SNPS - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Synopsys Earnings Conference Call for Fourth Quarter and Fiscal Year 2020. [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. At this time, I would like to turn the conference over to Lisa Ewbank, Vice President of Investor Relations. ahead. go Please

Lisa Ewbank

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

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

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

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

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

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

site the the be addition, prepared conclusion the posted remarks the on will of In call. at

the technology we or so please turn the or locations Aart Geus. all awkward to again de today, result. Finally, any occur delays hand-off that participating different forgive as that I will are from Q&A in a with session glitches And call over

Aart de Geus

$X.XXX IP $XXX non-GAAP than we've record flow introduced positive the cash growth percentage few IP, were report by our considerable the these EDA expanded nearly pleased and outstanding past for unprecedented billion, to original year over non-GAAP to through business I'm software another to and Contributing We and with EDA X strengthening and grew technology year. margin financial built Good new by the earnings million. years. customer results led revenue very substantially products points, more challenges, delivered plan afternoon. we XX% Synopsys. XX% operating Despite We momentum. macro exceeded of

on build that year. further groundbreaking We this this expect momentum we technologies to launched several with

to growth plan scaling growth. through years topline non-GAAP to 'XXs initial In margin and a We Integrity have year addition, financial our next high achieved re-accelerating Software by ago, ops XXXX. re-energized to operating the combination two a to on expansion, the its we three-year communicated of margin drive our double-digit level way and earnings single-digit and business is growth. high consistently growth target a early revenue About delivered

EPS flow. $X non-GAAP As surpass XX% billion to we margins $X growth in and operating billion cash we non-GAAP with than operating enter XXXX, expect XX%, of to revenue more to mid-teens in low

Beyond traditional hardware but and has beyond of trusted intersection today Moore's well advanced products most powerful capable demands expansion. the not learning, of drive XXXX, Meanwhile, design we and will markets the our complete partner solutions solutions will into raise computing scaling XG high XX further the position they includes we differentiation. of and cloud activity as cloud, are generated the our machine across of strong rule big by ambitious This AI in Trac operating devices. billions drive and at AI companies and growth Opportunities IoT as cloud to need massive themselves margin key in that particularly and automotive financials time start-ups enjoys more such ambition the to hyperscalers They as leverage strong board. a discuss adoption a as of detail. Synopsys advanced data a remains who all such revenue high-impact Law the as software. end only performance of connected increasing

momentum for Design to rely of has revenue over our particular, In growth adoption the advanced In continue industry's designs on highlights. unrelenting Fusion some design premier year, innovation than Fusion provide Platform has design digital technical to push to me our largest its from market EDA, Compiler leadership. More anticipated. significantly The XXXX. Fusion we our in strengthened the longstanding accelerated. proliferation We've and customers progression to XXX% today and from exceeded start-ups. Let adoption orders wins, our past product, cloud see strong solution. digital communications than even from ranging increasing graphics seen growing competitive targets to widespread global is processor orders influential system the we hyperscalers trending in and benchmarks AI better XX% high-impact Compiler and production firms houses

FYXX our chip compared excellent for foundation also a challenges pipeline with and evidenced inherent many the well design. by system across year the and dovetails of tape-outs results customers, yielded as five production us next rapidly to Fusion segments. deployment exceptionally For growing times number the in technology last market of The in wave

Specifically, in design and design AI-driven of in lifecycle XD flows, Synopsys multi-chip addressing management. area is new in new the term silicon opportunities

Let product, me where DSO for Optimization. Space start stands our Design DSO.ai with

tackle of Achievement tasks. combination power and more results in on teams automatically With this and larger Even product focusing more a Electronics better it and stage, potential both recognized for value-added innovative time for AI XXXX the and market. early Our design exploration of Fusion learns also this, design widely and being and Award blocks is World adjusts optimizes projects, DSO.ai to can the received thus as year. faster

traditional performance the moment design product extremely XDIC package multiple XDIC complexity chips of approaches. At chip. capacity are die that very a and analysis disruptive very system together the conventional our augmenting is and connecting better than disaggregated architects by that tightly Compiler Next chip and solution. timely together, far provides on technology This chip multiple our enables

into new engine the in customer we entirety visibility solutions industry's management. chip's of critical This security Finally, performance, design reliability, first yield these provides leading in-field monitors with issues to for from high. analytics all just lifecycle lifespan and management test the into is Early last of chip and On silicon launched integrated month. feed and operation. platform sensors very data interest

year. revenue innovations seen their targeting displacements power FinFET trust resulted in Custom Turning and to Having with highest Accelerated This number the of us. design, of are semiconductor logos over impact flow plus Compiler designs, our XX systems and during XX% for more advanced momentum full putting custom the new product than a our companies the in XX competitive growth.

now move me a into and for with which combines anchor a need continues increase Continuum rise. solution chip Verification Platform, software, seamless, market the products to of Let systems verification our complexity high intersecting leading efficiency to

to from to number of influential Our on in integration one automotive AI and center hardware puts solid market the fastest share position we this the as and state-of-the-art software engines. to aggressively both at side, in to us hyperscalers high ranging customers growth wave innovate software native mobile. of profile Contributing our our the continue

than unmatched are ownership of and more highest again power and customers This designs. repeat over largest record systems our capacity, lowest high includes XX we on new Building customer complexity XXXX, world's orders. expanded major expansions speed, at our companies. XXX the consumption products in Our in base, hardware-based semiconductor verification cost and XXXX year well lowest some adding totally for of focused on

Now to to IP, than where another rich in more $XXX strong drove year, market revenue. approximately our demand XX% portfolio million record growing for

title advanced XXXX performance is strength AI market processes In across automotive. key particular Integrity more year than for is processor. full processor XX wins Our on cloud ARC continued by high An the automotive Automotive based XXX of area momentum Safety achieved broad our automotive, and compliance. Level major certified all we our first This across more extended compute, than have delivering companies. as ISOXXXXX in and segments we automotive lead strength D semiconductor networking, and industry's qualified regions particularly in

XX-bit also family. and vision portfolio introducing a DSP, broadened processor We our high-performance embedded

PCI introducing IP. continue first to IP, we As MIPI we leader by our generation the memory extended exceptional Express, upon In industry's which generation of see an titles interface including in USBX important had leadership undisputed year. strong and adoption the interfaces very USB, of

include continued AI high-speed gig in cloud general compute specialty foundation year. on extended XX and our XXs IOs we excellent saw had our traction portfolio lead also very memories used in We which an and multiple IP, wins. and purpose Building in with XXX to

to our X-nanometer high-end high continues by X-nanometer multiple IP highly of - record and industry solutions. X.X announced than and nodes design and IP XX already and X-nanometer PCIe proof with performance We including the targeting process customers. compute. our points silicon next-generation USBX wins, more full market development started advanced leading Finally, products being mobile PCE track With first of portfolio is we with valued our of

Now approximately XX% contributed to This Software our to integrity, of address testing steadily software issues. code for opportunity The area security and is critical challenges vulnerabilities increasing market the revenue. quality need in importance. security with vast

are products services and the As we growing today, positioned this leader available the space. portfolio to serve well industry broadest of with

conglomerate. vendors to services and significantly broad near portfolio. aerospace that, of customers base. Fortune an as multiple products some have years, about customer important Over we products well our XXX is operational increasing multiple example allow Synopsys, expanded In one to user representing said breadth companies industrial successfully impact the of from enterprise is as area investment while software The and that Having expanding and leveraging revenue. base now depth of and services, integrity our with past an saw from their COVID and technology, adopting consolidate XX% we them saw XXXX, our term transitions. number a An several

hit in has and Manager made ground little areas. already the new Our a enhancements General ago three running months significant three over

coverage customers. customer and evolved better an organization existing First, and and go-to-market sales our timing channel. we building to and sales address indirect success new strategy our serve includes This

progress strategic our product capabilities recent consulting security expect we cloud with bolstering DevOps our The encouraging re-accelerated and road adoption. and are third, see we growth. continued and trends evolving to the we map are in Second, on year capitalize are to ending towards moves

by is optimistic In and Market $X.X very entering verticals. we about as mix. of billion are to fueled the demand past with high-profile We multitude we're technologies momentum. XXXX strong, significant mark scale opportunity long-term a the summary, complex work

capabilities Thank challenges executing adoption. well our in it raising continues strong who With dedicated over Our to seeing to product as year and employees unprecedented partners Financially and offering innovation advanced this support. to and we're turn Trac. you and commitment differentiation I'll quickly customers their long-term ambition. adapted is to engine our and deliver to while that, for our increasing our effectively very

Trac Pham

We afternoon, ahead expectations. XXXX everyone. metrics, Aart. was of results We our well cash Thanks in year initial flow. excellent all non-GAAP key record another the finished year. reported revenue, and EPS operating Good including

our non-GAAP recurring $X market, resilient in nearly in well model further solutions, Our expand billion best ongoing positioned revenue and business XXXX with exceed financial our We're execution. and XX% entering of end revenue margin. our to reflects annual class operating determined success portfolio dynamic a

nearly $XXX to and geographies. Backlog the all up on We across billion, result, with billion $X.XX, expenses non-GAAP billion, Adjusted software share I'll and earnings per with full-year $X.XXX a margin the $X results. strong were approximately and $X.X were total XX%. XXXX of over of nearly costs our now was non-GAAP in non-GAAP $X.XXX are revenue operating $X.XXX per review operating we System year As consolidated and particular track XX% than resulting billion. in more and earnings in GAAP grew were Total $X.X generated billion strength strength double-digit $X.XX growth share earnings non-GAAP EDA during margin revenue prior year were and total deliver GAAP segment cash and up the prior year. to million expenses cost over Semiconductor XX%. XX% Design billion IP. operating a was flow.

with revenue Software operating adjusted XX%. million $XXX of Integrity segment was margin

by COVID results market near-term are position. the transition, Integrity our operational industry leading our affected dynamic we were Software and about enthusiastic While and

XX% software Integrity industry range, corporate and or grow Our the believe can in time. to to operating exceeding reach market margin We long-term we the average growth our XX% exceed over remains evolves. as objective

full and business XX% XXXX, over in margin to high expect in to resume growth in we our the to year due then as operational our take in to we We the XXXX double-digit with XXXX. single-digit to as the range level adjustments internal and implement Revenue XXXX. achieve orders levels year the of our intend hold, accelerate exit throughout time-based with full is feather our in increased to objective in adjustments investments year year. expansion the model, we XX% QX the growth ramp will for time For

year flow operating record billion strong year with the cash, results of as of cash for balance a to as million $XXX cash the total well robust a debt $X.X reflecting Turning with million. $XXX ended collections. our was We

of total At XXXX increase our we year, $XXX this we completed buybacks expect versus time, million. the buyback in XXXX. to During

List Entity Now to changes no there restrictions. current which assumes guidance, the are to

XX%, non-GAAP For billion XX% other share. per total minus $X.XX GAAP income $X.XX of expenditures $X.X and $X.XX from operating fiscal million. and between to a billion $X.XX to rate $X.XXX XX%, $X.X share. minus of million. earnings to XX margin $X.XXX billion capital and cost between XXXX, revenue expenses billion non-GAAP and million $X.XXX earnings $XXX of billion billion, flow expenses approximately X GAAP $X.XX total to and per and $X.X cost between to billion, X.XXX billion, normalized tax Non-GAAP Non-GAAP and of of of operations Cash expenses of

we continued the conclusion, operating $XXX momentum, first the $XXX team. and enter term, questions. cost between Now that, and of to million through $X.XX with next non-GAAP we objectives. we And expansion our revenue over $XXX non-GAAP the total to several combination $XXX million strong quarter, GAAP excellent intend years $X.XX serve, execution solid XX%. the operator financial share $X.XX $XXX and targets revenue per share. and of and our earnings XXXX GAAP expenses earnings per million beyond manage it for and to of cost We to XX of million. In growth of $X.XX of markets margin are a $XXX I'll and expenses a between rule total our with Longer and to raising million, million, business for to resiliency outstanding between model reflecting the turn the over

Operator

[Operator with ahead. start Rich Instructions] the Valera We will Please Q&A with Needham. go

Rich Valera

some business what reasons, you raised Congratulations the on for really if off out you the being business China that in maybe Asia-Pac and some maybe your China to really and second that that and thoughts implies that's of but about on have wanted challenging results concerns of get that conditions the was forward concerns been particular row I'm with in any year. of that this solid another a pulled of pulled one guessing various year. is for delivering with finished strong year factor Asia-Pac that in in a just strength is next in quarter forward having and quarter guys And some

Aart de Geus

very definitely Rich. you, indeed Asia-Pac strong. China In general good It a contributed Thank very, was was and very substantially. year overall

there's that, had We have of business quite always questions Obviously, with but no except indication of fact of that a China. ordinary additional the the we out very number also pull-forward new from nothing strong really around customers.

Rich Valera

a of seeing you the kind have SI funnel changes. you of of lot this Just you've bookings and there nice that are some structural might of shoots actually impact? a any on the follow-up business, show point. or at an point can sort sort to, green of organizational I on those know Are pipeline are made to anything starting

Aart de Geus

Jason been Although changes, Schmitt, better. lot very XXX a able, where because we to that specifically just on made has for go-to-market think, has been say cannot the of much have He whole the new there yet side already we optimize about GM I good days.

that fundamentally rate time. through So the will expectation is is as the indicated, this growth business our see right right the we at thing again actually year gradually because the accelerate

will we quickly. the our as improves, results And think execution so see fairly I probably

Operator

Please go ahead. line Diffely of now Davidson. the with Tom D.A. go to We'll

Tom Diffely

first news based no got hiccup is the we you Intel and question out little of this for So, summer, on transition. Aart,

how is does just in bigger node what large when So, that while, customer in and at a EDA? that redesign stalls general - no impact you a out transition. broader a a what I just current EDA the the the they'll know but bit for question, impact to industry

Aart de Geus

Tom. Well,

gets are but bit of well anybody know, you decades about and race I that in point forward. any the time As is ahead, to And the think in customers, or move that if leading among companies point very the in we comment everybody. be all investing edge aspire one a never many to fast moving ball individual on the stumbles is at technology for know all I this at things the time, at

to Now, with be this market of in It's the the is high. not just want very demand that because they line the is first technology.

you node, high. level production also the rates are deliver yield So it's the the it's latest have because you only can volume, with in not of do pretty right

new news. to the wave us the are good It because aimed all So, very much see new latest strong of is this we good technologies. news designs, a at a is designs

fact people are classic, advantage me see more let at design. parallel of, that. continuation And the call customers more actively we also in or of of looking taking Law it multi-chip So to now Moore's this, and multi-chiplets a in very

And so I is capability think the more hunger for insatiable.

Tom Diffely

Great, thanks.

Trac Pham

XX-K we in weeks is there to of and This our want highlight to business in just you're Trac, a I grown this in very to the that XXXX. has at well see that continue do couple add going Intel

Tom Diffely

Okay, great.

Trac Pham

point. To reiterate Aart's

Tom Diffely

transcript I a about and Yes, on bit guess comments Integrity to going margin different in channel, Trac, any sales the Software than and talked in putting that before makes that then, sales is an is And - or sales line a indirect impact the approach have you you sense. that the profitability?

Aart de Geus

chime may I in. If

may I goes our have is actually working about really companies at that think of really with of typically help to really more it large that closely customers the indirect parallel install a it's different a channel Tom, utilization a ecosystem I sales a the so existing misspoken change, sort channels. not and and things

Tom Diffely

for clarification. thanks great, Okay, the

Aart de Geus

cough got started in middle Yes, apologies. misspeak, and sorry, of my to I almost the

Operator

of Please We'll Baird. go Joe Vruwink now the over ahead. go with line

Joe Vruwink

strong the income bridge, and start with a and outlook net wanted a cash step-up, year? in that improvement factors into next bit for can of improvement the reduction CapEx next maybe It's the just than the to I flow pretty cash year. other a quite conversion provide in you nice in

Trac Pham

are things the two are our income really up we the CapEx fact growing you reducing highlight that contributor, biggest The spend. and

adjustments, of over the XXXX tax build bit a flows. facilities. in parts will is us hit fact start and some or the whether we've one-time we our going or we've point, 'XX events to But legal the highlight related had the I'll that heading to normalize to that always back last years, with unusual expansion mentioned, cash settlement things regards has described The one-time the into couple of strong are as it's other that related up thing margin out biggest that's to contributing driving of

Joe Vruwink

I'm seems it's decompose the R&D I'm helps And probably you thank year. a is maybe see end. of quite step a strong Nice then to and if at and if I next improvement sure there re-acceleration. in until help bigger accelerating contributors, activity back could but of now backlog some really a year bit environment of terms kind contributing, be it broader the improving and to wondering

So portfolio. I'm across really sure of prepared remarks. or in any you terms just some But out that in the it of behind individual increased helps product momentum things contributors, of the the your called is

Verification So anything Fusion maybe extra else things can also and year-end? to good you like as at being here tell point you;

Aart de Geus

is software, the most themselves. customers in Sure. nodes other that to absolutely our difficult IP to and the Compiler of and IP needs they And all have for the et technologies. terrifically the it they most the We just thing from Well, nodes advanced and come is see are order In more machine and of that and they But all not our things. are ready those do and prototyping tools those blocks highlight among and want economically, software of cetera forms benefits, have to is building the is the hardware or the becoming stand those with do Fusion all out. were common on everything to more are really has broad well. in advanced which and healthy. and that one to for that if adoption very refer transistors data have people the as most the so of that transport advanced building to a viable that, do often we life, blocks and overall out these to It that reason we also The advanced are areas big storage if is would see and the computation transistors course, adopt denominator deployment. so be do it's blocks key with blocks is use customers that intersection many the really can these the doing and especially advanced one learning with much is I for more find of more race it it, that technologies so last which just i.e., between various I run mission is in as systems more on to that to

Trac Pham

more to You're backlog have certainty importantly, Aart reflect right. based strength does I a for the that metrics and by to at critical was thing measure well, the for encouraged but it pretty the think the up and $X.X have us that more the that and would also described, broad add is the when the year the quarter key and as business. that our substantially that we is visibility great I run billion for rate which we future, more it's one look are

Operator

go ahead. now Markets. the of Mitch go to RBC Steves Please Capital We'll with line

Mitch Steves

look Just guidance implying When XX% at looks last it growth, you're like kind wanted operating or the I lowest over to up EPS so. margin will of five the XX% here. or that years have four little around the put be double-click you years, the a on bit implied

margin lower or with relative curious to so. the the the at cost be as driving incremental Just to why 'XX looking three for years Just performance, last

Aart de Geus

we're right, pretty and is best growth business a the cash Yes up outlook I have well it's one growth, both year, very the as as the profitability, consider in in for as to and flows. point, revenue I this we and constructive margin, pretty well margin between At improvement. what that this as of driving think visibility constructive, half this remember coming there I is is points that margins margins extraordinary strong terms two think way

pretty feel point. it at year for about the this and outlook we strong good So, pretty

Mitch Steves

the big guys up you like look or few of should just on can that picture is people give lot there moved I years so? Integrity to the put the trajectory long-term sales next kind business, like know can strategy what of there. sort you as over a the Maybe you us, of then over And any Software and update the there. a

Aart de Geus

Sure.

software other So a improvements there for they some big there because things go-to-market the increase consulting that and our One how we at. two areas, demand that look of aside is are is and the to on applies the we on And jointly side, a CSOs heads each secondly, of report of very and double sort - individual the integrated sure on provide in battle lot of to that. our that of that can their of the are of is does. from the and business as more products small typically of differentiation, platform more product it a they status IT more because can their at integrated and really focus that one a because that in focus in with companies well impact one hand is more simultaneously accelerations on capabilities do rest have to the increase be and making or the the multiple to risk becomes tools overall overall that companies to of management there picture demand helpful able charge lot that look more are larger

Operator

Ader the Please Mr. ahead. One to ahead, Ader. go please. JPMorgan. now We'll of line Jackson Go moment go with

now. Your line is open

Jackson Ader

the in Fusion. growth on Just

ASPs basically I with orders, count what I think expected. our was mentioned in in and mean that that like is is growth line also it coming you you'd XXX% order

contract total is value Compiler? expectations also with So our exceeding Fusion

Aart de Geus

that not does both to get competition of has only we product that to it's - a familiar every power has you for but the and really - for the both are being quite but not design. was the of decade it's years to route, and this And for invested well is it, those in well crossed of also build management products Silicon point booking certainly synthesis core connected testing as to in stats as that Compiler with that It it new it of the became so road also all ways, the product, of not linchpin the revenue a able and very any the number dimension. see we look backbone it's XDIC, that is for you long a we feel and a know, where now other many markedly so other differentiated Fusion looking and doing and such technical many next things. whole Fusion in number very get bridge, lifecycle words, literally versus stats and the that have only stats, very intersection have timing platform we a the as and a you to brand entered place embedded capabilities which, in things on to also encouraging. on Yes. In

Jackson Ader

And a came then actually down Financial - phenomenon. licenses time a time rare based follow license based That's up, sequentially. pretty

it quarter, never it fact it's but a quarters. not In it's in like happens, doesn't, another fourth I think even then rare

services? aware the mix in be between should we and of time-based that that anything just So

Trac Pham

Jackson, unusual to is pretty and but quarter there the from really quarter. steady, time time over there's nothing No. base

unusual falls it so of a get You'll added given see nothing timing it's be volatile more contracts off, and in the business. would or the little bit really

Operator

ahead. to Capital Please Munda go line We'll now of go Gal Markets. with Berenberg the

Gal Munda

teens is one, about grew earlier and high I is your team than XX% that your the few been my could on based that year, this total up years had just way you a see low disclosure, to in revenue of to it reach look have to that. that really especially out I in this to of it China, comment you the we've right teens, you if calculation continues the this that be it? that seeing something the kind expect it would - first as considering quarter rate, if revenues can proportion around guess represents even the that a your grow happen The - fourth structural seen you growth, more long term, a now I'm is trying in

Trac Pham

know, Chinese new that where entering see in is you important as and technology the COVID, Well, we companies areas and but sophisticated that can where the number more their other country tools of many have provide and belt a a chip to economy we has going for them much in of growth companies post is course, rebounded design of now with fray the see we the general, years many is of phase chips. designing under with

going you me that And doesn't happen. I a at I continue it absolutely that's expect a long, long for think time. contrary, So, faze decade all, on to what's the say when long, to

And be so that job market because to a we as can, our well it's opportunity. great will service as

around environment connection add China would I are quite Korea, countries, whole on so with countries the is we phenomenon. all the rebounding somewhat ranging the very Japan in and Asia also that absolutely - is but China that to that it be have we from moving and have these Now, technology that thankful good we're and also forward doing Taiwan, well

Gal Munda

second the been then at on wanted the just And you one, remarkable itself. guys the a to little have quite up margin follow achieved it's incremental If look this XX%. margins, I bit year, I around

COVID a more the inexpensive it of that a of year perhaps fact little that so this FYXX? ongoing back a something come little of comfortable of higher-end year Your an bit hiring made the of for past the next guidance - on we investments some than and that in year, kind situation generally the you XX% might is really as implies XX% and kind feel bit terms and of of achieving just of reflection move basis it's

Aart de Geus

to regard XXXX. that get I right. benefit So With in COVID. Gal, of We say did some COVID Yes, you're would

income, said, driving margins idea but expect was objective that as rule year and and of as of incremental of XXXX, financial more at the regarding to further the you drag up on that for about say question year expecting overall, margin of to of we you're pretty things we regards most so drive a first rule and the margins, think normal we'll are have But strong resumption process some look to we next of our expanding activities, to margins. healthy that's With XX in refining a we're the from the plan. if the to year. But going really XX, stay way of because sort towards throughout of bit we the see multiyear do margins of do half, incremental year-over-year. this improvements we've while expect So, a growth

say provide So we progress I year. in like to what to we'll more details I specific as have the

Operator

with line Vleeschhouwer Securities. ahead. We'll Please go to the Jay now go of Griffin

Jay Vleeschhouwer

start the XXXX to connecting then businesses. me the customer. symposium largest plans about the management you've SLM or between lifecycle a back you couple of on be When got to of seem would with EDA that comment SIG, And level a percentage and connections the remainder it and you of perhaps at your business Silicon of with looks in as you revenue, at platform. business both decline we that earlier the in whether be for they XXXX? design months necessarily of on that ago, I talk XXXX in with the strategy Trac, dollars, not assume XXXX your to not of let for to depicted dollars, you look say extent Aart, your you even one the about of clarify the but and/or as versus stack might could in be or that roadmap logical perhaps like your so could what might make core given meant some platform

Aart de Geus

the entry chips really with a obvious one many or that are do that the of the working. be chip the in Jay, sort a silicon is really have very want And how are opened with big threatening to to that years, or that brake could would system management car, and to of charge life situation in that points you answer know you what because the to to you been you entry you car for know, actually midst a if the of still lifecycle box there points asked do is and i.e., is whatever stop like for of answer no, so a car do. multiple of have or

to mechanism the is connections put And a and correctly running on. chip different or for inside of have software years, started a so to example broken, is something there number that already the is so is still heat where know via are test first people situations of

to notion sensors some from don't additional so the go well, start and the things. are by there to we to little add why sensors very way, of, And

the the take them don't to can So the that external that so these make works inside then that inside this chips going chips read In data or very to some some words contrast corner interpreted put of data from machine the in, comes interpretation with the and the decision we gets learning easily find data, somewhere that out question, well, from better now sensors you of external quickly learning a lot a can brings that the of chip and can we why other use of we forward. make chip next we of of say, chip. it, you inside can can all have

so the and this that certainly you a exciting, and of be observation of you that of chip the little lot or hand, nothing specifically I'm hand, you'd new either on use new to just on bit minute a AI the here there to data and applied could opportunity a the site, all inside points anything up a a to doors is so you trying that open one here but say, out visceral And of sense well, lot way a put new on new have bring give the kinds on why is with can because you speak, in other it. and say is it

position IP for we is the leading that a of number can of very hopefully use The own machine with bit connectors mechanisms test of our in big. we very there, already number good the way little type space by that news of a our years. gives strong use that capabilities, we sense a and so good you capability, we opportunity are So is have a these has learning have a

technically do. So what we know to

Trac Pham

Trac. Jay, is this

So that reading on that the dollar our revenues K. your I customer clarifying the is year. Thanks at up - for like you our question, know largest you're this right.

a the away can to see in relative I come too to years. That's out we prior give So going much. details to want don't couple of of that weeks the and

Okay.

Jay Vleeschhouwer

Okay.

IP if if record like or those. you hardware, talk a you I revenues and word looks a possibly for certainly could the record Just either about for quarter, it had but I the follow-up may. think hardware used don't for you to well, clarify IP quick as quarter

Trac Pham

a year, in to, IP, good really yes for record good Overall. strong year us. year a for for and IP. same and thing really year with us a year it hardware had good actually year slightly But I quarter for versus XXXX. good want We and it revenue a record is was down nonetheless,

Operator

We Celino will Please Markets. to go KeyBanc Jason now the ahead. Capital of line with go

Jason Celino

this the first one much bit, of average? a how being into higher on the based business same the introduction XX the going than of As call the corporate little achieving is rule of margin

Trac Pham

part, most provide more year. for the think I details throughout Jason, we'll

developing profitability. margins going are As lot where the driving but that because said, I the we of for drive multi-year growth the view, that to of in midst and the XX us from is come business to it's of to a of of north continue XX% business, rest the

structural come years continue that's say of said, a it large out. will as pretty it be - we going is to that the business. and as that consistently. next to time to going - a by I'd Software about margins, some portion would a prevent There's think corporate from some nothing semi driven lot of it, that's we but about across continue the In few Our there but towards but longer-term bit, the converging Integrity

Jason Celino

Okay. And then…

Aart de Geus

of add to is rule high the would our and SIG it for have XX% absolutely it and to the but direction conjecture really businesses that quite of so applies only company, all is now well. move or we about that to best so that of the and objective of we're Synopsys, of but your to margin do throughout it's indicating understands improve will a direction, the its everybody XX true, numbers doing we number their I that in presently that that grow XX% the engines think potential need you we to are both a

Jason Celino

on quick to the are widely you side? understood tailwind core the And the design that's seeing growth what competitive the the prepared your any business, then side, one, IP you what one and I changes competitive think remarks, in mentioned in starts but IP the outsourcing, XX% for on

Aart de Geus

No, that growth in actually do, not opportunity competitive is for have direct that we compete I if the there doing number on There to then actually general, the provide some competitors are very mention more. market as we of very companies and specialized good other really. is sign blocks that and that Arm Synopsys, could good and capabilities that's and some partner of either a

lot very that a I think be increase. of all we and demand is because will we think will I think busy there market it

often quality organ to because Synopsys complex things increasingly it very much issues. placed some kinds IP a you're I all very chip these well make otherwise into think said bit little getting and particularly that because of a it's really business, solutions cheek, good somewhat that is your trust want tongue causes other like are very transplants, is you in I've sure

business, trust very And is think in so well and regard. that a much it I doing Synopsys is very

Operator

Securities. Vivek go America ahead. of to of the go Arya Next Please Bank line we'll with

Vivek Arya

for you taking Thank my question.

nice give in Aart, the have prepared company sure rate. growth growth were given hoping us year said your was not about the relative I from I of if acceleration you just some in us think, sales next you X%. you in I number you think segments. over I indication And SIG about whether for could thought different you whether overall business meant remarks, XXXX talking growth the and I'm growth just or

Aart de Geus

obviously all expectations business. vitalize product are is consulting think, I better and so the for market. lower time, what start was made, that our and me meant, that to let we've point talking specifically steps that really align direction bigger SIG go in function go-to-market the Three the changes to because and in about I SIG I intent Well, the than our with part, at and

part So I that be. talking it back of accelerating should about Synopsys was where to

XXXX US of I company, to the rest the you Europe that think an like and will the East as of a of view also predict not difficult is we're not with very I well. the very doing high but must coming but point in Far it's look only For will hope there second do half what it's in of that general, vaccines, the better economic heard year, accelerated immune say the on from are started very economy got communication, simple technologies the to the as are because of and that and things that, situation. to being the themselves. part massive that are the the semiconductor the of high to amounts the many work said such Having of just the going that home, needs be I segment used think data such from almost around continue as COVID, the so massive about

Vivek Arya

Got it.

And so my follow-up.

cannibalize datacenter, xXX Arm to other that positive net are a We market? it Max the in in high-performance and expand Is new or you just presence the for does supercomputing. your into see markets even markets starting

Aart de Geus

in processes, No, market, no. xXX Well, the around key we ourselves provide right. all these building are not blocks we the

very, if is very, going companies that massive handicap to the various not only through what forget, general great be competent are and we and processing of cloud to but more so of any there is it players. to to computing we're companies. specialty will go areas, more applications of By use accelerate themselves but a want see not don't I think various course in so and of broadening and processors, that, the graphics let's newer applications. But all market valuable forms I technologies more all those chip of machines that in These AI part very are be applicability for specific will computation very many ever all that's tends at these means will technology of specialized And because and foot, so or the XXX certain serving of go the general all wants - right. and doing are acceleration best

means by no any is slowdown there So here.

Operator

Next of go ahead. Please to we'll the Ramani UBS. Pradeep line with go

Pradeep Ramani

if business in upside the your to I of front the and missing is guess Most math how shape or Can of is year you feels, Trac. first correct, for it's revenues the SSD something sort kind half us semiconductor margin is there? going almost be weighted, correct second help terms of come going First of in to am basically, versus from margin my is on is that the I half

Aart de Geus

be the in on Pradeep. re-accelerate right, integrity margin the XX part some of given to the get this half. that of expansion profile that I'll profile, even business. where Closer fairly regards better a to see to additional XXXX. but saw what year driven by certainly investments You're software we improvement to still you'll it's for second more With being that growth, the going quarterly than specifically, to a from semi will second start it we make margin the coming in with is strong

Pradeep Ramani

a from grow your IP a because follow-up and or when other did situation - in my ARC greater interest is look of faster And angle, simply Arm indicating positive that it actually different for maybe for are that, sort you that you than And at I do the customers feel business. uncertainty of ARC actually around Arm growing guys. is is

Aart de Geus

in work competed which area, processes that has to very the main are strong in as to comment mobility there never processors form. driven its that power partner. don't about I we too they are much a say and different I would Arm at applications types strong for of the Arm affordable want order much really for level are have with many well in Well, low different really been

particularly ARC in say, areas, have we we we number has tools, the an as - or number so cores do we of I specialty well we and And situations do super Arm the drive in of hard should power of processors can. customers number do with enormous what our as very enormous low is our well. just an all a other build be possibly them that's and major for of specifically around and that we in And to kinds one have quality there effort is because specifically doing why of put a we those quality well automotive requirements in to for suited attention overall areas as ARC paid followed particularly strictly. automotive, automotive and it's done

Operator

with Cowen Next go ahead. line Sankar to Company. we'll the and Please Krish go of

Krish Sankar

on advanced XX-nanometer your to I EDA it there the And you the a there them IP what more the is what is IT like X-nanometer, say today One, mentioned question difficult quantify had the too to IP companies I wanted IP is percentage let's like way business, of quantify beta Is blogs a side of to I XX customers. blocks or percentage? on a getting just of outsourced building Aart, first at then and growth kind - two follow-up. nodes have to like

Aart de Geus

is feels do Well, point I I long, to I to outsourcing. say there time people a credibility. here group. in don't IP though, to for long, to the XX% the but Generically be that talk time, have like probably in good the very because way XX% XX-nanometer that at absolutely we long, honest, probably quantify it, long the that were and I have ago in a live cannot you of would or can

exactly standard. are complexity Now, same is being of blocks would blocks they in the interfaces, we some all customers worse has as that to are it really they often being and since is the you're do big these that much why they There certain than and the especially communication have because do become the time. not higher. the area standard controller where are changed what than tough standard maybe But and better a could they particularly themselves, a standard, is

more on the And our of chips. and area on so has taking I that more think benefited

embedded you a memory If that to is of add of covers chip a well. large as number that large swathe fact there that large, the a

and we and our basis differentiation its we it its is density the on percentage in this transistor of up is we continue to from grow itself an to business complexity and but likely So think up side we close the will of well, ongoing very what what moving keep be that that's perspective, is do to I do moving in why healthy, in very customers.

Krish Sankar

that It's like your which is there then the et the negative so And it's happen, bigger Broadcom, is a Avago, happens term consolidation same semiconductor for companies consolidated, also just time did also view EDA past a customer not in as question, the at when but follow-up. cetera, within longer companies rented EDA customers be supplier. customers a to going therefore the your

a of in difference lot look done R&D consolidation, would there to of be difference like spent. the lot so left future future it to the make going it could is tailwind of a M&A supplier you think forward seems with or Now, do like be like still there's the consolidation, you semi I feel that customer that when

Aart de Geus

it's Well, thing came base that time the like four-letter-word question, It actually every in years M&A ago you wasn't disappear that speak. it a M&A doesn't many customer well a recall one that and your so very sounds word around, are good many, the up. because the to because being it are designers

EDA IP And and expected. businesses much it so perspective, harm that from as initially didn't as

absolutely capabilities. of for of in our amount done stay amount consolidation as of critical to have largely market afford correct certain able R&D mass be that you're to new to a Secondly, order actually in needed all we these the

Sam between and new there in technology, these think are what's do Tom, we lot Now existing that I our things it, on at the but in of of very the sort are equipped and boundary new well to core are ourselves invest opening sitting up. opportunities

It's for describe to we be, And maybe so some of territory. ourselves, are a capabilities good. if a you Lifecycle new big the Silicon developing little acquired but is example we lot extremely Management, have take it a capabilities, the town, hard will new how but it's promise a

And And grow we that the technologies the drive is our doing customer are at aggregate. will I that next think perspective, our in will base decade. so well center because they base what of think from customer I over with the

with will So we race them.

Operator

the And queue, continue. with that exhausted we please Q&A have

Aart de Geus

forward your always time hope, contact have the that, family We all wellbeing. your stayed entire us that but we includes forward today. with and to course, you very We talk you within that participating to have appreciate of Well, through thank We you year. an momentum and that in so healthy yourself. hope not with look It's for that easy soon your fact much look and we XXXX many the stayed for again. to you been of everybody, with of momentum also health

Operator

conference our conclude does that for gentlemen, and today. Ladies

Synopsys (SNPS) 2 Dec 202020 Q4 Earnings call transcript