SNPS - Earnings call transcript Q3 2022

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

Operator

Ladies and gentlemen, welcome to the Synopsys Earnings Conference Call for the Third Quarter of Fiscal Year 2022. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Today's call will last one hour. And as a reminder, today's call is being recorded. would Vice turn President I to conference time, Ewbank, Lisa of this like the to over At Investor Relations. ahead. go Please

Lisa Ewbank

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

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

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

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

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

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

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

Aart de Geus

with market, Good flow. $X.XX, of design flow cash quarter non-GAAP another strength. normal operating earnings was generated semiconductor afternoon. broad-based $X.XX. million per excellent the robust. the of were We at activity delivered Revenue ebb $X.XX earnings the for quarter enduring with share billion. $XXX Notwithstanding GAAP remained and We

on strength full guidance are resilience stability business, our we're a model and solid In growth confidence year. by raising of this apart in Based accelerated the business adding the addition, our seeing. to for and sets us we level

the milestone. $X We approximately expect and grow revenue billion fiscal past XX% 'XX to

billion to We to discuss in earnings margin flow. Trac the $X.X we billion in share will intend drive detail. non-GAAP expect process, notable expansion, the generate XX%. per grow to approximately operating ops $X.XX cash we to and by financials In continue more

or every chips so mobile five security, to expecting affected vertical our Over systems transformed networks, decades, machines. the world. software more. have entertainment wonder and is medical from Every of home semiconductor to devices, last and market to From traditional to computers aspect

result, systems As by chips, constrained pressure designed more faster companies. time-to-market increasingly more world a demand semiconductor does and designed resources. with of only to need chips and complex. are but chips not expanded to the more Those being group an They are much talent due engineering be

has aerospace. delivered the tremendous engage innovations making are groundbreaking we is software, Meanwhile, Synopsys we their and XX and both companies accelerate an And their Synopsys bold to these are startups, have the On their the this collaborate from of essential own productivity. advanced transformation, as and system the from safety chain. all as intersection to systems years, are destiny with X,XXXx AI hyperscalers We now and semiconductors the this, dual large differentiation. a the more with systems uniquely Today, this and most security, partner software, automotive own of enabling to the capitalize sits decided years, design XX privileged technical been supply opportunities. with to top like automotive chips last last are at Today, reliability challenges while entire grow the the ambition decade. such successfully verticals of as systems of catalyst to few delivering markets another a in and more huge, so For number technologies million-x silicon In for to have to forces bridging robotics, impact. in and must Synopsys companies. of that companies to

flows. not only automating entire sub example, chip we're For design, design but in individual steps,

only not design, explore blocks but also new system and IP speed configurations. architects preconfigured let market-specific up chip chip rapidly Our

hardware interplay that provide prototyping the enable solutions more in now secure and software is high-quality well artificial and and verify And award-winning we IP solutions and is solution, emulation as to the optimize essential which are Our the revolutionizing security blocks. software as to our DSO.ai design. addition, Leading system. intelligence continue design our between grow in way chip

is are Customers substantial with DSO.ai's to ability First seeing years it to ago increases tremendous are already The driving designs. benefits that from in over delivers results outstanding today, two customer market are truly that technology groundbreaking. still improvements productivity commitments. from learn prior unmatched technical

These a company. the adoption are compelling achieved process chip largest, of business quarter maker, production chip advanced across also at top for turnaround set low-power companies in verticals most driving include tape-outs very a a achieving reduction. high power and time reduction nodes. XX% this and driving resources. For semiconductor and long-term by automotive compute is marquee XX% significant a U.S. outcomes pace world improvements example, hyperscaler the consumer a large of of exemplified Examples in broad commitments two DSO.ai

combination chip highly digital QX. competitive Our design DSO.ai. led company benefits empowers and in entire market-leading displacement a solution at a differentiated to from both This large automotive

Compiler Fusion accelerated drive of nodes. swath verticals to market wins technology broad growth product continues and Our a competitive and across

semiconductor hyperscalers. dominated have many area, SoC design by fueled products, AI In the we've learning. last and that majority This long machine designs area to of embracing logos performance surpassed with Fusion breathtaking multi-die and custom including and at we by compute segments for pass migration time run year's hyperscaler strong power new already design, Everything now mobile's milestone This positions categories. is year-to-date, high-profile tape-out also improvements Companies custom speed is X,XXX modern we driving additional next-generation older include XX high-performance and notable the leading and continue key hyperscalers, customer growth to at graphics systems. system customers. for top and are Smart with innovate Compiler in quarter, multiple different demand providers expect generated PPA and companies, at one of solutions. our processor to Excellent largest at progress gained the successes

Our markets data compute, our multi-die includes compiler center die-to-die surprisingly, strong IP and XDIC mobile. portfolio solution high-performance seeing platform and are is that the demand. Not system key

leading we continue U.S. customers traction design. hyperscaler marquee While stands of experienced at we incorporate complex semiconductor we for record high-performance and and IDM, expand In prominent interconnect deployment multi-die plan systems mobile, Express. increased XD IP Interconnect achieved also Universal chiplet their at next-generation new of a for high-performance multi-die a which Chiplet compute to multi-die companies processors. standard, In UCIe, compute, for

the captures, are to a As meet at intense wins have pipeline speed, IP is and about great area and a More broadly, pressures. is must time-to-market blocks with multiple seeing all healthy express Synopsys this traction in it term X-nanometer.

wins advanced reality, Our context, adoption significant OEMs, DDR, is than Edge continue such that with Tier unique gaining by semiconductor and as accelerate systems consumer VPX with adoption closed strong in In design segments. more as we Xs in such drive new processor our advanced secure connectivity high early multiple scale processes high-quality solutions compute, the momentum. Demand Processor market and and ARC and smart industry-leading and and breadth see high-performance of our as of AI/machine and to AI markets strong to automotive automotive Automotive center Alliance. CXL In all networks interfaces quarter. cores transactions process this and augmented in virtual geometries. strong particularly Meanwhile, applications automotive, scale learning, wins and and Express, front and IP neural Best where of continue portfolio Security everything, high-speed IP Vision across for our mobile PCI by with our named Solution Vision across vendors. the segments. ARC, was remains are fueled AI all We're XX security market MPX availability

that the will do chips and words, what hardware of intersection software. Now moving In was intended. to system other crucial and the verifying

products Our unique differentiator market-leading hardware and for Synopsys. strength are emulation clear and prototyping a

of With the capacity lowest cost and doing fastest we're highest ownership, well. engines, very

hardware/software ZeBu prototyping the verify of power but to our metrics only for and correctness, the growing emulation HAPS-XXX of High one not systems, semiconductor system. ways world. with consumption, products demand largest and reduce also continues hyperscaler in vital customers the find help most of any many Our

pace on another We every Smart entering requirements and yet for year security With record revenue. of vertical safety market, expand. to are for hardware Everything continue

security. is enabler software business Integrity a key Software of modern Our

in the is Our developers, the team. ability leading billion TTM $X.X the and revenue security and consulting rapidly portfolio value to corporate for DevOps high group, mark. its provide unique of This approaching products business is

software. This touched Business again in multi-million-dollar enterprise saw commitments a broad multi-year, including financial business. quarter, verticals, we and many government, both and medical, new of institutions, semiconductors, set renewals

notable program partner quarter, well expansions into progressed channel with customer divisions. logos new new this Our and

with past as in increase repeat we We business recently months. countries that and to new also the sold partners have before, never continue XX business new markets opened that as to

of acquisition strengthened further dynamic portfolio testing. and application its broad WhiteHat solution and product the our in leading security we Security with consulting Finally,

business WhiteHat outstanding out accelerated weeks, software. outstanding We’re part excited designs, business amounts game-changing summary: critical to chips, response for drive the vision software Multiple, provides while and invest stands while immense resilient few in Notwithstanding fiscal it’s and model are and is has our stability excellent results well system heavily level choppiness, growth. and – the Against team industry. raising integration the customer a ‘XX. technical execution backdrop, quarter, another and we going of and only In been of reflected to this that enthusiastic. in of are growth, economic technology delivered we our our Synopsys outlook continue our customers been have in a innovations driving

ongoing cross over revenue mark, employees around to their for to to With turn thank efforts $X the I'll prepare it the imminently that, world and commitment. we our billion want As I Trac.

Trac Pham

another our above achieved afternoon, Good everyone. EPS Aart. Thanks, cash and delivered above quarter. plan. excellent our and flow revenue QX We targets was

on of growth over operating non-GAAP approximately increase flow. to raising billion in operating earnings our XXX per in $X.XX billion deliver track of non-GAAP XX% growth, an approximately and and full share cash For outlook we $X.X year, margin the are to XX% basis revenue are points,

XX-month segment driven the XX.X%. & and share $XXX revenue non-GAAP a over expenses Design non-GAAP XX% $X.XX Trailing were Semiconductor billion. operating margin per earnings were billion, System a prior were cycles, our XX%, review otherwise up time-based to resilience strength. results. We to stated. year-over-year, testament XX% GAAP generated financial $X.XX costs up discipline design continue Total is business activity prior model. well, portfolio, invest continue with broad-based year, and unless semiconductor and third to year. who through strength IP. in Non-GAAP costs billion, customers was Semiconductor earnings We million, $X.XX, ongoing System quarter expenses GAAP were operating our the $X.XX. the which All was are over margin continued total in comparisons our & and innovative resulting of share Total XX.X%. EDA by of execute I'll $X.XX up and technology of adjusted revenue Design by now the stability per

million, margin Software Integrity $XXX of XX-month trailing XX%. segment revenue adjusted was operating XX%, up with

to expect continue We in growth to Software operating with Integrity to XX% XXXX. expanded deliver margin adjusted XX%

we operating of cash, our buybacks repurchased of past in generated used $XXX We over the to million cash flow. $XXX and Turning million months. million cash have XX $XXX for stock

Security. addition, WhiteHat acquire paid $XXX to we In million

We and sheet Our billion ended and of of remains investments with balance quarter million. $X.XX very short-term strong. cash $XX the debt

to Now guidance.

year for our raising full are We earnings revenue, flow. outlook and cash

$X.XX rate the $X.XXX non-GAAP capital expenses resulting of of from year year billion margin expenditures growth; to costs to a of billion; between $X.XX earnings $X.XX billion; $X.XX XXXX, XXX GAAP $X.XX $X.XX are: approximately billion XX%; $X.X per to and and and costs share, of GAAP XX% XX% growth; share; to full representing improvement non-GAAP of For tax approximately per in XX% operations earnings approximately million. $X.XX property flow cash billion $X.XXX which revenue $X.XX non-GAAP and billion, of billion, targets non-GAAP points; $XXX to expenses billion of total basis total represents between fiscal $X.XXX

on billion; and to non-GAAP and for and quarter: and non-GAAP provide per $X.XXX targets targets costs when next In with results prior again Consistent we the our share; expenses and earnings billion of expenses per share; raising full $XXX years, between revenue share. and non-GAAP excellent $X.XX between $X.XX XXXX million per we year. to $X.XXX for costs $X.XX our Now above report revenue additional we fourth earnings earnings $X.XXX and $X.XX $XXX comments billion the year-to-date million; to we again $X.XXX and will for non-GAAP and between billion; of Based GAAP total earnings guidance and the our total strong are GAAP targets. delivered our conclusion, outlook, quarter.

questions. the and see with With continue to We executing well and are I'll resilient robust operator turn to for strong our momentum business the business portfolio it in over that, model.

Operator

Thank right. you. All

ask to everyone I we Before please Q&A would follow-up to to the to limit one all one us participants. session, to and accommodate begin question like yourself brief

as questions, ahead. take Vruwink first additional please Please as [Operator from you comes will time question and queue Baird. we If Instructions] Joe many our permits. the And reenter from have go

Joe Vruwink

I'll stretch an of two renew every a One, backlog. completely enterprise where Maybe a growth. of kind this three-year the only been start sequential to I on quarter? just in deal understand backlog with you questions two, shot And then three And it really customer with finished years. get you've remarkable

we So starts revenue a the stabilize start of to in more reaching maybe to you that metrics? are where bigger the in up forward ACV backlog show and meaningful point pull a maybe metrics way backlog, out and

Trac Pham

with started and you glad I'm Well, question to caveats some it. that added

The the depending ended thing $X.X is that in revenue. and And quarter to range. billion. alluded at add we X-year too, of I'll the duration the X.X- backlog, to on for quarter-to-quarter, it you as one recognition backlog to, fluctuate will timing target So

was to the end, on X.X quarter This closer running lower years.

outside slightly our range. it's of So

Joe Vruwink

Okay.

then into current is account you obviously, all some And they as updates today, restrictions. to long-term entity list list your they're Okay. then entity footnote, take That and restrictions. of financial new all helpful. And were of There current targets. a reiterated in supplement, as the

current You've also fiscal much stronger had a year.

next the to Is it these right about bit guess that to which be you harder. I year? might double of interpretation intends the way, of when a Synopsys So, grow literal of all baseline things a kind against thinking what do digits, fiscal expect

Aart de Geus

or projections entity All list know government anything that projections, changes. material Typically, the I would of there. increases. terms list at suspected take we take the always grow a we the doesn't but not decides particularly you give lot, our or it's forward follow part. for entity whatever fast account the entity into say And point in list even me entity we list this about rigorously in Let time

Operator

of Securities. All from right. you. Thank And Gary Fargo Mobley the now ahead. line go Wells to Please

Gary Mobley

correctly, the for read hiring, aggressive we're a with want pretty all quarter-over-quarter. I just And that to acquisitions, background some If start up of sharp part close reflect the noise. about in of is why it's Apologize above? data the starting about supplemental to I see headcount. the X,XXX a it question increase to Does your reason OpEx?

Trac Pham

we're has planned acquisitions for guiding frankly, expected QX but reflects we year. increase how does reflect in that does to amount some for So organic the from our QX increase in it Gary, variable as to the additional hiring also QX some The quarter the WhiteHat, been, of accruing reflect the well given hire as, strong for comp. year for the are expenses

Gary Mobley

to down, clear and which just years, Okay. about above-trend had backdrop speak. a is pulling industry companies the on some you for And license, hiring, revenue challenging entering back more two so we've good we've a a heard growth. tightening had So, from pretty in industry it's the semiconductor past minimum But time, that right? we've

is, so large Or customers a to the you you on to having deals? hesitation of have large in level my to approvals for deals? And seen go signing question the to part get are higher you

Aart de Geus

being the well companies because their are is end immediately hiring typically a at heard temporarily or significant market really the aware hesitation. have reduced the chips least function i.e., The of any in sold. of somewhat. We of mirror the not I design pullback happens what quantity of don't market activities having sales,

invest to that And flat so when more And R&D is they a in people than very stable that. coming of often or have of it. -- make there's even R&D sure period against out even differentiation downturn, not, a

now. robust think, we business our in is said as that very feel right the actually we, I preamble, So

Trac Pham

Gary, we strongly that, in metric from pretty saw up business addition run perspective, in QX. rate a to

indication So we're of not concerns. seeing any those

Operator

All of right. Research. Munda Thank you. Wolfe Gal ahead. line And go from now to the Please

Unidentified Analyst

for [Arsenio] quarter. It's Congrats on Gal. the

you of if about us been year a it's Just execution. think again, the guidance putting down

year surprised to throughout most allowed the so year? of you you outside If guided, what first at walk look when this that has far you kind back you

Trac Pham

Yes.

where year, strength If in year. four outlook on back and business, quarters across is our expect traction momentum going year the the were last that with midpoint, the December, the continued did the to gotten outlook guidance strong what continued. it the north we million all terms previous strength of -- new we of of this $XXX we just to at into it's and a gave in saw be you the continued for the but to products, we compare products. the And We the it look of that the we're really in SIG that better we've seeing the on IP year, we're on just at just first terms up the for

the So, all saw we really customer lines. geos, base, strong across growth all across across product

really So business is well. doing

Unidentified Analyst

going Is one material financially Great. just outlook to have level I you contributing quick that? of That's guys that it you. follow-up. And to any And growth are How forward offering? just helpful. was kind growth? DSO.ai what to on your looking yet and Thank at

Aart de Geus

flow. a it together understand. have to a DSO.ai, little of as understand this the and was working product you it's think Sorry, multiply existing our products But whole a on hard on in sort of to to a

of And typically the results the and chips. really speed in getting of quality so, resulting and of the the improves both the terms of DSO.ai results performance power the utilization

work And matched because encourages particularly also suites value, DSO.ai. is our the our of so is super suite that to customers well high tools that with but of to

that we digital of is that see around one that design really solution. the reasons And so strong entire growth

Operator

to you. Sur JPMorgan. Thank ahead. go right. now And from Please All Harlan

Harlan Sur

and afternoon solid the results on congratulations Good execution. and

CHIPS new supply manufacturing prioritizing your Many past recent X.X semiconductor put got place Act the with to we've seen combined growth you've semiconductor Your more geopolitical customers are they're support long-term years, disruptions that to diversification. yes, one the of And of growing now partners. starting risk. chain plans in with foundry passing over outlook, the the or

library entail both have add new IP partner. So to new some to digital I even going engineers cases, this your development, time know new analog. and is in foundry a add new customers is leading-edge for blocks, design every they flows. and This that design

this both businesses diversification and as driver your for Aart, EDA focus of well? So is on IP

Aart de Geus

That to of they make not actually But place, services the of suddenly in when in on, lucidly talent. one is the answer are going be and is we rate, you cannot you clearly the And need absolutely tools, meaning and it's having And supply point many by front and correctly, view, nutshell enablement countries of the than many is that. in because The because world. very the XX-year in mind the you that to of manufacturing if it's situation the yes. visible that faster complete to a the development there factories recognized thing more said have attention And explained a IP, sure want that capabilities, immediately them, on the have the a shortages. they which value has you been put chips one supply. shortage from puts talent a the so of grow

of even and get one skilled fewer so, these we valuable. than is have is us with it's that less design so of And this in better them. for reason is capabilities value we additional results can being able to why ramifications of the But shorten the interesting of that side some people the one time

the the talent much the you. on employment described And contrary, it little this all Thank the does in pretty together bit no ties it. with with but and of in this you reduced way means, industry help shortage by a so,

Harlan Sur

wanted growth of touch bases that. And another to I appreciate I on. sort then turn

and chips customers Synopsys. got bring design, your level for and the customer They of Cisco, You like of companies, of into customer your to market helped lot semi a Facebook dive did have a about largest their And pipeline. systems talked business they sort the ASIC of deep expansion design right, win a many their chip they a and have others ASIC customers. one in ASIC base, recently it's so the big Google,

some like chip like of designs. over are XX advanced think I

engagement towards a design, or classical growth obviously model, The the been trying of would does much opportunities design closure, Now, I'm right? customers or front wondering which ASIC company obviously, like the see growth driver this is by as open up which Bakken well? ASIC systems systems the model, Broadcom more Marvell flow obviously move tape physical you're end does design, a strong for customer full the has the COT if verification, for these to your the off. Synopsys, to team more move

Aart de Geus

these direct have that, mentioned, what discovering see they other Well, go you semiconductor the as that but large And say multiplier a semiconductor the figured the these of software we can also are on they for like. them the on is their all directions. underneath. direct in world out semiconductor all looks direction hyperscalers in Because a the essentially software, you multiplier

vertical chip of was literally certainly example best design. for race of are different the design you for structure and you And and in think will applications full designing themselves. with segments. the is the just have the because is then yourself, functionality, most that course. And And company of everything you so do power correct design also all if see AI having throughput service somebody architectures, much alive, can the want these more all for where something this And XXX a physical a AI good do much the where And a broadening of companies or you but their is so they can let that you people it's different do other solutions, get can news is their stay higher reality the ASIC I for or utilization. just speed go architecture optimize that full chips ever, you can that's pathway that which three between, and solutions you flow absolutely to in a a else hope some words foreboding narrower are less cases lot

Operator

Charles the right. go you. & from All Please And Company. of Shi line ahead. to Thank now Needham

Charles Shi

mentioned my frankly ebbs you Aart, thank and the broader sort the first question. about industry in happening Maybe, the taking of and you quite flows economy. afternoon question, semiconductor and for Good macro

you're Looking Because 'XX, quite into when not ahead challenging of but in are a macro your going you low guiding to so growth that know point, you terms do year numbers your transition of around to is you at night a look you I away based that that after basically time which had year flattish probably growth, showing model, what historical year? maintain time. kind I double-digit think kind only revenue next was to all one of

specifically, a So 'XX. you how what question my to 'XX why? be 'XX, maybe in very repeat is in happen, not, bad happened think macro to for Do going has to if 'XX, and that's

Aart de Geus

was of think growth, R&D practical of in 'XX, because to cut for cutting course, stable decide every where, bit of said reasons back, model, Well, 'XX, all right? go this time flat. people or future. business actually were the was -- up year they for after little I eke our don't something reason belief a that bringing this little that, years. is that very a other the to 'XX, away were out would of 'XX, couple the Depression to one consistency a is coming in 'XX And able have we stop but before is was for people Great There that that terms, long off bringing but up Having that

technology out. is slowdown leading longer if 'XX, a in the the bit make X in order technology, meaning observation new that a in And to so are you new of coming even from that of other there the sure pack keep years, designing 'XX, start they'd was point rather And rest view. no for Company stop products no you of definitely the

going right not don't the believe I am 'XX, to that's No, we're that happen. going 'XX going a but to ask I'm have forward? person, economy also if I right So to person the

indications aside And so investing now are customers of subject to, all in and of situation. forward. racing crazy any that, course, the are But right our technology key political

Charles Shi

closer the of potentially 'XX business, I growth are believe, north your probably still IP double system guiding outlook, about integration very looks strong, XX%, I question and specific like your ahead year-to-date excluding outlook. 'XX, you're of Maybe about XX% XX%. you your is long-term probably your definitely, another IP, slightly mid-teen but assume, digit, growing, to

Is future a So point some why view kind of at risk or mean why maybe the could at some this under there point, meaning here. simplistic XX% reversion a not? is grow in IP of

Aart de Geus

objective in I only that 'XX, your you you what on a It's the do fact know that at I'd we're to the to objectives, is well we'll December, long-term we to better when look But is ago. understand like this guidance going you gave but raise in give that long not December. that. that

all. And so state not changing certainly at that right we we're now, that guidance

way And we December. some will big so, I in surprise don't expect that you in

to I were think we on expectations. track continue against those

Operator

All right. Thank you. And now to Jason Celino ahead. from KeyBanc. Please go

Jason Celino

using leading proof-of-concept edge DSO.ai, DSO.ai Is quite How impressive. it more type today, it Cadence Cerebrus for work? then And they're are the So type evaluating is references wins, customers Aart, are customers simultaneously? the customer these work?

Aart de Geus

using most impact been Well, new the this have it on business yes, up that that they're pick production. the the advanced always And first capable the on of course, our mentioned has I reason is people because people most tools. in

often companies that they definitely the And large and of these now this insufficient value capability are very with are are so, because doing many talent. seeing advanced it's designs issue the high,

even last made in going own that the are book, advances don't quite we to or that. year, sure not space. doing capabilities my are good of more broadening, the in But sort And the stuff. remarkable anything way, I by and so I'm competition, we've down them forward. see that like of they're main to and actually put the more know our much that's

a into they're customers. and And try EDA think very careful. very whole quickly advanced then very I adopting. tried we're absolutely what They will very phase our mean So quickly, and next often, to they're users of

Jason Celino

raise And Trac, impressive here. guidance again, then,

to this the try to of Sorry the WhiteHat? guidance out, but revenue from much how coming parse contribution in is

Trac Pham

give million for $XX year, the terms of the of it's in million to to about sense a revenue. Just you $XX WhiteHat

year full really a part is So organic very large healthy business. raise the strong a for from of the coming

Operator

Thank you. from Vleeschhouwer And Jay of ahead. go to Please Griffin. the line now

Jay Vleeschhouwer

follow-up question and technology a for you Aart, a then first for Trac.

So on AI, two of subject things.

tools for do themselves. is implications AI for IT that an ANSYS example, -- think how have reuse, That you talk each own DSO.ai. you're as internal for you AI? I'm development software to First, And recent all in AI which number technology I actually company, in seem And have claiming of about The an remastering, internal then across the do AI. as in broadly, or EDA. I asked IP the for at you about a arms ask about, design But production. I'm how you some context your the and out reason EDA specifically well is AI, business? more some to the do. there's for developments do for one, could at sure distinguish aware, how Synopsys presentation race multiple of would you're to your to It's own implication least is, design of purposes, The you and as for the compared spoke carve curious obviously, Conference you of reason which, course,

end guidance with of growth IP? And the talk of billion the a revenue your does and the disclosures, of assumptions? that it was couple sure predominantly number? as that For has you about in composition which and is that we'll of get Could I'm in become Q, update your your increasingly Is how days factor FSAs, $X Trac, QX. the number in one material

Aart de Geus

Okay.

AI. Let me with start

find the -- the to The we a for where AI matching situation where thing way the called different but also problems. of of traditional improve what's solution with we is you advanced, pattern to very AI to the course, understand you is of And a the situations recognition variety of allows something use programming approach, use first better.

to that applies statement that to. Now apply you the it domain

And of to in the for needs our you potential patients," AI domain, our complex we so because took diagnostics why all some unbelievably morning, the going And blood say, the if are solutions to right of and in finding question initially we're area offer by arguably, to DSO.ai do, for have alluded intent I all something problem. one know, the learn I and most the AI -- the meaning the matched have right? the domain tomorrow domain, we fact these our we their field. don't of its way, and because have, X would in spaces, to "Hey, to Well, that about any search are chips, complex we a minute ago people is optimized essentially those the on be optimizing

the exploration and And then really do of we AI of that so the the together. it's fits what with understanding combination

reason simple companies it for for Secondly, one the of would could the IP, a very advanced consider we as AI design of what most And be course, Synopsys in do. use one ourselves. we world

markets. don't don't put And the concept chips. design our But We to so, similar. actually is chips the on we We IP use designs design blocks.

mentioned design familiar you interesting to the with, I'm something it node. different existing an migrate desire Third, well the that take which need and to and is sometimes technology a

called remastering. Sometimes it's

because clicks did ago better fast. get we apply and vastly new them got in of we was existing design that initially, I for much results. the we've you -- and improved forward And word on used, Sometimes And and got knowing nodal going retargeting. That's the node it's Meanwhile, think. year excellent we've to node could move able already one we've many results, some a to to And similar. pretty experiments from one. technology we've learn that been another from called terms still it the

big one I'm we're But journey. say journey. a the so it's at so of a And first cool far, to beginning the pretty

Trac Pham

since how question predominantly of results. IP, and software, and software most EDA is been changed well. affects in but whenever effect, significantly FSAs what's have down in XXX FSAs it So, that would when revenue mix it there gets down a over as pulls of at a are our there's affects Jay, customer time. pulls historically, that good recognized us FSAs, portion point -- your where on the With IP, recognized

So you the business. see that create more in variability

that about great FSAs a our more from can in gives perspective, are lot plus on terms it Now commercial of customer what's they how side, a transact. flexibility a

this launch innovate continue new we'll FSAs quicker. And those is where contract. actually we sign will to see them area they'll products. So an consume -- and They

see that model. revenues an in business acceleration So, from you'll

Operator

line And of Vivek of now go from America. Bank Arya you. to Thank ahead. the Please

Sachin Jain

taking But of it's you year to mid-single This now want Vivek. slowed has for just is guidance. raised growth EDA digits, EDA. Sachin specifically, on you've Thank below behalf your trend the of for Obviously, to full Jain and I question. on focus XX%. to XX%

So help go expect it to understand, what's do us could you back trend the causing you. you Thank slowdown? the to And line? when

Trac Pham

we're business of we're certainly, very growth. business our doing seeing business in executing The -- line model And double-digit clarify. well. growth that is within me Let

which got you're So, loaded the fluctuation, this last the you've back-end last year. loaded. compared just this here to Remember, two function that's year, things, what is year, -- of is more to comparisons a seeing hardware front-end

when the -- So also business, we're double-digit revenues, you certainly when well very it's well -- software within up But overall you about our the EDA our match the is decompose function XX% of a growing which within nicely, model. comparison. of

Sachin Jain

to Great. on much how a sense the whether to gate-all-around give companies multinational? from Chinese China, And then domestic or in of coming of follow-up your question Thank it an just earlier a entity development possible Is sales list. you. us are

Aart de Geus

none that exist yet. doesn't China but material, Well, gate-all-around in of is

Operator

now go of Abernethy ahead. Blair And you. line Rosenblatt. Please Thank from the to

Blair Abernethy

if Science it opportunities wondering out anything Just -- Aart, or and there was from U.S. Any the for you'd present Act. call might just Synopsys? CHIPS change

Aart de Geus

China a hesitant commitment magnitude came And over a larger a do you now investments that been that Korea's committing semiconductor has putting as similar but is Well, in U.S. area investments that know, for to has to. of countries to longer general. conclusion. to, to while, the but period many committing big a time. the are that It's in Europe

that in when want badly. chips, And so, recognition I you you this don't think really have all them is

shortages I to chips That of attention. in beginning needs growing and think is of that really lot be the the And time, every the exploring the more adding smarts so supply fast of will same a of aspect impact At that an computation. the computation require AI. of importance because of full got understanding increased life also importance there's we're still at

from a investing people in view. So point strategic of are that

at we a in. dependent doing singular are investments that so or is but definitely aimed bit to we will things, and some essentially capacity to multi-die will term we location requirements. As I most that specialty that, also for be that, are companies putting noted, also ways, it those quite to and think a of partners Around make of made many to be whole the initially needs different like of manufacturing but enabler, in world at needed somebody the else ways highlighted are the XDIC, there are, the to enablement, close it, primary names these, are earlier, investments multichip look many there there not one to in the And there In of newer lot very packaging, that we be use investments the in on happen. those. respond technologies get companies are to to these catalyst the all tight

if And will us us well, the really so, to does need they industry well. do around

it's only think And upside. I so

Blair Abernethy

on looking the then the just it Thank breadth DSO.ai first. customers product? follow-up one the you. other the -- Any in sense And at But of Okay. Obviously, interest advanced Great. more in of questions. of in broaden really how it so Just this deep for bigger seeing example, and and you the the is is companies, into for your opportunity systems wondering base out the are DSO.ai? part -- forth?

Aart de Geus

set we a of there the and broad. no, not of "Oh, And the the the say, also houses, as companies well. of very already too In same sort some also is it have time, will it follow have go individual we people companies. fast. using people at number urgency let's think It I the the of individual skill system

and want they faster, in that approach." will go Let will yes, Well, me too. first year, to design "chip put a regular then take a

will ingredient to have and with wide over of this the in some strong But necessarily on fundamentally, fine and most design flow advanced that become time. very some any just So people very do people advanced we the most a continue not a can being versions.

Operator

Thank you.

in no else Please one have continue. We queue.

Aart de Geus

Well, in for support at interest. and you this thank your time, point

the what we to plan, for to deliver passing continue we don't that against do We skills exciting that that moment. that's Actually, we an And you to certainly we able to is we and mark, well be year. will said have demand billion $X provide. hope and this markets that the hope, we

this support, help you our happen. thank So your make thank employees and to to you for

Operator

AT&T call and conclude Service. your Conferencing All does right. today. Thank Event you. for and And Thank you ladies our for the gentlemen, that using participation for

now may You disconnect.

Synopsys (SNPS) 18 Aug 222022 Q3 Earnings call transcript