Synopsys (SNPS) 21 Feb 242024 Q1 Earnings call transcript

Ladies and gentlemen, welcome to Synopsys Earnings Conference Call for the First Quarter Fiscal Year 2024. [Operator Instructions] Today's call will last 1 hour.

As a reminder, today's call is being recorded.

At this time, I would like to turn the conference over to Trey Campbell, Senior Vice President of Investor Relations. Please go ahead.

operator. you, Thank everyone. Good afternoon, today Shelagh are and us Ghazi, Sassine CFO. and Glaser, CEO; With President

Before like will begin, regarding of and we I'd forward-looking our this the that other Ansys. conference course pending during acquisition call, including Synopsys statements, discuss of targets to forecasts, statements remind everyone

on not financial However, we Ansys' will be commenting results.

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

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

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

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

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

turn I'll Sassine. call that, With over the to

XX% X.X guidance afternoon. year-over-year. the and billion, we In strong our our with non-GAAP points was in year-over-year. Non-GAAP Revenue year-over-year. XX% up Good up XX.X%, the our of approximately end Non-GAAP EPS was continued revenue surpassing guidance of up upper upper $X.XX end momentum range. QX, range was $X.XX, margin operating EPS

laser business our focus our financial the for maintaining While success. drive meeting we financial quarterly commitments, on long-term strategically

CAGR. of have detail. growth non-GAAP X guidance the non-GAAP last revenue margin years, at Shelagh improvement CAGR, financials discuss EPS we more the and XX% and a will in X Over a XX% delivered points operating

and driven design design challenges, the to more the rise trends. architectures systems. era the We've new software-defined consumption and new intelligence, by cost, $X turn by starts These methodologies, semiconductor and proliferation silicon entered end as security. to intelligence, decade. address us industry while an Let's or mounting rise demand trends challenges energy compute, the complexity, of of revenue to more significant artificial the pervasive of scales market continue of the Despite to in trillion requiring

leading the deliver truly and are broadest EDA Across of and on semiconductor industries, already era IP, the opportunity of portfolio and with where company growth smart tools design best-in-class Synopsys' technologies this As companies incredible is as shift and AI interconnected. a solution to race silicon-to-system is pervasive intelligence, underway. underway omnipresent paradigm

silicon-to-systems shift, industry overcoming To a the to innovation. capitalize on on technology is this approach is converging --

the software-defined time, chips additional for as designing to system in now intelligence. era systems, and of mind, unlocking at As purpose-built customers through this is helping was design with companies approach companies of for delivering system while fusion At high-yielding of a the value and and the silicon Synopsys There the same innovate for made Semiconductor physics their companies no of simulation critical pervasive heart solutions business. more high-performing company electronics see are this systems. one moment. capable are and

highly forward we on closing attractive incredibly where feedback Customer look successful an go-to-market Ansys across supportive, leader industry adjacent to to Both established and growth EDA our Ansys, proposed transaction deliberate areas silicon transaction This Ansys. simulation presence of X-year has strategy. segment transaction design, further acquire in we strategy to on system in our grow XXXX. reshape month, business to by our a intent system-level our billion our the first to and this to has Building last core partnership TAM announced will with enhance X.Xx and multiyear our the a and half the been and support $XX expertise.

win activity starting share design we saw highlights segment the strong with Automation, Now where some Design business. I'll across

digital in as leadership leading to increasingly EDA chips nodes. capabilities continue for enhance become at our our the advanced critical We

firsts QX: first SoC partnered industry mobile are number a have mobile SoC EV tape-out of ARM to a proud first with world's automotive to XXA leading at completed for customers first provider, GAA-based The our tape-out the on core and next-generation for a server Asian core tape-out achieve Asia's in OEM. a flagship We ARM Cortex-X NX leading

addition, projects company. anchored leading by had we X-nanometer In mobile a multiple and competitive semiconductor X-nanometer wins, at Asian

networking competitive gaining also Japan. Europe and won signal flow several signal with companies are We at full We analog/mixed including customers. analog/mixed OEMs displacements momentum in

A Synopsys.ai these leadership all full-flow Synopsys.ai. from breadth the to of off, competitive and generative AI, focuses digital turbo data test design, and leading family, our with of Starting X X.da; analog value analog platform, which sign charged distinct pillars the with platform, in our key and wins including architecture industry's to differentiator XSO.ai; space for EDA includes analytics, verification, XSO.ai was from optimization, on Copilot. and AI our optimization. our customers:

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improvements VSO.ai company very test turnaround in time. to American significant immediately We North plans made saw deploy with large on VSO.ai deploy corporate-wide. projects a technology semiconductor a deployments HPC investment production with that for coverage and pull eventually are excellent A X multiple in strong seeing and

XX% in deployment saw American time and improvement faster large the Another large-scale a planning of technology. company GPU and turnaround Xx is coverage North a

for Samsung flows Our tool, analog with deployments moving and at ASO.ai, AI multiple TSMC, has now reference Intel analog migration. production to

of feature advanced for generation. adding to the pattern a We also ability design-for-test proven TSO.ai, the broadened capability

count quarter, demonstrated total TSO.ai. reduction we a XX% in International Conference using the At pattern Test this

engineering correct analytics, in enabling teams Silicon and outliers, logo Our Silicon.da design and identify issues boost data silicon phases. products is and analytics productivity. AI Management great family quickly part design a manufacturing of example to spans and through A the product significant highlights which saw also production engagement Lifecycle is Silicon.da automatically manufacturing data growth. underlying

capabilities provides groundbreaking tool had Last designers chip we natural with The design, guidance, from Microsoft quarter, language. across enable generative of for AI with chip creation announcement accelerating to RTL capabilities offer a expert that Synopsys.ai collateral GenAI and Synopsys.ai collaborative Copilot. integration generative

feedback adding will won other package multi-die from a number participants, initial positive beta Microsoft Following significant also and with be In of Intel we pilot our companies AMD, rollout. QX, designs.

EDA XXXX, in will design market create will Compiler XDIC transition momentum HPC HPC gained the Our be of significant that substantial in designs multi-die our IP XX% opportunity businesses. for platform the architectures. continue to an implementations paradigm this packaging. increase multi-die by new with expectation Like AI, to and Multi-die both

had a our verification with excellent and saw bookings Moving customers. bookings Software, In momentum X with Asian business. on a ZeBu across strong HAPS hardware OEMs automotive continued with top at expansion Hardware-assisted System at key North American geos HAPS, new and quarter ZeBu Tier grew on our share OEM large We systems X X logos. and to multiple footprint Xs.

with improve within to industry-leading Automotive capabilities and One prototyping the building Continental's framework, development we're market. development their that allow time Continental. solutions Integrating our collaboration example automakers Edge was software announced their the to accelerate virtual we digital twin

choice at industry-leading for to chips nodes. mobile Design the supplier which advanced automotive leading as AI, deliver to continues growth of moving Now IP IP, and HPC,

PCIe agreements multiyear, IP American HPC the We we the of design semiconductor XXXX. and the more demonstrated by a PCIe lead DesignCon landmark AI next-generation is XX our closed than at wave X.X, showcasing lifetime major A with where win keystone we in the enable North technology multi-foundry IoT in multi-node and company. automotive our quarter, industry next at wins. This innovation to X.X platforms and

gains UCIe is as We as and in silicon with NX. IP for Multi-die success in tailwind tight EDA. the S surpassing demonstrated well industry's XDIC enhancing The IP packaging leadership IP is space. with emerging X significant NXE our significant tool, this die-to-die our improved We in proudly first XX design want to a margins. lifetime, quarter generating Compiler, flagship PHY the integration EDA TSMC productivity engagements

with power processors beginning for performance RISC-V range based new and The such the customer applications broad IoT. launched efficiency and configurable extensible highly our to a interest. automotive, ARC-V at Finally, quarter, the storage strong optimal deliver as of portfolio we are of ARC-V

challenging delivered despite software. Software the segment, a enterprise for Integrity backdrop to Now which macroeconomic record revenue

evaluate we will this business, provide process. to and alternatives an we when complete this continue update We for strategic

the While will engages Integrity serving process, products market-leading leading our with continue in in innovating global and the application a this Group and portfolio our Software execution. investing and to company testing focus customers on security go-to-market

secular In to had an on underpinned year, drivers. summary, multiple growth start by building we momentum the excellent

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

greatest investment are return potential to our portfolio We accelerate the aligning our growth. with

passion their employees and our partners for to you Thank and commitment. customers

and Clara strategy March forward look which User's with into held more will our our we growth Investor at many conjunction there. you on I business, to Day, upcoming see be Event Group providing opportunities our in of to Santa you hope in insight Synopsys XX. Finally,

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

solid Sassine. earnings We of non-GAAP revenue a end end XX.X% above range. you, delivered start of the guided our high to operating range, non-GAAP with of in the Thank upper our and year margin the guidance

we year non-GAAP across across targets non-GAAP are in our margin design time-based business, our results XXXX business of leadership and stability result, confident and systems activity customers QX driven and model. our a robust operating our our and semiconductor Our resilience the revenue and We execution segments, and reaffirming full raising remain guidance. EPS position by our for and as are

million earnings were and were We included XX.X%. results. operating Total and I'll unless expenses non-GAAP were are in week costs year-over-year $XX.X All share and share stated. $X.XX contributed $X.XX. expenses $X.XX first were a $X.XX, which revenue $X.XX in revenue non-GAAP generated review now fiscal otherwise extra EPS. non-GAAP our earnings Total billion, billion. non-GAAP and an GAAP QX GAAP resulting margin comparisons billion. of costs in of per $X.XX quarter total per

segment Design Automation to was was IP operating $XXX.X our Automation margin revenue up Now XX%, driven strength. adjusted on broad-based XX%. million, was up XX.X%. segment. IP operating adjusted $XXX.X XX%. margin Design by segment Design million, Design was revenue

cash and was $XX million, cash was ended we revenue short-term was of the and the Integrity operating XX.X%. and adjusted quarter investments outflow for Software million quarter billion. $XXX.X up with X%, margin $X.XX Operating

Now to guidance.

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

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

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

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

continue the of XX.X% XX% to We execute to and points non-GAAP percentage full growth, growth. to XX.X% non-GAAP XX% expect revenue roughly operating EPS X margin and improvement for year

our our Our our leadership activity our confidence resiliency and and stability model. reflects of across segments, customers by robust time-based business the design position

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

[Operator Instructions] from Wells line Securities. question with the Fargo Our first of comes Gary

accretive I growth. revenue you modestly to, guidance it first the sales the you 'XX like looks be overall like or into on in you were a fiscal overall results, guess, drag But initially to expecting I think gave year quarter when China started were the growth. China

And headwinds the you wanted to still China? so to with anything question specific And is, out revenue respect my do to the to there call overall trends? some anticipate specific dilution you

question. for Gary, the you, Thank

out balanced was continue at growth the continued the are communicated X will view as we export important. we believe control. we as possible correct. other year. and well, headwinds. the slowness was we terms pragmatic the macro When we at and we're And impact looking the around enterprise One, FY of guided our of in China, That as both one the called FY You that around software 'XX the China being 'XX, look as

year. remainder QX as we of down business, pull year QX, to of in or of that pretty the that the our out, saw vary quarter-over-quarter you're you some timing can we IP calling guided is when as communicated in it much Now is the strong due but what EDA be our

Okay.

than Just give What a the the it was RPO projection, the like in including at of the end quarter. follow-up stronger you on is in source upside And other looks quarter? first the balance some the that? question. clarity income original of housekeeping Shelagh, coming the can some

quarter. Yes. the for The backlog billion is $X.X

that's and a obviously had record in of we $X.X So of the big of billion, sort lumpiness of QX timing backlog natural orders.

then in we a improvement some the of of And goodness that some in other saw pretty So with some ForEx. our was expectation. some normal

And that's obviously, but QX. that flow, in and so we can what ebb saw

comes KeyBanc. of question next the from Our line

This is Jason. Can you guys hear me?

Jason. Yes,

any off building the the but get billion, to lumpy it high it of backlog, year-over-year off growth Maybe really Perfect. down teens $X.X nice coming was question, see a Gary's little more from record, linearity what typically about a shape. sequentially half there I again. QXs. in timing? second think Is way year, the than the we've through QXs seen first understand to trying to Just the to or renewal half,

anything about XX%. we're year-over-year, mean, unusual there's I say wouldn't up it. I about Yes.

course because XX a things we of renewals like on So kind you think which over of about we the things and yearly that, these usually increment months. think of managing timing think about about

to out I QX QX than an was So QX there's other that all-time about really high. the point nothing would specific

high. of the renewals the senses, pull and sort of some backlog in drive through down So go that replenishment as and we expansion. We'll natural then all-time

Okay. side, again, of the was lot I IP? rest the on know through come or And out. of strength a growth. in Perfect. what really out how then have driver new guess, trend about we IP? are then IP the the of quarter, should main that coming that think mentioned I titles on IP the And strong year you XX%

Yes. Thanks, Jason.

the to they in As IP, with the what blocks the other it's world, our is we chip connect chip this as given the the far IP to need outside connect goes, and beauty silicon chip, IP different interface the inside and of chip, business, proliferation, we more IP to each have starts, more where business. IP an our lead

data AI said, are constant that and that there cetera. being in an are standards chip any to goes the chip be delivered it for that or et complexity being center, requirements into new performance support order Now the

a more another factor. Multi-die you together. to package, start more multi-die that stacking you need is moment The and together IP package dies connect in interface

So driving this confident for long silicon very continue IP those sophisticated we will as and more the there secular were is demand more are were the IP that factors silicon. and opportunity, trend with as demand that

is bit year. the just year, front add a from those would opposite we always back-end shape in year, that's talked Last design, towards that's it I IP downs. Jason, their because as And standards about the really And this Yes. we're about were when new But year bit pull a recall. driven, building that we last the get very every of to Sassine the as little more when loaded, ingest lumpy need those we're year. of then you talk big day. into we And the customers

with comes Jay question next line Our Griffin Securities. of from the

about in terms event So pursuing I'm talk kind the But acquisition, or the in to markets you conversions with industrial. you auto the investments seeing internal Ansys effectuate course, such target are, you new transaction for even the the convergence before is the industry. closes, you of technologies, largest question of the as acquisition, await aero, in the is, motivating Ansys and as were meantime, the resources transaction could particularly making of methodologies the that anyway new

question, Excellent Jay. Yes.

technology in to the was portfolio investing own we a Ansys if homogeneous order our some key So you an I XDIC leader correlate in we to with stopped even chip, in in of organic not design did in into collaboration it industry our implementation break implementation the multi-die only to because but EDA, single industry a integrate started engines investment. areas intention portfolio. That want not core a need that to die collaboration sign-off. the bring sign-off have package, X One you to of the mean when with with XXXX,

Design As order with the from complexity points created have standpoint. investments since we to to in touch XXXX engines grew, sitting sign-off with Fusion our expanded simulation a organically our the and correlate inside broadened Platform Ansys

serve they our in continue in looking their will solution deliver that develop a to products. design to and order to So order are customers that

So that's investment. one bucket of

where was the of as brand And as those out investment and systems product so to expand only automotive, selling The announced markets. call Ansys that Ansys go-to-market order started new called side, the was into that acquisition our from bring well is new driving and experience knowledge month ago OEMs other. they customers an this in or the we segments and like there an we a markets, market new we second when aspiration, a in will acceleration have into set not automotive one, investment into expanding that of into the

side side integration those the that and investments, continue we R&D we and we until go-to-market on on time. agreement closed So at the talking the the are both start will making the

Okay.

evolving over perhaps you that AI one and/or and been concentration. you do the that trends think you at Or current one that IFS all next all least about Over over the follow-up, of about other pervasive number the time things you've customer this talked event technology When and customer, less your aside for you hardware the IP Shelagh's becomes with more? do the think is about years. morning the call. you the customer will and former that Ansys speaking gets some that moment? distinguishes is the For concentration of in have company. think Aart talked That concentration time, your business do EDA, various at phenomena set you've trends, as How increasingly time, foresee core the concentration for customer about

of Shelagh correction, and to you were alumni Intel. correct I I out, left Jay, had so I felt So a just here. both

to both And system companies own for specific And you platform. complete build you the see to stack are either verticalization of will specific there's workload, for a and the customers reason believe their trying of chip talking go the customers. many go into a many is see customers, semiconductor when traditional you differentiation a I opportunity, a cetera. a building about hear when phases are deeper delivering or of our to et companies that to horizontalization. -- platform their through new system to So their application, their market drive silicon delivering trying And

and to goes, for which know you delivering customers silicon specialized the EDA for both ways thing market benefit companies, direction with to IP the focused that in sell because are deliver it are correct, we are because companies on those Regardless complex these silicon we more Same and them is at silicon the verticals, the different if on system most these concentration that those products. our they on guys latest offer end, order to deliver most chips. chip technology spend, we that the complicated working SoCs absorb that the to money us, the

the see I term. So changing don't it in near

inside fast opportunity them you if from semiconductor broad very now be system have us X-plus Now an will serve. many a to ARM forward years companies and solid, expanded for

comes the with question of Simpson next line Lee from Our Morgan Stanley.

to back product rolling couple the of on really a summary. things mentioned Just you

through like understand, get frame. trying more standing this does how all or XXXX time XXA, seem gate NX of products just to mobile X-nanometer there. I at to think mentioned work be with to up which leading guess closer And went talk player around as about generally a all out on a TSMC, then to you X-nanometers SoC I in the things Great of Asia. we and clearly with semis progress I'm come companies

this pretty should be that at as the decent secular Or that into the Is come 'XX? looking further right a driver the half be though this? of feels to could back and into So way does that year. to me

EDA technology, the or to case, the is In reasons. to earlier So to of to for explore its design needs it process technology to Synopsys value terms NX, opportunity about IP that want move technology be able add needs you power, enabled. technology, That the fantastic performance, in means if for order In the a maybe XXA, not? in et it feel, products performance Does even to process are be innovation, cetera? order direction that deliver order Intel do a enabled, in on they that process make to a the to area new that GAA, and they XXA want technology there be that this that's comprehending process today customer get and of X sure talking target technology any this time new heard the power to our in technology.

at sure available in X are least before So about years tape-out the order our ready. script the making design that products that GAA mentioned I EDA in our start work we IP the talking starts and IP, to the deliver and

design months So being called entitlement the coming that of early, hear of it the think seeing time around can technology, from you that foundries. early there to what then is you a start of an announcement provide introduced, design new process coming whenever a in you technology is point frame of from and view, leading the start in, technology technology XX from IP in effort

testing Great. And the some what having sent actually. the you get standards back deal the over-the-air. software or industry verticals the that my Could going this does this? drive announcement standards, of in for that one scale in in around for pretty I'm there software-defined it and vehicles. transition head through? that and that there's to hardware just decouples, to that feel to maybe drivers sorry, opportunity follow-up, Ansys tested clear, around they migration here particularly And ambitions the made software, a drive scope before when to standards. That's is might And fully play automotive new behoove happening -- does like clearly, to into, of one as are be of automotive particularly someone trying that main just a as be a the

adaptable pushed that at the you order in if to is to pushed for a what for software good down. is car, update out actually over-the-air implemented the that be Lee, that think got We're being changes -- say, Yes. to, be is software hardware question. at the to needed software

that the function How come to the of the system software reaction we where update cost. assume know? do response you we do you or know look model system, electronic of this How We of in. is can you every chip. every an the chip. the you're car, let's test at can where automotive And that entire OEM? Now a

So get the and every of change, will adaptable car. changing, and without change as make validation the a course, silicon the software OEM and actual that is the to chips to in is feel they automotive having the

that's really the in, referring what So every to where is we digital chips electronics electronics, car. where that's to have come aspect the the and the twin, we of ability we're model

So those automotive OEMs can do exactly what you described.

Our Baird. next line Joe question the comes from of with

at Great. that be starting performance. around think then And favorable I I'm a mix, maybe remarks, to you could is IP show these growth price in in maybe wanted lift to the mentioned and go that the you actually interesting, And back I maybe Sassine, the prepared software is core you over to wondering are last up? how portfolio. Design of what lift I this development growth applications. can would now starting IP related AI that, to quarters how AI starting your than to IP are it's your customers do IP look segment. imagine higher to lot margins Automation advanced but if EDA for Is some X of lines. if

seems be there something that's to So there impressive. on quite going

Yes.

that did in get point comment a because not to where IP first, are overnight. we maybe we So

say, XXth emphasizing amazing of our the built requirement an to business our memory the truly in up at ago. the number compute order to in networking aspect chip way. pace. the serving scale is is talking And years rapid We of that XX these scale, on of to with business is to part you're chip, about Actually, year a connect I'm for rapid, complexity customers required it that chip, to that the anniversary month, AI are this the keep with the that not bandwidth when standards a it the reason have if I'm mistaken, let's an a changing of

that version a to to it's greatest. For going the uplift what means for and pricing in to opportunity of opportunity us, you're that's with access any customer latest great next new because is interface the in a the time IP get it monetize a to IP our new order our because an

So it. execute to that's from high-quality and our when customer ability IP customer needs the deliver the to

please where of the of question, FSA, Now that other its nature, we have when by call the the when look an what part The agreement they need the down out IP a down we pull it. IP, pulled IP they customer committed typically XX at consumes it's your they it customer down trailing multiyear months. with pulled the the that

see naturally, a trailing with to So operating next absolutely months, an from either see you But going as where significantly quarter very, very you strong lumpiness to you're be or revenue lower. may margin over a up will the it quarter right XX measure and the consistently.

generation imagine on forward. relates expectations those in inventory of an way. business there cycles think then here the balances, then how about nice do upgrading Any jump you changes I Okay. expectations this, your the just looking at year? the the there, And I That's great. guess at and platform the In along past, to a And all-new to then second this point? looking which your pretty question, hardware the at just start was related hardware of concept

kind So you of see How get we're you would forward? and into years ebbs going progressing hardware environment. flows, that now strong a but several do

Sure.

support so have I'll hardware year, Sassine ensure quarter-on-quarter, had record them and find complex their with they last year to our then reason can essentially in, inventory -- their and a that's more building to another so improve that proper it's is and start, designing hardware supply actually me year the anticipating we record the the that we model about so hardware fill more and to -- customer issues environment, we're let software we're they're XX% to to they time and grow customers. market. before chips, design in this into So the to so have help important our And infuse have design align allows did we ability chips,

that would which sure the delivering year. valuable our year why incredibly that an after support have to value we're be our to it's is And hardware record record next for make record through year. they we customers I greatly available customers. have to this capability capability to So say want able sufficient something been is able hardware We to we've

the Sassine, to cycles, comment that? In terms on maybe, want do you of

Joe, viewed They because done back at you have an but it as ago, years customers. hardware to could sure. accelerated Yes, the if X, selling option. customers they gotten time it, XX The efforts. job used without the go their it it

now, tape-out, way to sure that no in verifying committed meaning before to possible manufacturing. chip can and go you to terms to many as You make a manufacturing of emulation you cover of fast many, cycles without is chip as prototyping there much having forward the to

it's longer the a in systems functioning their and hardware. investment from ebbs order around constant they by to customers and the no be is working. and greatest of silicon need a to flows So demands that take our There's of to back going advantage and expand ensuring support latest manufacturing get

JPMorgan. line from question next of Harlan comes the with Our

Great start year. the to fiscal

home right? now So their to PCs, add and endpoints, chip automotive, to scrambling they're of now networking, focus on front, like focused data assistance continue AI of semiconductor of data lake, we're center there future on customers road focus of been many custom strong, the capabilities ASICs, smartphones, much your appliances sort edges into but the this broadening On AI AI maps. seeing all moving has center GPU,

more design resulting helpful. the higher any analysis. is Ansys? it's demand complex for color in this engagements, already would more more for team be opportunities designs, in maybe systems-level activity Like mean think seeing of chip IP, performance more licensing potential here IP momentum, terms I I

exactly refer to pervasive are we -- era more and what we're Actually, we entering are for talk in intelligence, devices it's devices. Thank when you, interconnected we that's about, we intelligence. pervasive smart the Exactly of and Harlan, what the question. and more as

means you advanced sophisticated exactly those cetera, broader proliferation the on that the which silicon a reference made silicon and So et chips. more requires of AI edge,

investments cyclical flows when you of market, is think make to where it EDA different that opportunity. And these customers a those for our and industry, for see expanding semiconductor the despite us, don't fantastic this And that's we is about the for starts the because are ebbs applications. tied when R&D all we that IP, design commentary the market, and

is we're engaged systems that that when era describing start as pervasive about our to intelligence it. customers with seeing and the of absolutely, exactly talking those We're in we're here. we opportunity silicon So company

they're Altium, announced the then about Great right, strategy, company, a I Looks you on tell Ansys' We further right? decided cover looks potential they did company that positive. But and And going see, on in-house. acquire capability your more systems analysis and they they insights asked like there. And hearing just so them think you're me, that to the combination? semiconductor to large billion, $X for Ansys, PCB about to week, analysis like -- maybe be also Renesas, I your this, XX-something-odd and importantly, to we've has the last the customers' customers bring on companies, you major like is can inclined quite feedback seem directly looks is been, as deal was which important as mean, the semiconductor this from maybe positively design opportunity it what I a endorsement wanted know well. design and like

the has And to they're to overwhelmingly running they problems today. in the been they're they're a customer as feedback into into the the One, deeper for So positive points order they're challenges solve future. face make. X looking dealing importantly, around going collaboration with, truly

current solution a the and product way to their -- future they customers from at are this So anticipated forward products, combination. the looking are looking

consistent second point is, the you one can verticals, system-level of argue if you go is market you through going the the perspective Now to that an is touching in where them at which look on, which each inflection points at what were is feedback various is time. various

you we this, of et application, pick digitizing an industry, cetera. order If X, through XX cetera, Ansys strong be that base. to they its industrial inflection chip and Because where point forward will in you And very order in years connected Synopsys their fast again, from design let's customer be devices serve for say, in has their go health, now et since -- to smarter X, the and existence, transforming presence. a applications

hyperscalers our around is system where extended with course, XX% companies, and into system of of about our system primarily, companies are today, companies with And but business opportunities those many to we mobile many, Ansys just in for system for needed aspect the that's bring other verticals. companies. where market XDIC, rest will silicon-to-system more whole that than with silicon the And the modernization that expand is but of

Your next Wolfe of of line question Joshua comes from the Research.

you hear can me? Guys,

Yes.

about Ansys? Or the you're feedback currently want customers Ansys customers the these customer don't of up on the partnership? acquisition. I question both existing that leverage feedback benefits Synopsys Is and are that really to Actually, that of positive hearing Great. existing follow the on Ansys-Synopsys from the last

the when we the They're you same then structured both use was can announced customer from want Fusion available of plug into product platform can customer journey Platform you XXXX, customers. Actually, other industry sign-off there back go a that the Synopsys because excitement the Ansys feedback. and platforms. we And of the way product meaning to open the lot partnership, to is Design I can give Ansys plug the that Ansys an platform, Synopsys. into In

move as today, that the or tighter products integration are broader required where is that portfolio. is from to you offering for we X for only not Then deeper, Ansys X XXXX is

package, you you that multi-die a the plus aspect at it today good. package, electronics look of that a design from you use have to you're can and If Synopsys multi-die Ansys, solution

issues and mechanical in those package it's where are through inside overheating. running As it's they're you the workload, software as what is manufacturing, squeeze you're dies issues, and those facing stress going the

these dies of cetera. warping, cracking Some are or et

So it's challenge. very mechanical intense

to what need go engines say required this move sign-off. about. We needed, the when integration and be you in I and the algorithms stage And excited later that's is for design customer the phase, but deeper and when is not actual have where of design only deeper that during integration, you will the into

follow-up previously and from excitement because early opportunities? Synopsys of are customers the Ansys partnership of first half Synopsys now partnership sense. reaching about existing is leverage then this to you total around see because incremental close And in this seeing of you come my signs your payers are out and didn't I to signs to users customers the going will who of there potential, acquisition the or any this just is that that like asking Makes guess to these 'XX. you're basically, that plus any integrations

Yes.

Josh, already they customers AI, And and are with today, that leveraging I'm advanced not complexity described is I advanced about about talking think are when Synopsys designing what most chip. and below, So chip using et of any and cannot chip, Ansys. advanced Synopsys platform that the Ansys. talking chip, I X-nanometer I'm cetera, Fusion

there. more That's going is be the given plus X. beyond and challenges provide the to So they're to X that already increasing electronics the chip But X is is semiconductor opportunity core current where the business integration than the addressing further complexity deeper from perspective. going

regardless a that customer becoming if are chip Now today, will they're or many, be but answer that the the other part see X of Ansys there customer? a they are way, them, X a they to not a in customers The customer Synopsys There your going that don't or yes. customers are other not. Synopsys many designing Ansys is by Synopsys we question, there years, are the many be next

an I'll example. give you

they Ansys connected support using to say, if level industrial OEM of product. the If of an smarter Those over-the-air et chip you're that of industries software want And and are the the going this chip in are where to developing you where to going mechanical market Ansys aspect, need chip, a that Synopsys future, and absolutely ability and you're in is you're you product where an to that content you connected to robot, And market it's direction. that not you delivery move let's design that the today, in an to order next customer. customer to presence, that have updates. the device. to expand your presence, the because verify broad not a but knowledge, and example Ansys are model Even will an brand automotive back have very move to customer, that Synopsys more chip has cetera, Ansys a

Synopsys more So to customers, making Synopsys about making Ansys Synopsys the Ansys plus that Synopsys customers. opportunity is plus customers customers, Ansys just clear, about be customers and less aren't

the It's both. And the integrate a current Ansys portfolio, going that expand today, to more into are Synopsys using the part platform, you you're there customers they're Synopsys Ansys portfolio it. of

than fluid Synopsys that you a need the chip stress dynamics deeper expand challenge the plus will example, platform mechanical or X inside will For X greater X. that to a the be integrate into

is shared of by of run a in we'll what announced And talking integrated they're $XXX Josh, was a buy that the is cross-sell more able rate ways currently synergies. because big that's inside million part have It of both we that. Yes. X, in Sassine's that about to solution from that further And monetization a customer as one year then multi-die us individually. than existing either an

if our meeting, call And we're seeing you Area thank again, to forward for want of look month that just less in I we Josh. than Thanks, webcast. you a Bay bunch our the and or coming from today. on everybody here you to investor a can, the least remind join at

talking to with forward look we then. you So

to to the coming soon. you for and we'll talk thanks So call,

everyone. you, Thank Yes.

Thank you.

that Ladies and ends gentlemen, today's conference.

disconnect. You may now