SYNOPSYS INC Q4 FY2024 earnings call

• Technology is at a strategic inflection point with opportunities from silicon to systems, driven by AI, silicon proliferation, and software-defined systems. - The company had a strong FY '24, growing revenue 15% YOY to cross $6 billion, and completed the sale of the Software Integrity business while pending acquisition of Ansys. - Design Automation highlights: Q4 growth, Fusion Compiler leadership, Synopsys.ai solutions with DSO.ai and generative AI, multi-die design trends, and strong hardware business performance. - Design IP highlights: 24% full year revenue growth, robust design activity, Ethernet and UCIe IP wins, and automotive IP strength. - Partnerships with TSMC and Arm, and progress on the Ansys acquisition with regulatory milestones.

Design Automation: Q4 revenue was up 17% year-over-year, and full year revenue was up 12% versus 2023. Revenue for the Design Automation segment was $4.22 billion, with an adjusted operating margin of 38.7%. Design IP: Q4 was roughly flat against a strong prior year compare, while for the full year, Design IP delivered 24% revenue growth. Revenue for the Design IP segment was $1.91 billion, with an adjusted operating margin of 38.3%.

• FY 2025 revenue guidance: $6.745 billion to $6.805 billion. - Non-GAAP operating margin expected to be 40% at the midpoint. - Q1 2025 revenue guidance: $1.435 billion to $1.465 billion. - Consideration of fiscal year change, macro uncertainties, and preparation for the Ansys acquisition in guidance.

• Macro uncertainties in some geographies, particularly China. - Impact of U.S. semiconductor and value chain rules/restrictions on EDA software. - Uncertainty around timing of IP and hardware deliveries and integration challenges from the Ansys acquisition.

Q: Joseph Vruwink asked about the FY '25 guidance and impact of Ansys deal.

A: Sassine Ghazi cited market dynamics, macro uncertainties, and preparation for the Ansys acquisition as factors.

Q: Jason Celino inquired about Q1 seasonality.

A: Shelagh Glaser explained fiscal year change impact and lumpy IP business.

Q: Harlan Sur asked about U.S. semiconductor rules impact.

A: Sassine Ghazi and Shelagh Glaser stated it's incorporated in guidance.

Q: Vivek Arya asked about design starts and large customer impact.

A: Sassine Ghazi discussed design start trends and customer pull-down dynamics.

Q: Gary Mobley asked about operating margin guidance.

A: Shelagh Glaser talked about multiyear leverage focus.

Q: Jay Vleeschhouwer asked about internal initiatives.

A: Sassine Ghazi discussed scaling and AI integration.

Q: Ruben Roy asked about cloud EDA and IP royalty models.

A: Sassine Ghazi talked about cloud usage and future IP monetization.

Q: Yu Shi asked about China impact.

A: Sassine Ghazi and Shelagh Glaser discussed China's impact on guidance.

Q: Joshua Tilton asked about China conservatism.

A: Sassine Ghazi and Shelagh Glaser explained China-related conservatism in guidance.