SNPS - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Synopsys Earnings Conference Call for the Fourth Quarter and Fiscal Year 2019. [Operator Instructions] Today's call will last one hour. Five minutes prior to the end of the call, we will announce the amount of time remaining in the conference.

As a reminder, today's call is being recorded.

would Vice turn President I to conference time, Ewbank, Lisa of this like the to over At Investor Relations. ma'am. ahead go Please

Lisa Ewbank

Thank and everyone. Aart afternoon, Officer. Trac you, call Financial Greg. are today Pham, Hosting Chief de of Co-CEO the Chairman Synopsys and Geus, Good

of targets and begin, we and statements the Company course other financial to call, results. Synopsys that during remind forward-looking Before conference everyone will its like the I'd this discuss forecasts, regarding

future risks results represent our actual our best that from about expect. materially of performance current While what could differ performance these today, and judgment actual are statements as subject and cause and results to we to results many uncertainties

affect recent to in that In any our reports the SEC we results risks call, are today's our during release. described earnings that press most addition highlight future and may important factors

financial be refer to information measures we can will earlier their In and financial today. the X-K that directly supplement to and comparable most Reconciliations we addition, during financial released found press earnings GAAP non-GAAP the release, discussion. financial in supplemental measures

items, plus these synopsys.com. presentation recent most our website of All at are available investor on the

prepared posted site the that, on of In will at Aart With addition, call I'll the the call. over the remarks conclusion turn to the Geus. be de

Aart de Geus

excellent to again $X once $X.XX well on I'm in we are which year plan. milestone a and our Good navigated year to with external in next of In our another challenges, billion afternoon. XXXX, fiscal for and We quarter we report pleased it track Synopsys. billion. revenue an outstanding exceeded several generated successfully

Design growth returning $X.XX delivered and We was strengthened the to expanded through $XXX progressed. for across buybacks. & XX% $X.X year as the to non-GAAP margin operating grew System while Semiconductor billion. significantly our backlog strong shareholders segment Business million year, and to earnings Our

XX% in more million. discuss detail. to profitability Software Trac grew $XXX will Integrity achieved and the financials

industry, of Everything semiconductor geopolitical strong. in stress design IoT, proliferation backdrop machine Growth the considerable. and XG, Against learning, unevenness Smart in global with is market the automotive activity a challenging remains and cloud

AI entrants growth, the from center positioned Synopsys start-ups pushing we of are wave innovation electronics to silicon and and is are the complexity of power including and hyperscalers to enable software. New uniquely the intricacies technology and market. at of the and of pervasiveness of time cloud this boundaries and to design

I strategy next our ago, phase year A for of communicated our growth.

IP. First, grow and technology and in and sustain market our leadership EDA

margin drive solid Integrity TAM, a continue third, And to at further grow Software profitability. base customer Second, scale operational diverse moving steadily towards in excellence multi-year and to new while operating expansion.

During fiscal 'XX, very we progress three. good all made on

ninth Let cloud-based this expanded the of innovative me X-nanometer relationships EDA design with year. of for for customers example, of and chip provide and recognized the stacking some Interface Partner joint joint year partners. Year substantially infrastructure, XD we Awards IP, and were for ecosystem where TSMC, our solutions. with with delivery beginning Synopsys Award productivity IP, highlights straight development

systems and In their us. and leader, both key us the across who influential One is expanded some world's mobile on expanded reliance the with example largest US of addition, business significantly its most IP. companies EDA

wins have digital In design been. unrelenting displacements. ever began new driving they've and we as proliferating stand EDA, increasingly competitive our year, that products push in several the our increased innovation platforms This out already game-changing momentum. strongest is significant benchmark Notably,

Compiler widespread including November growing new last our is initial wins Fusion exceeding launched our platform, product business targets. and Fusion deployment, Our achieving

expanded cloud processor multiple company benchmarks for designs. competitive consumer designs, displacements for a designs, to results system a and mobile from X-nanometer leading with consistently head at hyperscalers time global image for high driving company firms and largest influential is houses large semiconductor many to Breakthrough Compiler electronics better winning and leading head sub applications. impacts such across the as run ranged communications, automotive X-nanometer competitive sensor wins SoC Fusion company to a and have global autonomous graphics

and with XX% wins a Fusion its a more turnaround as critical time, company Benchmark quality results who semiconductor Compiler graphics systems leader of for aggressively its expanding selecting implementation, programs its large is of the at cap US US-based business. Compiler company digital of primary Fusion superior solution US deployment mission representing and for than

setting still the product gains forward. important wins revenue momentum share usage share cycle, early multi-year these represent in going stage our While significant and for gains,

Turning nearly year, doubled this competitive by to custom revenue Compiler Custom displacements. design, fueled multiple full-flow

server large key US driven chip and in a markets, at and chip a full-flow company. in Japan high-speed displacements competitive wins XG, DRAM American Tier expansion server AI major complete a North large maker communications Our including by X the IDM is a company, and

We modern deployment also technology. start-ups, momentum good with a and demand flows Custom announced Compiler not Samsung LPE at its into locked five full-flow legacy a platform seeing are and for process are who

mobile where continue proliferation. the of products on Verification growth are hold memory position to and our verification set market Benefiting Contributing to drive system substantially broad Number leaders platform, America hyperscalers now from market, me of our houses around integration the AI, software North ranging and fastest and competitive we in and to cloud world. automotive, chipmakers to wins share the the software both engines move native Let X hardware. in Continuum from

customer Hardware-based row. delivery hardware the our record largest verification maintain finished year segment with a we X due the spending delaying well. near-term of as priorities, hardware revenue. We third in market was the Despite a substantial position emulators for strong Number a to of number year

consumption. suited well lowest ownership of capacity, designs Our power cost hardware products highest complex lowest and particularly with speed, to today's unmatched are

chips. semis. gaming systems and accelerate global the repeat gains result, new customer XX in on time to customers expansions more we example, for processor, XX significantly prominent capacity for emulation hyperscalers companies adding and our than orders expanding leading nearly and growing from We market ZeBu, major expanded at standardized and AMD, As graphics ranging saw customers to XXXX. base, to a influential share

and with all and across growth. strong driving more Now rich major demand double-digit XG. reaching markets, to our market including had engagements are million IP. We automotive, record AI, cloud prominent a portfolio in year, $XXX than With revenue,

embedded and the time the As industry's provide X address most provider requirements, accelerate lower to market today's to of interface, risk for broadest portfolio foundry-specific memory and design IP, Number complex we customers.

We have strengths interfaces and PCI particular in USB, Express memory X.X.

USB USB we and IP new the market $X gig the X is our significant achieved by year, XXX This as And good milestone cumulative billion in XX of SerDes our Number bookings, far. position gaining bolstering provider traction. IP

companies. applications. collaboration incorporate with XX XXXX. automotive achieved their AI During Rx next-generation embedded the vision XXXX, vision automotive Infineon awarded announced XXX nearly socket processor embedded processes Best for controller major advanced and we We ARC the momentum the to in semiconductor accelerated the Process From we've FinFET alliance, where wins accelerate were across automotive in Award into to approximately

advanced with on record We're across their to large global X-nanometer signed and highly we LPE global down continues track most agreement a great advanced for our X-nanometer foundries of seeing customers. multi-year and is process, customer. significant four on with collaboration and delivering development of FinFET Foundry announced momentum process XXX valued our Samsung the process IP process than of We with yet a nodes Finally, range achieved processes. also where very more and TSMC's TSMC wins IP by IP another

TAM and we issues. quality XX% our that Integrity them of XXXX. we for security into end Integrity, Synopsys We Software new By margin. operating and tools Software vulnerabilities completed software of integrated a and X completed revenue significant the Phase code test in this number new approximately enhanced to acquisitions, coverage. strategy had In features entered of XX% Now the with Synopsys' delivering XXXX, products our of broader achieving language and XXXX, by

and This with achieved multi-year the through steady planned, multi-million progress Although number in verticals. agreements, of we increase growth. customers our in multiple orders key softer were was adopting XX% in growth bit a of dollar than all the a outpaced market solutions driving

XXXX, consulting to moving testing companies market. positioned and evolution well must is of time security great are to In a this Phase The and services. compromising high-value $X.X without software opportunity is development vast beyond. Synopsys scaling products embed their business into X, enable as the combination billion to we to process with now

and Integrity Polaris, map Software product Polaris capabilities span a road of over scaling thus We've adoptions One, including of networking Our enhance to announced expand Polaris compelling efforts in number XXX we insurance the had cloud-based of areas. new QX, deployments. and expanding for months. customers support ranging three digitalization. including integrations XXXX the growing We platform. a XX subsequent as and our company large to XX capabilities services financial far,, industrial Stay tuned a Fortune medical to from and

the as It's software development large our where Two, engagements. with a help Synopsys differentiator DevOps key scaling in as This customers is advice, market. consulting deployments. product well high-level and benchmarking, program we

FY to enterprise And sales of verticals new couple We business, both exceed years refining the we further we sales customers, key realigned and in to our to next three, business. approximately track support this increase We've large our as channel. organization In intend serve 'XX, market are to evolves. market our the delivering capacity. and better growth growth market on XX% over believe XX% regional

XXXX roughly XXXX, resume For expansion non-GAAP steady operating to then and margin hold in plan we beyond.

per List. expect from Synopsys exclude we operating and growth share FY Furthermore, expansion, flow. on the a strong companies cash growth our revenue mid-teens as For plan non-GAAP solid forecast currently 'XX, revenue Entity we earnings any government's whole. margin In as from even we operating substantial US

In year and summary, well demand delivering executed we above results positioned. is beginnings substantially very targets. of we are XXXX, Market in financial strong well

competitive execution Our growth. financial benchmark product displacements. driving and platforms are wins driving and And are continued we

trust our the and commitment innovative to and into want move work and season, our and we to for for As partners Synopsys. continued customers products their hard employees holiday I their our in thank

turn Trac. I'll that, With over it to

Trac Pham

general spite ahead world. XXXX Good was by unique achieved tough a around we We while strong delivered afternoon, almost finish everyone. expectations. initial our expanding environment, strong operating results to In We transition results year. these flow, List multiple earnings all was X percentage geopolitical metrics points. in XXX, and at record the the of hurdles, Entity US operating ASC uncertainty Aart. non-GAAP macro key what cash of and delivered and very the despite well a revenue, margin times non-GAAP Thanks, growth in including operational

to well XXXX momentum. positioned entering our We're continue

driving ASC in robust billion design in is billion the deduction. is The despite as product the Our been, up backlog, of demand. $X.X result with portfolio year at the reflected XXXX at strong as healthy which backlog from our it's is end XXX ended which activity ever $X.X combination

context the verticals speak Our consisting tools, macroeconomic Within ability spanning results the an multiple and even mission diversified we base XX% to our of execution and customer portfolio durability geographies critical model, built. key to a of we approximately in recurring growth are of a in the deliver business environment. and uneven our solid revenue product confident

increase I $X.XX & fiscal billion, adjusting to Design review We full EDA generated total week software our year of XXXX. range. of will groups product results. X% for X% extra year-to-date revenue IP for or target strongest XXXX billion, reported and System or revenue our the well Semiconductor was X% the week results. to now growth a mid-to-high in strong the with $X.XX single-digit an adjusting both contributing continues within X% extra grow

Revenue as broad-based in record the a growth our the of strength decline than market position in reflecting customers. segment emulation offset business. more hardware largest had diversified our again Number X customer that base from We another year, revenue earned

adjusting million, grew from XX% Integrity $XXX Excluding customer the very Software extra for The hardware, well. week. XX% of that generated segment growth or revenue revenue

to marks XX% total As XXXX Aart profitability. the revenue, solid milestones, business as approximately discussed, key we grew a of the

approximately the resource and work $X.XX resulting were $XX costs consolidated approximately to we in includes which growth. in to and expenses $X.XX were our expenses Total costs billion, allocation margin GAAP non-GAAP of operating Returning million level, restructuring for long-term total sustainable costs a optimize as billion, non-GAAP XX%.

operating segments, per growth and Design the week. X.X% Semiconductor were Software for non-GAAP were System XX% XX% Integrity. & margins for or were for For share earnings earnings GAAP XX.X% adjusted share extra adjusting $X.XX $X.XX, our and per

$XXX of the year buybacks cash XX% total million ended and the flow $XXX years, to year Operating $X.X cash was to of over We investors past free returning billion cash with the Turning We $XXX five debt cash. in and million. million our flow over balance $XXX completed a quarter the of of million. that for approximately period.

to of our Entity first the XX%, targets, deliveries, Based the hardware current expenses. assumed government's distributed year. second on timing IP US XX% of for the no we in for assessment due to change evenly Now List the our split half, EPS, during which more of half and revenue XX% expect XX%, roughly and

total expenses billion; approximately $X.XX $X.XX $X.XXX non-GAAP operating $X.XX million $XX to billion; and billion billion $X.X a and billion, XX%, resulting $X.XXX margin billion million. costs $XX of and GAAP between revenue and minus XXXX, fiscal income For in and non-GAAP between expenses and total expenses other between costs of minus

$XXX tax $X.XX per non-GAAP outstanding and XX%; shares between $X.XX normalized $XXX to share, per earnings share $XXX million million, $X.XX Our of per share earnings per of GAAP of rate and expenditures and $X.XX timing million, non-GAAP of plan cash flow capital of project of to share, spending as from $XXX operations costs into XXXX. push approximately to $XXX the XXXX for million, million some

We XXXX. in expect expenditures decline to

quarter. XX%, $XXX Now, $XXX total $XXX $XXX million, costs million between Revenue million to expenses $XXX and other and costs shares the total our $X minus $XXX and earnings million, and and $X.XX of million, first non-GAAP expenses XXX million and non-GAAP targets for income to to between between the and between $X.XX $X.XX GAAP non-GAAP normalized expenses GAAP between outstanding earnings $X.XX million, share. XXX minus tax per rate per of million of share, $X and million million,

our our summary, results In the resiliency and business this model. of year strong execution our reflect

Our significant made operating on and across progress longer-term our the near-term portfolio as from strength we commitments came exceeded objectives. our

shareholder to 'XX of consistent, our margin in capital non-GAAP M&A and remains balancing beyond, drive and with confidence strong to double-digit sustained execution to on FY combined XXs EPS on deliver These longer-term, cash strategy ability metrics, our investments, single-digit high to growth, sustainable to buybacks growth XX% the long-term built look value. give focus strong us flow. revenue continue our the XXXX long-term in and targets expansion internal we As and allocation high

the With over to it that, I'll questions. turn operator for

Operator

& ahead, your to is Please [Operator Needham line we Company. And Instructions] first the turn Rich of line go with open. Valera

Rich Valera

includes the ramp stronger pickup and case Thank was talk profile, that's afternoon. hardware and if expecting of the you or profile must on a beyond least first what you. to Can from and customer hardware looks Good that about that like shipments? the significantly large at Based your you that half-to-half visibility kind quarter. year last hardware be if you have down significant the annual

Trac Pham

Yes, the part hardware affecting quarterly IP That's Rich. deliveries of both that a of it's and Hi, it. profile. is combination

Rich Valera

the be a about tends volatile talk underpins or that, since that that it. Got to subscription backlog kind visibility -- sort in of And the the that's can visibility, are just you your something how of than particularly is more hardware what revenues? to little

Trac Pham

the deals have done are and this good a pipeline Yes, point, that ability well revenues and you've backlog, is combination close our that is is as from and is than we're the hardware. quarter in what IP for we generally the hardware variable of which taken no more as to past. our in in It's way year how different quarter. projecting of that our both to assessment IP in a And

the So, profile estimate really of best our reflect at point. it does this

Rich Valera

Great.

in you've XX% longer-term target fourth there moderated, Is had is XX% light and quarter now been accounts you that it How we quickly, to you. was think, like target grow anything business? XX%. the of large is of that -- I a that Just moderation sort should it? bit as for structural little looks there? Or growth of SIG seeing in that your sort you're what Thank there numbers

Trac Pham

it. it fundamental the question, for and And good your see higher. to growing way. ebbs very start And optimistic challenges this Yes. be a quick change that -- is don't that which is, do outlook with a is business. we rates good it we address it's any we're we a some Rich, that point. that's second able We the to business? of which the there grow about half good of market I'll to Certainly, in we business to flows continue feel were or at the us, and natural should natural did year, we see and the see

Rich Valera

you. thank Congratulations good a on year. Great,

Operator

Mr. Please open. Steves, We Capital line go the Markets. is of ahead. a have question Mitch RBC Steves with your line from

phone might You have your muted.

Mitch Steves

Can Hey, hear that. you me? sorry about

Trac Pham

Mitch. Hi,

Aart de Geus

can. we Now

Mitch Steves

Sorry about that.

the guys kind is the little margin from that have questions. QX, XX% pick numbers the but, implies us at if that the kind XX.X%. XX%, on be you I to really two of of QX year the the going around rest for guide operating look track like I bit at So, like QX of so to Unfortunately giving are here, a but

So mean doing of wouldn't that there? incorrectly you're that or by starting kind XXs basically high the to 'XX, math year getting I close the am

Trac Pham

we operating full the year, XX% certainly margin. be around Well, for to expect

revenue the year. think in the the budget for been accelerating we where the are making sure timing that quarterly quarterly time investing margins really for full-year the some of really of simultaneously my that just of making and and profile an growth focused we've The is profile sustaining of in that I FY the when said then we're really we've outlook places, areas, these the while is deals. the appropriate plan Candidly, As 'XX, plan. sure an about are past, got on is XX% improving is and this outcome for outcome

read it wouldn't FY on XXs high that and the and out as saying, by much long-term we committed I'll I quarterly progresses. profile, 'XX year close will So the of further we comment to in too our commitment remain into

Mitch Steves

that have add the includes headcount. you to did guys second employee acquisitions few And is smaller done one lately Okay. a and

OpEx year And correct so going be additional in of giving number? that encapsulated in there's guys are guide, that all to you meaning that is the full no

Trac Pham

Yes, that's correct.

Mitch Steves

much. so Thank perfect. Okay, you

Trac Pham

All right.

Operator

Diffely to you might with line your ahead. have the go Diffely, D.A. on line Tom mute. Tom turn of We Please Davidson.

Tom Diffely

can hear me? hello, you Yes,

Aart de Geus

we can. Yes,

Tom Diffely

margin outlook a the year-over-year for would at margin you [indiscernible] cost versus sorts if from XXXX so product mix how Yes, and just at overhead the potentially today. split basis, question. absorption tune growth comes All on versus look you a fine nice the you structure? quick profile, a When it look

Trac Pham

that improving from percentage business kind G&A different by of in broad-based really of Board. points X functions. the it's The and the saw in effort. this It's really it the of it groups the all made across across continued across XXXX we areas progress really from terms business. year sales We came And a

For It's same tuning that all we'll really of business. to the beyond fine do areas thing. continue the XXXX across and

Tom Diffely

XXXX there it And -- even any then that weighted, items be to look lumpier, quarter the can any far a know quarterly can you and trends any should at on in fourth great. tend hardware about trends there quarter, of as are as when be like a it little Okay, is IP first after other we basis? other kind be

Trac Pham

We could visibility probably and you be given our to tend what for point this likely from but quarterly is would detail, the quarter IP hardware. both profile are help in -- highest at with the what QX us we

Tom Diffely

bit Okay. of higher question. then at a always like And the Is year. I IP second in final feel point? little seasonal fairly this it's half the

Trac Pham

depends IP see when And pulled We're business. you're not the delivered timing seasonality that customers. going we IP or XXX. has by the And to down of the seeing said, in variability when much really due is our as on the it to really increase

that that's in IP really XXXX. just be continues strong in drivers reflected and So, outlook our demand keep for for the overall, but mind, to

Tom Diffely

Great, today. thanks for your time

Trac Pham

Tom. All right. Thanks,

Operator

Gonzalez to turn go we of line of Bank next, ahead. And with Please the America. Adam

Adam Gonzalez

'XX, but set you there growth Hi, if group in longer-term particular or in by you help for for is us line taking of product with substantial my far, any you Thank I it is group? kind this you. know the question. you understand, out expect any thanks guide revenue deviation don't fiscal out targets the Can just product

Trac Pham

and pretty IP Integrity. that And or spells our basis. No, Software on model break annual long-term we out an down between quarterly typically, EDA, it don't well

the of is a business we and it pretty do view that beauty range Our over managing this manage multi-year over is that it about within have time. been we horizon good

Adam Gonzalez

data why from from into size relative imagine your from overall. on impact but seeing is you some I Got or the I'd bit Thank asked enterprise given you. spending of that you points that there been are that again, the insulated has are that? it. reason more business And going are fiscal because, of kind a weaker I you 'XX insulated SIG any guess

Trac Pham

Those you different factored guidance. our sort adapting that close would things we of having and go part how is reference when business there historically through recurring effect concerns to into to performed of XX% that's is is great I a cycles. the are that certainly

Aart de Geus

certainly, actually The would that thing to we an many, touched yet. I add in a Integrity you is, and very if the Software that haven't look young it's emerging even are customers situation business, so we're other there at where many business

think is a And that fairly so open I space.

a obviously, from the quite of are global point the I now, think Now we're high. utilization for subject to fluctuations overall, technology technology But the view right of markets. demand is

fast. be to And the so quite rates continues

Adam Gonzalez

Great, thanks. in queue. back I'll get the

Operator

to And line Gary ahead. next, Fargo with Mobley we Securities. Please Wells turn go the of

Gary Mobley

Hey, you you're January everyone. appreciate taking question. going X. like until file to not the I looks It your XX-K

your I So royalties? non-cancelable hoping excludes us can with XX-month on was you share this FSA backlog, future and call, that next which

Trac Pham

that information. disclose We actually don't What?

Lisa Ewbank

the In K.

Trac Pham

the number? Do In don't sorry, have off top head. will number discuss we have the that you my I of K, that I'm that.

Gary Mobley

that take your and by months expect Okay. it divide Part generate like critical It from is filings disclosed looks next your to revenue the now. is, more as you generating question revenue looks like juncture backlog. could you think is revenue recent I XX XX-month expectations, you've next or next been you of SEC you're backlog in XX-month the that which more

speak to you business guys can of as maybe that? lower why that turns to, hoping just modeling sort you are relates in So, it

Trac Pham

transition backlog the to Well, what XXX what of consistent From modeling some and and mix The have over we higher to that 'XX of few hard and with years. into IP. we've perspective, lower and range the from hardware around you last -- mostly visibility with is visibility backlog to traditionally been that. that's been, IP. -- business between it's we a hardware FY account for because managing take the have give when scheduled to specific than and is we I'll turns we roughly have XX%, how what and we're pretty The numbers a range the building of

Gary Mobley

of Okay. in an on And entirety? the customer, big the List, update the from Entity degree the impact could to maybe you but not maybe the give specific us one

Aart de Geus

as Obviously, a don't I subset or of disclose the zero Well, fully negative has same Entity customers. is we but general, customers, guidance do the it customers. in List gave, impact, at we the rather facts nor encompass disclose we has zero return think assuming that you specific know, time, the that which we strong the revenue from the

we if to the you So is of things immediately. change the right much know for path the more for let comment will better, course But wisest now, about not situation.

Gary Mobley

point you Didn't be that alright. it line? impact could to in basis past comment Okay, XXX top the the

Trac Pham

we have numbers specific that. not No, around provided

Gary Mobley

Alright, that's guys. me. Okay. Thanks, for it

Aart de Geus

welcome. You're

Operator

Jackson to go with line of we Ader Please Next, JPMorgan. turn ahead.

Jackson Ader

Thanks. evening, guys. Good

some is that the trend? on broader be is is of and or in possible hardware, symptom absolutely the First this could delay question a it just emulation customer something specific it that's single

Aart de Geus

customer It was single specific.

Jackson Ader

earlier, any -- Any in follow additional that, I the can additional the in, expected mean, -- delivery will think there? on half color that, Do you up be, but color asked actual Okay. or Rich you just delay? first expected I you the on any what when give to why

Aart de Geus

comment very broader a to don't we can I color cautious little we specific because the really, Maybe a and give in did verification know, grow area And about want not our always which in specifically of to No, is look hardware, we customers. color, markets. to opportunities well. you a actually, finding at different really give dimension, as diligent you if at set quite were we

the a on to to where customer software they no so, capabilities their doubt us for a be are hardware there offer, customers the about we both of that the continues invest sets and yet, broader And the have bullish need we that to we prototypes lot we have. and have run don't opportunity for continue very great real

Jackson Ader

million beyond. helpful Okay, looking sales Then, switching to is this and to refining of the and gears thing to scale business, thank actually $XXX channel the color. Integrity you. That the

So do processes there? think or give doing to Any specifics sales refined what the can sales XXXX? be in needed you you're you channel to what in additional relative

Aart de Geus

given experience literally that take growing Well, do by thrilled I'm first of the a had these through unique step go let as well. phases me fact the different always back, just Synopsys And phases. that we've enterprises through

And there is of $X.XX $XXX billion is is very $XXX than essentially in the startups million of is are [ph], again not million domains. buy company the difference we how different but so, different. that a they geographies keep then become different copies the And term gradual originally $XX global and and than more open the how very manage the and and development product external complexity the hoc, companies only broader million very you also relationship you that because the are expand. the they customers had adopt also smaller large with slow cautious of and therefore company it's adopting also On there Integrity broadening management, Software that so case certainly in is the when of any and course, and And bifurcation group, they on, but that up have ad the of customers. a they quickly this that, typically adopting keep adopting, certain that few internal many we and they in true the over the the is a top time acquired biggest focused too, agile geography, of were between enterprise versus spenders, of

were is originally maybe was we -- individual they was And domain then with verticals. third the the which in in one, that in that deal semiconductor here marked more is

dealing automotive on. sector different and And with dealing health than so so, with or is the financial sector the

support years, manage and just and of evolves variables against you deploy which Phase again. beyond, no our crossing do and multiple of will these we dimensions? the we is have now now essentially to you about learns we backdrop the as is, billion so, X.X are talking that and sort way and doubt we another the X, of saying, looking continually say of how I that's opportunity one $X.X to And the people, And have salespeople are And is should in that again. saying, multiple question your it when and optimize we go-to-market say are what

Jackson Ader

Thank all Okay, right. you.

Aart de Geus

welcome. You're

Operator

ahead. the next, And Please to go of Securities. turn with Griffin we Jay line Vleeschhouwer

Jay Vleeschhouwer

Thank questions both at time. you. I'll ask the same

First hardware were answered Aart when speaking a of itself thing are for big months the on is next EDA. then prototyping, already new had you prototyping. would broadly this in the next Aart, couple EDA, new how New and by conversation in not following ago, regarding be business up my is, and in York showing the for of here meant you, Trac. growth we you you requirement and that course, and extraction just the And largest K, been just driver that that you customer? since then year's And be for, very in XX.X% total of we worked a In largest from investing combine could it to And up million have last according and your two which fiscal you separate strongly. $XXX phenomenon? business of 'XX, the to was your over business it's out Trac, customer about but likely 'XX, which talk you flat that towards and that multi-year for with spoke was to ways, secondly question

Thanks. proportionately about terms? customer, So, grow fact just now or you said did absolute your either many and in business everything in

Aart de Geus

But that. short-term, answer I which Okay, months of thing more much complex, the if we fast dangerous sort do these clear of have direction. long-term, how a course, a is the other software next systems use well What it we challenges illustrated that prototypes agree that words, mark-ups, of very the a impact I like systems very actually or the hardware, of work, be and abstraction how machinery. function of create or world the the may then build essentially have a and on stops? always in ago, a well driving does going of it's The And to consume, things runs word see such it that how call next name hardware. happens because it? situations, that inside of agency, you to them car hardware you a as proposition in But there we things run operating is those something of the modeling well more the gave you its with life dramatically Jay. is they also is working you restart weird a how in on that always it's can of middle say, breaks, big is And the medium-term, software of the important number complex to my you it. very become of necessary How often level it if and power to some prototype of more lock-up lot some as if is of the is the

when and with automotive So, that's the went a ago years how the markets happened. that. [indiscernible] radically moving we few the all was a have the And car and to and cell some safety. and stodgy extremely people One in is a considered after potential with for by suddenly we the phone. Well, of market, was Jeep slow literally done was using secondly off two about that well challenges driving it things changed initially, that driven coming be quite autonomous saw security and somebody street

see And the to OEMs. how it's quite remarkable been

pushes their in they these that these so on chain, which prototype. So chain can now the in term terms capabilities model, have before all car which supply already are has in pushed is start X, their supply guys end which semiconductor is long a actually at assemble Tier companies is putting the on car the to of their

how advanced to to this see and good rewarding on to be industry we've to safe. it slow, because And central be so has has that fundamentally has been that been for quite reason quickly it's an

systems that concept Now a true ships example happens one all also surprises has is cellular before a for the I short to actually sophisticated can time this just the actually for and I electronic market phone described, product. an very more run only in on the discover of software emulator the actually and where

of is it one that literally chain and of So, relationships many directions that the entire of in stack takes are the of supply in stack our we the into relationships technology levels. going advantage and

Trac Pham

is Hi Trac. Jay, this

very question, grew of decline. strictly a hardware filing weeks XXXX. largest IP, in of is XXXX, second down rest will our you the and of for XX-K a and the So revenue in customer function EDA will business, that The well in to that your see be our couple in the

Jay Vleeschhouwer

headcount. it. could more, Got regarding Thank perhaps, in one you. squeeze your If I

openings up the has Your and Americas XX% AE tripled in about particularly of over and where nearly over by significantly Asia, increased year the in number they've year last last the in flat EMEA.

is on it your filling How growth indicator R&D? coincidental indicator? rex? So, by second largest openings AE leading are function that after about thinking you And maybe what driving is what's or comment in

Aart de Geus

of hiring verification, need do summary has as give AEs the as and and always it best and that very often, for the broad, rebalancing that's the the but say, and in the actually world is me teams can the of needs needs are you harvest case example, to in a place rates increase strong the so certainly different quite to quite hardware It products of our different such Jay, deployment or practices. in invariably at prototyping and rarely Fusion or make the either geography skills, have intersection areas But with custom many parts because opportunity well. as the every or as gradual specialists, let's software Compiler, beneficial different we various are of is of be in of specific our bringing support of in grow times. some up increase the

competitive in that. you. and think fact enters you are from a as the it knowledge take I'll positive that general we I Thank space, probably much refrain can the So, adding more, hiring,

Jay Vleeschhouwer

Thank you.

Operator

[Operator Please go Instructions] Celino turn Markets. KeyBanc Next, to we ahead. of with line the Jason Capital

Jason Celino

the Because expensive But XXXX, Aart's do I on about in 'XX. then taking won't of operating margins margins, full year, question. margins? think XXs in my back kind XXXX. design to should as SIG tying we again for in to margin versus track the margins you ramp for but XX% One, high the fiscal how comments about that said Hi, Aart, guidance be think, thanks SIG

Aart de Geus

correct. Yes, that's

to hold everybody growth Company, we probably the Company that is rest parts in. want roughly achieve has the said for we SIG operating the think have the now the if and to of the sensitized and flat margin ops we everybody that And we obviously to I of chip margin in for multiple course that Company. means

do of subgroups all same for time and at all on compromises the not any how we get future BUs making so And the there, growth. are while focusing

And is guideline as I Synopsys so, strongly you this get there. are to probably only aware plans throughout think, there. of that positive to there to improvements somewhat But room a committed is note, a loosely, budget so has rule sensitize people and for not desire, very we management used and get to on make XX the but and

little less So, that get whatever a to from more we the year numbers investment aggregate, you in to as of of we needed towards. or function corrections guiding a that bit to BUs or a are want else year, I we need do, but or different on reprieve we will all the deliver think know

Jason Celino

most of maybe come would Okay, can because great. little to you EDA you'd And of a would more that if clarification the suggest improvement in side, your from business? the then responsibility on that some have see fiscal guidance

Aart de Geus

course, multiple have business. tuned figures of of relatively different and of efforts rest have of quarter if by still XX%, Company EDA than XX% a we definition, and very the large, that Well, but realize, IP in less we a is Synopsys the roughly

has to margin, one towards is different businesses the bit And heading not growing one little are mistaken, more those if towards between improving so all they contribute. ops heading And obviously, of groupings, have a aggregate, to I'm them but the in deals heading of of all and and same so on. dent because in the rule difficult which they But but in sometimes the a XX. intertwine in direction, revenue, aggregate, it's in measure put it's the all

Jason Celino

the I you. appreciate color. thank Great,

Aart de Geus

welcome. You're

Operator

Company. with to ahead. Cowen go turn we Next, the Sankar Please & line of Krish

Krish Sankar

think and my like be thanks comments, them. next have looks lower the X%, Semi in follow-up. going taking have for of grow And said your it like that you two revenues division the I prepared else in $X.X SIG Entity a Aart, is historical. that there group of only a billion then anything on seems I which hi, there? Systems going Is List than I or is your function If year. to the case, Yes, could question.

Aart de Geus

is not Sorry, if not was did to pass my clear billion. pass but statement was I $X.X I would next $X billion the enough, that year. it next that say milestone

to the And at sense gave XX%, rate we of the XX% that it in now. so, bit a growth think is which markets for right above a we SIG you is

have on this also. all Synopsys did are all what past the businesses we are change set from that well, of components fortunate doing year. a some year the real And and so, that profitable in fundamentally, no past to there is is We're and its very

think, that manifest big many so financial the improvement itself that of And aggregate really got integrated an investments result good acquisitions it's of, and because largely years well. a of in number I

last years pathway the continuing very the are want a see to of different you'll over get graph sense how if then just our different stability manage and we level we Company. the then So, and of you a XX results Synopsys, of

Krish Sankar

just then as And Aart. follow industry helpful, longer-term very question. It's it. Got a much up, a more

a where do of of kind years and guys it like your the or AI the also looks hardware recently, you I'm DINI HAPS, for than vantage out, of durability the good completed of portion acquisition years on from SIG the five applications? curious versus more FPGA, FPGA have Given you on and stand FPGAs Group Reduced five debate. you point down

Aart de Geus

to on Law and need, much, AI achieve. making that much, the field its AI computation. how take fundamentally, no has many, is Well, itself is companies push that's own has that And small Well, we matter is one Moore's much specialty which hard so and step field a to a many on, it's bets. faster much, backwards, hard useful different which all much,

by so therefore, be architectures to answer different And will become the applications. definition has for optimized

a of actually chips, with was be combination can be suppliers objective number groups processors very for an can things. specific pieces, it of architecture a provide appropriate that's graphics Now, combinations who FPGA mean together it And together processors can of optimize for all chips, be of was one large it architectures situation. can FPGAs, the

for tools board. tasks, we on of of do ways, provide a way our for But an of because simulation, we say can lot And we ourselves hardware better to for as have own such computation that software course, certain use a been or tools. the we these so, in our FPGA much capabilities, emulator user is many

be all technologies to the can expect to do continue race to various of you these will evolve I combinations and build that continually available of well. So, how machines be on really to in continue do

give into will My AI not trying emerging the volume. is because will I companies. large new of tools last we architectures some think for vast provider are those of go and And is, to ultimately very people vast, while up comment a group this in ourselves a quite encouraging,

many in for companies doing very ways, drivers of technology hard wise, well those as Synopsys. we And business number we're them. so, a see And with

Krish Sankar

Aart. Thanks,

Aart de Geus

You're welcome.

Operator

have And no in queue. speakers, we further questions

Aart de Geus

'XX. Well, given had that, as strong you very heard, a we

also we're last great have your We all well looks which a The you soft good know, executing around slight say There think bit and uncertainties for you time but a 'XX. we this are for market meanwhile, bit. lot is support. I year, was outlook up thank as to a to us, of a

hour some so. you. we'll in back you or Thank often questions and next with the of and stimulating half be You're provocative

Operator

our Thank service. your participation for for using today. conference does AT&T It conferencing and you conclude for

now disconnect. may You

Synopsys (SNPS) 4 Dec 192019 Q4 Earnings call transcript