Synopsys (SNPS) 15 Feb 232023 Q1 Earnings call transcript

Ladies and gentlemen, welcome to the Synopsys Earnings Conference Call for the First Quarter of Fiscal Year 2023. At this time, all participants are in a listen-only mode. [Operator Instructions] And as a reminder, today's call is being recorded.

At this time, I would like to turn the conference over to Phil Lee, Director of Investor Relations. Please go ahead.

everybody. afternoon, Good are Synopsys; today Geus, and Chair With Shelagh Aart Glaser, of and Chief CEO us de Financial Officer.

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

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

addition call, Form XX-K to including SEC, performance recent may subsequently and future any during In most XX-Q. risks that reports Form the and important affect our filed highlight quarterly we most results are this our with that described recent in risk annual on factors filings on our report

of financial financial measures release and found non-GAAP comparable press able earnings we certain to their these discussion. today. without that addition, released refer that In in the financial earlier will GAAP measures can reconcile not financial measures non-GAAP most during the we information measures Reconciliations supplemental financial discussion we and non-GAAP certain be to directly X-K are supplement financial of unreasonable to a efforts to

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

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

over call the de Geus. Aart turn to I'll that, With

Building exceeded and on Good afternoon. all strength year. guidance QX met delivered our targets. our the solid a from to of XXXX, very momentum start we or

our we business. confident of operating design the earnings $X.XX. the $X.XX. GAAP $X.XX resulting per with high target share remain in activity, Based at above non-GAAP robust was on XX.X%, non-GAAP our at range continued billion, in Revenue end of margin And earnings

improvement are raising for our guidance EPS. while margin and guidance op year revenue We non-GAAP for non-GAAP reaffirming full

portfolio, three segments: substantially. reporting we Starting Design and including software In remains previous devices. solutions, software hardware verification other last And solutions in few cores design processor unchanged broad includes we our and which Integrity, EDA connectivity in security. our deliver are QX, and evolved which and memories, embedded are improve Synopsys and reporting. a software, grown to reporting evolving business libraries, products. years, quality Design and Commensurately, the has security financial from Automation, IP, Software

you give is is Design To IP our XX% approximately Design Integrity relative sense XX% is Software and a of XX%. Automation proportion, revenue. about about of

is we our While well are split easy these represents XX%, of numbers the remember think approximate, business. how XX%, and XX% to present

outlooks all We positions in have three excellent segments. and leadership

leader still continued automation, market design complex innovation see in we technical more towards silicon the system As much, and much designs.

Software the software of are and our we a of modern continuation more teams. groups the needing for storage a broadest DevOps business, advanced and products the enabler more security silicon portfolio leading more Shelagh bandwidth, technologies. see we a And security the security in with IP, discuss the with communication processing, company still designs, portfolio will of developers, in As detail. Integrity financials of key for corporate

as years machine full in everything into XX intersection identified already ago, and Looking of swing. picture, the at we big smart is leading of market age data learning Today, Everything. overall the Smart the us

solutions further applications has with playing this come have capabilities Everything such unsatiable fantastic Indeed, also reaches. is more opportunity may sophisticated recently clearly compute. every for Smart and as is market driving vertical towards far new showcased the more shows You the an by need out much ChatGPT. seen how and space as now It how

see ranging of and key of a investments customers complex all security to power possible. to enabling hardware in deep make our heights is the While of midst semiconductor and to of design systems. of With state-of-the-art in continue complex to software some the catalyst undercurrents all companies and present this our drive to we this role for market the strive performance, software chips solutions many make the Synopsys systems purpose of our efficiency, and prioritize the to work everything this and the is smart be customers to from our partners, physics world. silicon quest,

done. we the design how invested Over and past that years, silicon several in have groundbreaking system innovations successfully radically advance is

intelligence it now So share of for to accounts segment, designs our and some steps efforts let continues while results and simultaneously me power. to highlights which DSO.ai design begin With with around well lower revenue production from groundbreaking delivering over amazing flow, already reduces XX% months XXX the deliver artificial of performance Design design simultaneously our the weeks for to about multiple solution. DSO.ai customers. our commercial Applied Automation higher

adoption semiconductor others Customer by achievements. are across process impressive accelerate a to already many reporting wide as Microelectronics nodes of designed customers top and XX leaders, of verticals. We production the ST put Samsung, Intel, market continued MediaTek, and range nine in such

ranging deployments The in excellent impact driving significant to and and accelerated the DSO.ai and is our growth EDA multiple products. hand verification showing promise. are data DSO.ai custom we customer our other designs. In new to Critical extended additional design that learning solutions powerful memory have success EDA engines of These already verticals, saw cross-selling thus sit test to to we capabilities workloads from across Meanwhile, are mobile, QX, the center including machine design. across underneath. also

market and Fusion momentum across wide processes. of verticals is our manufacturing Compiler Specifically, manifested spectrum a

below using expand used Fusion key wave our high-performance achieved node and a multiple of advanced hyperscalers compile to XX% a innovations high-value the computing Synopsys quarter, three-nanometer of win majority their at three-nanometer node the a continue designs a During a design customers by at exclusively Synopsys on to is mobile node stimulated design from hyperscaler throughout large with flows, including a at reliance and portfolio. wins, we advanced leading provider.

both complex robust and with work pipeline. continued quarter and scenarios Our custom under variability added conditions saw logos QX like temperature, so market multiple and these momentum work as a solutions, on. market highly we for example, in in to voltage, manufacturing need new nine correctly All the and designs

come That's our in. where verification tools

prototyping unbounded our at simulation, of state-of-the-art these products with an fastest and emulation challenges verification is engines, ownership. the cost tough lowest problem, fundamentally and unparalleled speed While capacity highest tackle

Building growth on both in in hardware year another continue and see we to ZeBu with prototyping record excellent emulation our XXXX, HAPS products.

This the quarter, and in achieved our HAPS with Zibo the hardware of expansions several hyperscaler EPX we and major largest systems as companies semiconductor world. XXX

design the multi-die and differentiated systems complexity. production on strong multi-die large supplier sometimes networking continued a a chip Compiler chiplet-based is new momentum whole XD QX, high-performance around deployed computing silicon era also its our system In IC company. Meanwhile, opening of design, called top, tape-outs at solution

Let I IP, XX% of mentioned, move our which Design me to is, business. as about

continues chip of Third-party IP, as it and of importance. to LEGO complexity in the grow think blocks design

by portfolio, and IP high-performance far fueled mobile in markets broadest systems compute, speed demand Everything, market-leading Our and in the the by high connectivity. high and automotive continues multi-die with industry, grow Smart to secure

broadened new maintaining our four-nanometer mobile portfolio and HPC with While three interfaces processes leading and serve we've in technical applications to high-speed edge. the leadership, at

solutions own state-of-the-art UCIA first Tier now major introduced Express require universal of portfolio recently OEMs a UC see whole In systems industry an and node. protocol Meanwhile, become die-to-die strong milestone chiplet the their of chips. IE automotive with market, the test of Interconnect adoption of new a by multi-die standard developing short X IP. area suppliers is automotive-grade interface we process Synopsys The the choice. chip foundry the leading tape-out this on has for three-nanometer IP in

of me advances brings the our to increased silicon segment, enables software revenue. our Integrity world. push This mentioned, about enormous The XX% multichip in computation which as and for high-speed Software accounts

As their continue expand. security highly market developing requirements every complex, big data-driven to is vertical and systems, for safety

and Software to verticals Our wide to quality from range across industrial, of and health enable financial security and services, Integrity software a and more. the of solutions semiconductors improve automotive, systems organizations manage industry

the area where had continues environment, indirect in with feel we While to we and start macro transactions from this our multiproduct one channel. momentum to several year some good the multiyear, a sustained caution be

help to software risk platform insight robust and strengthen management. our and continue increasingly top-down multiproduct gain more evolve We drive comprehensive to companies

more application two testing majority account revenue our Integrity drive and purchased cross-selling for opportunities of now who security Customers as continue platform. we our scale solutions or the Software to

was a strong results. delivering the year, start QX financial solid summary, In to very

as are We growth XX% XX% well at as expansion to revenue margin operating of points. fiscal non-GAAP 'XX our reiterating basis XXX than more

fiscal non-GAAP growth to prioritize guidance 'XX to continued to macroeconomic chips EPS for are Notwithstanding customers raising our XX% and in systems. XX%. their We continue choppiness, investments

most technical differentiation addition, of uncommon software while companies. is business portfolio provides a In for continued stability our driving solidifying pipeline high-impact in entire our Meanwhile, our across foundation innovation growth. business resilient our model level

to welcome Shelagh call. like to earnings I'd Synopsys that, our With first Glaser

a as are asset financial, as exciting her on semiconductor have We we and as are the board ambitions. thrilled Synopsys understanding scaling operational a a well experience as growth industry of great to drive to deep

to Shelagh. With that, I'll it turn over

to the investment taking as and of the you, drive growth market the into welcome. of smart Aart, as next Great. thank community. look era you Synopsys part innovation the to in warm with for such of heritage meeting and in It's honor leadership. a company forward well join to I Thank long in a everything phase all an a Synopsys you of team

our earnings revenue range, end of a to above margin target of with non-GAAP very guided start midpoint solid operating delivered the high non-GAAP our and range. year We of the above XX.X% the

and non-cancelable strong chip that billion a model Our in semiconductor technology revenue results Robust driven commitments. and system was growth QX stable, execution is industry portfolio activity and by our customer design time-based despite business lower were $X.X backlog. expanding resilient,

tax result, We revenue raising targets remain for as operating lower our a due full and a EPS non-GAAP rate. business, our full reaffirming and XXXX improvement margin year non-GAAP outlook to confident we are our in and year for

were $X.XX. were which first approximately unless $X.XX share costs. GAAP in We costs review costs GAAP otherwise operating per XX, billion, XX.X%. non-GAAP restructuring non-GAAP million, now revenue stated. Total and non-GAAP $XX All year-over-year earnings total in resulting I'll comparisons expenses and share are our earnings $X.XX generated billion. expenses $XXX of $X. of were quarter Total results. were includes per margin million

our and As Design Aart mentioned, EDA we're Design we well. business. operating Design segment reporting segments, revenue operating performing was with IP align and XX. $XXX $XXX Automation QX, hardware the margin to X%. three how and now was million, reporting segment million Automation, we with both Automation Starting are software adjusted in are Software was managing X%. expanding segment Design revenue was Integrity. margin Design XX. IP adjusted

Integrity Software margin adjusted million operating was XX.X%. and $XXX was revenue

reach objective Integrity margin XXXX. to operating growth track XX% on revenue adjusted are to with We increased in XX% our for Software

cash. million investments short-term and of for of to $XXX $XXX We million generated debt cash We of buybacks. billion with flow. $X.X $XX We used stock our total cash quarter cash ended million targets. in Turning operating the and

Now guidance. to

are: revenue $X. more than share. per and share, Cash Non-GAAP XXX of rate XXX basis between $X.XXX and includes XX%. targets $X.XX year $XX.XX For which $X.XX of $XX $X.XX expenses to and costs $X. resulting fiscal full points. of billion Earnings GAAP of and margin XX $XX.XX year of GAAP approximately in costs non-GAAP approximately million billion, XXXX, $X.XX non-GAAP the to billion billion, expenses million of billion. earnings billion in improvement non-GAAP Total $X.XX operating to to restructuring per flow operations Total of $XX billion. $X.XX tax between costs.

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

conclusion, delivered a very start solid to In year. we the

While improvement environment margin Non-GAAP continue is growth. the the choppy, basis and non-GAAP year, for revenue points execute of XX% macroeconomic XX% we expect to XX% more XX% EPS XXX growth. than operating to to underlying and

semiconductor reflects to technology Our time-based resiliency customers design innovative and stability our ongoing business continue through activity cycles and who confidence model. by of the our our portfolio, invest

the turn questions. that, it to for With over I'll operator

Thank Instructions] from you. Joe We'll [Operator Baird. take Vruwink with question our first

drive this an nature to big your And to alter adopt enterprise-wide expect tools renewals of the period able how to then with enter in of step-up achieve? your a is buy-ins. project-specific share close product with guess, buy-in typically this they the the changing of How everyone. would next DSO do wallet be more of you're begin relationship heart we opposed this does inflect question, as higher meaningful and you contract to you I project DSO.ai. pretty total -- maybe might values? at customers we as Wanted when the backlog receiving to enterprise how Thanks, Great. think like when of visible a maybe

will was it the again that think the as does I beginning it yes, years relationship substantially. question, of which the relationship. It's after to And quite starting positive your a drive how on growth backwards going least Well, been with change distant, of your this Synopsys. physically at travel started have we of evolved being our for of remarkable actually customers number year at question, many

I actually, a the all the meaning And both Law, this in from fact sophisticated. Moore's or of way, way and think a if whole And be comes all traditional degree also that have demand big that becoming you the multiple continuation realize technology more that it piece complex. that way good on more interactions but software is a that that they is of systems interactions of set dies hardware a you automation there's have when

over a comes were not that things bit literally two how is it this changes design automatable. them that, now many very of And And results. done. us And automates with better a time little that to decades change in does of the it really thought the and Synthesis in fashion ago entry so the ago, a like moreover, similar be capabilities previously it years for of in midst fraction

have finished midst because the that fact very fast. out. they they're talking is so designs, these I we had Many and then of want I can before, that it than results the what And in production to project the said, better And well, trial, And reuse trying engagements yet. not many point out. at been tried the people extremely we're stuff so not

designs it is, yes. the is it. all adoption down the say, the fast. actually resounding proven Well, would so slows using why same it's you it make the that technology. That's tools sure slow has would production mistakes well, time, been At down? And they what what And these are a answer that are don't

high And extremely opportunity think space I see touching is moreover, there. the us of I iceberg. So tip for that the

negotiation fundamentally, in think I turns will suddenly can they and we scale be that. bear Well, bring evolutions. what contract way bring do. will the need a some of I that's rewarded to that Now we to But into lot value And need to will how to bear. that we they think to add from

great. That's Aart. Okay. Thanks,

design And quarter internally I Just the of obviously, planning the in different in you're this for were influencing quarter, is business. April terms IP has changed terms what guess, how the full you're the for forecast much presenting maybe a you reiterating than ago? anything starts of year.

bit the you So were in you half do still assuming? see volumes unchanged but the originally a more maybe than second

back for not seeing activity. we half this of the quite And is say unusual, and down sign not and timing in that are balanced and us half. seeing for pulled when weighted, XXXX own XXXX projects the their we XXXX. the second have the schedules. things were customers what a be first that So big would product in was traditionally and and seeing design. we're out bit year, really, note, I more half mean, I canceled any timing actually was change We're robust the the or is design with we're when and we as deals revenue projects shifted you aligned between

Thank you much. Okay. very

you. Thank

We'll next take KeyBanc Capital from our Celino question Jason with Markets.

for question. taking Thanks my Great.

Thanks. I are When first the other? potential margins you how see think, about Or Design the improvement IP Automation both, It's for out the the for margins. of think that. should interesting to breaking that improvement I we the and all, have? versus thanks the think what about levers

throughout to company. we four, thing improved that some the probably while probably Well, you IP specifically of IP, years, job. was numbers, somewhat as sophisticated haven't five you you better pieces, for seen very that before, were than I the was by have is last these it the substantially the I think individually And disclosing on which hope the realize know, Because actually a labor-intense is first over about think you this and visible margins it developing the expecting. not

think improved do we that, have of we getting actually I more steadily do because said we better at largely and it. Having what we're

lot history, taking then that I of IP and mentioned the into a the we quickly a of by increasing because IP a no start very acquiring earlier, we doing in lot our complexity there benefit a and benefit scaling are the see are will with doing it there's have that of they have to Actually, companies to chips hopefully, the you continue coming company improving it profitability move no they from that of that fertile done there. point our processes. And continue And And from themselves. understood before. IP, of never And reason view. preambles, to from improve very actually horizon so

true Integrity In that business do. is a a have you the leverage many sheer ways, on out company, which leverage work side, the software as the but the to same perspective and perspective, is that model you on different the grow you as the Software from get of

the And push that XX% opportunity continue all on is, continuing push both growth would time Software will Integrity to business, so we have now and the of on said it on by around we along the be which margin ops there's to sides. our while

quick follow-up. automation design that some room profile my side the still Maybe you margin on just has Okay. Do for…? core the feel as one

yourself, move There's how do is it the and could always right? you there's better. so always things room, And forward. saying, implement key then at you And when to look many we wow, it

company. all with there's so track to on the engine And we that. I think segments opportunity thee direction push forward the themselves three And there are here the But order do all same in have that to well. as of yeah, well or I improve in think cylinders

to than that have XXX just in our improve is reiterate margin. greater that basis And the for our goal would points Yeah. year we I

that. very we're committed So to driving

Perfect. Thank you both.

Jason. you, Thank

We'll Shi take question from Company. our with next Needham & Charles

come Hi, questions. around taking you it AI as good the ChatGPT, I afternoon. back you and for and Hey, an want to ask my Thank taking example. really just I'm

I really competition are your mean, some other But that are think internally there? and between the that people I Google what this there is between GPU this processing view about unit tensor TPU, is some Microsoft competition Google, but developed. and between is thinking a think people actually

you by and you everybody just want hopefully, from I to on exactly your So this. you. to The benefit this is that the there? the trend as a in-house reason what's right? don't in-house but custom like well to why designs vision thought want I to on this companies kind this comment AI? hyperscalers because of lead system of to customer, TPUs provide can tried Synopsys, like Is it check companies, Are ask knows, Or designs they the you chip designs? more on Thank your going I

every Well, possible. field, dimension I the on is meaning whenever with and major other Therefore, agree you everybody wow, is realized, want because must statement in true this things made, be for history, there's in some to is every race some possible. this our breakthroughs,

the put suddenly other do you that fact a each major or speak, catch mentioned, the will so up trying And usual to all each suspects, so that emphasis to with other. on

by for, half and smart true do realized to by now is they our that need meaning had to can we that is that benefit market has a it doing specifically by from increasingly It at chip down, verticals their that for that driven their say, I perspective, domain design also problem. decade every end least something want said

so but is the they with better people course, chips. better to same agriculture with algorithms can and phone. and for just as And win can by want and also win they of algorithms finance multiplied much the as And same not it's automotive, better optimizing win not for

chips, why of a see new think chips fertile will that's and derivatives therefore, so for we the And continuation -- see and semiconductor I for industry a us. very we of ground

follow-up another question Thank this question, had asked. Maybe just you, a Aart. analyst to back

margin surprised Design your IP the pleasantly margin of XX% operating operating very QX business the by in On side, 'XX.

to back point. really to the come want Just

Thank gap it an it's I is labor-intensive some with well, you think on always about the thinking more may quarter-to-quarter fluctuations we least going operating but be structurally the like partly despite design may it's of margin as quarterly annual line kind because a basis a you. not basis, than there's IP looks be be some still there automation Aart, or at EDA, from there IP probably case, be premise margin that on but in mentioned, forward, may shall here? lower

in when already IP. two about things because we're there a design flow to ebb supporting IPs, are bit nodes, multiple that and we're even and There's a multiple they've is labor-intensive that I fluctuations So the natural pull more make for sure want standards. as down, talked really customers and got building out just quarterly IP

lumpiness, domain. just lumpiness So next moving we're inherent is down. customer an always to the there And with pull a the

being we corporate think that the slightly over and time, margin is higher. than margin lower And overall slightly as about EDA

Shelagh. you, you, Thank Thank Aart.

Thank you.

We'll take our next Mobley Fargo with question Securities. from Wells Gary

Good questions. call, Thanks to Welcome my Shelagh. for evening the everybody. taking

the I'm Regarding higher first licensing that performance assumption is is than on XX% maybe fiscal the half. the lumpiness 'XX related in obligations business. the verification assumption remaining backlog? is more some supported Or I general, this and guess by the this based or upfront second hardware specifically, if to fully half higher curious revenue year

really combination of a all things. those It's

business, hardware aligning balance customers' does mentioned, terms lumpiness then product starts it some We have on to think we our you schedules aligned have design lumpiness when of our the possession with it. year, our and as that has take with Aart? a about So depending we to their backlog just IP customers a of as do, schedules through business that. with significant in

By the Sheila earlier. just the Yeah. on way, comment that made building

the in over, that you push high XXXX year. a quarter-by-quarter time, early in an the point recall with euphoria may anomaly see four, was I'd that actually you revenue that five, look six, market. was there say, would years, seven in And you If at at also our particularly

the there's weaker up. last to one in phenomena is, quarter that the on tends because essentially much And some Actually, the is of sales course, said of last this the works the year. than one. hard profile having a gradual I normal be a ways, more that, But slope everybody first think moving normal many

Got it.

Okay. just set you customer maybe maybe did. terms product an give that But new in I silicon adoption? of cycle haven't missed us recently stands Aart, I you if update I where life management heard mention or it. can on

Actually, from Sure. recently, that us. in is be talk which minutes all notion going finding topic came electrification, is it's literally. the which the of And field, applicability the must because is than car automotive XX to a device of also software-driven because love here about making I'm advances whole clearly what last domains redo are not I broader a happening there. deep we're And excellent we're somewhat essentially the motivation actually And motivated what initially initial of that of into a the the very a about. thinking

that the a ability the early car. then of comes steps literally the is And of do work? very how is with of And the you that manufacturing, chip, management sensors set the the of that cycle potential I the query question, they also years cycle, essentially when do installation should them having sophisticated of life where at the know chip in certain inside development putting or the that have failures say, and life through way in you about to still start a over abnomalies, very through but there, the through chips smart

key that was a so And driver.

in the very hide as just protect going fields such customers should from from are that different compute life that cycle down say, servers their some that high, as stresses are way out wanting their have really customers a centers about other I sensitive or, that. that to and Turns that

well, Synopsys of are whole opportunities the have silicon utilization development broad. many sophisticated test techniques One we that there assess because physics that are the all our AI and way utilization. to And very I skills and is skill to system here results. to very And the profile truly close design things fits different the so set the of are this think And in phases

see so broad will be And we this see a and growth us. here excellent project that for long-term

Thank you, Aart.

you, Thank Gary.

Jay Securities. from comes question next Griffin Our with Vleeschhouwer

you. has the in headcount one been in years AE thank the Yeah, phenomenon over large evening. of the growth made seemingly number Aart, interesting organic you've your capacity. investments of Good last

the which other about seeing is, are you being so to SLM, you're AE capacity of could just being follow-up. product And mentioned newer upon areas what specifically, the kind that which for question I'll any then you investment. speak that called utilization generally of directed. ask or my AE And is capacity DSO.ai resources And

Well, because new have great different question or introduce it's a technology, steps. two you whenever three we

how The their time, their to first a and of them for it useful how the situation thing while doing to make quickly can at X of obviously, is, essentially given flows, their it customer same ways run basics things to adapt good teaching the it get results.

course, do By sensor their there's going is this products, course. get things to good want circumstances. great of different And of Once can we by types a for somewhat results. you have goes learning of with once lot this results, done testing designed that, different because it for way capabilities or because the system And you they does in never be ultimately intersection techniques now time ends you optimizing many interpretation fast talk on about something like chip. built-in get the how it techniques, the you of to have all the different SLM, and into directions

to a of that some general, people automation set chip with The they people entrants lot handle a of the possible for swath broaden broader flow different into And the think be more the design, really customer that the we important. are to upfront. skill or as as more areas. in should some design are we going of newer have are and with customer, so the last can say, I the deep very And obviously is much looking I as in for is two comments multidisciplinary

done. preconceived of also reuse be should And sometimes with so away no And new and how because brand can on. one that's start right are there notions helpful things flows, of IT

are the and So becomes deep designs working a as multiplier and people our production the customers. and business we on our of relationship more more trust it's our quality of the in general, in important

Okay.

to upon is in you So was to grown. talk of the back verification $X.XX DFM already as how category the DFM fab sizable whole with grown at segment of with is time last has reasonably at and in XXXX, growth to a you business? reporting, a that U.S., report all primary activity business once which imagine perhaps progress used are you the it's of time, which the that looking segments was at that's new physical the era regard which say, could the time, the I since billion. here Or of of construction particularly underway, it, But you talked about about one

while and detail is results. we Design of why that has disclose extremely customer the the go what because we much part become time imagine, it and a there's a more advanced more also also expensive, can the the this, that are return our the customer. fab sizes. development in for great more And more of is you long complexity very but more as is dramatically the the Automation complex involved takes is have it absolutely technology Well, before you don't as doing we segment. doing smaller and reason technologies in of with And also in But to size device

you the more are manufactured build today called the better. things and it so twins digital And what model can how essentially of electrically be would

for certainly high much silicon really And -- the very Synopsis. that kitchen in area growth because are we strength an very word this -- good inside again, is this the see here. I'll trust we So of use and

Thank you, Aart.

Jay. you, Thank

Aria We'll take with from America Securities. of question our next Bank Vivek

year. question. last the was seeing raising go for between impressive. year if last were years, saw not terms think, I every is raise different do call, mean I full I'm sales go when Thanks you're statement you And few your in you obviously here, years the steady to or probably throughout it quarter. is but outlook so steady about year. this for to of the throughout I But over consistently able what surprising, versus you're outlook how XX% this year, the find it the growth very still why almost my but you not That's even upside taking few last year? nitpicking XX%, a far there I the year

that last the market. Well, that of me they uncertainty given surprised just you remind commented do XX% that to the you let were many we in quarter, XX%

year. that we domain we market, I would of it is there's what correct in customers but were to right are in questions -- our estimating this our what now stand for, be a understanding relatively the doing. that least reasonable at that we we on solid shoot think have understand some for open where feels still all

time, this at change see so a don't we need numbers. those to point And in

good to And think it's another impossible really to different. compare -- so year almost all a right on we're but track. because now, I one are the years And

tool as a headwind they expensive, intensive. it's becomes starts become it. And advanced then move because is two-nanometer to more then more Got positive but the sales maybe nodes very it that to to or fewer do cost growth? Does expensive three-nanometer a to design, your design mean or

for I'm So Synopsys? is curious, netting just out how it

there Well, for starters, are design think starts. fewer don't I that

think race on. is I very the much

because massive at are we've transistors. a of we thing technologies. complexity developing least the the we us believed all hopefully, and number stand little to a of learned in and us enabler, they people use is an have for saw But Secondly, I to new of bit of that fact all good the that always

itself. in in midst in have And we already. is in production multiple top we're design think a and leaders with field a actually doing are which new exciting horizon, number of fabulous now really us proximity to this going the is I close it one that is of very the feat a chips that that, from And are technology

not new get it's on active opened way the now the that ago. think. that systemic one has by years is age characteristic unbelievable of I'm formulated in so and retains many past, I it contrary, which up times there's to more going ambition from and so exponential a is this of worried complexity And many on whole having Gordon the I'm said learning, And record

opportunities. a there's different context in on, absolutely Now race continues. completely new is The

I on. to bring it want say, So almost

Thank you.

you. Thank

our next Ruben Roy Stifel. take from We'll with question

the pays. wondering to bit have more customers your a see I'm XXX Thank of first I following is at it part question can guess how implementation part tool, a I the DSO. your that the tool? then asked using of about But that customers you follow-up about that you. Q&A. guide a I the commercial the Is of talk in are how question the implementation the my follow-up [ph] quick cloud-based on And of a terms A was Thank beginning answer. had little you.

the we people you now even have is it's they it of say, most of it's because customers well, computation. we're towards can clouds. in had and way fact are better? we to enormous move But of circumstances. do Remember, interesting, very for number the more are exciting have what though, a Great company a And customers, biggest question. really But both. more still better. advanced number a still capable see also completely ones that you on their that cloud-based compute very wanting themselves that the top Could running to And it weeks. there, with Actually, of that that experimenting driving those couple

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Right.

AI and weeks Okay. And the and hearing the the to a been Generative AI, is of systems last over the obviously, more get that beauty as is few months concept about follow-up the learning of it, information. lot we've

in way as that right whether it forward Is cases. we should learning, some the accelerate that talked system that, move of the fiscal better DSO.ai? that gets mean on you improving or think the use to to would about, tend it's I would and so about that [ph] sensification think here that And layout

of lot a that's because about people design you're also better. not often essentially itself generally, results But a talk absolutely what get of product It's is about design the to that's getting well, is product it it's good there getting we forget doing. time, negative absolutely new we're product find better. design way The better. only and right. that, new doing over And a the understanding is can specific on When the working think great. improve to that? It this we're That do about, is

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but I way, And to absolutely of better, new a things is in think potential quarter-by-quarter lot of still we that's advances this, we're breakthroughs way, tracking are And remarkable. these things. see in way And all exciting. many do there the and

Appreciate detail, Aart. that Thanks.

You're welcome. you. Thank

our take question with Gianni Conti We'll Deutsche next from Bank.

Hi, And for taking you thank Yeah. there. questions. my

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that So little projects? follow-up of after. maybe terms I'll a And give then a in development sense me just a of Thank how you. ask is

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essentially the than systemic of that more So is complexity assessment side ourselves, effect before. providing

close because quite stage little an lot what there's is progress no of this. we takes the at And automating deal a normal one actually of continues surroundings, time, is a economic the longer. area to barely strong. business same is grow the the that see as overall, But this essentially At the mentioned to that customers needed and has bit in levels potential still of that continues lot technology of doubt a our signatures are

on looking little Synopsys. we we're and billion pass the It's with before. this at luck, And of will exciting. XX% soon. told a between XX% XX% which mark you so growing And target year, had exactly pretty we $X.X it's that close is to And

bit DSO.ai. engineers And GUI. Is same on like sort really new and as about going My a they also pretty using maybe like time amount Great. time using design. such that training growth for the be, the little how only that competition seems a say. That maybe are towards new tool little if compare to are would It to be Could follow-up consuming? on of was race market, existing it maybe just seems the guys great you bit could you the the capturing helpful. are of doing to you share much does a opportunity. a both in talk it Or most

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fast half year same is with the follow advanced and had run year, limited And so fast us, runs set of them. first years, really we a that whoever and we with will customers, recipe, we

discussions in And real so issue a we've it be the to made the training had. has never

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we've well. I So think done

the about -- hard feels compare years to speak, it always the already And speed a very tool of see benefit ago. for this this next not the excellent objective is I designs production have now of we we training and fact to and high and XXX to be will over hill me think that we moving would getting has say we rapidly solution only fantastic difficult results that bike driving But very generations going like that. well competition, continue to results. we It's to at of And kids our are very, number that to wheels, so I down I dare are tell should you with do. to is

space, and but also I applicability digital some the also I spaces And had not in the preamble broadened parallel mentioned test of that and think logic signal. in verification we've of substantially the the only

open And for are us. so of areas opportunity these broad,

you. Appreciate it. Great. Thank

welcome. You're

Abernethy We'll with next Blair Securities. from take our Rosenblatt question

Thank you. want you. to follow And nice with results. I just up

from perspective, is lines market and the the more along opportunity a have core your to in DSO.ai core -- to is your tools? business? Do put this same So as you Or it question similar product EDA margin Synopsys to ramp it? resources the get it is

better suddenly like, really moving lower power. so Margin work in may can budget be have issues another third you and simplistic more step of It's not and a gets say to somewhat when that XX% does here. find It or speed would time the driver. okay, keep are the I they the terms. you

very a to think of important we about question. successful with that no technical be multiply people there's for don't themselves our customers it times. and extremely But overall, high that adopt is opportunity ability are we advances good want many and These And value, have. many, space that they the our light directly work I to And statement I in because too for customers be like years. further in tougher

I we So will think be okay.

Okay. Great. Shelagh. just you, for one quick one And

get of $XX QX, mentioned million recognized? to in us QX what through just You tell in are is million is restructuring when impacted? expenses And sort areas those $XX costs. coming you when Can that that

$XX will in the areas It year. is the come growth quarters through over we've talked we're we're A it QX, about is of million of some really And then And and sitting taking QX. first about what of reduction. that doing that doing into the three of a that today. is portion small we're shifting hitting investment in it

trajectory. as that growth future rebalance ourselves for set to this up and using we're So a way

Thanks much. it. Got very

you. Thank

that the over de And session. Chair concludes Geus. Aart question-and-answer and our would back CEO, to turn to call the like I

looking enthusiasm to thank else, degree to later forward Well, of you and we're the participating very be the our Bye-bye. we And safe, speaking you have much heard today. advances a on call. in you day. probably nothing some you making. that, great for will in some If know, of for as With voice that stay

presentation. participation. Thank for concludes you And today's that your

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