Synopsys (SNPS) 29 Nov 232023 Q4 Earnings call transcript

Ladies and gentlemen, welcome to the Synopsys Earnings Conference Call for the Fourth Quarter and Fiscal year 2023. [Operator Instructions] As a reminder, today's call is being recorded.

I would now like to turn the call over to Trey Campbell, Senior Vice President, Investor Relations. Please go ahead.

Lisa. Thanks, everyone. afternoon, Good are Ghazi, Geus, Shelagh President today of Glaser, and Synopsys; Sassine and Aart us Chair De CEO CFO. With COO; and

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

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

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

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

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

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

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

generated improved at strong an capped orders XX%, expanding and in by flow, margin billion exceeded afternoon. our billion. operating non-GAAP targets further XX.X%, strong $X.X $X.X Good to end non-GAAP revenue exceptionally billion We $X.XX billion delivered to backlog $X.XXX sheet. while by XX% a $X.X by operating billion. balance increased EPS to maintaining just high of another cash we high QX record guidance year, quarterly revenue all In the QX, growing with

sustained momentum. moved forward Truly, with Synopsys has

year, business CAGR. at a for AI-driven expanding our by dedication operating deep, increased collaborations points for our the substantially relationships. customers non-GAAP passion customers' widened EPS by the but X differentiation Synopsys. cementing XX revenue XX% XX% expanded CAGR, non-GAAP and we've their through we trust also our and while in our and long-term that margin Over last thank years, product their unique and our at Through differentiation strengthened We also grown employees capabilities,

harm Meanwhile, unimaginable inflecting dark geopolitical clouds multiple are conflict in zones.

humanity. with Yet, the employees, families, others our uncertainty. compassion of how to respect never is caring, It thus see active for hurt colleagues, our each fast give we that and have heartwarming impacted hearts customers in for other all support action. will pain, by deep into at the positive loss teams is up Synopsys. Our And and norm turned caring and into leaving potential our compassion

share pass the briefly company the in XX which, industry to of Synopsys before impacted of ago, Synopsys that be the Sassine. and first the our to came some on semiconductor ambition Let thoughts industry state and defining navigated days radically me the the years exponential enabled and world. I now turn, the has baton From

initial contribution, million so design, revolutionized computer-aided design. to ushered XX EDA, increase productivity. Synthesis, a automation, transition We CAD, design delivering Our roughly digital from design far in electronic in x the

foundries with Law. During as our majority age big on of the at of era empowered with needs the slowing to leading the us compute terms AI moment the are been in Together the enormous and data triggering Law of cost transistor entire that have Synopsys' performance real, improvements, Moore's Moore's state-of-the-art. vast economics down becomes of the horizon. classic and digital then the very referred exponential products existence, And

clearly this $X fulfill age trillion become Smart in our semiconductor forecasted, X furious years decade. growth to driver we would About the advances ago, are. vision. This for and generative here And Synopsys the year's of AI this Everything adoption

in Law Moore's but on chip turn, front exponential of of era, even of systemic proximity. with SysMoore Law transistors These is again, eyes with underway, on Synopsys still complexity, is now is is morphing massively available. stacked the the the Moore's reinventing single AI will And happening a capitalizing architectures but the chips, on not so-called pervasive impact. based extreme classic our into a in era ambition. number each by software-defined at As increases other of top enable heart tightly or heart exponential the massive connected of in multiple multi-die architectures SysMoore

also IP hardware are technology new computation. production learning Our verification many race Adding results and essential AI-driven use digital design. investments technologies, deep that outstanding our broad pioneered adoption chip enablers rapid. spark all software Applied and collection into driving prototyping more of one building lets our to the and design, massive technical multi-die are customers has AI and the Synopsys optimization, twinning test, actually leadership, our in in exists to silicon electronic of run the is blocks before and

for the sense our a you our Most of exciting is technology on give adds capabilities yet driving to for the state-of-the-art my recently, and If opportunity enthusiasm advances of angle SysMoore move. announcement gen it. AI for another both the else, Synopsys to nothing

all about Ghazi Talking confidence, ambition next the I our Synopsys. also please give Sassine, vision CEO. expectations as leadership great your way our the transition. for executive enthusiasm perspective, on and us in we're move, floor on yours. and have The well for is Sassine

opportunity I for building the wave for you, am next our for world's and companies. into to Thank on propelling growth. building succeed grateful as essential industry Art, of semiconductor ecosystem Synopsys our and in of the CEO, to foundation profoundly Synopsys strong you the work one your pioneering

Let's remain macro leave resiliency. a Despite backlog business and dynamic turn to that model noncancelable $X.X have design with global with growth uncertainty, our macroeconomic in billion continue investments time-tested We to balances R&D trends. customers XXXX starts prioritize chip market robust. and

but outlook China. solid across our growth a near-term continued growth geographies XXXX, in challenging our expect We reflects in environment

adaptable China is an large and market.

weaker of and appropriate. our a more we list outlook, is given entity the in restrictions technology combination believe China pragmatism However, and forecast XXXX macroeconomic

and we productivity. trends those era semiconductor a providing AI productivity, the our XX% business. capabilities role greater solutions AI-driven that like a semiconductor thus, Technology is among so success. decade. trends relentlessly XX% to breakthrough step-up and We play challenges, customers' tide new for are intractable in industries advancing rising a pioneered is improvement Chief of continue to resource design reshaping is and create that our for can our shortage function their facing drive in this AI-driven AI design

Recently, Azure's at into Microsoft's the capability The to announced collaboration Copilot. generative breakthrough result power is strategic the of a a capabilities AI designers semiconductors. of fully enable AI generative gen from that the offer challenges, for for for integration across with Ignite of tool guidance, gen to Conference, that and chip expert collateral Microsoft brings capabilities the one autonomous design collaborative we Synopsys.ai The creation, integrate natural service with engineering of process most RTL capabilities complex design, creation provides AI new Synopsys.ai accelerating capability chip workflow language. and

of manufacturing. We're AMD, chip the Intel and the Microsoft AI engaged from to value deliver stack, makers, including Synopsys.ai across test gen EDA verification, to full leading with design,

AI are investment road early of exceptional. but to a results new our this We And Synopsys.ai customer customer are accelerate are our era, very increasing AI at we productivity. to initial stage the key massively map. unlocking is

IP design multiple see automation tailwinds Beyond providing expanding and other AI, business opportunities. growth secular design our we

with of device case and complex are our both delivering performance level are levers per systems-level optimize performance requires With yield and main like demand for Law, at customers the who design Multi-die architecture increasingly, today's large electronic implementations the our accelerating from software on semiconductor the and gains of seek approach competencies systems in PPA rely designs. these cost full to the critical slowing push validation of watt. the semiconductor insatiable software-defined bring-up even automation as design, silicon multi-die software Moore's And customers frontiers cars. use to our software and now as and

are Customers IP us wind prioritizing protocol Our and differentiations to now minimize content and node broad resulting Synopsys for sails. choice. vendor leading accelerate of IP partnering and making turning design teams success. titles strong silicon business Applications And device. to as advanced faster part the of claimed design on in their and foundation ever chip They scarce needs. resources IP X a an their on also integral IP value migrations us critical per development focus faster has edge IP throughput, in all their with design risk foundries architectural and range its are are to interface ingest increasing of

started have our IP automation our leadership XXXX. to TAM. this and software of more of positions industry businesses with and growing in trends in investment playing both We increasing design Coverity in design the integrity acquisition investments technology segments We're Our market our strengths. capture these with to

breaches. security point risk portfolio we help was searching for and security and to Software of were expanding. services every Customers to that risk company Security need. quality approaches the the reduce developed in failures meet innovative software were and testing a pain broadest for And

forward with industry-leading become today, over mid-teens months testing business Integrity the team in XX at our security margin. in delivering non-GAAP to revenue $X.X trailing Flash Software operating billion has application leader

of significant investment the much and compelling remains return believe automation opportunity we opportunities with attractive. expected are At time, higher the and future We profiles. design the growth the X years we've made progress proud over last design have and same in IP

review, alternatives have we portfolio to Board Following the business. decided in the our Software and strategic with Directors, Integrity of consultation strategic explore for company's

process, considering this we're full range strategic of part of As opportunities.

conclude that We update we after will provide an process.

XXXX high our guidance technology business, Based confidence are on trends, these targets. with and here our and market in

XXXX expect revenue between $X.XX We billion. $X.XX and billion

to deliver versus expect XXX year. operating basis a point XX% We improvement last non-GAAP margin,

$XX.XX non-GAAP financials year in and $XX.XX. discuss more full will Shelagh between detail. expect the EPS We

segment highlights share I'll some with Now Design Automation. starting

World recognition EDA benefits for the and by to of HPC customer North AspenCore hyperscaler strong to American projects. made This even We're by flow. a the more commitment excited receive major the Year. Electronics quarter, PPA use after the productivity demonstrating the for of proud selected across DSO.ai Synopsys.ai Synopsys.ai Achievement design was consecutive on adoption Award major but A Software

XX turnaround engaged up we QX, demonstrating over In faster time. customers XXx in verification, to with

pattern While in added than engagements Kioxia with test, more we highlighting XX% reduction. new customer publicly X

analog is TSMC process we flow migration that across announced through Synopsys.ai Finally, enabled advanced TSMC's and our technologies.

IP results TSMC internally seeing our with great teams turnaround verification to XXx seeing X-nanometer. also and are coverage deployed target improvements design flows We IP time Synopsys.ai are migration time Internal for analog teams. in have deploying

based and fastest our X-nanometer get ECO SoCs. won saw adopt the mobile closure leadership key We continues better XX% implementation Fusion power leading-edge including gate core and gate GPU SoC. ARM with Compiler In modem all DSO.ai, to by PrimeClosure Shield in a based data prime delivered win continued We designs, tools. designs. momentum with Prime PrimeTime, around the providers industry's delivered for saw all-around also world's family the X combination first the center on for engagements sign-off and PrimeClosure of mobile mobile Fusion for X time top to Compiler multiple

multi-die standard our we product the Partner momentum industry's Expanding leadership of design Verification, remains also prototyping solution, strong. OIP XXXX from XDblox. prestigious Year, a TSMC, new ecosystem, XDIC developing received supporting for the award first industry the

at our announced we in we a verification, AI-driven large with deployment quarter, functional Asian delivered and companies. year. ZeBu won semiconductor American next-generation large which record In [VRD] with than expanded This footprint [HAPS] systems hardware-assisted lead QX, a competition continues semiconductor solution, X XX another company. we hyperscalers top debug large and already North American our In North against at company more its

Now turning to IP. design

proof interconnect at Ethernet now for engagement X-nanometer mobile a technology on interoperability point The won proof industry chip. We and points Intel our with high-volume saw are IP showed production This concert PC Intel X.X UCIe delivered We Intel over firsts. we quarter, We with between at our this gig UCIe multi-die for IP, foundation and X-nanometer PHY other two and TSMC quarter. and with a demonstration in IP demonstrated die-to-die silicon. company IP PCIe and CE key IP XXX interface Synopsys on Innovation a foundry interoperability. first both TSMC leading key in

target extensible a the announced IP to range ARC-V to optimal IP. a flexible, we that This ARC RISC-V applications. choose new portfolio, side, the power options of performance processor their processor broad On product for from processor processor efficiency deliver the customers IP addition allows

win in automotive, at a multiple multi-generation in we project a delivered displacing Finally, customer a agreement. marquee significant competition

In the Platform. for is the QX, growth development against to and SecOps Integrity teams. SaaS-based Polaris application of delivered optimized of year-over-year solution saw Software Now security the continued in segment. macro over our backdrop Integrity Software Dev XX% needs testing headwinds a enterprise software. Polaris which we growth solid for

in our leader This We composition were for also on Wave was recently a as software based recognized an the software analysis of evaluation solution. Black Forrester composition analysis. Duck,

XXXX. execution operational results In momentum FY an summary, tremendous QX we into had forward and and and XXXX outstanding take financial

resilient position have We for business future in to that a the and and them continue prioritize model growth. investments chips our customers systems

growth. return customers to our aligning commitment. to and accelerate with Deepest are portfolio their We the and our thanks potential passion our investment for partners employees, greatest

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

was Thank record you, revenue, operating highlighted earnings. by Sassine. an record year record non-GAAP margin XXXX excellent and

We model. strong design and business our leadership by continue invest our through chip resilience with in our our are who confident the XXXX, system backlog, noncancelable and activity segments our to and semiconductor by position and continue driven billion execution financial heading discipline robust customers cycles across of execution time-based business our into in stability with $X.X and

while is EPS operating we non-GAAP approximately drive of margin by to XX.X%, expand uncertain, grow percentage expect non-GAAP growth result, macro in revenue environment a XX.X% and As the XX% points XXXX. X XX% to to

were expenses share operating $X.X non-GAAP per GAAP revenue $X.XX year and results. billion, $XX.XX of resulting with and up costs share growth were double-digit geographies. up our year-over-year. non-GAAP in highlights and and across billion, billion, We earnings all of XX% and margin year, $X.X total of Total costs total prior XX.X%. the generated some were me key Let earnings full GAAP products provide over were per expenses XX% $X.XX XXXX non-GAAP

to driven Design adjusted Automation and segment our Automation driven software Design segment. Design margin XX.X%. segment IP was strength IP operating was by XX%, XX.X%. was EDA adjusted XX%, $X.XX in up Design revenue strength. was on $X.XX Now margin billion, revenue up broad-based billion, hardware. operating by

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

for $X.X of million. billion. and was with the cash investments $XX and ended billion flow Turning $X.XX year We of Operating year cash cash. the total to short-term debt

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

impact and export non-GAAP further the IP the and split Now expect to on of and assessment hardware to timing half XX% for of XX% current the second year. EPS. assume reflects no regulations we which first revenue from our control deliveries, targets, approximately half, of Based changes for

the of of $X.XX between full billion; and points. For billion expenses non-GAAP total margin fiscal non-GAAP and to $X.XX XXXX, and between billion are: billion; $X.XX GAAP share, operating in year expenses $X.XX of $X.XX non-GAAP $XX.XX. X $X.XX roughly to earnings $X.XX billion tax and of of XX%; revenue year GAAP earnings costs improvement total Non-GAAP rate resulting targets $X.X billion, to costs percentage $XX.XX per

that approximately expenses. of of $XXX million which includes approximately Cash in of an cash of we 'XX impact amortization $XXX pay to will flow taxes from higher million and operations billion $X.X approximately the XXXX taxes due R&D of

in Following cash tax growth to be income line operating over expect period. XXXX, approximately multiyear with we a growth rate

and share, Now to $X.XX from billion, $XX of approximately the Revenue the $X.XX extra total per extra compared between $X.XX billion, earnings expenses week. extra and to non-GAAP approximately which including $X.XX costs between quarter earnings billion first $X.XX of billion week, GAAP GAAP and targets billion; expenses and $X.XX an non-GAAP total for $X.XX per fiscal to the share, and $X.XX XXXX. to from $X.XX week billion $X.XX first includes $X.XX includes million between of costs the which quarter,

of include you press forward want to event highlight GAAP Synopsys conjunction release Our Santa we additional look financial and targets on to many also Investor there. Clara. to non-GAAP be March XX, will will Day seeing that supplement Group our Users We reconciliation. which our in be hosting held with in and I

resiliency position to In across XXXX activity and time-based through our with and the cycles our who confidence our our conclusion, semiconductor design and customers momentum by reflecting business. of we entered invest robust leadership segment, stability continue

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

JPMorgan. take question Sur We'll Instructions] with our Harlan first from [Operator

hardware? mean, strong revenue been double-digit emulation past contributor years. the wanting this verification complex big prototype year software your number has year over chip 'XX start profile verification and Is the to Hardware and guidance. focusing on them application a a fiscal Congratulations very another for on I on customers of Lots growth next on [indiscernible], execution of get team head the strong design, these of lot development. embedded the a to anticipating

up inventories, wanted a double-digit a they're growing look of year-over-year your right, rate pipeline, be which is good hardware but I a sort think I to it of get your to And guidance? Will within at if XX% indicator of at views. record 'XX growth levels, fiscal kind strong

the Yes. for question. Thanks

even system company, want if from exactly they're a the chip with of trying you many semiconductor requirements early verification hardware-assisted having way chip. and system is a not Or design a companies enable terms need, process it, to to the step In verification that their the development start to software is the their they early. highlighted are and continuing, software of only develop to in getting accelerating the

where our enable the to into in that anticipating We're part And is Zebu XXXX. this continue comes platform solution. to and HAPS of that

saw into our had As don't 'XX, will in as year anticipate we XXXX. anything verification and hardware-assisted different for record you well, that we a going change

As Shelagh for to it turn the inventory comment, comments. I'll for

Sure.

a in said, Sassine As had XXXX. we record

We record able XXXX, expect inventory our be to customer in we're to fulfill building and demand. another

faster connectivity side, similar right, question of business continued right, backlog, in total as just pretty at DDRX, on will I And big Chip customer some the HBMXE a year, just complexity, XX% IP the your Perfect. right? revenue line with programs, transitions X, mean the pipeline business, 'XX tailwinds, growth PCIe interface reliance CXL, your there's design driving looking And gen be more forward. on profile? fiscal and growing IP IP sort last slower, maybe importantly, on strong licensing. off-the-shelf going up

door you've the various the listed. the the CXL, for factors. the opening designing the one And or exactly markets is of automotive. Xthe for for UCIe, that new SoC chip is There then the with again, two way outlining different requirement. different PCIe, there are an methods you're So multi-die up protocols complexity. protocols, There is There's

And as the today, different is in the complex interface What Samsung position supplier foundries. IP, the And today, business. the the are business. their in for are developing chip most that we Intel leading application. in and for IP sophistication an in we advanced and IP because they we these be position system, in great providing As leader partner a it electronic foundry script us requirements developments expand of outlined automotive on these requires that the for TSMC, the to for a fortunate are well puts very

the market to chips we given So expect sophisticated the growth that demand for will continue, continue.

take Vruwink with from our Joe question Baird. We'll next

to demand commentary. some Great. by out of start parsing the Maybe want

first, step backlog So that I XXXX the was to At same time, contribution revenue revenue signaling a incremental think and think big the moderation there well you're for revenue. the China imagine last in positive X months, just growth, incremental contributed worth of up from I'd in about XXXX as bodes the about just XX China. is China, points maybe I

is China arriving So are And you [indiscernible] a more XX%. growth XX% at then just outlook? factor neutral maybe the in than your guidance,

A the we you approach export sure that observing, a of that of is forecast at other China. the of of I'm And China. is for are the One into the some as inside of continued we is We headwinds, restrictions and market. factors. account X guidance economy all we the them course, macro mentioned, really headwinds took which seeing one the couple the number one balanced as the the that FY are took of tailwinds and in the 'XX. look we're We the and observing

from software we does our that enterprise account software continued headwind business. and stress spending is other impact integrity took The pressure into the

get is this Some about and is tailwinds, what we're seeing. excited where exactly we

demand amazing advanced and an and driving as silicon it's automation for The on most complex. us design megatrend and is our silicon opportunity the a demand AI nodes design is IP. that It's amazing giving

with headwinds balanced took both guidance We FY and XX% we came account the around as So view the the of midpoint for 'XX. into a tailwinds.

now verification DAC vendors in think more with of Okay. tools wanted actually development members I just and as you there relative past? possible their technology this back robust topic That's July. incorporated how if here not about And for the to the Microsoft conjunction team product were AI And done from far speaking I to of such a want then And get with clear. gen contrast July, using very product of EDA incorporating the Microsoft verification context take, just they generative to guess your to in I Microsoft a in this did and question, in are on the that what you've AI. their is from pace the maybe we're workflows. it's

it So maybe that able it seems than do the past? what much Synopsys like a very to quick was in Is quicker turnaround.

did easy, really back, one talk started mostly frame. time DAC leverage learning that Maybe produce well product machine first and was that but The work lot a DSO.ai are optimizing when about -- If we the we there every Joe, step pillars was and the in ahead -- a That made frame. product. focused there under our to the XXXX look it the we time and on too using the was I we Synopsys.ai, of one product take of around quick in the opportunity it. X AI

in bit calling excited AMD, of and The we're coming in actually the super collaborative gen CoPilot Intel, a pillar, what or of announced And which natural base of our the a about both that's using supporting which we're Then the language. Microsoft AI, knowledge-based down our were AI early is we and results, the is seeing about capability for users. that's using little CoPilot using Microsoft, where generative productivity with users capability the and talked and autonomous technology. what's path, workflow which our We're around announcement results users with approach the early we assistance. customers CoPilot terms of what for second some or is and a gen

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

impact million of you $XX remove -- the I the or I think week. extra If said about so

up. which to have to conservative be right, roughly sales XX% relative You're to very growth built guiding you the strong seems that backlog

enterprise of had I'm the neutral, you this but all is of kind growth think than Sassine, what impact last when that's curious, lower at XX% and now. that is AI then is I look China starting in I though years, and excitement the even X the mentioned So there software you AI

So is used are over should How kind of context growth the the conservative? of to it this from last seeing X of rates XX% kind we put the Synopsys we in years?

I'll that. question. in for Vivek, on So is This Shelagh. the jump thanks

we're balanced obviously incredibly year-over-year. taking about Sassine XX% a design have growth at automation, as we're the stance So talked we're momentum. at seeing strong design And a IP

in We're You mentioned billion $X.X the seeing long-term line with our targets. that backlog. growth

And we're seeing AI as a its catalyst, early but in inning. it's

we we're our horizon. a and China, forward the headwinds China, imposed So in some are it's dampening the be think that been it the long-term have on help having China catalyst. to about, we've effect. over macro talked having looking restrictions the situation to growth And able business are as drive But X

and environment to but China for in in software a at that is are enterprise Integrity that, muted growth our it we single-digit assuming that we lesser expecting a spend expect We be to the have will rate XXXX. 'XX, other grow business, impact grew in than we're 'XX. And business headwind Software

those headwinds at leading XX% tailwinds midpoint. our combination to it's So that's the and growth the rate of

successful are you Are you feature. this as it capability? kind is product. with track monetize are Are right track Got like very how selling a how to curious incremental to I'm the separate just interesting it. my seems it CoPilot, right a as the is for what it? the way tool, AI What follow-up, And selling way of right? to new you you able

license, particular customer an which technology. And and our that DSO.ai in access expect it's thinking well they're access long-term offered still AI offered an it it, project few this where terms are of CoPilot overall. we it be terms it talk we're monetization be it And customer case, stage way the if to cases be providing make early us how looking for to But a to be use and wants in subscription commitment, will the capability, the the of to as tools some we're to AI the et get early contributing it. will se, still cetera. may to adopter as spend customer those very use is get ready is for in meaning, in early, to incremental a to per offering flexibility So consumption the calls, through VSO.ai, They base. or we're the about customers one over not very to last a

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

Great. The quite impressive. it's number, backlog

back last looks like seen, XX% ever Looking year-over-year. quarter-over-quarter the it the of years, sequentially at couple it's we've up biggest increase

broad-based, just wanted much of the it this or check to design to was sounds Just It driven just been revenue. like tool the AI from how activity AI has more but wanted check.

EDA a the With customer agreement added. to is when we lesser average AI, that's bigger seeing cases, for -- communicated observing and contract some and much XX% a be on average that in renewing their asking average number growth last we're we're what AI the quarter emphasizing About because capability or over number. contract

that of that sense, customers, on they side, projects they're x going observing. have it or that Vivek, early projects, in if adoption, have X over made may number growth more monetization aggressively. The with with stopped But contract the they X stages it's meaning early other contract be I'd give emphasize EDA that to and still they earlier as are other I of we are well, point on we're in using We and to like AI. they roughly customers you early XX% a

Can grow $XXX headwind going Are with from then after? cash additional year. you to that just line And you net next will a then amortization guidance. taxes in you're million Interesting. OCF income there's and down saying saying be one that on question then It the it's growth and clarify? Okay. are you

question. Yes, Jason, thanks for the

and for amortization November. XXXX was as it impact We've by capitalized. And that moving are of it, is which those to R&D. $XXX the taxes guidance where then the in million $XXX So total of $XXX that $XXX already million paid $XXX impacted million, the million Out we're XXXX. of of R&D payable new was tax million of both from for is is again,

into of operating move we that cash the growth and with XXXX will as forward, move we of tax align growth the income. rate we our the As anticipate beyond,

a we not is forward. level there We big up step of move year. bit do So a as anticipate up that this same step

Got. But right? this is the base new level,

is It be is we for amortizing the us, of our about And of our future, foreseeable R&D R&D. forward for half is and the half going U.S. because we're about in R&D the now U.S. will outside

So scheme for foreseeable with future. that the is new us

We'll Griffin Jay from Vleeschhouwer with our take question next Securities.

first, a For Shelagh. financial for follow-up and then Sassine, Aart

you number investments fundamentally and the chip often of system AE specific either cetera? years, phenomenon the is, And one of et Sassine, outside at the AI very whole does is as need the it special that. is you've the main chips. a of capacity design any in architectures R&D, that services, or is case in specialty turn, and you think referred phenomenon? how we've Aart customers what question For spoken to what or altered the going be level do example, make for the additional mean for last of to of by AI of to And tailwinds on probably part The had about you've your for domain-specific this

you, the Jay, Thank Yes. for question.

we argue mobile I software architecture domain-specific in based mostly on started optimizing number can years the optimizing customers couple their you own X hyperscalers. The seeing it say, of to right. that silicon. You're their ago, investing about a And X, want started system of before companies whole

investments. number on -- the specific and that power, can cetera. effective chip the -- performance workload they for initially, is made yes, hyperscalers, et they develop on And they answer the a based the of With workload, more is -- these cost, target a a can was

the they around are applications. train Now models that again, their you're wave for, can investment expanded and how another they seeing specific of creating AI

X the of in And own they're for I'm their drives they sure is the last made chip most means you've investments workloads. hyperscalers which both that comments drive couple towards and methodology and top I many almost the the more not their the weeks base and chiplets, EDA typically, AI up that and chips door noticed cases, it's for for silicon in, for different our training only another node efficiency What customer which are is opens Synopsys announce specific earlier. investing in advanced to pushing and multi-die IP optimization IP, and

view, solution it's fairly design enable complex chips. offering to I our On to customers the expanding of point straightforward. solution want to From yes, these we're say our IP,

these deliver fairly standards not X the need straightforward, you road is do. but connect chips. the is map to work But You what straightforward to

customers the XDIC case. On the those in architect Compiler, that for ability that gives chip system we them that a of using to EDA number have side, which

these running. SLM, in life the and and the the and it's dies the them to field give their the system the data into into connectivity and ability as health hyperscale up the to in all management the or way it of center silicon cycle trace case sits

why expansions and a support we design in So and number continue that's design, portfolio excited opportunities. these growth have order to the And automation IP. we of are our opportunity for to bullish in about the

Okay.

would to I IP. assume, noted. would one Shelagh, of for date. case larger believe FSAs largely increase matter, $X.X of backlog that faster pull which FSA any were backlog, the has related to of reason you component IP down And to are, which in the For the been that or is there in future, a consumption Is the sequential for of components than large billion FSAs has been largest your be

different FSAs. are our of different many but There's not of that IP It's purchasing wouldn't certainly I model, -- percent customers there's not that a mix. a something preferred note who a

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

number. the current higher guidance and number year's relatively much thought into strong think backlog to consistent, billion how Congrats bit backlog into the RPO have much bit goes how ask I With a goes into on little RPO the want more much and you years, that ratios of guided results, $X.X next the few at would current ratio covers RPO given little revenue. mean, I have as RPO, you I in -- the past little how because that in backlog. same very terms bit I a a the backlog

a how conservatism 'XX? that billion it contract So within like to what Is you little guide this want time, bit reconcile longer $X.X Or duration should I something backlog? there's the at will around this? is average for some

the Yes. Thanks for question.

booked. contracts. And duration we It of backlog said, our was was customers. new There as them in in the some multiple across So deals -- renewals Sassine that there's broad-based. larger and was the was change no

from our no change there's duration. typical So

the headwinds been on last for the large were very which for in are As years. seeing strong that core momentum China, really is driver obviously forecast -- in we're growth year, we where design balancing seeing together tailwinds putting and has the seeing because we're seeing us particular, several design backlog, the business a and automation we the headwinds for in in business, the the and we're of the we're

-- difficult We're other then slower purchasing seeing going impacted and the SIG, software still by Integrity the is business environment. a that is to enterprise Software growth we anticipate which rate be one

And why single-digit so we've growth. that forecast that's at business got

goals So businesses. those aligned IP and are our it's the automation things. of design for really seeing balancing But with those we long-term design

profile the year. a going that I that Yes. of because revenue, like because you the half-over-half IP the year the signing Maybe I the think to of for hardware on Is And you its keep follow-up right and front would half profile some bit I mean, nature the EDA be contracts, bigger is be flattish seems to to relatively up to time-based a suggest loaded. a quick profile kind you're is mean, case? half-over-half why that maybe little of tend guys next thing? through but that

our business. the just ingest wanting really It's our hardware customers we how see Yes. the of and balance to IP

what in with we in we also saw 'XX aligned fairly saw and 'XX. with it's fairly So aligned what

to IP, XX% about nodes, our design IP our the -- and when IP. by those there's an we're said. to the a agreement and of talking a overall you what $X.X you EDA percentage design from IP, revenue which and billion pull agreements get the development numbers, down have, add on day different is IP the the is I'll software the is mostly given the just automation developing the then and day sign There's time advanced portfolio you Rough down. deliver our XX% pull and especially if about when comments Charles, business in the you large a on we're of XX% lapse of did deliver, the we most XX% advanced foundries, is Shelagh of Maybe, and and couple IP

large, So while consumption to of for number $X.X the and et the and used be get, that the renewal different EDA is the cetera. to the backlog need that we number, will billion I timing very backlog IP across would say,

Charles. Thanks,

back you and could to one it Lisa. Let's question do if over more turn me, then

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

that fair color of I we provide SIG recurring So about could one into considering? you the into it secondly, closer expecting to XX%. And the think assume you're we're 'XX, XXXX? will Is would first it guess the the hard record given should be, how on that to revenue year initiatives some another that strategic rate inch more

Maybe context the through. what will Shelagh said some I'll backlog. we've what a talk just The the went SIG we we and review, around comment strategic -- through about went the remarks portfolio on put initiative, in to that

leading truly the each have X have segments. we earlier, we that stated I in those As fortunate we position a one of and are segments business

the years I market automation design market about the X at are the over opportunities cannot we IP. these look within how XX design we next of these expand segments. to we opportunities more express the and portfolio can And segments, we have excited in As our

the alternatives and make a higher our us to decision the based and design to discuss business automation for ROI XX% led for we to our on software put that investments the a IP priority to believe there's make investments between where of the of So segments. portfolio and design integrity explore where strategic

get that to through to that's So we in really the order process went that point.

that a year recurring we're and change add but 'XX, expecting expecting in question, record revenue business the 'XX, in a Yes. is not too. had another in on one hardware and And that. We've 'XX overall the I substantial would we're growing

won't substantially change the recurring mix it So of revenue.

Thanks, Johnny.

it closing Aart me turn remarks. over for some Let to

in couple of each only I Thank the earnings but [indiscernible] XXXth one said I is Since that call. not of my was you. one, IPO at remembers words personal did A these suspect exactly what closure single calls. miss in XXXX, a literally this here.

big you them. of well asking thank a that you, So you for gratitude to never your up Jay. we will perfectly giving but your But on write-ups, to market. also where you for advocacy all answer the your questions know huge feedback, on really never

fragile for that family having more leader hope today. this that will made with really Sassine, So in worldwide Synopsys strong child and Thank been and gratitude the you that travel keep market technology into I start-up up but raising members is you. importantly, a

are my He say, with smart but we're CEO. heart relationships ambition, Synopsys perfect choice well. his is hard, trust. full CEO Sassine and already and and customer complemented, I very think doing and some support. very is comprehended experience for enthusiasm my the transitions course, Now at my I should XX has years respect, leads great is by of of importantly, Sassine

you, him as to base thank touching look so time, to please time that, support you much. very I So With well your with well. give forward until and from then, be

Thanks, can out? this close Lisa, everyone, joining call. the for you

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

And does now disconnect. Thank you. that presentation. conclude may today's You