Synopsys (SNPS) 2 Dec 212021 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Synopsys Earnings Conference Call for Fourth Quarter of Fiscal Year 2021. At this time, all participants are in a listen-only mode. And later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] Today's call will last one hour, five minutes prior to the end of the call, we will announce the amount of time remaining in the conference.

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

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

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

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

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

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

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

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

geographies. cash billion, happy double-digit and generated afternoon. Good $X.X grew product substantially I’m growth $X.XX earnings more flow growth, year, our our another XX% in of billion. than expanded margin, record revenue with substantially and with Synopsys exceeding groups to delivered We to record non-GAAP report XX% that We original operating all goals.

with as orders significantly a and momentum, visible expanded in innovation our their year. disruptive as addition, outstanding number of In accelerated an large customers Synopsys, commitments collaborations

with we result, As enter XXXX a fiscal momentum.

discuss and a very which our forward, expansion, flow. long-term to strong in non-GAAP market, aligned earnings Trac double-digit outlook The Underlying in the more financials Smart era long-term our all Synopsys are a only powering and we inherent raising vigorous just of per with the segment. but importantly, driving revenue every range, for challenges in mid-teens in operating well technical a growth EDA IP elevated new will this vertical growth, in margin demand ongoing non-GAAP are share anchored detail. strengths. as financial Everything step-up targets, strong is Looking objectives not growing cash

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As interface, across provide one of segments. key is number provider and position to solutions physical foundation unique IP, multiple Synopsys the in complete a

example, compute PCI the and interfaces. memory including XXX/XXX HBMX, high-performance many and IP Express, For fast-growing for gig market, broadest center Ethernet, portfolio have data we the

in automotive, by to reliability. the fueled safety, push higher We security of electrification driving, continued for see strength the demand explicit also cars, the and autonomous and

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prototyping products, Empower higher-capacity now This Meanwhile, our are XX competitive solution are than application-specific that differentiation. in ZeBu and at capacity of highest emulation ZeBu with EPX, machines We significantly we sweet faster sit market. new spot hardware-software and the the and solutions HAPS-XXX the year, our performance co-verification increased and fastest better introduced our lowest the XX cost emulators delivers driving ownership. and Our system of debug, accelerated the faster any growth.

we achieved and During of about the the the added repeat of of flows. automate The not learning enables question, competitive Which we AI year, entire XXX significant technology advances a new orders. disruptive different the our Smart more tools, base, begs is machine design delivered promise XX ago, very at and Obviously, Today, AI. capabilities wins two just significantly but we at what a all design? to years outcome multiple AI chip key sits logos in era fundamental runtime magnitude remarkable. broadened than applying customer products. About to our the as center Everything and using enabling

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As awards design our most collaborations well-honed flows from multiple that the at our have and ensure by recognized customers trusted technologies. deep our mutual partners, foundry advanced

how the Synopsys heat at computation. much This wave. high, addition Compiler, of many introduced chiplets that a continued modern, challenge. which the a and stacking design. is In and connections emerging much the the management abutting push geometries, multiple In differentiated brings offers and of making XXXX, storage a the chiplets, this fast, Everything compute, driving into smaller chiplets of XDIC for blindingly or XDIC push chips between multiple data hunger and dissipating predicting to about this for including economics we complex challenges, approach design so-called to towards is so Smart architecting is so physically forefront partition the to more

is on solution designs being in industry. XDIC Our cutting-edge in production the deployed

Another and system added is with ConcertIO. accelerated adoption Lifecycle platform, with lifespan. during our which the IP logos, optimization of Management sensor year, area real-time and throughout applications new in-field their AI-powered great key of the The acquisition new showing Silicon promise recently we for XX analyzes, optimizes chips monitors,

safety built Quadrant has testing in Magic growing the theme increase market. flow, software. invested application for software broadest in Smart year Everything, Gartner were the rapidly enhancements for massive Benefiting provide complexity and in exceeding the row with a years particularly security we ago, systemic a seven a quality made, Synopsys world. to operational About for This the products to in chips deliver since security security original the services of testing. of expectations. today’s we to in With application amounts and growth Software Integrity, in the for portfolio year consulting leader orders from XX% our achieved is strong we’ve Integrity recognized and from fifth the our as full-year, the Software business

to expect XX% our revenue We objective to return XX% XXXX. growth in to

largest-ever structure networking, and year, a We our our substantial enterprise reached to launched airline we Software the adding partners groups go-to-market partner of a past. as as growth new with proof well is hadn’t the segments. integrators. significant in scale dozens systems and multi-year, execution. priorities. been has that and our customer focus are market the geographies During hyperscaler, our multi-million-dollar the refined reach and year, renewals our in strategy point software already sales our expanding into U.S. One of order Integrity this agreements. notably successfully This We They includes channel and tuned program

to risk into considerable progress it which analysis within We enhanced automates Orchestration, more made cases. with their pipeline. Duck solution, efficient delivered us very testing supply-chain and a Software company’s protocols. directly Platform. also easier This We development We software Integrity security positions our Intelligent Black specific for Polaris composition our which software makes integrate well

competitors all solution excellent in our that automate and Code delivered with in greater XXXX and discovery results of Finally, beyond than through products software In what remediation the vulnerabilities we plan, groups summary, provide. Dx risk strength rounds of substantially and our well geographies. original management out all accelerate addition product

XXXX We technical strong market momentum. entering and are with

wave crucial help Smart long-term We will And are Everything. as innovations the customer objectives. are of catalyze our seeing result, we raising collaborations, a commitments significantly as be expanded to era our financial and of

entire of our to to year. journey you thank say great looking me another Let our staff exciting into forward growth. for an next Synopsys I’m phase

us has Finally, family, to I’m saw and a desire CFO, understand will been of him. until stay And place all to we we will course is friend ensure to remain transition. best. company has XXXX. personally. excellent miss other to it that a to I’ll the leader, time Trac will very to while earlier prioritize and your decided support in Pham, his retire successor family, sure a fiscal with and of you wish his our and He a Trac, Trac. we all that, good to turn Trac Trac with in and wonderful our seamless news Synopsys today partner over with you the

Aart. afternoon, everyone. Thanks, Good

While here team I for the so and have in forward we’ll a great family. transition forward to and be to in that and certainly manage with to I’m away a developed will of is I’m long, while career miss looking look years you. me leadership from is position, Synopsys and to talking many retirement, a over a the my step time I relationships with I’ll time also good team, our for still, to analysts. well. the this investors I the Synopsys confident fulfilling prioritize

earnings, Turning operating FYXXXX to our cash in was flow. an revenue, metrics, non-GAAP featured and record year all results and excellent key including results,

due a Looking that and earlier. to FYXXXX innovations; referred revenue the we and are execution strong opportunity and to Aart market new beyond, new the following: commitments; step-up first, era growth, customer compelling third, and in to expanding second, seeing

we as stability and Additionally, QX us dynamics XX% customers’ to results R&D non-cancelable our position of which nature because for business raise long-term are of confidence give financial $X.X backlog essential of describe momentarily. a I’ll revenue have in objectives, nearly was Ending to high our which These detail model, and significant well. billion. the level greater the the priorities backlog, recurring in in our

resulting non-GAAP prior of Total were revenue and share some margin non-GAAP in broad-based from across geographies. generated was $X.XX, We total $X.X up prior First, growth Semiconductor per double-digit share all costs XX.X%. highlights $X.X expenses $X.XX, by and and year, XX% of and full-year and up segment GAAP $X.X the all billion, Design with our XXXX billion, and expenses total were of products operating $X.X strength XX% were billion, costs product System geographies. were revenue earnings billion, a earnings driven GAAP groups the across non-GAAP over year. per and results.

and up million, $XXX over XX% prior exceeded plan. our was revenue original segment the year, Integrity Software

growth to XX% return to expect to We our XX% objective in XXXX.

operational to and expand we investments expect past margin in the operating we made following addition, this In adjusted XXXX. adjustments year,

billion, to We investments with Turning of collections. year cash, for strong debt total reflecting flow robust operating short-term the cash $X.XX $XXX our cash and and the year was a billion, record and ended $X.XX results million. of

year, During completed free cash or million, flow. of of buybacks $XXX the XX% we

the current evenly we Now to our be hardware to deliveries, timing of our IP assessment on Based revenue of targets. our the balance then QX expect roughly for the highest of year. quarter and split

We QX. to through expect revenue an QX expense profile for that similar of

total some billion a XX% total of the $X.XXX I costs to per of are: non-GAAP to full-year $X.X sustainable rate $X.XX XX%; believe targets For share, of tax cash earnings preliminary non-GAAP flow is non-GAAP and we the more between non-GAAP $X.X assumption. representing resulting long-term expenses earnings on rate XXX thoughts offer billion; $X.XX potentially tax billion mid-teens despite billion, from fiscal basis beyond $X.XXX points; $X.XXX operations additional to of rate; would tax non-GAAP GAAP modeling, rate expenses growth higher regarding of Based tax and like revenue $X.XXX share; XXXX. to and per billion. billion between in margin billion XXXX, $X.XX operating $X.XXX improvement the costs to than $X.XX year of of GAAP and $X.XXX billion;

However, for reform, a longer-term outcome is tax tax of rate confirm to it given uncertain the this us premature at time.

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

non-GAAP Our and financial include and supplement to press targets GAAP reconciliations. additional release

all of raising other particular are deliverables depending commitments. our the long-term financial on a will years vary that with and we which are expectation timing multi-year basis, on Finally, objectives, of the

is operating reflecting growth non-GAAP the range, deliver and growth year. on goal revenue more EPS margin in expansion Our XXX to non-GAAP than our focus double-digit mid-teens annual continued of per points basis

to commitment terms long-term innovate financial strong the combination mid-teens, testament that, shareholder In growing revenue it year In are meet new focus our is Software for customer groups, a for objectives driving to a to of digits, raised XX% IP to double confidence ability reflect Integrity value, the long-term our on our growth product and over of level to our for between needs. objective our a results scalability and execution, and is to investing EDA record in to our to grow summary, turn With the to us, in in to questions. XX%. our and and ability This step-up operator succeed. I’ll this

All go our Gal from And ahead. Munda. right. you. Thank first Instructions] comes question Please [Operator

thank Hi, questions. Hello. you and taking for my

changes previously? that talking leading on and and edge were what you. hyperscalers stand systems, the that and of out which there, The expected electrification us kind comparison those about versus terms specifically I the trends understand that first you the help for Aart. maybe you're for at what upgrading, you can you about talking you changes confident new the between you demand, one Thank one in the previous make guidance to the long-term guidance of is of was biggest look just you wondering you've When and that and is the materially customers in the the if as kind demands of you you had making long-term out trends to a

learning. still I'm Amazing.

Thank broad. question you. to that. let about is start from me the outside. inside The Sorry And the very

have investments actually of On degree moving place are vision really heading put a inside, along. we've field is the was our where that in high over we confidence coming many a the towards well because of because of years together of the number

And requires investing so this market technologies we've towards smart notion of of every the that in set vertical in. a been whole transforming world capabilities

quality in and the including in the it systems, entire the it manifesting themselves implementation, including these the all itself investments And backlog. actively. of design manifests be software really deep also to very of see collaborations capabilities, software, also the trends investments so overarching many and in of of and And be increased as are of verification in customers in of but validation a hardware intersection AI security, the us strong advanced in witnessed in we technologies area it commitments and

how there us that clearly shortages only for that the outside, very sense right the companies, it visible itself ones development is either contemplate so but themselves. important invest painful, semiconductor some But illustrate From and a be semiconductor that architectures industry mentioned, starting semiconductors semiconductors doing are hyperscalers, the the it companies, many industrial to because And including maybe that year. so coming or well visible is gives you not through because are. companies, automotive the all

the and is And where the the are very active. need alignment of capabilities so time market it our between

we've we that of growth the margin the of committing reflection well. operating a what the all to investing is margins last in in we're driving add And lot been by the also we're year long-term really seeing our us that. expansion active raising business, very to areas. and in I business And a we overachievement operationally. while objectives, in can giving over across simultaneously seeing also you're are basis that's as have Gal, the what's points, increased years, over XXX confidence this few Operationally, as and momentum certainly

value really the significant So create long-term. to there over we going believe opportunities is be do to

kind you you from close I Awesome. forward And it low-XXs imply on very maybe the carrying very, that that going basically are to on in order business Does growth years, that incremental implied. towards the margins the to of at more for being just achieve or just look of of comment guiding is margins now margin, bit for? last if that XX% few the are reinvestment potentially kind a in to continued conservatism

would There's margins approaching Yes. time. and the see details a this deliver to providing not clarity to more And very more expand we're giving opportunities I financial characterize drive us on we specific it how in going actively. it we're as long-term over you mid-teens for will We we're cap change terms model, no continue do margins. how growth about earnings of margins, time. to with over

Ashley ahead. now Thank McEvoy Fargo. go you. from Please Wells And to

Hi. Gary This is McEvoy Mobley. for on Ashley

In license as you QX terms of that terms any is for in color billion there metric average metric far can you ending that you backlog color or $X.X – called the any guys out, that anything as give of backlog of mix? additional else other on duration

The billion, run as characterize very this business the I strong really good momentum year. is it Sure. for rates and annual business $X.X One growth renewed twofold. would in we that

product In addition, expand and our that and confidence to their commitments we're of customers technology really several saw a in reflection we the it's us, delivering. also just their large

– think of for establishing good So very several confidence I the next in rates years. the terms growth good very

Thank you.

welcome. You're

from Thank you. now to ahead. go Joe Baird. And Please Vruwink

Maybe take customers portfolio? on direction are typically they renewal. engaging they are quite specifically development? how the on the investing I'll key I last as with product bit are want they upsizing just of these in What you What everyone. with themes? renewals Hi, And that a your are guess, engage you to obviously up on point seeing product in pick the on Great.

big system, as related as people broad question Well, down such a not customers, These compute, big the and which that spells chips objectives they automotive. it's past big combination necessarily need are all that from actually were because people fundamentally the throughput the and thing, in to hyperscalers software, now quite more think they same all chips. of the of an earlier advanced more and better is capacity, meaning And or that to complex have run that.

this software you in predict can how emulators really run by actually fast how system or can running intersect make latest by how will two you technology so on faster And us secondly, your And mostly to they state-of-the-art the just the and areas. optimizing then tasks want actual One the that chips of for actually already that architecture the people is start prototypes. optimization set even they with implementing AI and can chips often design they specific with they the node. interesting to for is technology of And the tools. oh, our where a use me with And new – do. let have becomes And very that staff. flow then they to particularly move simultaneously, say, a optimize because node largely be automated

you so of of acceleration game are sort And everywhere, our the would two field. always business. of the has drivers And an see say the been acceleration those name and our in biggest I

And XQ. XQ maybe what you revenue upside a guidance that investment then of guidance back delivery just the you hardware, get fact driver cycle What year? that to would be of equipment on here dynamic the a sort could actually quarter half hedging The for the a of procure I of verification the to within to XQ. similar as of today ability implies of the need potentially brought the new deliver there appreciate perhaps be in any and kind we kind through of one I the that's timing generation it as this bit finished phenomenon. not imagine assumptions? into up since going stands hardware, the Is

side question. financial of the answer Trac your let I’ll

being general, also as business but of in sometimes regular, I the is highlighted, you exception that hardware in fairly lumpiness in our think IP.

we supply in check those at looking clumps these and we so whereas obviously And well. very continue issues, as now, come chains and to we're sensitive right to are delivery any major things all the not

at where this have time on that? planning basis And Trac, so numbers to want to of it we're in you already we hand. add that you the the call caution can point in do

strong well for and things Certainly. reflects first really the on And timing One to momentum deliveries. guidance we've you profile just business just specific give it hardware the And been we and up of And is just build – and to as rest QX seeing happens I the time that. given for be Two up. will Hey, that want time the outlook for had momentum IP, the in of the hardware and visibility to was add. broader is the as hardware results when to this significantly XXXX. us IP. build of say they're pulling really IP year a And revenues backend We XXXX both would I XXXX record when just and down that we is they hardware keep XXXX, question, reflects have hardware a for loaded. their in had in To of mind and in it pretty IP the actually compared your in deliveries. that where Joe. the the

then to earlier, And is so And Aart of at us as top for $X significant. that grow XX%. pretty IP, on mentioned it’s a billion growing business

good really showing momentum. really it's So

Morgan. ahead. now Please you. All And Jackson to J.P. from go Ader right. Thank

guys. for And know has congratulations Thanks I offered if yet our from side. anybody questions, taking my Trac, don't Great.

So yes, congratulations on your retirement.

but be around you're least at You'll for sticking while. a missed, little

Jackson. Thanks,

multi-part my Vleeschhouwer best actually Jay impersonation am a to going question. do I with here

front want versus And you you do in core it market curious it you double-digit is end EDA, taking double-digit end like expect in facets to assumed hardware, are So Thanks. others? on the what you EDA to break EDA that what fusion the break out just of share? of software, on EDA, core however and maybe to of facets – back or outgrow out, want or planning second, growth I'm growth the whether what particular

point advances that clearly up they they coming are where because over time in lot now and we a this question. to do a extremely others well. how many ways, do, our well certainly of to Well happening position the are line see looking of haul It's support. a does time. overall industry with the have that is in are hard do it technologies and number suppliers where customers point with Okay. we well that a technology in and will right predict start entire longer let's a of many trust But when And of a competitive demand the at lot

synthesis not it at do. but it exactly know, was computer meaningful many, Well, in and that this term the where Now see is Synopsys, of fusion, artificially work, of design time, that technologies to of in you essentially AI because very different layering access invested an astoundingly exciting been fact result we instead see. ingredient to that get multiple fusion just ways me literally many top in very And essence independent better it's But inside that autonomous is days have tools, to many, better is feels as as early an in having notion a was miracle, mentioned the succession miracle. collaborate, can almost we mentioned human many because running was well the as to did like well. we you the that I'm have was the hard And of that, many a area now a tools and years key and the same of can growing with learn that a well. on we a driving And to it the algorithm working what And get for here. of also preamble, a fusion you doubly glad of exceeded a this being flows. use like results lot if I a can had concept capabilities fusion, fusion was

have things forward. area many So that brings this to I an that drive things will the of that together expect be we

not repeat much said to I too Now earlier. what

by half chips what the system chips are for executing that a equation And fundamentally that are for. other is software. the runs The task given of

hardware system, now. what do well, for the is Well, fast. if is types applications new creating to software doing so unstoppable. to certain that that make software. that run the run is system of faster then architectures we one is that say, designed And desire the everybody to just is essentially And for what blindingly They're can way right specific

is the And a And one need effort the to the good the in and able these be. application have the between predict where and results so emulation intersection place the on. been that is prototyping, how hardware so all be to therefore what will

to adjacent I want EDA. I and Now, understand to slightly mention, the third it's area

I the been functionality and as surrounded the look it to silicon has have technologies, build. the enormous are history accomplished of in would one at accelerators that IP. is which advanced blocks EDA to more great of in IP most design more Although difficult have And

sense And things gives the I that of years, IP to we so in very that before AI coming us is those a And strong mentioned position. way, a that block. what same applying combination we're for also are the the by

of whole So there's integration an space. solutions the

Jason to And you. Celino KeyBanc. go the ahead. Thank of of Please now line

maybe Great. because double-digits to a more quarters. with can a To And is this looking couple a questions. taking Thanks for first clarification my in lot it more is But for least forward Trac, double-digit kind this my double-digits things. you assessment? question, mid-teens, working that of mean the here, SIG and fair of EDA growth just low really implies growing growth framework. at a calculating IP least out if at mid-teens Is

on depends how IP, It you're at looking Jason.

segments businesses other systems the you're IP the keep as the in mind with growth. to on – segments in – segment line our think Just I includes the spot regards supplement, But well. overall that

on earlier software. is an Okay, EDA a QX lot a QX. and revenue on clarification absolute on industries maybe perfect. just question quarter Joe's of across typically the for basis And then lowest

As to pushing this Thank or some is you. hardware forward IP deliveries? the of their and it it possibly these relates pulling concentrated deliveries in deliveries quarter, out customers the maybe

unusual Yes. And how things in. about really much either don't from Certainly, or there from really fulfill typically just it match timing of our seasonality. pushing ability perspective, It's weren't see to anything up. or pulling we the the seasonality it customer

couple the – This seen unusually past year other last profile even, XX-XX the strong than QX, second it's is of the years, in back in line QX. the loaded, balance. has backend business in has half a pretty been terms particularly first what been half half, QX the the the with we've more in Over split and like

timing reflection profile So pretty other demand, is the QX, than which a good year. normal of standard actually for of a the it's

better profile we've seen the risk a certainly than in I years. of last think it's couple

And ahead. to Jay you. go Vleeschhouwer Thank Securities. from now Please Griffin

Aart, enlarged gotten last to have with growth number that this the you've evening. investments to respect end with point. years to track number made that Thank referred respect of to or of things the investment The question over you the you. expectations, Good to internal a the you your for in customer's investing appear deployment supported been when have incrementally priorities in, and initiatives, look a there's AE you are you about some of is we thinking how example, your substantial the been at increase investments requirements.

in SIG synthesis in like and level, at areas be appear custom. you purely an substantially And increasing. technical New to software to consulting seems increase the have

or for those to feel invest of number that you need on incrementally you comment can other the you priorities to next are you any or of speaking perhaps expecting growth the years? that that sustain So

some it. question. And question answers excellent had your Well, the of in

is or You top which of together, no do I grows of put the support additional mentioned grows, business and themselves there's that themselves. their using delay those that reduce value. that benefit which it. actually help an with done, essentially of customers our that of matter would that how be high on are some used is And business growing getting them – time of what’s number consulting, or a a our consulting, But we that, is chips and skills bring skills until have can extremely difficulty these the if to

continue. will that So

our very You custom, course, mentioned first product. and synthesis of synthesis and was

this will still Silicon bring So the we after mention. more transistors And that is new that and One except complex XDIC, in Lifecycle ability actually to two have to the and is and an so lastly, synthesize a didn't area that Custom that in very, they're extremely area. unavailable. is which an very new while, continues you us. done SLM, chips. tightly, There invested well will called AI, XX This this. upside, the as in that more years, year for grow hunger a has be excellent now And version quite of together is more for is super good area fashion, Management. because the we're That's still for is right. grow investing

the organically complex can more autonomous could through of then that and putting as is car, be some endangering if that in such healthy, and into become We grows as for it's of notion driving essentially human inside go as And acquisitions. the chips both diagnose example. it still have an systems invested particularly chip applications, systems sensors importance interesting because a the

that's also are finding area making one chips an lot of chips, some the their of is outside where this a AI can learn interest advances sensors we from very over with so that put rapid the inside and some so we've and of lifecycle. And we chip AI that put inside the

a time bit in is that capability broad embedded excited it's it of until take will this about. very So little really extremely powerful but adoption, we're

Hey, Jay.

that of really are board. you way Another the business might that at well of the We're areas that look lots are, not problematic doing across investments at looking the requires we investments. is

So a targetedly portfolio next years, across the to few of situation across that. the – you're and improvements see to and the broad we're a in of able over as going we're very thoughtfully business result continued all

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

well. from to and Thank wishes as my you question. best for congratulations Trac side And taking my

same for but what For of when the the you did you question, acceleration it's double-digits, last as my first of growth year. you outlook EDA at mentioned trends, look about

that's at overall accelerating, business shouldn't perhaps why yes, SIG. is comes segments? from IP more Are less more the And question incremental growth stay the my predictable accelerate? is they predictable less then also than going segments XX%, and to EDA EDA the is So your if So coming or from but growth business?

provide growth when do as numbers single-digits. let double can from a the it, just double-digit. actually the was us. to EDA to ago increase we but that and for our color opportunity broader it we a view high in of in see the as do not growth on described Well, talked we as describe digits, really an with context. me historically, about just then we When multiyear Vivek, mid one-year years as it a And Aart business for high several see we've some model it effort, it multiyear, single-digit medium a – grow start

the a double-digit in an increase the various portfolio, to of So us time. And that period single-digit extended substantial contributes substantive and growth. from over confidence describe it portfolio growing for the EDA to that's high to really that pieces the pretty reflects of

would Yes. second I that.

it think we gradual do, but the of also the I offer. increase is of of the what a of capabilities breadth importance that we

the hunger unstoppable. be the I'm And would so this impact more certainly times record. will opportunity, moments that do as from multiyear vertical see Having AI the that on a down verticals, many we and silicon have starts said for in

lot our perspective, time from help themselves. customers very of place And will that at the capabilities we at a the with so are the differentiate right right that

expectations the guidance as continued our high. direction overall work. of are But our has years over Trac So is last always We giving in that to delivering said, know you. the we're hard improve terms

Got it.

price my so And we the follow-up, expansion, in semiconductor of market. have ASP parts seen other appreciation

So is, pay to negative neutral other nodes So able foundries business? if I'm prices are you example. right? a Or positive higher first curious, raising prices are across having for inflation your them just product more or their for of that are or the if for curious more careful prices, let's your cost extreme make about to the of the the your also is the opportunity, it raise board semiconductor adoption customers that say, pricing perspective across parts and I'm base? what other of any? Does does advanced your get to nodes. does advanced growth more ecosystem to

and that to this because technologies how you lot for with of think is industry really need role capabilities true, is is become is also Well, an decrease. you and better important exactly is you design that I expensive, be expensive, believe say, close certainly these. some the increase well, positive sure, they're we careful the Sure. a And more more our deliver where for they to I more a new them, are semiconductor and us. as doing better, When that doesn't

with to to itself seminal we we as contracts over industry. while have what feather do gradually That opportunity is we'll so come. our so to value that up in more is be this multi-year customers, deliver entire And able verticals in all the to an the certainly years

good have just pricing it are that will the I with and so to point that way thing. future That's in what were is path, that of in time. go clearly What they increases more a visibly, and important semiconductors over shortages. the do to see So not builds value. is positive. builds value some the over a I These perceived that know are as

UBS. Pradeep And Thank Ramani you. now right. All go from Please to ahead.

I taking for on Thanks guide. Hi. question had congratulations the and the two questions.

what I the been IP magnitude on So much such a would've did I a mean, at And and on timing or big pop well? the the mean, backlog, the it – course feels superimpose follow-up, would is trajectory going one you and the the as of shift a it when then of should the the as would hardware. guess it first look of commentary, quarter? to I mean, from end you in how impact, shift I but call was your if backlog view we like how it against you or would of very potentially characterize of I XXXX? lower year the backlog then as the at year be think being during that the about higher normalized the strong,

Okay.

when hardware. was this draw the IP. timing question. is mind The shift revenue. really those of reflects with And website. under And quarter from matches shifted want want really in that operating when rules IP development me no our up IP just from that new their year revenue first happens IP that they keep hasn't be what we're that for in and the third to your XXX when and recognized customers there IP one that gets And another, they or shipments down to hardware schedules. Pradeep, Let start it our as that

it that. normalized guide $X.X than just also little saw QX, run bit are our quarter strong – $X.X of don't we renewals. lumpy. was and regards – we as often will of we rate years. The The overall we a the to In being billion model during as With backlog, significant vary. is strong so three renewals. no But significant in that to on refer years. projections And the that we going bookings it longer why convergence several backlog, reflects on really the large But profile growth overall booked. billion about quarter-to-quarter, then deals we three there's saw what large that's duration And very the of And several said a forward.

from All Needham. Shi go Please to And Charles Thank now ahead. right. you.

Aart, said just number. a duration. length could question. and the understand Hi. and around want really renewable thank my contracts year Obvious, mean, contract I contract I and three you years. skew taking supplement. I and afternoon, take few I back Trac, did the Lisa, maybe you than be Good up that average noticed to little the you the go to for the bit seems backlog down that of But your duration large a to – longer very large number,

just However, you the long-term is I I like contract quarter they want number. years? to that going duration trend of two forward? the which to maybe and is partly in backlog to back Or be ask with resulted are commitment will this a customers expanding you, high to because maybe one three that wonder, you phenomenon is your years going go a somewhere mentioned north between since three

Yes.

they that it with some breadth in that terms of see don't not and – that to that we've trend business On as duration-type our a with run quarter you given three-year start continues tends three-year on specific But case in to And are duration. they business seen, if at of little customer range. but be and dollar the we or are. typically changed. norm regards what any purchasing. me commitment, – this necessarily that's hasn't linked the history, expanded Let might a size, the it of our deals products the to our lower higher these is requirements deal, are in is depending With look the growing the it around business QX,

Thank you.

maybe little So want the next ask I a bit longer-term. to of question,

expense Is of R&D bit should hey, said faster percentage faster I say way to regard I things my little mean, go And than imagine R&D can you. results to the to can customers, Thank spend, than you the about, to the understand tracks the trajectory but really longer your term? EDA. try of product go EDA R&D budget, going you with can that get think tools, ask that to the maybe a what industry use you can deliver maybe change In human growth, maybe beings. more into human will you terms can of that guys allocate can could go and AI fix – the mentioned EDA, of if than of it DSO.ai you beings, right a human terms impact do beings, guys largely faster I results in higher DSO.ai, maybe DSO.ai EDA EDA

tools, is for engineering exactly when At absolutely quick to constant how the argument race use about Oh, opportunities. great time there And be which going that it's better many against normal say, the phenomenon save same is good you accelerations yes, are a we time, become of the to I great every our happen is because a will invariably major in field, advance, make, make which our off. a that's customers run. even competition. more is, And of competitive you my acceleration this these our way will think use I'm to it the because that now

was on lower chip, think share race that on And the absolutely is in saw the power so days definitely we share so networking, the for of AI chips. of computation, wave, of I computation race the for And early the in on. now mobility and faster

future, so moments the and perfectly is it well sometimes great are as competitive it on that it may our discontinuous for we but Be they fact of differentiation see a customers. understand view our have point point again. for of a customers opportunity a And that too race for view positive competitors therefore, these see their very the from us, advances,

And a in suggest. why positive just to as as much also so the one of reasons have year, will we And do years. the what confidence we but not you possible absolutely try is this coming

does of you to have All with portion right. Thank like time. remarks? our you, the conclude Q&A and that any Would closing the

Sure.

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Thank conclude does using and for our your Event and call AT&T ladies today. Conference. that you you. for gentlemen, Thank participation And for