Synopsys (SNPS) 22 May 242024 Q2 Earnings call transcript

Ladies and gentlemen, welcome to the Synopsys Earnings Conference Call for the Second 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, Investor Relations. ahead. go Please

afternoon, President Good CFO. us are today Thanks, CEO everyone. of Gazzi, and Glaser, Synopsys; Sassine Sarah. With and Shelagh

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

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

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

during financial Reconciliations comparable X-K earlier in supplement In most directly that and their measures the the financial released discussion. can refer addition, 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

continue Trey. to invest In Good continued companies we strong in and Thanks, momentum. capabilities systems and Synopsys QX, execution solutions and R&D maximize Semiconductor their our productivity. afternoon. to

above year-over-year. XX% non-GAAP was Revenue points XX.X%, XX% up EPS our Non-GAAP end approximately was of up guided and And the range. year-over-year X high guidance. year-over-year and at was operating up margin

and year financials Shelagh momentum the continued our will we full guidance. revenue more our Given EPS our in detail. in again non-GAAP business, are confidence and raising discuss

business share highlights for context some our I'll First, and confidence some from quarter. the give

opportunity driving the trends Synopsys. pervasive artificial of era and silicon complexity which drives technology of an rise R&D, are for software-defined unprecedented turn intelligence, systems. in in intelligence, fueled for proliferation are by These systemic We

optimizing defining customers their level. customer design at the are chips either or their is silicon purpose-built are our designing also racing and own systems set and silicon as system to and performance complex silicon manufacture expanding companies Our

yearly we're about Synopsys Thousands design the and In of learned semiconductor many Valley. Tesla Intel, contribute Conference March, regarding engineers Group our practices honored passionate User their Synopsys attended others our were plays a shared their and including AWS, the AMD, best we innovations driving. innovation. dozen to in SNUG, Silicon NVIDIA, and mission-critical systems customers customers, perspective key And role have of in

As of broadest best-in-class design leading have the solutions has Synopsys been and EDA system silicon to company, silicon opportunity portfolio never Today, greater. tools IP. a we

planned technology further Our our innovators empowering will acquisition our and of Ansys mission TAM everywhere. of expand

important a me brief on Let update this provide transaction.

Our customers for have rapidly overwhelmingly physics. they told provided their deeper innovation design and their solutions need see the tremendous electronics for accelerate to system that address us integration between that potential and combination increasing

this progress the stockholders confident the and making customers are securing We're transaction morning. approvals, of Ansys regulatory that the approved given pleased and process towards announce clear combination for benefits Ansys this and we necessary in the review compelling remain regulatory partners. to Synopsys and

half close transaction We XXXX. continue in to the the first to expect of

Automation. Design impressive starting was power performance, in Design segment continued gains QX of XX% the Let's move area. with adoption across revenue realize and customer's with year-over-year to rapid business Synopsys.ai, and highlights, up strength Automation business

design process now Synopsys are through quarter. have Mixed more and nodes. Signal wins the Design, flows displacements to Analog the and of modernize year. XX In advanced saw and customers in We looking half to as they first move displacement the their XX

systems designs. a In environment a leading Asian delivered flow memory for full chose company, U.S. displacement memory their we at a for company marquee design QX, our while leading win analog next-generation

ASO.ai. power analog recently allows using high-speed simplify reported a productivity for connectivity customers engine of to to the XXx Synopsis.ai customer A gain harness AI node Our ASO.ai analog, migration.

node advanced Digital, on a to continued for continue flagship at higher power optimization, Transitioning where better our at push company competition mobile In X% and performance X-nanometer and U.S. across we CPU QX, CPU efficiency and expand the to demonstrating performance Fusion Compiler Samsung. power design based leadership boundaries versus flows. a to CPU

Compiler as a and such mobile better U.S. these U.S. Demonstrably, also CPU results led PPA a to at wins company. Fusion top a large hyperscaler

company the for While with In services AI-based productivity. Fusion customer from the frequency improved targets exceeded U.S. Asian are is exceptional, Fusion DSO.ai design believe a we of leading optimization firms game-changing. multiple maximum results and deployed GPU DSO.ai combination and QX,

our competitive in and Synopsis.ai that company, adoption the VSO.ai GPU leading Verification, hyperscaler systems well. with as product at The partners a quarter Asian U.S. top by flagship U.S. engine VCS, In saw displacements XX a an company. VCS led significant delivered wins optimization

engaged fast over and now to customers, We coverage. double-digit with demonstrating XXx in increase up time turnaround XX are

Shifting and to company to quarter mobile a At customer win Asian repeat for wins. exceeded and large sales the Demand full the for announced expectations customer SoC hardware-assisted X EPX a ZeBu new SoC verification, saw and verification. our XX over first with wins competitive we SNUG,

also by We on significant deployed U.S. for HAPS approximately company, designs a XX%. at which mobile reduced including and large pull customer saw multi-die HAPS, bring-up time

nodes. strong IP delivered the strong quarter revenue wins. comprehensive AI, QX automotive was Electrification, our ADAS features XX% for Design growth HPC, which demand automotive leading and IP automotive and drive chips as to for mobile choice at for portfolio. a continue to supplier On of infotainment advanced particularly

in level of chip extensive to IP IP functions technology, Ship over quarter be add new continues security unclonable PUF More including we to designers. a portfolio. customers. physical In secure Intrinsic announced gained broadly, ID our interface or acquisition to wins the X the to we QX, XX concern

at data X of blistering solution bandwidth IP quarter, Ethernet X.X applications launched a high-speed and In the meet we design terabyte growing chips, interface Ethernet the securing industry's wins AI the first hyperscaler for is AI high at pace. leading to and customers. center for Demand needs

more XX X.X and wins than solutions. CXL secured we Additionally, design PCIe for X.X

licenses starting We with standard the in memory to quarter die-to-die from for the interconnect to mobile the markets UCIe. library across end IP multi-die We X also industry's IP HPC. have UCIe most for expensive won

With have die-to-die for we XX now these lifetime connectivity. wins, wins

we've in customers. support As silicon an to manufacturing becomes of and world. foundational around plays foundries, seen infusion industry, manufacturing funding a success Synopsys the on-ramp for our an to government world's mutual chip every as the for enabling nearly role mission-critical innovation

QX, builds In win won engagement foundation. emerging Rapidus a significant leadership enablement design Rapidus we a with foundry interface our the This involving major for Corporation, Japanese IP. leading-edge X-nanometer on

world-class of portfolio foundry. requirement is for a Having IP every trusted a

market of often As manufactured Rapidus first provider risk. Synopsys and with lower and customers mutual IP enablement. a for to for foundation bring path foundry the the leading provides stop Synopsys to IP interface is faster chips

of silicon we and At with IP. IP deeply NXP the points manufacturing NXE and and semiconductors is announced and design demonstrated TSMC all we linked, inexplicably NX for development proof The symposium, TSMC engage foundries. major

At other Samsung, storage, secured applications. AI, for automotive multiple we wins, leading Samsung's enabling IP and processes to customers confidently adopt

to accelerate partnered also Foundry Synopsys and Intel with with chip advanced IP flows XXA EDA We certified designs their for process.

marked Integrity agreement also our the transformative strategy our quarter systems to investments we Clearlake as to and the and recently IP Francisco growth another Software partners. silicon sell accelerate Capital business and core announced to definitive prioritize milestone businesses. and This We EDA

establish SIG to customary and XXXX, regulatory software valued transaction billion second testing as expected approval. conditions a provider leading half close is closing and $X.X application to subject to the This security at will newly independent in up of

close priorities our key on deliver and can about sale. the financial business and fulfilled agreement new owners customers our to team to nurturing investing had great care we for and full in certainty Find transition deliver to for speed focus the and and smooth its that the Synopsys. value This potential,

transition. business, the application grown to the to seamless and and We with will it a started new are owners partner to testing proud leader security have be the ensure

secular drivers. across We by supported multiple have strong growth business continuing momentum the

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

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

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

Sassine. you, Thank

QX non-GAAP of our margin non-GAAP We high our the of guided at above XX.X% end the end with high continued in momentum our guidance. earnings and range, revenue operating of strong

driven with targets Day relentless in billion non-cancelable execution, guidance full revenue for raising at mission-critical after backlog. March, results technology is business customers our confident raising resilient non-GAAP remain are we and year We QX leading a in focus EPS. our $X.X our Investor Our to our and in and model and business our by are on that stable again

as sell our a our We discontinued as all otherwise to presented and -- Sassine business periods noted, entered an our into agreement Unless operation Software business. statements been has presented. Software for financial consolidated Integrity we Integrity noted,

review second on are I'll which continuing year-over-year a unless stated. otherwise presented basis. comparisons are operations our results now All quarter

earnings expenses and were and Total GAAP were operating revenue share XX.X%. in non-GAAP margin total share $X. expenses per generated costs resulting were earnings Total $X.XX of We $X.XX were costs per $XX.X $X.XX up of GAAP XX%. non-GAAP billion. and million, billion, non-GAAP

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

flow, for Operating billion. and cash discontinued free and quarter ended We $X.XX was operations, the was $XXX cash short-term quarter, including million the operations, million. investments cash $XXX of flow, including with discontinued

operations Now a guidance, on presented continuing to basis.

billion billion, operating midpoint. targets billion in at costs are: For the total margin and $X.XX $X.XX expenses and resulting non-GAAP the total percentage approximately of billion, $X.XX between year full X and $X.XX $X.XX fiscal and billion billion; year $X.XX XXXX, revenue costs non-GAAP expenses improvement of points between GAAP to

-- Non-GAAP $XX.XX of $XX.XX tax earnings cash Cash share; and approximately non-GAAP per billion. $X.XX of share. rate $X.X per XX%; operations of from flow free flow billion $X.X to of $X.XX approximately GAAP of earnings to

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

Our operations supplement on as to financial additional press operating release reconciliations as basis. continuing presented financial GAAP and metrics and targets historical include well non-GAAP and a

of are achieve X growth revenue we to percentage improvement XX% points EPS XX.X%, growth In conclusion, to and non-GAAP to of XX% on approximately million margin $XX.X in operating track XXXX. non-GAAP

resilient position our activity enable mission-critical confidence robust our across and model. leadership -- products to reflects our segments, and customers' We our a stable business design

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

[Operator you. Instructions]. Thank

Your first Joe the from Baird. of line [ ] Vruwink Smith question comes with

start, sounds a to really wanted customers. AI products like at nice it foothold verification analog are gaining and I

financial probably So baseline bit experience. more a a there's of

factor and figure Is I'm DSO.ai. what just newer products? it say driven around are to adopting wondering XX% by a be AI with customers the the uplift provided uplift possible last products upon year renewal to I to maybe AI newer starting tends how -- into model? change the just you these the more think was ACV the

good very Yes, question.

So DSO.ai it's revenue is incremental true booking Fusion capture able the on XX% and and we're increase the uplift baseline based Compiler. the to for

we're It's VSO.ai, you still the give stages. this and at to ASO.ai difficult very stage average early On what be. in will

us to able give capture before points. some So, time more we're data

technology thing consumption that But monetize able is and as that the same in confirm and to we through uplift consumption. using for production, the baseline customers the technology approach we're X the uplift on get -- are the can it an access based to

and of Okay. balance you approach for you together good about just of performance the year can financial Ansys to expectations kind the business? of the and financial customers how on performance terms working you anything are then of X of as say That's about Ansys great. joint the And in Ansys. think update yes, the hear your kind of Maybe and

on the separate know, you as we're X as points One, X Ansys companies. performance. So operating

refer they're commitment to here for ACV So back what their my and you continued communicating, which suggestion their FY to 'XX. revenue is growth double-digit for is

-- more diligence tilted point where performance is the in year, second the for And process, shape of had and close of in of a half the a terms during we compared terms to insights the our shape. other half first it

the have questions, that's really, the this Ansys any refer back stage. But you to if can most So commentary. we say at

with question comes Jason next Celino Your KeyBanc.

update an the unique quarter SNUG This the Analyst to raising that basically guide see high a come in little was at Day, again. the nice we days ago at quarter end XX and in got the

very period that just a drove curious, but But like what curious the short strength loaded and exactly don't like being upside company, I see as ago. from Synopsis the back-end

or momentum is the demand as in increasing faster for by compute, core seeing for greatest compute, companies is we're the by what business. the mean, demand either continued I So the semiconductor energy-efficient technology latest, ongoing the as EDA our for portfolio. demand IT well hyperscalers

a that driving with ago, as take software position the portfolio with fortunate a operation. just customers that's So we and days updated our and integrity in XX growth. that, know our discontinued are we to I

at of midpoint which quarter, for the through us we're as year. gave another year, the looking But went it to million the to raise and the roughly XX%, we $XX raise the confidence rest is

I Yes. is, prepared his And hardware in I said add outperformed the other think on this quarter. would thing remarks, Sassine as we

So another nice by quarter it execution the team. was of hardware

then And for Shelagh. just quick Perfect. X Okay. maybe a

said number? ex-SIG you think I backlog backlog that X.X%. a Is of

Jason. Absolutely,

'XX the thanks question. So ex-SIG operations. get week on filing. to QX basis that will on that course, quarterly you this same into for was that's was of the It's X.X%. give in X.X%. 'XX same comps basis come you just as because, discontinued relevant And out some then moved later that And QX

X.X%. our shared QX So that's I just versus actual what

Okay. Excellent.

with Charles comes Your next of Shi line Needham. from question the

solid I quarter, like year third a It a pause maybe the about takes little to of guidance from a higher run Congrats fourth. bit seems a second results quarter. full level -- into have into but the rate will IT in the quarter April have the slightly it business. fiscal suggest question the on the your and for seems but IP

little were that like you to Is shape going about XX a IP weighted. is recall ago, talking the first expecting? you're maybe days half be still I bit

it if if implies growth I And year guidance may, I sequential very driven? more is the your another strong guidance kind in QX and into because IP and -- full wonder the year-end, it's concentrated QX of

for us. IP noted, tends lumpy you to be as Well,

have is year saw so QX strong IP up us although about that, XX% and And QX growth we we're for and so is a -- bit XX% in muted -- from anticipate IP. QX year-over-year. another you still

really is into the lumpiness IP the their time which the line design. ingest And about customers the to in need

continue and QX. we through noted, will QX continued year, growth QX and expect a so with And as that you throughout strong the

expecting fiscal I mean, May that Is I ask still to wise with be contribution basis. a lower still the revenue, but China to that year-on-year be again the -- in grow guys the compared dollar you to going record 'XX. were still 'XX are on case? a going

Yes.

recall, little we that restrictions. bit challenges in as the a you on communicated early we economy some year macro we're cautious in Charles, China see and impact in As the the China of

first good half. We had a

the we're anticipating balanced are approach growth taking in overall, China, We a macro. but for overall

Tilton from with Research. comes the question next Your line of Josh Wolfe

hear guys me? you Can

. Yes.

for if tracking Really But appreciate year-to-date. displacements these a just think those? coming from? or of was the on kind the rest out, this they're year? on XX. to give us you maybe color I that can expect mentioned trend we Where called those bit how kind you the that should of And more I color don't the displacements of you little what's quarter remember driving

Sure.

we Our of cetera, things. Synopsys, feeling and design of more customers et for is a introduced analog are a and it great environment, modernized, think expecting workflows more methodology, digital. And this to like opportunity be couple

AI the ASO.ai. which is is for analog, One

some we've the migration aspect primarily analog node foundry of to Our from or node full the the is using in And a had foundry. to other cases, customers it flow. wins competitive are that for

we're you complete and cetera workflow that actually environment, and a about putting at driving modern our When the we're customers. ASO.ai competitive the for that design momentum And our et look is the platform overall very customers. offering for excited simulation, together

know Ansys purchasing Maybe are a follow-up you But in already to businesses at mentioned any the and changes just separate running you seeing I are a that. that moment. behavior? you

all go and they you but starting the are the now of because that customers weren't are that, that Synopsys by mean to maybe in identify any you in I weren't to more between all customers buyers strong at or the buy exist see starting combined can future there what or And will maybe Ansys business?

had we've a Remember, XXXX. Josh, since Yes. partnership

that products connections customers. So between established engage we Synopsys technology have our the and core the relevant we that -- of with in customers that for go-to-market engage are grouping business, established already that we

stage. in say started So we in different there it is behavior a of of what XXXX. customer as I continuation won't Think at terms anything of this

the guys. helpful. Super on Congrats great quarter

Thank you.

Securities. next comes Wells line from Your Fargo Mobley of Gary question the with

And I wanted about most presume that developed SAMR of for what's regulatory guess approval acquisition. recently expected always half with year. approval. I process the I the China ask next SAMR was given to the to China Ansys you close frame time file first

you that make if the to Maybe speak to to might just in you be can and any line? approval concessions get process confidence across finish willing your that

Sure.

So Gary, on we thorough regulatory and a that filing jurisdiction, needed we really process view, map a point from things. processes of road had few different One, to. a

first step transaction merger our last that is And threshold. confirmation. below the China, a is the was in actually week latter, positive With confirmed communicate to notification was took which we the that

will it notice, communicated reviewing this the time, the at same next to transaction, the the that At review desire was they potential we're which, steps. stage, evaluating we're

And we collaboratively, competitive, to that any we're we to customer at following this And what try cetera, to communicated account. are need important concerns work every et process into to understand stage. it's jurisdiction, as just that take

Sassine, in I'm as designer. Okay. a follow-up, about my commercial leaned heavily hasn't subgroup mistaken, historically on prepared a Asian with you memory win of if mentioned an memory industry And EDA. semiconductor the customer not your remarks

insight Maybe of might just center the for give if you particular, your how us some some that that for tools. be and needs can how factoring data memory how HBM And in be changing. might -- into then

the a for memory There incredible design. portfolio are of spot of sweet couple are parts they Yes. actually that

where simulation, acceleration in memory bring memory structured where and take our you more our by fast to know, try simulation. have in we custom spice design, fast custom position you -- design you design in an a As leadership is a

been for memory in of spot sweet technology adopters flavors memory us market years, to early that for that order as last simulation GPU engagements. to were the it new the continue the by these has introduced of in opportunity the over We memories, drove even memory growth design, complexity and for number and expanding the for leaders of actually, all fast deal a space. especially the with HBMX those that there, And customers that nice on us acceleration

So true. it's

that the companies technology of been years complexity. flows, were they've to over a adopt heavily deal leaning of number design latest type memory more While with custom last quite to

good It's color.

you. Thank

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

IP to a Great. really to being node TSMC. question. relation new wanted up just I ask just in And an stood at

think the know, I of probably So up around many us as mid-XXXX. stood capacity NX being is

I the to about from and impact get broadly, around just as your maybe in you pull want things of well. an how would foundational And like HBM forth as thought so caller on understanding when IP was perspective? might particularly asking business, that more last

Yes.

sense foundation in performance, So called deep when X.X a and applies Samsung, engaged that's online, a even in entitlement get the IP, that the trenches Intel, the to node. other new node in to what's order a engage area what's the in we very a of in And and the some like the reason we that to foundries. comes is the node cases, before TSMC, this X.X PDK engage case, of it deliver power, we early collaboration but many with,

process chip IP are the the they where have is way us. IP. test technology. those is the before come a interface the of our internal their So it's Then validation with shuttles that the of first we And after IP, for followed from shortly buying customer foundation number by

and when wait That's in know, from ready the to IP start PDK, X.X a they by cetera. the PDK X.X some pulling time they us. at customer the you for So as cases, -- is et

year ready before some So the a year, a customer IP. a the starts, plus in to we pull engagement see cases,

X clear. really call-out Fusion noted also Samsung. at around think just last at good I lot doing AI-based mobile I quick and some Maybe That's the with the quite follow-up. nanometers least optimization and well Great. wins a chip over a a flagship color of at quite quarter,

build Red guess I Fusion could some a stack going is which think forward that with you've and where interesting. quite Hat I'm is that -- around I work Fusion, this got really around with way going looks the of the

become this be too Is interoperability in other in past thing of to the EDA make stages interest there offerings. to interoperable will leap people's -- the much it say make and no with that design might various a the that flow to

for essential. all. workflows, at so essential the is Not Interoperability so

in well as can reasons. far back in environment I go thriving mixed using you remember customers alive EDA, that they're and have and flows, terms mixed many of mix using very As this customers It's for environments.

flow, And the these customer it competitors, been special doing introduce changing they I ways. been standard with with to And we've want there. see comparable to we've in the have times, and Ansys, handshakes it inside their wants an sauce industry our et Many don't and anything cetera. doing

X that thing technology when about our a well is step X, your But of it predictable cetera. into that deeper an the is is X mix with correlated through integrate X to outcome, absolutely The hear achieved be step is talk we environment. when Fusion as interoperable value you customer correlated value where can et there with the you the step platform,

in you complexity It my platform absolutely gap So be, and future. see deal continuing mind, to cannot will that with I in X the of to close of is the a complexity. need an ecosystem the absolutely order that -- sufficient

Great response.

you, Thank Lee.

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

Starting with AI an question.

of question. noticed of products seen. a adoption branded your You some are some X-part But perhaps

margin et of Number are by of indifferent structure, adoption AI relative those the branded adoption? systems the mix that to of X customers AI. be your over classes you cetera, would to what with versus be with terms In indifferent of respect And in with you other AI, supporting customers? to your ACV, AI seeing economics time, words, your one, semi

of And point taking to also And solutions AI any at X are more this branded products? signs or see customers beginning my of then you follow-up.

scratch, starting The legacy advantage, have legacy teams, meaning the is of regarding Actually, cetera. workflows, CAD I mix. want it's they're company interesting the et from they say, an typically a question system the don't to

faster, that's So new technology of typically is adoption we observed. the what

at So of look DSO.ai adoption new a have classic the now faster. when VSO.ai, for back, we a introduce as hyperscalers But rate example, of the the and ASO, the even is well. mix semis new at adoption technology, technology, or as I we

for question, seeing are absolutely. And they're if customers understood compared using AI answer was and is such we the I Synopsys the can correctly, I trying your use prove new XXXX that is a customer to AI X it more different, when it? the to the do now foreign even concept introduce What engineers What's second supporting it? we adopting part or The of requirement trust it DSO.ai, of field yes, How Jay, technology? in the it? they were to I compute use it,

it's completely discussion. different Now a

Our that to AI and they compared executives to any absolutely booster are what giving productivity an get, pushing acceleration leverage customers' of witnessed their adoption can in it's teams XXXX. we

Okay.

decade. for category. you been your revenue data for has substantial latest growth total follow-up. of shows you well harbor, including the of numbers, and peers for course, strength your a the a over it's $X.X billion of hardware, Now And is a this The category noted that

grown foresee still The the question including do under into has IT automation growing example, a I category, $X of EDA see underutilization a billion billion is category? $X this, where to mean or pockets way be, for hardware? do yourselves, vis-a-vis you you

One, cases. bring-up. up going if verification think going silicon and is the are to software I the more software we debate will possible hardware? verification much Customers and the faster; why ask two, bring ready. customers done fact acceleration, don't there I the that as do use there back to the So are to whole before have software X is content. be as step get really There can you use are

both for software reasons to cases, -- of but biased use is just a described. have opportunity for we're that I the the want say bigger to use adoption And case I bring-up going

I our believe areas suited our to the the And direct or a you don't verification we the are architecture those And when given comes know, case there change as are hardware to slowdown will solution with use be it use cases. software bring-up direction in that system. hardware-assisted more any of

Okay.

Jay. Thank you,

with Your line of next . question Gianmarco the comes Conti from Deutsche Bank.

great Congrats on another quarter.

be one around first will the perhaps AI. So

prepared you relevant little In the GP Could deploying in to your remarks, Are broader the how backlog? after. a XSO.ai bit a it rates is talk currently more ask And included American revenue KPIs much the a generation you about perhaps here? see seats? spoke you DSO.ai. penetration and I'll more leading designer material about starting any follow-up

for Yes, for cases that take actually can in if Investor at the Okay. use we We're that what early technology. during of DSO.ai that advantage communicated still DSO.ai Day you you the TAM, look stages.

in are We roughly point DSO.ai. the view of adoption for XX% of TAM an from

rhythm customers plenty the XX-ish within to back into next there's of of project they're are continue the blocks, finish opportunity or design. you of XX% have tape not terms call So out, are at we we adoption a that expanding. deployment broader across go And the percent of roughly because the in on and them, that not value, to the there's where meaning adoption. partitions And pushing reason for seeing that, more,

So that's DSO.ai.

one. to adoption it already anticipate by faster to ramp run verify and not cycles, something and and we previous faster than DSO.ai it you go be does the at be VSO.ai, improves because it what verified having verification your in the the On the to and coverage looks back

a at smarter hardware a it that TCO looking is to impacts speed customer, get while higher and just cycles. improve their the reducing And waste up. because software order coverage it, way to reduction, to time So where they're the it the what the and they're coverage running utilization need approach more in verification the on

in And of As workflow. I modernization mentioned, seeing a we're all node cases migration. about the on ASO.ai, it's early the use is

digital performance it's need accelerate automate, feel they need stand SoC this and where area, entitlement B, through from you to not to go thing, So moving do you a customer because exercise. A terms in power only whole node of node -- the of the to

Could a follow-up your Understood. are perhaps you above noticed I for the grew where most you revenue quarter. -- expenses X perhaps Shelagh. investments? the of I well directing second you about R&D in talk have

is AI product pouring be you would be setup in into development budget the being the color Are Ansys more acquisition? or development what great. would post integration Any more allocated whole of

Sure.

So our and main design design focus both automation obviously on our investing is investment in IP.

in we building leading-edge IP think for needs more out AI. the of I kind standards group, we're by especially blocks as we're much insatiable the technology, about Day are of driven So the the rapidly, Investor in IP the moving talked

standards a So out rapid fashion. more we're in the building

significant a that's so part And our of R&D.

investing and all And then in in investments. ones group aren't our to even capabilities automation those, Those we're and in we've a particular, Synopsys.ai in the continuing improvements design we're just already static launched, EDA because the those. building -- driving that the further out

Your the next Jeffries Piper with Sandler. of comes Clarke line question from

for operating based clarify is X X continuing margin SIG I core is wanted think expansion about operations, operating follow-up. percentage for then going not and how margin of of First you within the off expansion point Shelagh. the And forward? to ongoing that number of removal business for

It's the with and know lot of clarification. operations. of moving movement the we the R&D we're company. way SIG here discontinued for how thinking do thanks business, the I leverage the the across continuing Correct. a operations within leverage And there's of the parts scaling are core and we across as do drive how we the better is it better infrastructure drive about then to

drive is mid-XXs. we're we is expectation did operating shared we Investor to to our that in Day going expectation Ansys margin our and long-term that And that when the

continued about So part of a much we we're growth and the how of the very see thinking company. it's expansion,

at everything to we're lot to AI innovation. more a allows about so we're drive if company. things inside do And customers. modern ways the Sassine we're And you us infusing doing eating drive restaurant, of infusing in our into more will, our the that own we AI that talked

Perfect.

should proceeds we how Just net the sale? there there, timing? think consider SIG I What in about cash. for to of a payable know payment was absent

Just proceeds net any way deal closes. the to about think as

Certainly.

with is in way up consideration. So the what that breaks $X.X billion And SIG we in it's X distinct is about to out talked parts.

'XX. as in had we'll And that half noted, second billion transaction. payment $X.X we will close of SIG at this close we the the So of transaction expect have

year. this in happen would that So

over QX, $XXX the X subsequent XXXX, starting payment. million quarter quarters, first a then our cumulative And there's of in fiscal

$X.XXX the cash get So you billion. think that we'll about can is

So return, a participate in upon then agreed sponsors the we to upside and would transaction. balance, potential think that. $XXX the about payable liquidity that rate of that specified the is through that And would million achieve

Perfect.

Thanks the question. for

Your comes line the next Rosenblatt from with Blair Abernethy of question Securities.

sort Nice you quarter, the that business to you've Synopsys? seems performance come of analog? hanging you the on momentum like opportunities the best shift you here. see fruit lowest in seeing it a of good And wanted side just guys. Are for the Sassine, where in part back things. analog in of And for a of do had

productivity, et cetera. from So we of from the are workflows more hearing what be to companies more their trying to truly of take a customer are customers can And digitize the way of improve analog how that that base latest efficient, there . cohort our improve view, core approach we the point are technology, they analog advantage is design. productive,

of we're for grouping chips. it that their engaging for if designing about based And technology customers. think of you new a them on grouping customers a because very that's and exciting approach, is new So

grouping customers to the to there -- competitive for player encourage enjoy And have motivations. as for other many it where, to -- part have as always of other you alternatives that's customers many is strong Then of a see and know, well.

and well. a competitive engagement displacement as see that we in space where So

as it seeing of that the think we're momentum . that buckets have. So we X

Great.

you. Thank

is have you that. follow-up, Did a Blair? Or

No, I'm good.

Alright.

at There time? other no are questions this

Thanks, ahead close go call. Sarah. and Let's out the

you. Thank

you. Thank

joining. thank conference for call. you today's concludes This We

You disconnect may now your lines.