiconductor IP) to chipmakers and designers, mostly on multi-year subscription-style licenses. Revenue was $54.2M in 2023, $59.7M in 2024 and $63.1M in 2025, and ran at about $17.8M a quarter in the first half of 2026 (about $71M annualized), helped by 2025 acquisitions including Mixel. Contracted revenue not yet recognized was $47.1M at the end of 2025, about 54% of it due within twelve months. Sales are spread across the United States (about 37% of 2025 revenue), China (about 20%), Korea, Taiwan and Japan; Japan revenue fell from $10.8M to $6.1M in 2025, which shows how uneven individual customer regions can be. How we measure earnings. We start from operating cash flow, remove swings in receivables, unbilled revenue, accrued liabilities and deferred revenue, deduct stock compensation as a real cost, and deduct only the capital spending needed to stand still. On that basis the business has not produced owner earnings since going public: about -$1.09 per share in 2024 (when an IPO-triggered $26.9M stock compensation charge hit) and -$0.59 per share in 2025 (-$17.6M). The 2025 figure already excludes the effect of a $32.5M litigation settlement with the Nangate parties (a former related party), which was expensed ($11.3M in 2024, $13.1M plus the co-defendants' $8.1M share in 2025) and paid in installments through February 2026; the last $8.3M was fully covered by restricted cash held at year end. 2023 (about +$0.02 per share) predates the IPO and stock compensation, so it describes a different business. We use the post-IPO business, 2025, as the earnings level, with 2024 excluded as distorted by IPO stock awards. What the latest quarters show. In the first half of 2026 revenue grew 36% and the net loss fell to $9.5M, with the second quarter loss of $3.7M. Before stock compensation (about $2.9M a quarter) and non-cash amortization the business is now close to break-even on cash, and after stock compensation it loses roughly $2.5M a quarter, or about -$0.28 per share annualized. This reflects an October-November 2025 restructuring (52 positions cut, an early-retirement program and site closures) that is already visible in results. Growth path check: owner earnings per share improved by about $0.50 in 2025 (from -$1.09 to -$0.59); we assume year one holds at the current run-rate loss and do not assume further improvement, because the acquired revenue that lifted 2026 is a one-time step, and underlying 2025 revenue excluding the $3.6M from Mixel was roughly flat. What we credited and left out. Credited: the revenue run-rate already reached in the first half of 2026, the $47.1M of contracted revenue, and the restructuring savings already showing in the quarterly results. Left out: further margin gains, new product wins, share gains in EDA/TCAD, further acquisitions (the company has only begun buying businesses, goodwill and intangibles are now $56M, and it has no multi-year record of doing so profitably), and any decline in stock compensation, because none is contracted or has been demonstrated. Bear case: about $0.15 per share. Revenue stops growing and slips (organic revenue was flat in 2025, Japan fell 43%, and China is about 20% of sales), costs stay sticky, and the business keeps losing money after stock compensation. The business is worth nothing on this path. It owes about $3M of vendor financing for acquired IP; cash and securities are about $14M, less roughly $5M of severance, lease and wind-down costs, leaving roughly $5M or $0.15 per share. Goodwill and acquired intangibles could also be written down, which would not change cash but would signal that the acquisitions did not pay off. Base case: about $0.34 per share. The current revenue run-rate holds, but nothing named and evidenced turns after-stock-compensation losses into profits, so the operating business is valued at zero. Shareholders own about $14M of cash and securities less about $2.6M of vendor financing, roughly $11.4M or $0.34 per share. This is a statement about how little the evidence supports, not a claim that the business is worthless: it has decades-old customer relationships and near break-even cash generation. Bull case: about $2.14 per share. The company's own levers execute: contracted revenue converts, revenue grows 4% a year (below the roughly 5-6% average of the last three years, which included acquisitions), and about half of each extra revenue dollar reaches owner earnings because the cost base was already cut. Owner earnings turn positive in about year six and reach roughly $7.6M by year ten. The business is then worth about $61M (present value at 6%, assuming it sustains that level, which rests on the long-standing recurring license base), it owes about $2.6M, and holds about $14M of cash, giving about $72M or $2.14 per share. What would make this wrong. Upside: if stock compensation (about $11.7M a year) falls substantially, or revenue keeps growing organically, after-stock-compensation earnings turn positive sooner and the base case is too low. Downside: a further customer loss in China or Japan, or a large new acquisition that consumes cash or issues shares. Shares outstanding rose from about 25.7M in 2024 to 33.7M in mid-2026, and stock compensation continues to dilute holders. We could not reconcile the second-quarter 2026 balance sheet in detail because only summary values were available for that quarter, and the vendor financing balance at June 2026 is estimated from scheduled payments.