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1. Company Snapshot

1.a. Company Description

Silicom Ltd., together with its subsidiaries, designs, manufactures, markets, and supports networking and data infrastructure solutions for a range of servers, server-based systems, and communications devices in the United States, North America, Israel, Europe, and the Asia Pacific.It offers server network interface cards; and smart cards, such as smart server adapters, which include redirector and switching cards, encryption and data compression hardware acceleration cards, forward error correction acceleration and offloading cards, time synchronization cards, and field programmable gate array-based cards.The company also provides virtualized and universal customer-premises equipment; edge devices for SD-WAN and NFV deployments; and distributed units for the 5G mobile infrastructure market.


It serves original equipment manufacturing, cloud, telco, mobile, and related service provider customers.The company was incorporated in 1987 and is headquartered in Kfar Sava, Israel.

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1.b. Last Insights on SILC

Silicom Ltd.'s recent performance was driven by strong Q4 2024 earnings, with revenue and profit exceeding expectations. The company's design wins with major customers, including a cyber security leader and a global networking and security-as-a-service provider, are expected to generate significant revenue growth, with the latter expected to reach $3-$4M/year at full run rate. These wins demonstrate Silicom's leadership in high-performance networking and data infrastructure solutions, positioning the company for continued growth.

1.c. Company Highlights

2. Silicom's Q3 2025 Earnings: A Strong Beat with Design Win Momentum

Silicom reported revenues of $15.6 million in the third quarter, exceeding the upper half of the quarter's guidance range. The company's gross margin was 31.8%, compared to 28.8% in the third quarter of 2024, driven by a favorable product mix. The actual EPS came out at -$0.36, beating estimates of -$0.37. The company's strong balance sheet remained intact, with $114 million in working capital and marketable securities, including $76 million in cash, deposits, and highly rated bonds with no debt.

Publication Date: Nov -19

📋 Highlights
  • Q3 Revenue Exceeds Guidance:: Silicom reported $15.6 million in revenue, surpassing the upper end of its guidance range.
  • Strong Balance Sheet:: The company holds $114 million in working capital and marketable securities, including $76 million in cash and deposits, with no debt.
  • Design Win Momentum:: Achieved 8 major design wins since the start of 2025 and aims for 7–9 additional wins in 2026, spanning FPGAs, Edge solutions, and SmartNICs.
  • Gross Margin Expansion:: Non-GAAP gross margin rose to 31.8% in Q3 2025, up from 28.8% in Q3 2024, despite higher operating expenses due to U.S. dollar weakness.
  • 2026 Revenue and EPS Targets:: Projects double-digit annual growth through 2026 and aims for EPS above $3 as revenue scales to $150–160 million.

Design Win Momentum and Growth Prospects

The company secured 8 major new design wins since the beginning of the year, with 3 significant wins in the third quarter, including one from a long-term network optimization customer and a leading SASE provider. Liron Eizenman, President and CEO, mentioned that the design win momentum is tracking ahead of expectations, with plans to achieve 7 to 9 additional design wins in 2026, spanning all product lines. This would drive forward its growth strategy and provide a foundation for sustainable long-term value creation.

Guidance and Valuation

For the fourth quarter of 2025, Silicom expects revenues in the range of $15 million to $16 million, and anticipates a double-digit annual growth rate in 2026 and beyond. Analysts estimate next year's revenue growth at 14.4%. With a current P/S Ratio of 1.4, the market seems to have moderate expectations from the company's growth prospects. Additionally, the EV/EBITDA ratio stands at -4.35, indicating that the market is pricing in significant improvement in profitability.

Key Metrics and Future Outlook

The company's ROE and ROIC stood at -12.21% and -13.42%, respectively, indicating that the company is still in a phase of investment for growth. As revenue scales to the $150 million to $160 million range, Silicom expects to reach EPS above $3, creating significant long-term value for its shareholders. With a strong balance sheet and design win momentum, the company is well-positioned to drive growth and improve profitability.

3. NewsRoom

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Silicom Ltd. (SILC) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

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Silicom Reports Q3 2025 Results

Oct -30

Source: prnewswire.com

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Silicom Awarded $3M Design Win from SASE Leader

Oct -28

Source: prnewswire.com

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SILICOM'S THIRD QUARTER 2025 RESULTS RELEASE SCHEDULED FOR OCTOBER 30, 2025

Sep -30

Source: prnewswire.com

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Silicom Awarded $2M/Yr Design Win for Cryptography Hardware Acceleration Solution by Application Delivery Leader

Sep -29

Source: prnewswire.com

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Long-Term Network Optimization Customer Selects Silicom Edge Systems as its Next-Generation Platforms

Sep -04

Source: prnewswire.com

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Silicom Ltd. (SILC) Q2 2025 Earnings Call Transcript

Aug -01

Source: seekingalpha.com

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Silicom Reports Q2 2025 Results

Jul -31

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.47%)

6. Segments

Networking and Data Infrastructure Solutions

Expected Growth: 10.47%

Silicom's 10.47% growth in Networking and Data Infrastructure Solutions is driven by increasing demand for high-performance computing, cloud adoption, and 5G network deployments. Additionally, the company's focus on edge computing, artificial intelligence, and cybersecurity solutions resonates with customers seeking to enhance their digital infrastructure.

7. Detailed Products

Bypass Switches

Silicom's Bypass Switches are designed to provide a reliable and secure way to manage network traffic, allowing for uninterrupted network operation even in the event of a failure.

Server Adapters

Silicom's Server Adapters offer high-performance, low-latency connectivity solutions for data centers, cloud infrastructure, and high-performance computing applications.

Smart NICs

Silicom's Smart NICs (Network Interface Cards) integrate advanced networking capabilities, offloading tasks from the CPU and improving overall system performance.

FPGA-based Solutions

Silicom's FPGA-based solutions offer customizable, high-performance acceleration for various applications, including data compression, encryption, and more.

OEM Solutions

Silicom's OEM solutions provide customized, high-performance networking solutions for original equipment manufacturers, tailored to specific requirements.

8. Silicom Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Silicom Ltd. is medium due to the availability of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the concentration of buyers in the market, giving them significant negotiating power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the availability of multiple suppliers in the market, reducing their negotiating power.

Threat Of New Entrants

The threat of new entrants is medium due to the moderate barriers to entry in the market, including regulatory hurdles and capital requirements.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established competitors in the market, leading to a highly competitive environment.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 3.86%
Debt Cost 3.95%
Equity Weight 96.14%
Equity Cost 9.10%
WACC 8.90%
Leverage 4.01%

11. Quality Control: Silicom Ltd. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
BOS

A-Score: 5.2/10

Value: 7.4

Growth: 5.7

Quality: 6.6

Yield: 0.0

Momentum: 9.5

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Hexatronic

A-Score: 3.8/10

Value: 7.1

Growth: 9.1

Quality: 4.6

Yield: 0.6

Momentum: 0.5

Volatility: 0.7

1-Year Total Return ->

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Stock-Card
Silicom

A-Score: 3.7/10

Value: 8.8

Growth: 2.0

Quality: 3.0

Yield: 0.0

Momentum: 7.5

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
Eutelsat

A-Score: 3.5/10

Value: 8.3

Growth: 0.4

Quality: 1.2

Yield: 5.0

Momentum: 6.0

Volatility: 0.0

1-Year Total Return ->

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Stock-Card
u-blox

A-Score: 3.5/10

Value: 4.4

Growth: 0.6

Quality: 3.3

Yield: 0.6

Momentum: 10.0

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Napatech

A-Score: 2.3/10

Value: 6.0

Growth: 0.0

Quality: 4.4

Yield: 0.0

Momentum: 2.5

Volatility: 0.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

14.7$

Current Price

14.7$

Potential

-0.00%

Expected Cash-Flows