Synopsys (SNPS) 21 Aug 242024 Q3 Earnings call transcript

Ladies and gentlemen, welcome to the Synopsys Earnings Conference Call for the Third 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

good Ghazi, and Glaser, With today us Thank and afternoon, CEO Sassine President Shelagh of are you, everyone. Synopsys; CFO. and

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

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

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

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 let's Sassine. call that, With over the to

the targets afternoon. of record. setting in excellent We the guidance in quarter, another era the the value X maximizing Good mind, to midpoint company's our in all pervasive quarterly deliver results exceeding revenue portfolio the customers We of end positioned third with delivered while strategic we that intelligence.

XX%, EPS X.X Non-GAAP high XX% guidance remains and end our and the was operating IP, is above points in its at the year-over-year. robust. deepening Revenue commercial margin operational in our of continued EDA focus the systems. innovation non-GAAP was and strategic while strong in quarter Against guided backdrop, team up Our up momentum range. Synopsys our year-over-year on leading And year-over-year software-defined range. differentiation up this was execution XX%

our discuss detail. the industry-leading growth. financials guidance We confident double-digit continue for revenue more in to and be Shelagh will

in becoming partners. grounded traveled countries, reinforced execution our which January, some and than our have in over of with industry give partners, and CEO Synopsys and their The for every in context the First, Synopsys XX message Since continued meeting team participating is Synopsys customers our confidence, discussing X is customers I'll meetings loud trends, our to I is innovation, and in strong their priorities. their mission-critical business clear. more and makes understanding by which resilient. uniquely to challenges XXX

market silical rise technology and only Our pervasive success tied all (sic) dynamics. innovation us. intelligence, The of is is cycles, end evidence of silicon this innovation artificial [ ] to around the is by fueled intelligence technology era systems. proliferation not In accelerating, software-defined

of silicon combination the contracting customers are components This racing AI help despite infrastructure. necessary make complexity pace Synopsys. design equals good we this are and many design news for possible. Remarkably mounting to cycles and optimize complexity, to Our

AI Artificial thanks intelligence that are new centers Bottom and more innovation. AI-powered good and line, smartphones silicon refresh is exciting to Synopsys. and which incredible driving demand is PCs, for data an for poised needs silicon computing for complex and more high-performance

to innovation trends to good chip each process new nodes. the of enable of and our is AI and driving again, proliferation capacity build-out Synopsys. accelerating IP and business. the new EDA silicon Finally, transition the for node, count These Synopsys resiliency on manufacturing Foundries advanced reinforce

and define as level. the is set expanding customer more and silicon optimize at system our performance companies Additionally, more industries

our and greater. technology company, As acquisition solutions planned to systems our innovators a everywhere. our mission Ansys will TAM been has further expand design Synopsys empowering of silicon never leading of opportunity And

well. Ansys, we and and closing regulatory transaction. provide The future this progress with can physics. good is That's R&D deeper of making important proceeding review a integration with electronics technology we're solutions on The design require what system of

working are constructively We cooperatively various agencies. and the regulatory with

continue Customers the worldwide. filings to preliminary support all half close expect first to their to in XXXX. we completed overwhelming the of express have continue transaction and We

customers growing criticality segment complexity. starting and move turbocharged complete Automation. accelerate offer Growing QX -- we Synopsys a Design business despite Design a QX highlights, versus to strong with -- let's Automation up design, the helping innovation systemic are has Automation Design as very solutions industry. the their in solutions prior We X% chip verification revenue complexity year-over-year was most of portfolio and of the

a Our large reducing advanced debug to was adopted minutes. SoC large company, company GPU by debug next-generation capabilities for failure U.S. from platform Verdi days a U.S.-based mobile and

customer, flagship and verification our Chinese hyperscaler. customer a Chinese displaced large While VCS mobile tool a HPC a large U.S. large at competition

compute XXx AI product, aggressively reductions ramping increases time, verification quality. verification significant double-digit in Our verification requirements is faster VSO.ai and verification to also demonstrating in better turnaround coverage, up

U.S. company up deployed with marquee VSO.ai A to across turnaround XX%. improvements time IPs of Xx coverage Xx improvements GPU multiple to and

platform excellent had upgraded ZeBu as leverage hardware Our to an quarter customers EP for and hardware-assisted emulation to both verification business prototyping. X from product line HAPS-XXX our

a U.S. hardware significant at we hyperscaler a saw In in competition. large ZeBu versus win direct a QX, expansion

We the also increasing capacity U.S. large for IP demands increased opportunity companies, X provider large and large for were drivers expansion a ZeBu these adoption high-performance European wins. in HPC at emulation with

with in with HAPS Physical verification point We a the also also systems worked strength quarter. on of customers and successful U.S. product large software workloads was hyperscaler our several bring-up line.

with ICV tape-outs rapidly. X to these on in TSMC of on are designs on continue were win XX QX, increasing where XXA, IFS new NX, engagements tape-outs We NX

in We Design, displacements more Analog to the our where for have competitive XX displacements we QX. than continued now year. -- Turning

X American simulation at chip company. and vendor supplier, quarter, completed SoC and companies a and competition provider analog wins global Full at Asian an displaced in This we analog North we European X Flow accelerator U.S. AI Analog IP leading a a Tier

and to Synopsys Like nodes. in analog the advanced Verification, our to multiplier more power looking of to process scale AI to unleash are customers flows as move modernize their a

Our engine XX more than ASO.ai analog, Synopsys.ai for evaluation. in has now customers

NXE first Fusion digital AI node across TSMC in process customers. mobile this tape-out a and flows. GAA number first our to NX, quarter, along SoC creates customer expand Fusion of X-nanometer NX. leadership on advanced Samsung's world's for Transitioning with powerhouse where Augmenting EDA engine, our Compiler design Digital, with tape-out DSO.ai a capability to the delivered we continue at Compiler

now XX% Asian customer silicon adoption are the reduction vertical, in the leading power demonstrated spread company to with automotive a automotive We where seeing design DSO.ai.

specification and our operational requirements, we interface cycles On innovation nodes. matching creating and to consortiums are the advanced lines for opportunity pull IP, pushing to in revenue and customers, IP the protocols, XX% growth time by our HPC, execution. for us of with faster increased hyperscalers leading delivered for space chips AI as are Design mobile which AI, and choice at automotive Driven bandwidth supplier

announced solution first fast and to QX, secure PCIe In we world's the transfers. X.X data IP enable

edge Gen mobile while processing devices ARC smartphone optimized also seeing platforms. AI including devices DSP customers X into leading new our to nodes mobile applications major are in secured neural increasing X unit We capabilities, adopted We efficient AI with enable on were edge processors for momentum customers. and power X

have multi-die, and lineup of our an to the IP where EDA outstanding Turning the in products we for customers. space

which multi-die deployment portfolio, on momentum a based We IO application launching continue to continued a EDA, multi-die and broaden design interposer IC specialized In XD our tape-out hyperscaler. with for Compiler XD is of IO a CoWoS-R Foundation the an XD at integration. for major multi-die automotive IP, U.S.

from compiler a at by XD to stages floor to accelerate enabled Foundry for Intel EMIB, We reference designs multi-die all also IC systems. silicon announced multi-die

on-ramp range the SFXx on the achieved for a we As world's and success Samsung's interface IP. processes silicon foundry SFX for of

partnered targeting processes second process We and acceleration TSMC's gigabits technology the in X.X with microcontrollers. GLOBALFOUNDRIES compilers first memory AI XXFDX new edge per industry's also advanced automotive, and for demonstrated industrial HBMX X-nanometer at and to develop operating the

A closing remarks. to comments couple before Shelagh's of transition we

call celebrating Award. Aart the and I our transaction the his honor, monumental Integrity continue working in want to and selected to awards recognize expect Exec and at friend, and we'll industry's contributions admire industry to Noyce November. are someone complete leadership I of ceremony both was And XXXX Founder semiconductor outstanding proud business We a the before Robert sale Aart final that in receive We conditions mentor to look Geus. the a through highest the closing forward to to de and Chair our a that Synopsys half award I'm deeply second to closing, Software XXXX. of for

growth In summary, across business, by secular the multiple supported momentum strong drivers. continuing we have

We resilient business very have and a model innovation. are to our customers' mission-critical

future investment the return their ingenuity. passion us ignite our with trusting accelerate Thank potential you partners greatest to portfolio for are growth. employees their aligning our to and our customers our and We for to to

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

Thank you, above was our revenue excellent We range. Sassine. QX and record non-GAAP with guidance EPS had an

our We momentum business that across well, which a is resilient strong model. stable testament a to continue to business, technology leading the and to is customers and execute mission-critical our

Total billion; non-GAAP range. costs non-GAAP total the stated. end on presented $X.XX, our are billion, were year-over-year which were results, operation. per of revenue and XX%. quarter were third comparisons otherwise continuing our high our resulting costs margin generated All GAAP unless are review and $X.XX XX% up and expenses in now expenses share I'll and range. operating at a were guided non-GAAP million, earnings total above GAAP earnings basis $XXX per $X.XX of $X.XX of We share guided

Interface IP million up investments Now segment The cash Automation Design $XXX of our the cash Operating IP. and Foundation [ and was adjusted strong million operations X% -- was by free for operations, discontinued very up Automation adjusted the billion, approximately Design billion. XX.X%. ended We a quarter, strength margin $X on $XXX to was was Design flow, year driven cash operating discontinued IP XX%, operating including $X.XX was ]. margin short-term to quarter and in compared Design was including with flow, $XXX ago. segment. a million, revenue QX segment XX.X%. revenue

X metrics, total XXXX flow billion $X.XX and costs between resulting and costs expenses operations The Now billion billion, points to to $X.XXX expenses revenue billion; improvement all for at GAAP and targets full and are: presented Except billion; midpoint. in total are margin continuing year basis. $X.XX than for $X.XX non-GAAP guidance. between a targets of cash on $X.XXX the non-GAAP more operating billion of $X.XX

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

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

financial additional to and Consistent will and we when report and comments release press provide Our years, next include quarter. GAAP guidance with additional we prior supplement targets non-GAAP XXXX for reconciliation.

revenue we approximately X than EPS In more expect for of improvement margin approximately growth XXXX, growth. points operating to achieve non-GAAP non-GAAP of conclusion, and XX%; XX%

leadership and and execution see to mission-critical and across reflecting our position in continue We strong relentless resilient customers' the momentum a enable model. innovation to our business, stable segments, our products business

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

Instructions]. [Operator

the first JPMorgan. Your Harlan comes with Sur from line question of

mentioned, also Great a amount the and continues the are chips at X-nanometer in chip the quarter. custom Sassine, merchant accelerated as are both compute but market. you leading-edge to ramping, node, by coming design accelerate execution especially AI ASIC that that to around X-nanometer, significant of activity

internal IP all efficiencies announcement severe development, of one near other of pretty a tools interpreted at we share buy wanted more bookings, the I better solutions. amount to of from your less customers to and tool core their a any announced some about if despite and this, But revenues Synopsys mean, more own impact are market large EDA did or customer. And on semiconductor as less EDA But also driving the maybe across momentum this this potentially they're this do IP of EDA development off layoffs of own their going IP get your organization. have of I merchant leading-edge We competitors. I the and recently your downturn. and interpretation of internal software significant around of talk midterm and your coming

in our you, in for made, it's down first as you're silicon on our bid or exciting edge build-out silicon. forward on opportunities stack from the to be industry. companies which first racing custom time as to an center to are silicon you the in of right, system deliver Thank the Harlan, the along to increasing that part is, the device the AI workload with where statement want such question. their comment data on I the to well or of differentiate investment flavor customers to

to far at you're to, As Intel by referring new they as our that started journey in started Intel, the external not and customer way, IP, that EDA that XXXX. looking it's

journey a were EDA internally most it's the years over to and their IP, externally. As developed of you an transition last recall, been of number

an what's from going where or Now at is to pick with what's seriously ecosystem. they this company and deeper target the efficiency and transformation to can look looking they differentiate their this context where resources core, at opportunity can they're through, up

So an opportunity we do there will ecosystem IP. that leverage for both EDA believe for be further and

midterm we As impact, see impact, don't short to as far actually. much

agreements customer. our value know, term for on we that delivering you are As continue long high to and impact and committed

don't we of a in negative in short So midterm. the see impact much terms or

heat past Great. And just is the these drop actual right? thermal, of semiconductor you packaging causing chip the of of many of a these performance leading-edge into your reliability designs, that for XX over customers advanced stress a problems. we've revolve on the amount mechanical, And chips are pushed whole yields of don't challenges and with interactions chips is the of days, these as the chip issue they packaging causing around significant challenges solutions, example, dissipation facing The power heard generating the boundaries bunch itself. sort once

And AMD moving then systems board, announcement VT into where a on to right, is of you full-blown server be the their scale all the your sudden more see like and going flip to acquire and AMD recent market, customers more side, Systems, rack server, design. doing of

solutions is for portfolio system like the as So this analysis big it part exactly the Ansys of having becomes team. we're seems a advantage a

interim, build package Synopsys these maybe given what mean, that challenges. continuing support is doing the customers But And Ansys positive is system-level around acquisition some chip momentum? to then from and all these dynamics, I in with help of to the of customers

and support you yes of customers actually start the reason from I on transaction silicon yes, system exact customers not highlighted. support the the, with will continued the same silicon in for and only customers,

chiplets, dynamics package die to you those you which each and an design, know, are going advanced you as by them complex put it's you other field. a many dies fluid an you attributes and to packaging do architecture electronics, no -- together. plus to all look advanced itself phase in electronics is during know you advanced chiplet packaging thermal, structural at that them The the is challenge work once If design how go is silicon all manufacturing the from into has very the very longer mentioned you in

level a AMD to system. racks. sort going look system you some to and workload to to of you to on at cluster rack to That type cetera, do system board, and at based put, the what for sit that design that chip for power cetera. manage et going complexity that type is as Now of a cooling in need, chip is and of determine How how design the designing the and your reference sit supplies on what you heat of to et want are you manage

as reference and know, our And as system as the right I we've is you silicon we're the working company, And the now customers love talking about which systems, our on. positioning to exactly a to company. hear solution I solution software partnership with customers design to the been silicon our

America. Your Bank next Arya from question the Vivek comes with of line of

this Sassine, kind EDA What at Analyst the in growth early of had time, to core where that journey? the curious, would monetization. that over the from in you signs I'm AI XX% have is business? suggested to drive Day Synopsys XX% grow been from acceleration the

Yes.

technology to not double what traditional deal to Vivek, single these in of The too we've in you we been ago, of with due reason if new long referenced AI. grow XX% case complexity upper introduction to that outcome talked and back complexity XX% best is systems, digits we So was the EDA and look to for the about digit. a able

a of on journey engine AI view, portion the DSO.ai first from is of digital we point introduced which the design. optimization the

part portion analog. the in AI. itself, my which chip VSO.ai, customers number mentioned ASO.ai this adoption generation use mention we ramping. stage I And As and is for script by LLM of for knowledge we and using about and the of have not itself. We're in assistant remarks, talked of this prepared did at generative I in

So about where from contract. it we're XX% of baseline of the about the are DSO.ai capturing maturity? we now, been portion and uplift that we've With for average the X years monetization in selling on

in early we're validation. we're yet. have we're not and the ASO, is with don't we is VSO but an stage, XX% an For it? be enough monetization eval still points What stage, in it in in Will lower, means it to share yet. higher, Where phase. customer similar early at there is data you

generative And so to AI. the similar

X at that a have assistant currently knowledge we offer customers number that have We of across products stage.

XX%, to be communicated. time is to So we specify are frame, clear that is but will did a the -- the be the delivering and justify will XX% able impact we monetization a why X% to we absolutely able value not to that's what that support growth

for And more near follow-up, my kind term. of

so going trend year growth probably kind EDA? for a last been of conceptually? make this Or you're EDA help industry, has the understand you Do year I But or seeding it back into growth kind you your far to fiscal seeds so. do year to that see that. what of of about a semiconductor drive X% up early tough was effects being too year So the think next is the in conclusion? laid line return to are so

it's So outstanding quarter, like XX you based quarter-over-quarter growth, not there for double-digit misleading. alarming, may comparison that trailing the an and had anything in is it sometimes but It we please mean Design this on a have does not particular months, 'XX. because measure Automation, quarter-over-quarter QX be

And still mix we feel is strongly Design months, at As the double-digit XX it's growth. the changing. you Automation, look within trailing a

then software, an you which traditional where and the the is becoming more customer for the wants FSA increasing ratable portion have have you that flexibility. have software, upfront hardware, You

For around at I'll that's look cloud trailing flexible you they more that account. months. to comparison spending how it That's get the example, quarter-over-quarter through access is caution why XX

Yes. add of QX some last that I of year, TTM X% would obviously just include QX so growth. on was top last contracts. as expiring did And is XX% references, just And our of year tremendous And Sassine XX%. XX%, is

not So reoccurring. that's obviously,

from next the Vruwink with Joe question Baird. comes Your of line

up, incremental hardware-assisted for very products generation the even Great. compares in order IP wanted growth launch in to the I'm with is upfront that's you verification revenue showing stronger relatedly, products, growth if ago. of strong quarter, the quarter. the if a hardware maybe wondering contributor but it latest a flow the I EPX And ask of new of the how years here. compare to couple and

Yes.

are use So the our sweet which of introduced you sits in number Synopsys hardware the case. emulation, The those customer system it on of use which think in the selling in, systems of EP prototyping nice is is seeing a that adoption a the for to cases. and not existing use a we to is bring we product. system requirements we and actually competitive are that pull But actually itself, like performance case able We is system, need between very sweet adopt very a because pull our from deliver, for up software bring-up. to have software

we customers a looking their an in a we and historically, That's see strong a continuum quarter as as need that can while given The use Joe, case competitive are did for use momentum, to had back the typically that you we don't hardware Synopsys emulation. same that see compile case. the make it we complexity. not That's or in why, that We their is compete hardware, a prototyping where use simulation a down wins of couple area to from a acceleration. sure use it slowing strongly have they a other solution identified as

would And that had component it, upfront other is and consume can the happen quickly. that extent add to IP, we available quarter. is the customer exceptionally strong then that, is an pretty ready And already and I to a IP IP

give momentum robust. forward don't pipeline update an initial helpful. remains if all the in there. guidance very then was you like to but next That's evident the wondering just of fiscal on how developments, comment that year-end into Okay. then part year. that's can give if they commercial And And looks any I'm backlog and the backlog, made maybe

Joe. Sure. Thanks,

$X.X continuing So 'XX was to last that operations billion. backlog billion. for reference And the of QX, you a on give ex quarter QX so $X.X SIG, was

as ahead up race as Thanks, So we they're year-on-year relatively to support burn. And and quarter-on-quarter. all was flat customers Joe. out number complexity very the it's the that dealing that ebb does continuing we're and nicely flow with. It build to and

from line KeyBanc. Jason Celino next of question comes with Your the

the you're like just guidance for Maybe year. the my one, It narrowing the first revenue on range. looks

we've as X every much raise already quarter, I As I'd you raised X think seen to this to you year. like times

there Curious areas . the strength that were I So you of curious that some you any areas any or outperformed think give there. we'll offset did But past. could downtick more if see? the have

you Jason, year. Well, as times said, this we've raised several

seeing So us results to would Sassine that we're to our confidence seeing is really product and is our that the the in narrow line. industry. say about midpoint the strength give allowed talking the across We're that guidance of XX% I QX

to and good with the operating customers and our very margin some as very, because raise things with across the EPS did we're they of being talking non-GAAP we're So about, sure doing with about talked deliberate accelerate customers maps as expenses inefficient. again, our board, onboarding the meet their demand. we're engagement robust We and investment AI road really non-GAAP making Sassine that

on improve saw metrics. so both those And us you

in just -- you region? quarter, about one X% And that year, maybe China. to It up down but quarter, I how it are one last on Excellent. still like the demand for compared the X% then and was quick feeling environment looks guess, in the

of One, entity continued restrictions is about then factors. Jason, beginning for we the approach year, Yes. of the is taking second That's technology the impact pragmatic talked China. a list China at and in the environment on the the why, X macro

we see the excellent rest in performing when at China the incredibly said, being executing in China, we're it's that of are to you regions, we're of all and growing still well. Now look well

approach on given to balanced So we take continue X factors. China those a

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

could. guys. Great. question, an just Great I R&D I quarter if wanted ask to

if you I And there's product the hardware at particularly it but around ahead slightly expectations obviously, maybe of around look looks IP as think So, though new be quite to updates, a IP interfaces, people's out R&D some there. maybe as been fair, numbers, well. was foundational build

I with of that there we as the let outperformance to year was next of those for that on the wondered the some and and just I product maybe innovation to So earnings if line the go R&D flatten do balance that. pace scope you end through wanted you this or of into to understand X maybe just to is between unlikely help positions.

Yes.

the a industry, So certainly, even piece the of in pace of accelerating. is the about new Sassine standards talked and

have we be our customers. ahead to have we -- step to almost a So of

continuing priority invest talked to capabilities that EDA then map continuing evolve and road is think you then to out incredibly continuing to and So our is in our about building of our when important, really our investment. invest hardware that we in top both about

anytime efficiencies the don't reinvesting further Obviously, lot there, I as we product we're and really investment innovation. see soon. an us a those So of think for about savings building of area that driving benefits R&D and

wanted of Maybe as automotive. Great. Very maybe ask end I on question follow-up, market to clear. just a kind

noted the you've the in call your seem out. think past, and -- focus automotive on comments to Sassine of growing that some talk I

software-defined to pivot a vehicles. are We seeing

coming view. seeing custom silicon are We into

the you automotive, going couple over including sensible to the out is assume of trying next to some work, the of growth say for us what understand micro car. just of So years all proportion giving into processes big would coming

been things the about car, were in And smarter challenge last whole over to a I say, more of Thank it system to driving segment, level hyperscaler meaning very you, to context question. Lee, the delivering for and X the couple years. the X exciting has the applies talk often the a that want push automotive. a is same we towards at sophisticated exact silicon Automotive

and already of system of working own architecting to own that building what they're are suppliers, investing happening, silicon, car X, Tier started, doing starting are as and the X but automotive with the they spec the the not these communicate of software A do they're chips consider others the meaning electronics overall electronic the number they're some of their system their they're the system fits how the even Tier building it, the car, if within is requirements. system, in OEMs their silicon, absolutely

For where virtual call our Synopsys, chip and we electronics. twin both that's virtualize based sell you architecture work work opportunity as their the solution, the these and companies what on for define where think for it to OEMs an that we virtualization digital we virtualization electronics with the semiconductor to automotive with we models, can of

that's cars great overall how We new percentage that anticipate that more se go given on are the that market market market, et because and And et not for of adopting going we Lee those a be in further cetera, do cetera, systems, contributing these intelligent, for solutions products which of by market growing in that the that, will acceleration some generated what that's to is were an growth, per sales that's solutions. continue are not necessarily our now, the automotive than but opportunity. I a those report cannot of segments. connected, more terms of right

next Your Ruben Stifel. comes question line from Roy of of the

contracting? Sassine, cycles should how that about And relatively maybe prepared in go new of business. that, And a to think a me, to back like as it's impact we longer-term some this. wondering mentioned least development. seems you you I'm I think to that remarks your at face complexity. chip something of thinking mentioned I regarding the increasing wanted design in And to that's your about

It's leading other cycle to you design on you really, are the your designs? with and those the happening helping it's longer-term that industry of could as of you but move that that here question sort do your are with guess edge. across at your most And the IT to design, the there's customers complex Obviously, develop systems happening tools that, end? think sort and as AI try a continue accelerations. But their accelerate they there for is, asking I areas trend is

Ruben. Yes, excellent question,

X Moore's the rhythm that you the industry moved had Law offering. it If I Moore's was and X, Law back don't at a last, every product look -- just not company the entire with next of know, latest decades, the and

You move from cetera, performance a et when cost, to need it move power it. to to you

it's at of talking Those possibly to the in you Right as customers chip. of set. their down be it reduced X -- when with are year, product optionality package years, a definitely now, a cycle multi-die XX it used from map will number they to that way look design look a customer to to a serve what systems X designing be in that new we about traditional certain months at road target cannot advanced

How afford see moving the of many market that fast Not customers in complex. market in because the can it's the and too and to the move for direction direction? very do them rest I have that skill

So it's both. a of complexity. the The with significantly -- the cycle increasing is time design shrinking

at from technology for design you with use that's level the us, AI to need the and the an automation For capabilities, because et industry, advanced chiplet cetera. as level, EDA news package latest great the

the on hardware much these I spec you as protocols a X, set requiring, verify, adopting from side, remarks, is and customer of finalized. them of before it's Then in X-year validate ability to designing prepared mentioned my cycle the to to course, verification even the this. all of need, for over IP, shrink requirements as For well shorter even it

to see look Now acceleration. very well, you to need that the from pace how this skills it's we many exciting whole resources at dynamic, have ability customers will wait and with investment as

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

China. about question a have I

it maybe be beginning the of China to implies dollar-wise maybe year-on-year to the wise, that higher of probably of may of China contribution imply, the China quarters ahead the be like year's plan, which X reasons, as last the faster kind actually corporate, the year, corporate. the would and grow XX% a right were year, macro, ahead actually the fiscal you for also sort you the be chance percentage that of said that meaning going grow probably the doesn't can may X I than you is year first but full contribution restrictions I be -- there's get actually, going for also which expecting you and than revenue but from of -- think corporate, still the lower, may -- faster of looks the going grow as China, to fast at think

And to of Chinese any mind maybe getting for pull-forward wonder the of number see QX specifically, the export there. And you the new reason, by what fear some your changed? is China the that, revenue them customers if has particularly color I for any controls, banned Related did from could strong. of provide whatever from you

we're seeing part Synopsys. So question. unusual approach No, anything terms pull-ins I'll in start the a different the with to engaging not of or of last

very the as growth the far products that year region we the a beginning FSA As see the again, on at or of specific be strong onset from year. quarter-over-quarter a The communicated the at pull hardware see what communicated we true. may what of nothing may but more why have. That's still or IP we of It it reason changed in mix down. you holds the you based quarter is,

line comes the next Your of. question from

a follow-up, have may I think had Charles. you

I Yes, follow-up. Yes. have do a

doing question you other the expense maybe non-GAAP I think for The looks Shelagh, like better. are

see quarter, You're $XX the for you million year, the numbers I with can ahead July total full expense expected. non-GAAP as what $XX million better you also did actually you planned and than the compared the the what based less on

hiring, et compared what's some with of opportunities I Is like new because invest there the for wonder in change to some of I EDA, the cetera, like the you into remember was the growth IP, like OpEx ago? in months [indiscernible] anything the cetera. did year-end timing But et the X

So what's driving the here? slightly lower OpEx expectation

Yes.

continuing about we're map So talked talked invest overall our titles. where all our investment. to about that building to sure in about we continuing We it's intentional the road . Investor Day, invest building to invest. out in And we're out IP really making about being that continuing

implement And digital so AI while the as things, we're we in driving we business implement and also for ourselves efficiencies investing transformation. we're in

interest would in product had good we're prudent on also And expense but I news other. some innovations. are about then our and So just the investing we we say really being new structure,

and some So both to disciplined on things of those and then good investments is our that what's really interest upside. contributing on being news other

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

I've kind to questions of already. on asked I actually X want up follow -- already

about But more that the laying forward are And gives is, the any because going more the EDA Intel's is off, clear. if you comments. no in to ask of one you vendors And changes forward? just first using efficiently, there Intel's not, about IP is people your question The want I there comments kind efficiently. of straightforward question very what using growth very confidence change and expectations

Yes.

move we Intel multiyear So the IP, why it see a of resilient as are investments you the cycle engaging impact more it terms will deliver programs that cetera. to engage build our when until et moving make the were customers, these et to think IP, of us revenue we that business impact not type in it's it to multi-quarter are our of on and if Synopsys, we when refer commitment of we to takes say, on because cetera, see That's even in type needle terms before things need to we business. back, as you let's of are

EDA not midterm, don't is simply Intel. engagement to in build-out. our the IP more negative, engage see we positive the short-term why an straightforward. of just course, This that's the So or of is impact way we we and that's unique how And to structured just an broadly, because

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

does development AI I products product let's ML branded how all, product of from intensity developments? is, own your development AI conventional at have the if question call for differ, to process products, of respect with your X or, it, the development Sassine,

was regarding indefinitely separately do products measure versus products interesting remain EDA panel and within branded you for months discussion products whether they EDA In Relatedly, of conventional X the features how words, as or become those other your product. DAC core at in AI products. readiness subsumed which an your ML evolution Shankar development ago, AI own the participated or whether of they there inevitably productivity

And be So, maybe will then my that? about all custom. follow-up address of you can

Thank a it's question. very Actually, you, good Jay, for the question.

we look that traditional by tweaking, has, the to all the call foundry the you is specific foundry of order rhythm that it, at leading node the tool driven who product back that needed et the on make process cetera. edge let's PDK, were customer have right is in tuning, If with do sure to EDA features enabling releases, software that the

a technology. from it's So process

the architecture cetera. customer so AI With view, to we call a to have it, let's it accelerate they did engine customer release product, tool from of point using can a optimization similar, the some use tool, different based From not of the engine of inside traditional to very do or was much customer, extent, a that the sits the just where cycle can around the different the on that EDA same products. AI we released et

Fusion So with DSO.ai VSO cetera. et same as release VCS, Compiler, as same Verdi,

they which the to because in use of these which own generative environment accept becoming different a technology. their in customer use, in the want the are at so which own preference they chip, of their pace only AI model to pace may it's designing environment they not to Gen AI, With this context -- releasing the of models, which have

with are we're view, each layers at level. not that as say, special these of an the pace can a as, customize have having for what's a and without releases have some to fast and that well layer engagements from how engineering customer, for slowing can we we development point so want I that away common As from infrastructure the what of investment customer-specific we the at is the it, to deal product

and AI, in Gen terms EDA. changing the what's there's that's AI optimization traditional So the of there's the

our made, customers target. or part customers, As agree Compiler use They does with in especially that is not most AI I order the as give to will will my expectation with complex engagement Shankar use need that it I -- differentiating, me in current you advanced to the everything not. of just the use chips, to achieve on I Fusion point is

of of as start and is we expected forward, you part moving will know will absolutely we AI as separate or thinking around So an solution, EDA how solution. a where it the as of the see keep we become part -- in

Okay.

with obviously would inhibition about excluding look layout mixed conference percent signal For lot analog But towards mid-teens my it which could ambition more? IPs. for are your When is a signal, referred the percent business of we In ultimately a of mid-teens and that is to things words, EDA, large having what that custom, last of follow-up a data, mix that business your the Automation. how industry Design analog mid-teens and Ansys. Design do now calls, you've roughly at on be? if several business, can of analysis cadence Automation other be skewed percent be not your A your to

of see fairly a have of we portions analog. analog for. the portfolio. you are verification you we this we X strong offer When on Jay, an analog, design is So think simulation of know, X there that One, fronts. as opportunity And solution there, as

portfolio. Where is se that are logic, and for the type design. the these a of environment, And call, design in environment. discontinuity which earnings And about call, wins we cycle an customers offer by are very customers. that portion previous they the faster are the the are with per the challenge increased they in analog the traditional complexity, we those time that and driven this dealing does smaller discontinuity of a the in for same digital Actually, is is so talked TAM a to design strong referring competitor. been much earnings our we've analog

this can that chip. In an case, more So industry modernized they are bells a the do ASO.ai new whistles to approach offer. leveraging analog and and any

interest. So customers' and an aspiration have TAM. of we're we excited to about our the grow course, offering into that And

you, go Operator, let's ahead wrap everyone. Thank up call. the and

you. Thank

Thank you. Yes.

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

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