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The call communicated accelerating core revenue growth (Q1 revenue +33% YoY), strengthening design-win momentum with several material customer wins, improving operating and net loss metrics, and a strong balance sheet that supports inventory builds and investments. Key risks noted include ongoing inventory build-up to mitigate memory lead-time constraints, still-negative quarterly profitability (albeit improved), modest gross margin pressure, customer/geographic concentration, and timing uncertainty for AI inference revenue (expected more meaningfully in 2027). On balance, the positive operational momentum, upgraded guidance and tangible design wins significantly outweigh the highlighted risks.
Silicom guided second-quarter revenue of $20.0–$21.0 million (implying up to ~40% year‑over‑year growth at the high end) and full‑year 2026 revenue of $82–$83 million (≈33% YoY), following a strong Q1 print of $19.1 million (33% YoY) that materially exceeded prior midpoint guidance (which assumed ~18% YoY) and represented an acceleration from 17% YoY last quarter; management reaffirmed a 7–9 design‑win target for 2026 and has already secured 4, including a customer whose expected annual spend was more than doubled from ~$4M to $8–10M (with incremental revenue already in Q1), a Tier‑1 cybersecurity win with initial orders >$1M (expected to ramp to ~2x), a streaming customer initial >$1M order with 5‑year purchases forecast at $12M (and potential work that could more than double related networking revenues from the ~$25–30M range), and a European encryption design win of ~$3M per year with an initial ~$1M commitment (Silicom’s third post‑quantum cryptography win); Q1 non‑GAAP gross profit was $5.7M (30% gross margin), operating expenses $7.6M, operating loss $1.9M (improved from $2.4M a year ago), net loss $1.5M and loss per share $0.25 (vs $0.37), while the balance sheet shows working capital and marketable securities of ~$109M (including ~$63M inventory and ~$63M cash/marketable securities) with no debt and a 12‑month geographic mix of North America 76%, Europe & Israel 14%, Far East/ROW 10%.
Total revenue of $19.1 million in Q1 2026, up 33% year-over-year (from $14.4M in Q1 2025). Management highlighted an acceleration in YoY growth from 17% in the prior quarter to 33% this quarter and noted the quarter was well ahead of guidance.
Q2 2026 revenue guidance of $20.0M to $21.0M, implying up to ~40% year-over-year growth at the high end. Full-year 2026 revenue outlook raised to $82M–$83M, ~33% YoY growth.
Already achieved 4 design wins a third of the way into 2026 versus a 7–9 target for the year (halfway to target). Management expects to meet or exceed the upper end of its 2026 design-win target.
Notable design wins include: (1) global networking/security customer more than doubling expected annual contribution from ~$4M to $8M–$10M (incremental revenue already flowed in this quarter); (2) Tier-1 cybersecurity customer with initial orders >$1M for 2026 and expected to ramp to ~2x that level; (3) large streaming service with initial order >$1M and expected 5-year purchases of ~$12M (with potential to materially expand to the $25M–$30M region if additional form-factor work materializes); (4) European encryption leader with a $3M/year design win (initial $1M commitment), marking the company's third post-quantum cryptography (PQC) design win.
Gross profit of $5.7M and gross margin ~30% (Q1 2025: $4.4M and 30.3%). Operating loss narrowed to $1.9M from $2.4M year-over-year and net loss improved to $1.5M from $2.1M. Loss per share improved to $0.25 from $0.37.
Reported working capital and marketable securities of $109M, cited $63M in cash/cash equivalents/high-rated marketable securities and no debt. Management emphasized the balance sheet strength enables inventory builds and investment in growth initiatives.
Pipeline spans Edge systems, SmartNICs and FPGA solutions across cybersecurity, networking and other verticals. Company is investing in three 'venture-style' growth opportunities—AI inference, post-quantum cryptography and white-label switching—viewed as additive to the core business. Management flagged meaningful AI inference opportunity with two leading customers and is developing an inference-specific product (material revenue expected mainly in 2027).
Ladies and gentlemen, thank you for standing by. Welcome to the Silicom First Quarter 2026 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not received it, please contact Silicom's Investor Relations team at EK Global Investor Relations at 1 (212) 378-8040 or view it on the News section of the company's website, www.silicom-usa.com. I would now like to hand over the call to Mr. Kenny Green of EK Global Investor Relations. Mr.
Green, would you like to begin, please?
Thank you, operator. I would like to welcome all of you to Silicom's quarterly results conference call. Before we start, I would like to draw your attention to the following safe harbor statement, during this call, we may make forward-looking statements within the meaning of applicable securities laws. These statements may include, among other things, statements regarding the company's strategy, market opportunities, customer demand, product development initiatives, industry trends, expected deployments of the company's solutions, financial outlook, revenue expectations, margins, operating expenses, profitability and future growth opportunities. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. These risks include, among others, those described in the company's press release issued today in its filings with the U.S. Securities and Exchange Commission, including its annual report, Form ...