Synopsys (SNPS) 20 May 212021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Synopsys Earnings Conference Call for the Second Quarter of Fiscal Year 2021. At this time, all participants are in a listen-only mode. Later, we’ll 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 At conference President over I would of turn the like to to Relations. this time, Investor Lisa Ewbank, Vice Please go ahead.

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

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

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

non-GAAP report Good GAAP $X.XX. with of billion, groups exceeding all of afternoon. earnings metrics. geographies. product across quarter earnings second revenue strong per to I’m $X.XXX and of of $X.XX, We happy and results, outstanding Business our delivered all key share was guidance

$XXX million. generated our expansion and of operating progress record cash on good make flow to margin continued We goals,

we cash for non-GAAP and will more As the flow. half financials ops growing margin, a are result our strength first and year, revenue, our Trac detail. in discuss earnings, confidence guidance raising of in

the commenting South situation in highlights, me about words dire let say Asia. on few a Before

of are of people an world challenge South Asia. progressing we well vaccinations, seeing parts with for While are the enormous the

taken sure clinics, make customers are a of with Synopsys many family objective we impact business steps disruptions, of Ranging that with solidarity. food wellbeing perspective, from material Despite oxygen up beacon and and challenges, and care call services, their business is can pandemic employees, ambulance families. well. as employee orchestrating to is priority from maximally on vaccination top them the to no our COVID that our and thankful ship products to doing to of is we and teaming Our our support mitigate the every support we have and our a our continue help, and delivery the to concentrators,

semiconductors overall Looking demand for at the very is market, strong.

demand with slowing, the catching technology new near-term race era opens attracted in into machine now XG, software, on health, the in the by early economic push/pull the is technical the to harvest learning for pull. a economic to and and are solutions segments a smart so it, and to of The All vertical has is This on. automotive, edge, the everything. smart grown are whole moving for promise impacted, Synopsys. and push great on provide opportunities learning needs. data to semiconductors the segments consumer, of year some specific While cloud horizon such vertical In of other can there of a after successes market COVID wave new of automotive undeniable big chips for be their every an machine their attributed demands growth as up as words,

is security. sensors, chips, transport, generation low IP First: needing for storage, chips are great all and for and for and This data blocks, power, complex Synopsys. for blocks The foundational building speed, for compute,

chips, just Not systems of chips. Second:

is brand-new moving and While open functionality. transistor By other, systems door on complexity to leading abutting Synopsys. the massive great to the of counts the complexity seamlessly chips. continues them systemic each top for on system grow, a them to is stacking chip of This of growing edge

built-in Chips market. diagnostics. power. Aerospace requirements. Mobile be and industrial vertical financial Third: own requires Automotive for much And chips High-powered want safety its has everybody new their design better own security. medical performance. and has and needs extreme low or by cycle differentiated such hyperscalers everybody, super sector, life as health it AI, vertical infrastructure, Each markets, needs. entrants, communications,

All of silicon must And that these are for each other. tuned linked we Software have for and in invested great lastly: be and tightly for disciplines Synopsys. years, are

always, optimized to optimized for yet be of written And debugged time on consume data, chips be less technologies software great sensor all market, chips we to speed are must been of for together. These chips, in, built to Synopsys. computation. be in blindingly prototypes chips amounts to and power are Software fast to the software have not for to be huge to chips leading secure be that

drove that are vertical delivered another partners quarter, in and and competitive verification. this proliferation perfectly particular, digital by Fusion is again which context, our share EDA, with we me strong mission our ambitions in and semiconductor So, customers the growth, a Design catalyze momentum smart-everything beginning strong In of placed, highlights, to XXXXx Compiler. both strong some system let Fusion by in our Platform In performance decade. and design, design displacements for delivering

also next-generation throughput was example, by Fusion at designs cores. Compiler NX for VX For Compiler superior mobile leveraging and results. Neoverse is its performance-per-watt Arm selected Fusion driven advanced and Samsung, on infrastructure

announced technology advanced XQ, analog/mixed-signal tape-outs node the well simulation. as adopters. test-chip Continuum momentum X-nanometer processor, with for see is market We innovation our mobile strong and X-nanometer next-wave at Our also disruption Platform PrimeSim with well. Design evident most leaders, new our as Custom and Platform In graphics, in we five as

and where by brand-new companies acceleration, With at time-to-results PrimeSim delivers productivity Endorsed significant Technology, design. processor-based on gains is by NVIDIA XXx. KIOXIA, it as graphics cuts Samsung such Nanya industry’s deployed Electronics, DRAM the it

Platform, the driven Continuum again by Verification software, multiple in analog we secured adoption another hyperscalers. growth with we In including momentum Japan. flow addition, company in with full In strong design large displacements quarter, our verification had

XX perform customers new market emulation Fueling first power-related cycle, XXMHz ZeBu well, of and AI earlier handling the new went solutions up verification Also, QX. last XX repeat which in industry’s hardware high-performance the Our and risks. emulation we billion designs lets dramatically X ZeBu than quarter, EPX, more just in the XG, power including in the two results continuous system. launched gates. is growth It ongoing reducing orders to systems, GPU, system emulation strong drove week, logos ultra-fast for excellent Empower our turbo-charged, analysis design as compute targets automotive, including to innovation, application-specific

also shipped generation prototyping, HAPS-XXX. We the latest of

Furiosa like and demanding accelerates for it unmatched already scalability, the development, and NVIDIA system on HAPS-XXX most are relying performance and With software validation, projects. their enterprise verification. fastest Customers

and Arm delivered the Neoverse the our offer And interface Now bandwidth in our IP existing driven IP I to our in acquired demands, to we achieved In Needed now X.X the roadmaps platform. We announced leadership and with collaboration a on with industry’s we PHY, next-generation customers. features and compute traction Express Express strategic addition strong market. applications. Ethernet PCI the in complete by high-performance IP, XXXG/XXXG strong PCI first high-performance data excellent again to Arm we specific our XXXG which EDA enhance we closely align solutions dynamics. market adoption Ethernet product we its Ethernet interfaces, Combined for revenue solution extended market a leading referenced QX, solution. MorethanIP lead earlier, growth, controllers. Advancing see full advantage with with for technical huge center for

X-nanometer automotive high-performance also Our vertical compute, with robustness to interface IP gaining on segments and adoption semiconductor foundation as silicon our by the are process driven advanced first-pass of such than our industry leading More successes, and the and reliability IP broad XX X-nanometer portfolio. use multiple FinFET companies attesting AI.

the DesignWare Safety above-mentioned automotive, and solutions Hardware Secure we safety safety requirements features. Processor with launched Lastly, integrated address Security new ARC Module security to the functional IP for and and

technologies we now turn Let introduced. recently and to exciting two me disruptive

months very learning. design technology system for at machine two it able world record. chip productivity example to First is quarters reported only very is improvements to our U.S. foundation the solutions teams, using One this been leading-edge large, new schedule sophisticated company, the DSO.ai but envelope call, design an not influential The terms in DSO.ai optimal a typically area. better push in extraordinary. solutions. the It and was entire a who chips. hits of weeks design autonomously very single vast the award-winning DSO.ai, the a a them have the accelerates human to complete. does space using This performance, last On growth over and right team era, results searches what like chip, what complex takes to enables towards of that of substantially I power engineer AI-powered achieve

these specs notable are designer productivity leader global of unprecedented Another Xx schedule. like and weeks timing ahead recently Results adoptions. meeting highlighted driving

its example, uses environment. automotive now chip design For Renesas advanced for DSO.ai

Silicon a analyzes, our The Management other and the manufactured, into is safety for monitors, performance, short. entire issues chips tested our they are and Lifecycle give optimizes designed, reliability, chip’s longstanding leverages SLM field. as Platform, unique This in and innovation deployed to SLM expertise customers or visibility end-to-end push solution lifespan. security for

aspects optimize Several capabilities. of our with actively flow driver collected multiple one a X-nanometer SLM already portfolio, for important is SLM by new out adopted new pull In to are their strong capabilities. We of other Stay that roll adopted during are The of we at data engaged with as of our tuned platform. continue design adoptions. XX hyperscalers, test. customers market QX, broadening X customers vertical variety of example, to use seek them, to element a and having to

quarter to Revenue region, accelerating Now solid of fiscal towards ‘XX was ahead had another strong its every and in plan orders momentum. Integrity, very meeting reflecting Software which goals growth.

value In services good changes go-to-market and targets. and was retention we seeing replaced made in XXX business strategy is products execution. new driving multi-million-dollar results exceeded logos, our our is example The we’ve for Synopsys new end-to-end transportation an from company, added A win particularly We’re great the strong QX, service-plus-product important, comprehensive large who and a we incumbent with provide. the with engagements. business

direct also geographies are partner touched apparent. our reach expand our verticals program The to We benefits channel and currently not into launched through sales.

example, new America, South For multimillion-dollar didn’t months ago. a where have in we capability adoption selling six closed any we

integration Orchestration in specific front, technology run that we built set steady the opportunity processes to testing to we’re their the customer’s progress fiscal outlook the is efficient Intelligent synchronization and for and On It’s we enhancement pipeline. DevOps automates Intelligent encouraged development our each summary, and a significant security Polaris Orchestration. ‘XX. In protocols our making. delivered is of within is outstanding Polaris company’s parallel raising vast, with and space delivered QX for our team in communicates a platform, and The are pipeline. into by easier this an

customer reflecting an chip for system in investments strong, and extensive are need critical and with increasing markets safety Our security. designs

revenue cooperation complex milestone, as the we in era of And to at many that see and billion and and are this will $X we technology software segments. success. we market well-equipped As year’s we a catalyst smart demand in. disciplines, look of disciplines silicon vertical strong this everything the that beyond around deliver We partners’ the customers’ vision see challenges intersection midst new our teamwork all to Synopsys a see

Finally, have it a half, I’ll who I over succeeded hard want recognize of Trac. and turn global past upheaval to over our that, team, and and Thank With for your despite efforts adapted you the solidarity all and uncertainty. to the work. year

Good Thanks, afternoon everyone. Aart.

on exciting outstanding echo focus the for innovation their but also thanks to another report we As not only their our have me to ahead. fuel we for team opportunities dedication, Aart’s let unwavering quarter,

our a diverse financial and our growing On foundation in leadership, position, are solid top technology recurring continued nearly a sights customer track and in on XX% record we next-level as base, We set revenue, our of execution of excellent ambitions. great market a and of QX.

the increasingly and margin, our confident and non-GAAP in for flow year. are guidance earnings, are outlook our revenue, non-GAAP raising cash We operating

in results. All and and XX% target was We System total both, segment groups unless comparisons & of million, otherwise strong range, stated. geographies. software with revenue $X.XXX driven Now year-over-year, above quarter revenue IP. broad-based billion, strength EDA, across and up product to $XXX growth and Design are hardware Semiconductor our our second generated by

hold. was orders positive saw taking The made that segment million. quarter the to we’ve $XX we revenue are in the shows the Integrity adjustments Software momentum business

are fourth in revenue expectations XXXX XX-XX% We growth to the double-digit and meet the exit with of orders on-track year quarter. growth our to

XX% good the a accelerate long-term. growth to path on We’re range to XX% to back revenue

and costs expenses, million, Moving expenses GAAP on to expenses non-GAAP margin $XXX non-GAAP and a costs of were total XX%. operating Total resulting $XXX were million. in

& range. We Adjusted Integrity end on XX%, System margin again are the Design operating guidance and year to raising the expansion was operating track and for deliver segment for Semiconductor Software our margin the of are margin X%. bottom was

per share earnings our share and range. $X.XX, earnings per were target $X.XX, were non-GAAP above GAAP well Finally,

generated completed total we million. ended to year buybacks, million $XXX stock bringing and with in operating Turning we cash total million $XXX the And We $XXX $X.XX cash, flow. billion, in a $XXX of cash million. a the the quarter record to for debt of balance

Now to guidance.

fiscal representing minus billion; total expenses billion Targets non-GAAP operating billion of $X.XX share, third mid-teens expenditures $X.XXX $XXX approximately of GAAP between million; XX%; per million; billion; $X.XXX between of between million; For $XXX expenses and million $XXX $X $XXX of growth; earnings and for $XX and and $X.XXX of to costs and GAAP $XXX billion; per other an billion $X.XX revenue $X.X $X.XX capital a income expenses between GAAP non-GAAP share; costs flow cash margin $X.XX total million earnings share; non-GAAP earnings total double-digit XXXX, of to $X.XX earnings XX%; tax growth; of non-GAAP quarter between of billion; from costs expenses billion, to the per GAAP $X normalized and and $X.XXX rate and billion $X.XX $X.XX $X.XX to representing $X.XXX non-GAAP $X.XX million, revenue billion and to operations minus and million. share. and $X.XX XX.X% to expenses $X.XX of per total of costs are: and between to non-GAAP million and $X.XXX increase

beyond the reflective rule an to excellent Based our revenue XX. strong the to execution, growth opportunity is our of market on operating see and vibrant of manage opportunity, Our business margin our we track exceed XX%. expand to intend record and portfolio, we how accelerate non-GAAP

delivered long-term cash flow. to Our will long-term In to we financial of our revenue provide a complete. is conclusion, rule planning operating details over once and additional manage process years, growth, is non-GAAP strong we XX several and and the objective earnings next record

and and groups Our customers’ us for are that, and many broad-based our we is develop raising same across With the transformative that strength innovations deliver it guidance time, year. years our over I’ll endeavors operator we for for the questions. to product come. well geographies, to enable turn to and position At continue the

[Operator ahead. Jackson first you. Please Thank Instructions] of to from going come from the Morgan. Our go Ader question’s line JP

one for you. Thanks taking is my first questions. Great. for Aart,

the the Company. the nice differentiation I’m a of about these talked do how differentiations You I’m from -- of those chip that IP be entrants. scale as more not the benefits by some vertical just of usage benefits curious, tailwind for or scale there tends with to newer we fact to the increased sorry, square -- those

many? once just custom mean I’m by for that to seeming IP differentiation those with used and lead so, that more does And what to get designed curious, blocks design,

the choose the of if design Okay. their And the the need own Well, or you to there’s semiconductor two perspective chips, people the of will is, the the chip design, at first pure Tier all look not thing some hyperscalers of automotive but hyperscalers they their it more looking doubling and the sort are of some of are doing own some, their either the companies, more are and in doing clearly automotive all, design. cases, or In Xs. chip from yes take ways From from no. of the to example this companies. the at vertical, perspective of suppliers, or that vertical they more

us. And IP that IP is you’re done saw And absolutely, that so you and is a business substantial good lot that news for is by design of reviews, strong. that right our

we doubt IP or for all of that so, chips -- different my are to a you design. no the submarkets on provider, for do just and architecture some how that more is more take sit core grow. necessary at In therefore each different well, see a will just -- side and as consumption essentially good cases, reuse opportunities fence type vertical? that some do customers them to some will IP then you I of and reuse continue the of if sort as there I say, architecture is that particularly and different are take other look think of Now, of that these are semiconductor add derivatives And

Trac, anything is quick I so performance expected. pulled cash was bigger the pulled follow-up. pulled forward, flow we much but then, great And Was think that it to any collections deals I was than Any think or see, -- there forward? either forward

operating healthy, No, was not is generating business at pretty strong actually. because obviously and the very It’s all, profile -- the good margins. we’re

and to renewals quarter is profile up collections was normally the part right in it we years other of QX. a The keep It’s the end business QX of a last But, be biggest of both. invoicing where now. the given at healthy of mind over our very definitely combination will end couple

Tom Next Please line from of to D.A. go then, going the ahead. go to Davidson. we’re Diffely

for your increased pretty your afternoon. of during the Yes. you. did business Good Trac, see first is backlog, a time or in at comfort factor was of substantial passage with this of is one look actually more you increase, quarter? guidance, trends acceleration When which a an you

as your question, there’s to a things on. number Tom, of going

First got after visibility us, right? certainly we year -- we booked half part of improves And the that the the business is we’re outlook. have the that that we’ve behind

described, against As we’re healthy, markets that. are and executing the overall Aart well

rate saw strong business the And the in that really the year for overall, a run in and function backlog, business the book not. business there’s the But So, I to growth a confidence of that year. quarter is renewals the we we outlook of us The this backlog did planned. gave had very number growth. backlog increased good would a increase or translate healthy in The that different factors. the whether as

we enter where those broad there’s When design impact positive for is what you. then, question activity, the have like chip a shortages on you market negative? And today great. shortages, Okay, into or either just a Aart, of

existing impact. of it do Actually, they’re that’s a some work that get really you more it’s going great. some modification and to But direct time. if to that lot There can because do to very are so and customer, little that capacity do take People that a another decide they ship vendor. benefit, hate can with takes people chips that no except

obviously that reaction think as to driver. And shortages so, the going best I example, automotive made is catching something. the be because partially And that I a they very is now mistake particularly been And to everybody that market stopped ordering. But, strong the is they asleep is up. and the interpreted during the and a COVID that be they should not don’t were just powerful, was a needed jumped when there think has time past, in

was of the of by is they impacting expect with to which have profound, to the decided will continue. our reason way, But, couple the huge of substantially you sort many because And capacity Those field can that is no the that verticals. years including era to there to taking. more is all a a increase new direction that just illustrate actually a I much historical places, something And have impact. the by just of demand out think do And wave, is comes capacity. demand take bit whole that left left. how semiconductors the increases see countries many, capacity is period. versus why And temporary capacity no I’m I used that’s Now, trying little this differentiate there’s X.X-year

you clarification. had with Did virtually a impact in no India you just And say Great. quick your...

impact anything. India point for delays while with rebalance for date, been still in zero point a to give we that of a like to such of number be, a dealing a support expect to humanitarian our demanding. of where a But, very is employees of else from I focus months, supporting will everybody view, situation lot team. a have of activities our humanitarian we’ll that or anything shipping or the a able We’ve that already in we’re material fashion Well,

ahead. to Please going go go line from to Vruwink the of we’re Next, Joe Baird.

to be regularly everyone. these I DSO.ai, called different getting new And products consequential? in the wanted AI technologies? is Is ratification SLM, later this just and quarters. something of technologies there or to maybe been about like adoption Great. but it’s different? the Hello about out perhaps or to Is characterize more there new more natural there past over something is industry, in compare start your have the a the recent on these way where maybe specifically of Synopsys, technologies evolution consequence these could

That’s a actually. really question really, interesting

is Let because this and know a a me put in it start cycle with in if word life we it one chip just cycle. you phone the you SLM car, because or what’s has say, interesting SLM life which put a take all about longer

safety age part of so and have of that course car, the the of And you -- in is it.

the people to in want centers, know run speed, them max the they and process be chip value, I’m feeling inside and going by where sensors to I can practical that a at a stopping gets And set by so speak, so car, the that is AI happens. the as, replace ability a cloud trained system is diagnostic not start certain down so suddenly, to the the before even to so that, very so is chip well, to of self-diagnose way, high go it compute put better going immediately of more you maybe good, is

preventive essence, in So, maintenance.

early of at so, even what transistors. is in touch are these of we And that chips because the type sense, interesting SLM literally the days

exactly very minute in also described. but those So, have we physics, now verticals interaction companies are very meaningful large that with I very

time, and human Now, of something fraction technology. similar, always DSO.ai, Synthesis ago. difficult the than had were in which it over circuits the years human something do and were smaller. could And automated set better a and compare where was overnight, we But, XX And breakthrough took did what days just think, is, do I that it. a of could to of faster tasks the complexity human we is early outrunning it’s that a

XX and that multiple many with take them of even tasks very weeks few that down the designs fact sounds can Now pieces, these large moment certainly sort many, me, And in chips where all bring the quarters want we well fits years for results magnitude I to think we’re And it’s industry months fewer many many verticals. will of a essentially and semiconductor later, orders better very talking the last of more people very similar. with constraints. the complexity. people more to entire to literally do take few different But chip it

And so, of we sometimes the design use And what frontline exciting. chips, is to but AI exactly it’s is. using this that AI

the at users. of that. economically felt just the beginning We’re But, the impact is by already

Okay. That’s really interesting color.

Second maybe about different quarter China. like a that of sequencing expected? question, fiscal particular by is anything very the was another there than this strong things bit originally quarter is Thinking in year it you about

hear pulling a sequence hiring to occasionally looks future appears And maybe it way some bit incremental more related. that’s You this maybe the cost, perhaps like year, margin then, the business. has about XQ forward guidance just

your or So, sequencing the of is quarters? maybe is timing-wise I anything Thanks. there different suppose, just that

the backend-loaded profiling what this had was. year. Overall, with of is Joe, profile around. this much really year, the I’m the to things quarter how happy planned described, Most given revenue, the pretty linear Track. very the last of year you we close Hey is this actually

year. it’s that’s pleased we’re a margin to the hiring profile, of far pretty But of the the up had just the beginning As how with function we that a -- as relative hiring plan of function the throughout largely shaping at year.

go ahead. Mobley Please line Gary to Fargo to from going we’re Next, go Wells of Securities. the Instructions] [Operator

of ask some on see strong questions. on that changing first so on to China influenced are year. was aligned realize the to perhaps the proposed, this have side now Thanks Aart, well. half whatnot lot of expansion that the Hey between that wanted U.S. Congrats and to get and broad again. a these my we are your chip personal focus R&D onshoring investments semiconductor measures dynamic China, color taking view, bills not you the think strong a about you’re wanted I -- geopolitical renewed the But, up to much on And seemingly I by for And I the reduction. I production everybody. supply chip to so in from U.S. and and growing more these focused shortage I ask fiscal as

So road? to sort or I’m your licensing if for guys you that of any from starting order see influence may perhaps wondering in what the be looking you’re in down

smart market tends to the fact know it is -- comment and invest And Well, strategically is encouraging. certainly the know a next whole because seen is, typically that have when close the think for be us. be And they nations encouraging not but it’s everybody. that very to even first one to I age important want a strong strong, may very this is fact this to all for more of politicians everything only what AI, chip think is

to referred are these is just And linked words those by fields. is there fact is means, power products intersecting enormous that that not country. to any data of are much infrastructure with to AI, as all all part encouraging evolve the is the Well, shortage even And it electronics certainly broader very, i.e., interesting so, accentuated and problems of to it’s very while has all now countries gradually this I because human all panacea on, may big smart different a of while some is that think, results. believe a of be tension understanding what, wave of of it’s race impact that the there in interesting notion the whole by human most a the I on tensions. next the between of But, vertical who and does now that so

on want degree fact all that that the really capacity, it’s people news attention of gone has surprised not I’m so, up. right the semiconductors. or And spend for R&D now, manufacturing But good to more

larger mentioned yet, I backlog were other, of what over that, Q up you of Aart. business, percentage to generate you trend with that sequentially. was related line the whatnot? for to turns and know Trac, each revenue a but backlog your in appreciate that, you specifically, would haven’t sort time expect obligations performance remaining -- or emulation the was expect from filed like of And you growth what I quarter? would end or revenue the to

be and largely -- IP up, has We’ve and week. beginning pretty transition. might But, good is change turns we’re made in right mix, percentage filing from that the should the now. been on the you as move hardware business The change it’ll say most the stable quarter-to-quarter, depending a be for next think a their a I And at would in we level saw XXX I or -- relatively stable, the our deliveries. part, backlog a result of of FYXX Q

going the So, or of we’re billion you’ll it’s $X.X billion. amount. north about $X.X that But, see to disclose I actual think,

going Please we’re to ahead. Berenberg. of Gal from Next, line go Munda go the to

Yes. for my taking questions. Hi. Thanks

The very you when in first in -- of at HX, your last year total, Q performance was like what we backend-loaded. one opposite I had actually really said, in look is just very, when it It’s the

conservative consider what kind hardware fairly orders, or this to the good that’s you nice looking you for you in, of think fair especially fair have of guide, at is if of do the the some visibility stage, the thinking, there. solid, recovery and some at still when as So, But rest is it now, other a could at then, say that a comes year you I’m stuff QX, seeing? especially also the representation pretty very of which look QX you’re into guidance

point, in profile the The this of had for when we QX in hardware of rules, QX is that. profile guidance nothing a business and that’s there’s you’re reflection And half, core from the mind, some we new quarter-to-quarter, half, or question. the and revenue second why We actually keep going really laid recognition we profile for in given unusual profile on variability in the to depending IP the full see and is hardware. It’s a -- good year. out out is very the than IP largely laid good well. raised other actually doing Yes. really But the second delivered. At the visibility revenue the

Software double-digit growth about the were level bps growth sense. if now, That Yes. in effectively growth. well. second is last planning? Yes. for contributing about this increment was maybe potentially growth up kind And when Integrity as think at I’m guidance, or How company talked incremental thinking Synopsys now about you’re of new ramping midterm one, you year bit that a few and that profile of virtually we that Right. a implied the makes again the starts you’re year, thinking. what kind a Like, then, double-digit do thinking as That’s especially little with of sustainable happy I

But forward. is specific really be cautious to you’re we to overall, seeing year want numbers looking last in the our a getting I results being combination towards to able I business year this strong optimistic rule future? And and mean, a the why what about in really going the why the too have for growth about expansion. about we feel of come margin really through drive confidence and that’s XX. communicated revenue

And little so, touched on a bit. you’ve it

only integrity software the back acceleration of XX% rate in where business. -- and well. the it doing EDA ramps up, as the growth The that overall help at, capable to IP of in with of how good we’re seeing mind, believe, as it’s we But what some business. it’s is in operating a we’re well should And, mix. keep reflection overall You’re really gets

so again. to Thank nice a that’s what questions. Right. right? XX Obviously, Thanks X And you. thinking, points I my No, growing that’s taking contribution. faster. was for It’s Yes. XX%, congrats

Please ahead. line we’re from Next, to go Jay go to going of Securities. Vleeschhouwer the Griffin

years, new your two me era? business Tonight, now be Aart, The up. think era, so, similar silicon, to some the that or how as three encompass chips of say, to time affects often and a this mean chips, you the We’ve do to you you industry so it, referred your EDA is you to model necessarily new And about EDA. in a question evolution specifically that incrementally and of about have intensity is this AE however in prospectively terms evening. model, respect and with and Relatedly, of to services into next goes per If you like kind provide the we design of to questions your services? support heard think process of the or think era of this to now simulation, profile, now utilization if ask actually Good for talked increase license Renesas that the the you you. kind as that tend the in consumption move as does markets. provide related with that the is forth. remarks you you consumption? run, respect implications from or new case or consumption about Thank that the degree of per support what others want necessarily design, let domain-specific could regarding That to margin what generation two to for having support? higher does of during

I continue Well, But complex more meaning that players Certainly, interested people refer we bigger are interesting brings that the vice question done way, there, how to verticals sort the you companies as write highly these makes together be will of and software, and to continue complexity What example. really more that, course, have are is get systemic a and for your would their by chips everything systemic for think being complexity, And they on versa, transistors. because that that -- work will in the while. sitting of providing multiple intersecting. knowing interested. actually chips are that own chips you that

intersection silicon may literally the that you to to accommodate users really And need summary that are really chips has in that was on years be this end of that it there’s the put not manufacturer under get to does that of continuum software except smart software. essentially of because to architecture role what And we’re my number fast, sitting So, that. all of at car change I recall the broadened that? that of to interestingly chip can a run so really that want our is this a our of interested that Well, chips, time ago, outcomes. vision the them they that we power at logo, ultimately brings to

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verticals a the suddenly our and And that so, is middle that on. speed, different will the engage more all be catalyst see And these be will at high race think there I in very role much fractions we of to understand. I and more

of Next, to we’ll go John Suisse. Please Credit Pitzer the ahead. go line from

years? if deceleration, a other line, Congratulations it can Trac, the full -- question us full a trying beat politically quarter the into more this conservatism, relative despite top quarter are pretty EPS. year year maybe I some softer guide, than something this year I mean, a normal are on the the asked have a as than was you little the less to really meaningful earlier, in correct gives results. it insight last in of there’s where or QX this just bottoms-up makes that well. that raise, bit might little this a not guide and the in but embedding signal that Is solid kind is in to ask bit way. And you nothing been

don’t We business see all. in deceleration Not all. at any the

I’m And the year, of in we’re year. revenue good pleased almost is. first about how depending In momentum really that’s move always full is reverse. this the fact, to in have it’s a to quarter-on-quarter booked -- of profile business really the what half business. able the fact actually the the from that going perspective, with the it profile We And really, We’ve we revenue quite in feel linear guide. and that is on reflected half cautioned the the year half get

So it’s with a great visibility. good profile really

so continue to time. for go implies up hiring it the the to expense up the ability we’re second see in ramping But, in our second to mindful We over continue the hiring you’re up. profile ramp and and of half to what expansion trajectory margin we’re going as drive half,

very cognizant wouldn’t there’s we’re I that. to unusual deceleration So it at no, characterize But as of the nothing all. profile. And

I unusually year right now, comparison, mind when last just year-over-year the think you keep in at look that backend-loaded. was

skew So, in the the it’s going second comparisons, to half. particularly

better trying the get to the helpful. EDA But, domestication it production. And That’s to sort I or semiconductor a back of understanding of earlier of a clear Aart, It’s question ecosystem. then, benefit means ecosystem. want what an the about to I’m equipment regionalization the to to go

number of the big Kind spend a from As out existing IDM. region trend from foundries does one try move spend there’s the business trying to duplicative just question How one. on two, of as question reemerge to foundry region, to is that’s as they EDA kind of or EDA? sort conceptually And redundant guy do that? there an number there

Good question.

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the means time. very this point more that advances field. number the that want actually around be at the the R&D fact the to sheer of designs are so, and And also people the are more in silicon in positive manufacturing technology in And of people into investment

point So, all in at time, this it’s positive.

over about tightness -- market term you moving years? of I’m seeing in. just down And how is but faster are then, seen, kind the one rate current try capacity are on is historically that more see kind or could take near just customers design thing using now. up underlined is you edge the with for trailing to that with of unique evidence this node they’ve kind than as of to trailing in One semiconductor I a if tight picking about how edge Aart, And do this that’s next rethink activity the perhaps right of cycle several the maybe any some trailing curious, TAM

better wafers. edge, older amount are lot edge gone an as out question, comment we it’s trailing of by Well, in application excellent XXX-millimeter And too. trailing behind try other wherever nodes, be of the get the in means a middle let’s the type because terms the What has edge interesting in four different different there is focusing a lot newer nodes. capacity then tools other tools on limited of the capacity most on focused leading some pricing of that sort field. of the newer the that, would be of older Because But, at has of truly the for foundries actually they they’re those, of already nodes the can. the three, that equipment design would leading, nodes years some up on older but have impact advanced maybe to sort nodes, are manufacturing still people not typically these nodes, mostly say, also

And a so, actually been from well do it efficiency as an have point bit can of the really nodes of honed gives life people that second with view. And you them a if said, well where of one high, And some with we our of example, with nodes very attractive. most older is is our equation yield cost going see, the customers advanced a great back Fusion for tools, delight. Compiler to

Thank you.

Capital the go of Markets. Celino go to KeyBanc from we’ll Jason Next, line Please ahead.

two, Great. the if taking product pretty good EPX customers for past, in some some we’ve and then, new is questions. But, a case? greatest Thank to market? of you. my across announcements compare And other to seen board. the how the still the demand the thanks Aart, improvements is towards Trac, gravitate ZeBu seems for One, and just the still It like environment the does emulation that that latest in here. the the case, prototyping

welcome. You’re

example, high it’s car conceived. these of some the will in interesting many, that and that space, intersection for specialties of before there’s compensation, fully automotive many working whatsoever So interest earlier importance has question capabilities, clearly, increasing that the in value tasks, for are no and that parts is on us they even task mentioned for have area prototyping the we And because do to that And especially start a and grow. is certain software. in that emulation are to this the hardware an in prototyping years in software of at verticals, continue is

And to accelerate able that is of being importance. high all so, of

Well, it is most differently, that to always it going make answering are question the this of, you give emulation we’re now how be is top much are underneath my it’s I But that able on larger is do I it specialty prototyping Now there advanced the are such it the that, On if a it’s write that that, if as about. also, those there using prototyping. machines would same faster, of of like increasingly is is it available. and all we make power tabs certain which and capacity; write accelerate demand, chips well, invariably I software way, emulation better? faster, what questions that will to our to consume versus and inside are also

well very, And ability out And it to very and valuable. with that. optimize so, for turns we’re to specialize applications, extremely this be specific doing

line Please of America to go Vivek Arya we’ll Next, of from Securities. ahead. Bank go the

questions. my I Thanks two had well. as for taking

in The first the also one growth the about business.

mentioned up. fiscal the at of when Aart, verticals improving as XX%, growth did I fair year. same So, outlook of such year last autos look back it’s a about engagement you But, your about bit coming the in full you that growth

they is conceptual aren’t flat designs And question Why semiconductor I complex? your look at getting year-on-year. are when sales, when my So, the QX accelerating one. are sales more more basically a implied

year seeing volatility, So, you an acceleration are about even growth if of sales same I year. ignore the aren’t in visibility quarter-to-quarter level -- your or the the Why last sales as full growth?

orders Well, themselves a multiyear play one. recognition the come the for to revenue acceleration tends out ratable after through

is should think I track. confidence is I say, of with just high you well right the we degree thing The year, of end that -- guidance, our on other or the towards increased projection actually, the now, it for a for

our objective single to doubt we to there’s the ultimately that So, we’ll But, is where see beyond higher. no have digits to move land.

we will we is saying great We should in everything do from well. as we this have we that feel to take our point enter we’re grow that that changed have message time. very But, the right away just year. not you at next guidance now, And opportunity

you Vivek, I IP was to at and the about looking I QX. of QX. high last also hardware caution schedule in remember, because want extraordinarily -- of year, QX Because really this Trac. is

to not not QX the And that comparison the comparison so, a business. indicator is of of momentum in that good going be -- is

the the what’s level rationalization is, of or see Got startups? I’m the AI of that companies after it. number you And others. the that can kind systems the high? calls, startups? the have own staying going next smaller afford exposure do curious, the so cost the of market industry basic is hyperscalers so in question of see all exposure incumbents, their your then to one Thank the in shakeout Do players we and to bit all of work, of your rationalization, such in fair think to large have this startups? And being these a as AI Aart, kind any and of that’s AI what you then, Because semis you really that? mentioned have And NVIDIA do by doing the done previous especially you. work when you is sort is any So, in many

designing Well, single of best-ever we of consolidate yes, it caricature, a you many, AI you is the say, companies. on And chip. extremely know many that is broadly over will as true maybe exposed a bit one AI hand, every to And many, well, one little them that time. can

you’ve see a been lo successful the And exactly is someone, no, already that product a behavior this On later, more and is no you early that next And of doing same hand, the high other very the can of or one. people a you in promise, development. years there the doubt phase the technology larger companies companies, have number AI behold, two by acquired say,

time, of verticals. think, an extremely And over itself see become more the so, the we’re more then, development, active And to invention, AI that specialized we’ll is going also to in end market. I phase finding and

have at types time. And declining consolidation we the very when phases done certainly be these exactly in of a of point not actually designers is well number -- will there there’s yes, lot activity. So, of But, remain some where that through happens.

Please our ahead. final of from Thank Pradeep then, from Ramani is to you. go the line And question come going UBS.

my taking had a questions. for Thanks Hi. couple. I

revenues about a are getting right First, China? sort your comps as have -- to And on half? contributing deceleration I just of a harder, you that. half, want way think roughly back China. after any to sort the in follow-up or I Is of around clarification investors I but China to in XX% of about back think the do the how probably the see mean, being XX%

that on very -- Pradeep, us. China is country. to this And China for by continues separate do comment well Hi, we as country, or to outlook we Trac. don’t a guide the disclose while we

sort mean, I not should are XX going I the just XX. follow-up, this of How margins -- close sort guess, Okay. rule of sort be to semis margins And to of of you’re quarter my XX, of the of already respect And for were with I of the this mean, XX%. year, back to your term very just within but in semis, half, framework? XX% about we in the longer sustainability think the rule sort --

Okay.

Let Overall, to And way. contribute. it semi to really we across rule to mix. represent going me this XX, see do of drive to that mind does the margins require keep business for opportunity the try XX% business. it explain an us Really entire improve overall to everyone in is to

get to But, feel do the and business, areas with margins why growth. going ability margins drive we that’s all I that about seeing starts business strong up the to to drive it of operating good reason that’s leverage so, in And would and our fact therefore, really up. in the going us help that circle contribute. back to more The we’re effectively growth

can on add XX. we I our of objective to If set the rule that. Fundamentally,

XX, that’s obviously next. that’s striking to of meet to in obviously that. distance because We you whispered and even what’s coming We’re rule

we we disciplined think reasonably ops growth, well to other. I sure make the And while margin. said, support increasing two Trac as on focus are that, each

communicated So, few away you years, think with on release, should we’re we’ve the you if I plans last track that executing everything out that we’re else of well for take to on. nothing our own earnings and this

And that is hope I world safe meeting thank so stay and today. that over. vaccination. this the much any to participating In Be hopefully moving we is rapid assume case, your as means for you the you well. family that