SNPS - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Synopsys Earnings Conference Call for the First Quarter of Fiscal Year 2021. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [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.

call recorded. today's reminder, a is being As And the Vice conference time, I President to turn would like over Investor at Relations. this of to Lisa Ewbank, Please ahead. go

Lisa Ewbank

Art everyone. Thank Good Pham, Chief of With de Trac Geus, Officer. us Synopsys; you, and Chairman afternoon, today Laurie. Financial Co-CEO and are

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

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

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

the very Please you again much from are a session for over Q&A all awkward And Aart Finally, call we handoffs the to Thank delays, different that. forgive that, locations participating technology today. any in or de as turn I'll glitches that result. Geus. with occur

Aart de Geus

EPS year, product for $X.XX. next-generation billion over share design, smarts vertical across with growth, secure AI hardware-software start machine and more guidance software per more system-on-chip was software space. or need market, embedded of advanced Synopsys the $X them Revenue XX% met AI-driven at not and revenues flow. strong our our non-GAAP to these With both center make compute our system in every huge the one secure at only margin and computing, exceeded through systems seamlessly gravity enhanced end that low and our together in for still general to or save ever all excel markets and enterprise tie chips very an business Meanwhile, the escalating in on the in of for is massive portfolio software. geographies automotive, than earnings electronic This product hyperscale-enabled reaffirming with introduced but afternoon. targets. the innovations and past earnings software XX% and momentum Good groups. through the the and cloud, of It's or to non-GAAP Wherever see we this QX million, billion $XXX wave enthusiasm into adoption amounts silicon foundation above are all and are with our up intensifying next expansions uniquely years at of IoT we disruptions. a to domains technology we've into down around $X.XX data quite mid-teens guidance our business our needs the of as Chips chips of opportunity reaches surpassing are critical and the devices and of XG, good software, require to the year target range smart was more was non-GAAP And we heart IoT of the space. to chips of the GAAP further cloud several for positioned rewarding the learning, operating it all massively and brand-new manufacturing and to of strong. store operating the milestone, $X move cash be more connected huge The looks, medical

EDA. with beginning highlights, some share me Let

now leadership supporting to historical drive our X- and advanced at This competitor strongholds. clearly and competitive evaluations and Our strong nodes proliferation growth. displacements, Customers groundbreaking at expansions recognize X-nanometer. to Fusion revenue includes down the continues Design most Platform major

Fusion semi our competitive high-impact Integral around numerous signoff guarantees with accurate systems wins Our deliver is our native wide the influential, companies and product, sustainable power specifically which differentiation of deployments with momentum. growing performance, results. and to business results golden integration and superior area the world, product, and Compiler most we see timely

Our deep can ensures mutual foundries collaboration advanced most that access customers technologies honed design our with well with the flows.

fastest example, and closure three with nanometers. to the and This collaboration for Foundry quarter, announced for design five we Samsung signoff deliver the

several added customers, communications segment, also two verification Compiler challenge continue in A in software including never-ending our chips and the who is of further of to custom. of with are We the momentum see adopting also custom inroads complete We the also in top good new that growth memory companies the designs again on wireless Custom only today's runs intersection complex end-to-end them. not solution. but chips, the with

to platform and automotive semis global of growth. Our strong to sophisticated are driving design uniquely most verification powerful continuing is hyperscalers Adoptions leading this the systems sweet from rapidly in is spot and at influential ranging modern companies. customers, expanding

autonomous hardware our AWS example, utilizes automotive data Strong development automotive solutions. For center verification for to accelerate applications. supplier demand software driving its and for continues the chips of which our market-leading

portfolio XX this repeat and plus adoption. had XX Just added design comprehensive new orders. solution evident verification of our is customers in we The quarter, power full

it and who complex included global platforms tools. Fusion leader adopted replacing highly both their designs, legacy Verification quarter, a This for services design

IP strong delivered again Outsourcing we continues blocks double-digit growth. where sophisticated of revenue IP, unabated. to Now

advanced broadest position IP. leadership Our track memory time-to-market of have foundry-specific customers. and embedded to node reducing and record by in far, the for our one provide interface, led accelerating innovation, risk We portfolio number reliability and our

more and proof our multiple In achieved portfolio most show to driven in has this the X-nanometer, product over XXX wins This leading-edge one in dynamic which today, the area. of products. Ethernet than comprehensive quarter, key and driving PHY segments X-nanometer applications X-nanometer. XXX-gigabit in we IP across of compute, We high-performance our on is continued XXX momentum strong silicon

in hyperscale the cloud centers. transfer security data Internet concern traffic, With tremendous in the a in big growth is protecting

CXL IP launched PCI X.X This industry's quarter, first and interfaces. we security the Express communication modules for

design our offerings. IP the secured growing a our Building first first innovation and we on Building already win our and foundation with lead technology, on advanced X-nanometer pipeline. phases and have in have momentum breakthrough do released the We combination ecosystem of We next-generation we in a R&D face. solutions technology that acquisitions. collaboration to partners and this customers through and our IP, of with invested unique close in EDA challenges

configuration me design; While life with three, number data than Think speed our management. to one, board, multi-die not approach. it XD traditional with and of as a AI-driven have board multiple and cycle we announced: flows; design. these let innovation much the on but pipeline, and chip. silicon extremely specialized in a Starting we with a XD combining higher three bandwidth tight and together large design recently multi-die die that on This two, of stacking packages leads highlight

Compiler XDIC by enables our product Fusion leveraging performance of are new of evaluations both tools. older from advantage is technical adoptions. and benefits and our Our move mix-and-match to and expanding Early design away beginning analysis the capacity environment and a of Compiler full with the momentum solutions. building seeing breadth taking signoff complex these systems, and Designers are XD rapidly single

combined high-bandwidth weeks large advanced test of Asian example, Compiler also highly our enables and semiconductor saving interconnecting in memory this, IP a complete we chip die-to-die time, record design For complex helped time. systems. that With company XDIC a these

design. AI-driven to next Moving

for Space Design already a breakthrough Optimization. new and stands DSO.ai. solution, DSO have award-winning We

engineering leverages of customers the design work learning in QX, typically DSO.ai better explore better the Indeed, in using of chip improvements, recently to multiple and team. substantially the On production and This human time While tape-outs have design space effort realizing accelerates maximizing consistently and remarkable a area. productivity performance, in still the machine terms DSO.ai required. completed. for fraction top reported of been that, contribution techniques of results solutions computation teams, of search power the autonomous

customers across product as are already Our deploy to beginning an their are DSO.ai organizations. holding and anchor

acquisition new are strong we activity only These Moortec disciplinary providers platform a our new are interest which capabilities Silicon as reliability deploy We into test provide with analytics platforms. and tools. yield issues the service Finally, growth in not to leading-edge and new solution of also optimize In and expanded provides fabless with Synopsys IP. expertise field. QX, into the opportunities security engaged create of manufacturing a strong comprehensive cross insight and through process, This and and and lifespan. expanding. manufactured, leading talks and sensors. safety uniquely sensors, We're to cloud analyze Initial manufacturing to is to entire they long-standing and add chips IP. in designed, innovation their IDM our major performance, gives We're to also of well temperature voltage with Lifecycle and chip visibility reliability, they design for from expertise number on to data areas critical equipped monitors smart customers. our in management aspects in provide monitor, leverage a chip's solution deployed tested Synopsys to business design, Management,

Now meeting growth. towards 'XX for delivered a our to to vulnerabilities fiscal Software on solid track quality and issues. testing the software We security beginning and Integrity, year to are goals reaccelerate code

mentioned several important we As all December, enhancements, in I have showing implemented encouraging progress.

our sales capabilities to our are on latest third, and channel success map strategic improvements trend. or the our results. building geographies strategy including bolstering at and evolving evolving consulting These tuning indirect market to our an to better All product growing go-to-market in above show program; organization coverage and road second, First, customer beginning our needs; serve capitalize delivered plan. security

multiple a multimillion-dollar customers is We underscore adoption The from of approach and in aerospace need. only ranging financial breaches industrials consulting-led products publicized that trend expansions to have security and with agreements sizable Customer software Recent continues. interest services. security numerous electronics growing. new and towards to

team long-term is opportunity. expanded see we good ramping and up, very Our

amounts quality reaffirming very Wave was as analysts We testing. very customer financial strong. a results markets and good the To well leader summarize, system static of as recognize a industry in strong delivered designs outlook year. named for portfolio. QX In and Our investment fiscal continue for addition, again the to are critical of Forrester as our remains software healthy start our was and chip immense to application Synopsys in breadth are the security

of including solutions demand differentiated exciting disruption areas Our is in generating growth. high technology innovations brand-new of strong portfolio and

Lastly, to stewardship, keep report turn With areas made in for our objectives. next of the be corporate published I'll to social metrics corporate sharing solidarity of we've We're forward annual governance. environmental an proud the responsibility second over We weeks. you in that, and out to it with and eye Trac. look the progress social future few our

Trac Pham

all and flow, execute expand Thanks, and everyone. $XXX Aart. our a our to to collections, cash and grew start year robust margin. to short- the We continue reported revenue groups above on targets. in across range broadly we and well produced quarter. leading and We million a long-term geographies. We delivered non-GAAP product Good afternoon, strong very continue announced very target the to repurchase earnings a of quarter operating another non-GAAP strong We

business start, design stated. segment of I'll activity timing and the the remained revenue shipments us year-over-year revenue products well. for strong grew and with to XXXX gives particular resiliency unless XX% performing IP Our All financial as into and $XXX with reflected to forward The EDA demand in both our million, our was review otherwise million, leadership first results. System revenue $XXX and high. our Design $XXX Semiconductor Design segment shifting million, are model some recurring and nearly generally reiterate quarter with of revenue System targets. up our product the was market QX. quarter also comparisons confidence total now We XX%

our Software year million, $XX Integrity segment towards solid full a start revenue was objectives.

XX.X%. expenses. in Total margin and $XXX were for as operating million, expenses million. was Integrity X.X%. was Semiconductor Adjusted a System non-GAAP costs non-GAAP $XXX to resulting and on Design operating GAAP expenses were of margin costs XX.X% Software Moving & Total

and share per Finally, were GAAP were earnings earnings share non-GAAP $X.XX, $X.XX. per

billion highest initiated in We customer our operating driven quarter to flow cash payments date operating $X.XX of to stock first guidance. buybacks that to increasing the with a provide of We total by in our commitment million strong million Turning couple early. $XXX $XXX year. a ended cash. repurchase, cash with $XXX balance our generated quarter and this and flow, now We large of debt I'll million. a collections came cash consistent

billion expenses of profitability and to are Revenue billion and growth non-GAAP to cash XX%; per and $X.XXX million and approximately between share; earnings billion, of $X per total expenses minus income of $X.XXX of between and expenditures million. of costs billion; $X.XX and GAAP to margin billion, expenses the of and total billion $X.X to GAAP $X cost XX%; $X.XXX million; operations Other non-GAAP minus We of $X.XX reiterating $X.X billion; solid flow $X.X from to earnings year. a a operating $X.XXX share; $XX capital between $X.XX non-GAAP very outlook and $X.XX for XX% $XXX

Now billion, Revenue to share. earnings quarter. $X.XX to costs per $XXX costs total $X and million, between million, $X.XX the earnings GAAP and second between $X.XX non-GAAP GAAP expenses and targets share total and for $XXX non-GAAP $XXX between the to per $XXX million $XXX of million million expenses $X.XX of and and and

As in we'll continue for process to strong XX to In of conclusion, revenue and details margin plan and very have our through expansion model is outlook good flow. growth XX%. we and manage a provide financial to beyond to and a the our start long-term achieve operating a we Rule important We'll year years. past, to further objective drove announced in reiterating December, executing At double-digit delivered through once an complete. of non-GAAP long-term step process, next towards that and raising additional we same we time, over generate a growth we combination planning the work We several this the solid revenue the as that are cash year. We're earnings strong is our objective. the

focus well. on growth business the long-term managing us ongoing served for sustainable Our has

questions. turn the managed that, While invest of we've substantial to steadily expanding our we've customers' driving for And cash in over operator profitability, critical balance balance the with the generated M&A of And technologies prudently we a a continue through value-enhancing flow momentum. to and buybacks. I'll strong it next-generation

Operator

question ahead. [Operator first go the Instructions] is our Capital line Steves RBC Markets. with from of Please Mitch And

Your open. line is

Mitch Steves

good so good quarter questions. Hi, I here. afternoon, a guys, had couple a obviously, of just

got take guess, year guys out back and But the you by a something the pretty quarter is a guide first a in second guys beat magnitude quarter, one when I've the first that realize The model the actually I I goes you full haven't like usually on far. of guidance. just quarter the up historically, missed the decade. you beat. lease

secondly, my how So occurring of us of then just business, in that the last is probably that I terms through business, difficult not an kind update tow I why guess on you questions. margins realize how year year? is And you time? are to trend? expect maybe of terms that Software Integrity provide a those kind should this can the of year new trend getting but the in So

Trac Pham

Okay. And is Trac. Mitch, this

to me the for we year, year, the good that guidance and the first this take the Let feel in of for we full in regards with just quarter question very definitely outlook strong about posted QX. light the especially

when We've May. and the to deliver year earnings growth us, very that is on it's sure we'll report got the early we our there's good execute of provide on growth and business for And for year, year. we and track guidance more of in book. that Now the ahead the strong said, and we'll a still on full to in that, QX and focus QX are focus making still color ensuring we a in lot that

Aart de Geus

the we good the main made think And are that to back we've a objective is much of SIG, changes some we proud starting news that to not more come where change this growth of. that margins for Regarding can to rates the so number be of positives. our year, see was to I

growth but right said, so does the But encouraged and in in strong margin is team. very invariably, see so heading well, very that the also a manageable. and direction. little have as I'm first objective so And trending because of I our can quarter, in we're change that It's because much a tone I it's very of early, growth is feel can see right the the once first more is all some people direction. joined is encouraged.

Trac Pham

leverage as good I is going and strong -- of that that growth start business a margin on year. the combination over to the Art's a resume the comment certainly, And to well. expansion add margin growth long Yes, very in it's story contribute overall that should as to would it we to the that business, is both term,

Operator

of next go We'll to the Please Instructions] Celino with go ahead. KeyBanc. [Operator line Jason

Jason Celino

first my for for my question. Trac. Thanks for one taking Maybe

of but quarter, what beat, very You mentioned bit the solid just what maybe amount a pull and quantify little could products? in maybe the you forward

Trac Pham

That little on hardware QX that side. saw the see the Jason, most a you quarter. of QX. scheduled that better than in the across different really did had of the But the it's that mostly the a element hardware deals also products. an was quarter. regards bit were saw and mix IP to expected We part, in for were IP, we in then with by of execution we can was And how in results board, we and for the good function geographically QX some

Jason Celino

my looks China whole And But for data QX year. versus pulling. confidence year you've broken be what follow-up, it accelerated even kind it specifically in QX wasn't Okay. it and even seems limited of maybe your that what year? out like then And curious the in you to all meaningfully here, about last with confirming of of I'm saw last China from

Aart de Geus

well high-tech is simple terms, China in a Well, country. growing as

doing economy years. tools many a more that on And more are so rely that are chips and as number are sophisticated and to for chips will our there essentially to get that doing more continue a of growing do that customers all well

Operator

JPMorgan. [Operator will of from next Instructions] be question line the Ader with Our Jackson

Your go open. ahead. is Please line

Jackson Ader

of demand? those type on or increased of the anything an from that consulting-led product Art, Tinfoil might has is in these that deals. or products. Integrity attack demand either do specifically Are Duck just on this future? products And recent the also help seeing curious Black there specifically you awareness the breaches, wins But side, the Software kind solar that with the mentioned increased the

Aart de Geus

business much our be in tends the to diagnostic issues of not of more prevention and them. Well, in the so

more just of some be would that. where through the the Then initially are and type of consulting And these that they these breaches had And a much precisely honest, their this group phase to the are that go the focused do is products say world not in. is breached sophisticated not, different Now considerations, people a product makes over want that on. of the And than the often plotting that value more of how because go I many actually offerings the mentioned long-term are we any our business on. strategy they sort is In there is boundary so longer-term requires sophistication. panic you into why out, some in if bump-up. a know is almost is so like environment I development That have Software which stronger of that environment they general, make on find to don't Integrity and been solid. where

so, we're do staff we that up is it because has And see why to areas those further that trying in impact.

Jackson Ader

just then And quick follow-up. Great. a Okay.

Given in IP kind maybe we the any from the headwinds track, can can how market, royalties the And should to slowdown? see see that automotive remind booked shipments? we you your of revenue on automotive just is us supply much expect chain disruptions product or of

Trac Pham

of with the second question. I'll Well, start the part

in to that and that's change switched of over experienced the XXXX. a business. There's seeing the several to good segment IP the So function mix, years. seen -- momentum far, momentum we But we of that the any IP fact in up-front last a growth a of over the good terms so in of pretty for XXX impact that we've With element business. is diversified. more business not regards we're a automotive is Obviously, the haven't the far,

I business, variability, of couple going more will experience that the you're we've managing. the good to bit that's some got little a create so which more but in up-front see think And over something years last

royalty, to portion So the those I in it be I as that smaller overall With to mind, numbers of don't have tends a see an regards issue. specifically but revenue. don't

Operator

Vruwink of the Joe ahead. Our go Baird. next will question line be from with Please

Joseph Vruwink

backlog you've to I line suggest your was maybe being the been an quarter. making update And finished comments in on start. relatedly, where I recent some order wanted or in quarters, to than to get better hoping expectations. trends

Trac, quarter. Just wondering, if your at to on thinking new of the update how an we the could business, maybe relative story get

Trac Pham

deals planned. $X.X in mind the on Joe, we quarter was in ended to Keep the And expected and trend that from that the quarter-to-quarter, quarter. quarter quarter. backlog well in be much for around did We the the at that depending backlog bookings for billion. will are the large pretty vary as bookings the

more So definitely the rate trend quarter and that we And it quality looking that the whether deals not rate, vary. emphasize the run this what closed run at and quarter. was typically will is of in on was, what we the or higher

Joseph Vruwink

product going the discussion Okay. That's are the SLM. through between then DSO.ai helpful. And then to back IC and new Compiler,

a this products think other discussion as of the the we a material mid-term the revenues a some Or you which anchor Synopsys the one be flagships? midterm? years customers, flagship for would to if When DSO.ai becoming influential are performance? in think things PCA over maybe of is that few of to being to wondering, other towards an you of point these Synopsys you potential do Just has down to going more product your where more in out demonstrating your framework, the be road, like throw type you

Aart de Geus

our preferred a course, to correct a the in of its every of Fusion some that number high certainly it team flagships. they're potential one applies is But one, tools that uses own very at other of say of of to really the with DSO Well, meaning working design on. because case it. And you're has Synopsis the and automation, go but Compiler DSO

where for work ago amend market you the them. XX did if we we essentially power automatic acceleration, years similar what the when they're became and to to machine then its a with in the lot synthesis, so, learning-driven can of light and a because tool very And it's came enhancements synthesis human with in power human the literally did

and people that year. we a that If the a we fundamental well that of next you as law. And of will had will because predicted very more this be little year see lot expect XDIC, it's way, substantial is that is in down. dead, all slowed my together. XDIC chip, far on with very so way can And where another it them do has the adding instead complexity of look complex I at interesting, connect but impact of to that doing already from what death opinion, chips Moore's multiple bit gradual, certainly by but you is it's it and so, closely one And know,

applications where sources the of chips inside could used as the and data more time, And there. this that number are in but particularly places chip will Lifecycle now the high over we'll first we intelligence put because see word engage that a over that, And more life. be that's the out extremely areas, but on course, of to for Management is of be So already grow the our people cycle because and example the have importance. a comes same. utilization interest for if important well, for going be interesting and then would up say, variety longer rapidly is a Silicon could to the all robotics other time human life frame, self-diagnosis, turns And that the in to will tend of car

and And acquisitions. value, emphasize in are new from we -- this, perspective be it sort very creating the bodes organic what so, speed And these is well which that's for an much to amended are some of exciting small it you. also innovations about additional to reason our with may

Operator

question Fargo the And of our Please go Securities. from Gary ahead. Mobley with Wells next line

Gary Mobley

I a question good they're so process and intangible I leading-edge ask latest Is the, companies struggling or have from is really adequate the chip? greatest the Good maybe of my one design particular, of But chip fabless we've slower perhaps light to answer, is, to to chip that there have any to afternoon slowdown capacity, of hurry the customers question sub-X-nanometer everybody. Thanks get in taking the to of to in you seen Art, type access want hearing less and feedback manufacturing to question. seems constraints for any as pace guess, And wanted industry don't. be kind been maybe to of you things a you you nodes. capacity seeing? innovation from develop of a my that indicative

Aart de Geus

a Okay. good I have do think answer that. for I

none the that of on For contrary. the starters, see on we advanced nodes,

A in the that me opportunity, think sophisticated lot end companies chasing enormous people markets, be call understand lot lot are essentially is let that hope are a the race of, fully a AI-enhanced those offering. is I chips. of of on. it, on to of the And impact the and of computation going all having best

so, slowdown because I and no can precisely technologies emphasize new tell, the of preamble, as have as we And many high that far is we the in appeal.

product, by a the a that And foundries. wafer months, to not you couple really it's these car, they a the back older so in quite I sure, really now, is ship an the of in And these sizes. think is there's don't these chips smaller there's a part and of of could lack redesign of few even parts hammered old these order to have parts. but are because right just XXX-millimeter chips, alternative redesign because fact automotive hold in industry, those, for now a the for because wants And not the older right number but manufacturing you and who little which technologies limited enough essentially mostly the confusion around capacity actually value question from pathetic comes parts high

impact. essentially is meanwhile, supply caught see can that see. will in if the chain that, the picture that away we so narrow the you're go that I in But nonetheless, And expect spot, you a months. few

will I now already I design technology, of in to so companies it a so And move a better technology. will documented think saying, that over that if to is want time, I be design to have new number more and hey, remapped we newer see a it's become what careful can this to essentially

Gary Mobley

thoughts Okay. Appreciate there. the

Software to can in end earnings were current would to down growth bit which follow-up, a back guys perhaps rate down the my 'XX. to I similar last little mentioning to bookings you related growth ultimately out-year your pin XX% a that XX% you you Integrity. pin year, As translating to that If I think up little in on detail call, the generate it, call I go fiscal you want year more fiscal let's

the to that. that Is Just the of down given reaffirming on today you pin here start year?

Trac Pham

Yes, what that's we're Gary, reiterating.

Operator

our Griffin Securities. question the of Instructions] Jay [Operator go Vleeschhouwer line And next Please from with ahead.

Jay Vleeschhouwer

breadth follow-up with you, with Trac. Art, the of a concerning for question me then you in a EDA, start let growth core

be your OpEx the equivalent year head been the last it's to quite growth to in of then about highly in induced how implementation suggest your in just DC in DFM logic usage the end and the number physical head better as the you synthesis and had growth for synthesis a and rapid technologies growth correlation X% number what for RTL that to industry in been for 'XX? implementation trajectory But are At you products. you seen data fiscal where then also benefiting The close of growth well of appeared record obvious two those a and as count. between there for openings, thinking and areas. has you're obviously well Art, -- market technology correlated years for the of a question of more guidance So those leader the of both Trac, rejuvenation verification. was is, you've therefore the similarly implementation and count the context over and simulation, quarter, in that for of a would And correlated there's for of

having the your talk two competitors? availability, are about do thinking recs maybe if you about issues numbers your So And with then in on. the frankly, open of large as given have how you that people rate bringing large you're

Aart de Geus

Okay. tandem. Jay, the because used towards and you're with and other the picture had is asking that very each individual with in that painting question tools picture complex started a fundamentally, correlated long moved that is are often you're tools

together. coming heterogeneous systemic point number constraints to and that more the scale which so And same the I we're of a of years the complexity of from same plus term complexity, is all demands more ago, moving

if a said look RTL, because gravity does I is sits a but And at very describe and surprise of you you and way look which upward, right on in take hardware, you to a that, software. much like that's and so, like you essentially RTL top language, of implementation synthesis arrive as not did

and software And by of the see together for cone as that's so software for much case around and systems. variety is be And prototyping. simulation, hardware very such this a added the where the the large increasingly way, emulation we to broadening a upward we verified and and accelerators and optimized, hardware all hardware-software

worry absolutely you to physics, downward, to have design DFM, which worried and And manufacturing. you when somebody things, term look about go because you you was stands as manufacturing, that is for the correct design you isolated, was else of lot If about an which a smaller nicely for mentioned the smaller a things chip.

word I have design test the could the we so aside manufacturing added and we for there. because of connectivity the manufacturing, way do has down grown substantially, to And test. But also more ourselves do

heard a we Lifecycle safety because in one products. fabulous FUSA, to for added the the word all to Management, have rules is, to of in later. that what and these of well offering follow, are have designing reliability which You I is functional all the for is in as actually way, importance happens the there cars, could by of sort that. now Silicon manifested have for all also IP. And has going That grow kinds

times picture. of the I the big always the as these we is a Synopsys precisely And that's So time, shines. the a of for our I will where really cross-discipline can why actually think value where one customers. complexity to And few we add in long have that that at of that the lot preamble mentioned benefit continue. of this is areas the a something And looked intersections

Trac Pham

Jay, is Hi, this Trac.

I to correctly. sure I make your So want question understand

with You're asking how and expense guidance for matches year our margin the count head correct? for that that year, therefore, is growth and about up the

Jay Vleeschhouwer

to looking number on bring More large people. you're yes, a of or less, clearly mean I

of you of within If example? open one OpEx today, would guidance, fill for the were to your you positions every range stay

Trac Pham

the margins making to with want year. goal but consistent increasing about to the for business. consistent. XX% speaking, of XX% the in this in that don't business itself, investment comment general that's The the is I generally the rec And to -- we're

that, sure the is improve expanding time and commitment to to continue XX, our investment to and addition a also really the that head a over Rule to related be In grow XX, of also which of commitment balanced growth going making drive business driving that to profitability. is long-term to so to goal we simultaneously, the itself margins count is

Operator

Pradeep UBS. of question from Ramani with go the line Please ahead. Our is next

Pradeep Ramani

at company is I couple your when on up-front mean, revenue a questions China. had XX%, year-over-year, XX%. XX% time-based to revenues growing year-over-year guess, but look I grew a your XX% I level, of I are and XX%, growing

to China my the sort both or are and or of interpretation to your in more with the or skewed it growth? or of in regards mean I respect mix IP, dollars correct is less you or EDA in So Or with of towards more overall? line is EDA hardware absolute revenue that with is hardware -- mix sort mix terms

Aart de Geus

from take course, China, speaking, Well, of roughly most product online, the XX let it side. after years me of west. the came

design they so but meaning, methodology entered the the really of they use. things, space companies with when small some say, a other starting what entered do, more of right not chips, up-to-date significant that away, some to the And was than of let's

in And advanced so amount start a the from substantial that predicated the to parallel being IP of technologies. used

that the physics capabilities. have in the than the are companies the of traditional in with U.S. that sophistication development top I the and from all the if with Korea that. the deal in be the same the different it increasingly to slightly deal to art China, underneath is or and Europe or in All be driving have can large sense, state software it it have us these the time, to blocks call deal balance to now with And ones on At IP the so of look same of west substantial

are while and is it I so, it's that is was very advanced think users ago, And it or so think a shine. software, decade it precisely the more of are maybe that intersection at in sitting and hardware, I most different, picture. hardware And where before. of a the Synopsys was similar than people The now more sort same the

Pradeep Ramani

at faster my do your -- for you you year? again, of get I progress you at how are and follow-up, -- And de-selling of the a get Okay. comps revenue, you guess, I the think China it bit? the looking grow last how I are -- do obviously, to the as in Or look year harder back half sort through if sort in that, of rest seeing the little sense going mean, it's you overall? than a of terms

Aart de Geus

say would year year last us strong I a well. as for Well, was

you and end it well And China market be and now the chips gets did economies. say, right contrast that believe so general, west demand Chinese would in all in COVID specialized start know, And markets will of doing overwhelming of general, for economy to a in no to not continue of very grow that some because touching the is the I will The of as well the actually the around us. verticals. everything But in western live more. course, overall, hope, there's grow down to to reason as hammer general, the is

Operator

and Okay, have Pradeep, move moment, with the question line Vivek person to or additional a line. I you have going line onto your of [Operator next One of a in is next go to Bank release I Securities. the We're Did America question that Instructions] an follow-up Arya Pradeep you Thank to queue? open. from going we am Ramani. should

Vivek Arya

was with way one the for and in I'm kind Any the the server trend curious, last versus quantify whether How Thanks markets? Art, in years? technology or of you now it seeing two to down? or up that about you gone taking question. PC are more design customers ARM my would has think it what

Aart de Geus

quantify years It's cores hard a number for surface if have that look quantify than is a was ago, but are of at, possible ARM and it there easy meaning is more, already they that it more -- to in to to years to started the two it people number space. use progress, of ago,

now, But that small some at I using actually a cloud up that have And the who given service to continued And time. definitely Others announce in are. these people looking there's have want to is try. group don't environment. at

sufficient hard good be now and of to typically Some question lot the spoken in at a the has processes will time. to But that are of that the have And point work that family make publicly in followed counterweight capabilities be, used probably xXX a this cloud. the possible. are economics to the

see but computation machine possible particularly certainly, to dealing have have And that largely going diversification in market general not well on to data So, for of now learning. is the is fast processes clearly, of everything cloud computation, players regular with for dedicated number actually further big and it efforts, because are that that, put that specialized a we're and are we it. the purpose a only

specialized ARM these are doing people of processes. other of all number so that fits but -- And their categories into so a

Vivek Arya

was believe. I EPS? Got QX. B that impact XX% I it. how year sales or into about mentioned did growth of year? that Very midpoint, of And they of that so outlook some the XX% I given part the business moved you've you helpful. the at the implied of And follow-up, clarifications, think is then Software two for growth Thank as is, for in just somewhere wondering, Integrity a my shipments your full growth you. and Trac, much part full What part

Trac Pham

Okay.

So is sorry, part of the first that question was... the I'm --

Vivek Arya

you moving The I something those shipments lines? said QX, into recall along

Trac Pham

XX% that in growth. that year. that the for time-based we that year for the we at to expect by we'll -- XX% model high to with would quarter execution. significant business, some QX, of the the but Most over of really year was planned Software amount. what full in grow the on we the beginning strong IP probably that to double-digit had overall, was originally revenue for Yes. SIG, the exit single With should that regards on digits. bookings QX shift have year, was at is be in the commented we it a Integrity But on was the full that There And

track are that. And QX, so -- after are we far, delivering for we on

Operator

question next Pitzer Please ahead. the with Our is of line Suisse. Crédit from John go

John Pitzer

we do that take back way if environment COVID how growth that was such then opportunity ability back have the open question, within earlier get things point future guys to Software and I accelerate to going about is ask Or Integrity, board COVID the to distributed hindered I the kind OpEx? just follow-up. like your the people And Trac, OpEx of a in where to growth? of dynamic you vaccine the actually might the maybe year, up, on for to reaccelerate guide one, widely another for about that First a think bring OpEx some markets to anything actually there an

Trac Pham

think head of done I we've Overall, on and a Yes. bringing pretty board. on job good breaking count people

fact, the the a physically you matter new general without Software bring Integrity up topic. brought general business on ever for of manager We As meeting our him.

And pretty health learning and or think. the So, that think to rest well, and adjust year things environment. it's to throughout managing and as how work free the up something change like much that just of with the the that we're adapting through we'll we're the business, rest of do I I remotely continue

John Pitzer

some helpful. follow-up, business. That's just sort help core EDA of wondering then, me customers could business. the if in I'm as you understand of that traditional better is had the And between how business in just you've my more Art, the tracking

hyperscale I'm market and had call business? is it's of How maybe faster, nontraditional private that meaningfully me and a very help the differentiate? we kind growing that world can but of EDA years. we big semi in nontraditional I'm of the bucket. more companies, core now part Broadcoms And curious assuming you customers, the the it, some have Let's that of haven't Intels, the Qualcomms now vibrant

Aart de Geus

it, the no matter at what. first, heavily invest I traditional how meaning because technology, your big they to or driving, the continue Well, think situation, you fits well, look advanced chasing players are Sure. description depending

companies to hyperscalers the Secondly, get more but that's doing chips design where products chips in the already product to order Having own companies, one chips. the use to said they to have hyperscales design clearly manufacturing, of other designs And themselves that. they different been about are own much to manufacturing, the offering. more their do their see a continuing They versus don't control successful number do so that, in from. these thing at sell them not opportunity

their literally speak. start-ups acquired design growing are have to it small and go some their we with teams experience as and Some

And or twice the start-ups, companies of say, the as them we is call learning-ish sometimes that so, the rest. trying and a essentially part machine do as all also market other And there's I definitely it's growth, to on there AI processors, they that all but future. probably would them very you much the good category, AI vibrant a call many change companies that because are world around not companies that is then

And minimum, say And a you only compute of otherwise because using words, so and you once compute two chips. things, is not the to power fry too also fast close have anything much the which highly at data. super interested that very is these say lot with machine is learning you to

And advanced means, for us are advanced words tend tools. to most of good head heads the towards utilization so, those they that most IP, immediately the because towards all

for us. good a market so And has very that been also

guys acquired list. by some AI So, the the of get traditional

very there a by because the opens live a It's word doors acquired the field this a new good is opportunities. of are moment technology the a is And of get where in advanced traditionals Some hyperscalers. at here lot live where market. change in

John Pitzer

bucket but nontraditional a size early, know And revenue as Art, that any of percent is I to today? there way it's

Aart de Geus

there Well, don't do unfortunately. a for is we you, it way, but

for over forward individual safety, back be angles hyperscalers, other number to is functional very time, other the mention be advanced us make few the typically are the on to now good of for concepts also I it AI very will of for little powerful to because us think, demanding, specialty and very guarantees, that cycle good be are coy. And don't drives life because think tends be while, don't is I also mean growth a into a very these very and which automotive those we I it are will, did whole want actually and buckets. of technology looking groupings. reliability, meaningful. behind precisely it disclose clear, example, But much Sorry, because space areas it needs technology, the most I and a of I

to I'm a which our I to describing live So, find is well the you nuggets really are as field, of job what we ones them and and is as can. guess serve customers these

Operator

in our line Markets. last the question queue of we'll Capital call, the with remaining minutes Berenberg our Gal in from with Munda And take

Your line is open.

Gal Munda

to in of growing end. separate share market was of you're kind of is the you're seeing. it. the the market first as to the recently And what of the what the that that close what fact you're we that seeing the growth referring taking EDA trends. in market, at considering I around Clearly, question is double acceleration kind market if as for Thanks there's growing you're win an able significant growing above in to wondering some addition terms much the just to what when you're used is sustainable say the taking. you're and general Appreciate wins to you're is share growth market how been at And digits?

Aart de Geus

response on as to question. Well, careful always the And think before a that do competitors. the commenting is think market little my I overall strong I'm previous I actually

often in some top us we of And no that of the next-generation to years I you focused that that my communicated that. building that very particularly moreover, mind There's that are on the look promising. on capabilities and last of in doing assume about, have of all few that we're areas benefit for we so, sort And well. from advanced question very,

I in areas this and we invest now good time But always positive, assume that. it's because continue we context, that may share. So is time, is these some should a landscape in the to gain in that overall over for that

Gal Munda

one. Got just the then you. And last

it China, -- growth look now that any run million-ish without revenue, at Going revenue of implying which rate if back you that and similar percentage? in have to more $XXX as China you're specific? the you is Or I around revenue would is significant. right similar general How that rest to you Is just classify the if on this of it of what much recurring? extrapolate business, in of sequential

Trac Pham

Overall, been is Synopsys. to able similar across board. well business mix total to very in the We've do very China the

Aart de Geus

to hour. of us this end Well, I brings the the guess,

Be hope foremost, vaccines, we of light you thank so have your stay there well. and to also, and we'll patience healthy protect hours yourself And for as to soon both up as the and continued that first following in the and calls. in And families your Synopsys. one-on-one been able you coming a And have the next number be you possible. of for you, of few get following that in

Operator

Thank using you. Thank our conferencing you and you AT&T this gentlemen, Ladies for conclude teleconference. and the service will disconnect. may

Synopsys (SNPS) 18 Feb 212021 Q1 Earnings call transcript