Cadence Design Systems, Inc.

Q2 2021 Earnings Conference Call


spk_0: good afternoon my name of scenario and i will be or carpets operator today at this time i would like to walk another one to the cadence second quarter twenty twenty one earning conference call all i have been placed on the it to prevent any background noise after the because of mark there will be a question and answer session if he would like to ask a question during that time simply put sorry than the number one on your telephone keypad think you are now to the call over the allen lindstrom your group director of investor a leash implicate him
spk_1: please go ahead
spk_2: thank you jamire work i would like to welcome everyone to our second quarter twenty twenty one earnings conference call i am joined today by look through time chief executive officer on will be a gun president and john wall senior vice president and chief financial officer the winter girls to lose cause be able to our website craig's dot com and will be archived through september seventeenth twenty twenty one a copy of today's prepared remarks will also be available on our website and future inclusion of the call today please note that the discussion today will contain forward looking statements forward looking statements include but are not limited to statements about our business out what product development business strategy and plans industry and regulatory trends market size opportunities and position due to known as an unknown risks and uncertainties actual salt mary differ materially from those projected or implied in today's discussion for information on those factors that can cause a difference in their results please refer filing to the securities and exchange commission please include cadences most recent reports on form can turn and form turn q and a cautionary comments regarding forward looking statements in today's earnings press release it and by the way our second quarter to him to was filed about one fourth of been eastern time today to it's out there you should dog rely on are forward looking statements as predictions of future bench all such statements are based on estimates and information available to at this time and caves disclaims any obligation to update any forward looking statements except as required by law in addition to financial results prepared in accordance with generally accepted accounting principles or death we will also present certain non gaap financial measures today kinda management will use it in addition to using gap results in evaluating our business we can also be useful to review results using certain non gaap financial measures these non gaap financial measures should not be considered an isolation from or as a substitute for gap results these non gaap financial measures are not based on any standardized methodology for scarred by gap and may not be comparable to similarly titled measures from other companies investors and potential and dodgers are encouraged to review the reconciliation of non gaap financial measures were the most direct comparable funny answer results gap financial results in today's earnings press release copies of today's press release dated july twenty six twenty twenty one for the quarter ended july third twenty twenty one related financial tables and the cfl commentary are also available on our website for the q and a session today we would assets you observe a limit of one question and one follow up and you may reach you if you would like to ask additional questions and time permits now i will turn to call a little
spk_3: but up then everyone and thank you for joining us today a don't you outstanding financial results at a second quarter at brought faith taught them at the my father innovative solution both stronger than expected revenue growth of it ability and castro that's an neat on the raising our financial outlook for the year i like that i have forty million increase in revenue guidance or campus and ill the year that the new pool john were provided details you know moment of both our kyoto results and to update that i'll look at a year if i get into a more details or the quota about a quarter i would like to talk about e o transition feels that we are now earlier this afternoon we are now or never done a lot better than a kick over as your on december fifteen two thousand and twenty one and our transition to the role of executive chairman at that time it had been a privilege to serve as a fee or cadence or the past twelve last year over that period i'm very pleased that we in skilled adults can double cultural center on it for innovation and customer good like auch very close partnership with our customers upon us and build an extremely talented caters team of over night thousand employees a is now firmly established are just as a top and to an idiot provide built choi but a company and it's well on it's way and expanding beyond a the i executing our exciting i it he said that she a treat for our pam but thirty billion a bought and i are very excited that under road what become feeling december and we cannot think of any one more uniquely qualified to lead cadence even higher fight it's a proven reader with all such a vision of relentless focus on innovation and execution and passion for driving customer success over the past four years since he became president under load and i have joined he left the company and a bought and i think it has the right time to execute the next phase of are such a plan and handle but upon to him you can expect to see a lot of continue with he going forward at the beautification a small of up on the like station about current responsibilities as executive chairman i will focus more on new market opportunities key said the chick initiate it and deepening our relationship with customers and pilot and on maximizing shareholder value and now let me have onto the fifth of highlight generation trends such a spiky ipads killer an autonomous vehicles and that kinda a i was bending and data analytics or accelerating at it it though transformation across multiple industries but semiconductors a good foundation is trends are driving strong fee fi activity across a growing spectrum of by and system company and the out very well positioned a gift to be a sustainable long term growth drivers he lighting customers and accelerating brought the quite a relentless i'm a month to innovation it the launch of the for new products we are now introduce eight significant innovative products so far this year across all a bit groups and will contribute to future growth what can we continue to expand our business with market shifting customers and differentiate that solution that to a broad base expansion of our partnership with some songs including but of ration about picture fulfil it was an outstanding quarter or our digital and final business they'd revenue growing sixteen percent year over year other digital to floor delivering industry eating quality a result at the most advanced i think and new customers that included t competitive if statements by expanding significantly at several market shipping customer outwardly among them well a large us data in for such a company but the expansion of on my key us aerospace and defense them a major issue epithetic hyper tequila and like fighting a i thought of we had been steadily in property putting h a i am l it into our solution and with cynically at violence at with last week's introduction of new therapist in college and chip explore she refers to nyc reinforcement learning model a creep effectiveness it it's use an end both an able to bring keep a can keep gay improvement and can x productivity it up it was and dos i some phone and venice super cop drama at relied ginny i'm in bidding for benefits across multiple parts of know and and application it was also a great quarter blog only the kitchen business good twenty three percent year over year revenue growth of ability to kitchen sweet on pricing of guessing class engine and delivering the best notifications for food source on she knew strong customer adoption and expansion at silver a leading of them fuck you ocular a month for all of us will continue on updated eating to best your to ever bother palladium and him that one a the robust customer interest in the new each will an ex to system with sales ramping nicely both fields of the one and x one billion strong our hardware family at fifteen new orders and over sixty five repeat orders in the quarter with the three largest transactions being with hyper skillet and included a world's largest put him construction to date it was for new extra strong momentum continue flawed system design and another segment with twenty percent year over year revenue growth we expanded our system for train with multiple vertical including aerospace and defense by to your wireless and communications boeing system complexity for high frequency application is driving the needs or and integrate a platform solution across system design simulation and analysis as we continue building our system portfolio we are pleased to see earlier indication of customer increasingly chosing a brought the said about solution cross his to me for instance in kyoto a large us better infrastructure company because significant com human who our keeping i see packaging are f and for some analysis so you should we introduce a what next generation tcp and ip packaging is i platform illegal acts that provides a unified engineering platform incorporating innovative much funding ethnic and delivering up to four time improvement in overall design team productivity it up you are an integral apple record quarter and the integration of out reason to mecca and point white acquisition is progressing well we have added several hundred some customers as be and hands or will go to market and channel organization will help accelerate our business because i want to make a few petrol love of a man the continue to monitor the ongoing semiconductor supply chain situation as i reported last quarter to far we are not seeing any slow down in design activity across our customer base unfortunately a the night him and and it continues to the war in our unpredictable medal and and unpredictable mental but overall progress being than a new variant as always a health and safety or by employees after my and partners
spk_4: is paramount
spk_3: and we will continue doing what it in your best interests are working closely with local regulatory agencies wow what fun it over to underdog the say a few with
spk_5: thankfully libby
spk_6: i'm very honored and humbled to be appointed the next to you have eaten
spk_5: and i'm deeply grateful to the board and you do for their confidence in me i'm also very kind to delay boon for you mentorship and guiding over the years and i'm excited to continuing partnering with him you know when new roads
spk_3: generational industry driving and rapidly unfolding digital transformation across several industry present the enormous opportunity for guidance and i strongly believe the couldn't be better position to seize this opportunity
spk_6: our intelligence system design started he made out a very exciting good bad as the enhance our portfolio to so a growing said of customers
spk_2: are highly innovative solutions
spk_6: have led to him very strong foundation in cody dna be
spk_2: and to our early success is in the system and a mlc needs of i started you
spk_3: as the expanded too large for screwing adjacent see
spk_6: side to the ftp look forward to working with our talented team
spk_5: to accelerate our growth strategy while relentlessly driving to deliver strong business loans and be like our customers
spk_3: with break through innovation execution and unpacking support i also look forward to finding our collaboration that customer the ecosystem partners
spk_6: and deepening the gauge means with you our valued shareholders thank you and i will now and it only to john to go over the financial island
spk_7: thanks i read i congratulations to you and boon your new rules disagree paper for kittens
spk_3: good afternoon everyone i'm pleased to report to be exceeded all of our chief financial metrics for the quarter with broad based demand for are innovative solutions driving stronger than expected revenue growth profitability and castro as a result we are raising our financial outlook for the year across all key metrics
spk_7: getting into the numbers i'd like to a particular thank you to our india team
spk_6: as we all know india was particularly hard hit by the pandemic can you do and we are deeply grateful to our india leaders for going above and beyond the call of duty
spk_7: to put people first home we commend them for their heroic work and helping the local relief efforts and it's reassuring to see the situation in india approve over the past few weeks
spk_2: well let's go through the key results for the second quarter beginning with the piano
spk_7: total revenue was seven hundred and twenty eight million dollars non gaap operating margin with thirty nine point five percent copy vs with fifty six cents
spk_3: a non gaap dps with eighty six that next turning to the balance and castle
spk_7: a quarter and cash totally eight hundred and forty seven billion dollars while the principal a castillo locate eight hundred and forty seven million dollars while the principal value of debt outstanding with three hundred and fifty million dollars
spk_2: operating cash flow for you to we three hundred and eighty million dollars
spk_3: the those with forty nine gave a joint you to we repurchase two hundred and twenty million dollars or caden shares
spk_7: before i provide are updated outlook for fiscal twenty twenty one i'd like to take a moment to share the assumptions embedded in our outlook
spk_3: we continue to expect that are new mecca and point white acquisitions will be slightly diluted this year before becoming accretion next year
spk_7: are hiring plans in the first half were delayed by the corporate situation in india but our outlook currently assumes we catch up on much of that delete hiring activity in the second half
spk_3: our outlook for the second half includes the cost of salary and promotion increases for the board until you brief
spk_7: those salary increases and promotions were generally affected from july first
spk_3: and finally or outlook assumes that will be no changes to the export limitations that exists today
spk_7: embedding these assumptions into our outlook for fiscal we expect revenue in the range of two point nine to five
spk_3: to two point nine six five billion dollars non gaap operating margin in the range of thirty six to thirty six point seven five percent
spk_7: yeah bps in the range of two dollars and fifteen cents to two dollars and twenty one sense non gaap dps in the range of three dollars and fourteen cents to three dollars and twenty fifth
spk_3: operating cash flow in the range of nine hundred and twenty five to nine hundred and seventy five million dollars
spk_7: and we expect you to at least fifty percent of our free cash flow to repurchase in chairs and twenty twenty one for que three twenty twenty one we expect revenue in the range of seven hundred and thirty to seven hundred and fifty million dollars
spk_3: non gaap operating margin of approximately thirty four percent
spk_7: god gps in the range of forty eight to fifty cents
spk_3: a non gaap pps in the range of seventy four to seventy six cents
spk_7: are fearful commentary which is available on our website include our outlook for additional items as well as further analysis and kept to non gaap reconciliations in conclusion cable philibert another quarter strong revenue growth and expanding popularity and we're pleased to either that for the year
spk_3: i would like to close by thanking our customers partners and are hardworking employees for all the be to and i'd like to remind them all that their health and safety continues to be our first priority
spk_7: and with that operator will now take questions
spk_0: at this time i would like to remind everyone who wants to ask a question to have a star than the number one on your telephone keypad now please limit your questions to one question and one follow up question again sleep when it's your questions to one question and one follow up question we will pause for a bother to compile the you had a rough sir
spk_2: your first question comes from jaitley we shower with griffin securities thank you good evening and when the storm you and the my follow up for rather go with regard to last week's public announcement on cerebral smile the application that a i'd melt mediate it would seem fair to say that that's perhaps the most significant methodological advance immediate needs and said the day that emphasis placed well on years old around the country will help you know his cerebral extensible team leader nine digital businesses such as costume and pc be i enjoy new got computational software ambitions and similarly to the extent of there's a growing at design turned toward spanish lt or to name specifically guys cerebral have to be too greeting specialty chick market while and then peru on the middle of the follow up his and and your keynote last month at at canaan five you listed all your market opportunities and five g i n t and so for the interestingly the referring to hyper scale of market as quote the most
spk_6: most exciting could you explain why you said dad and was that circumstance for the cute two was an ongoing of view the world
spk_3: jail and side the thanks to the question and you know we're really truly excited about city but i believe that he breathed in a in on fundamental make to
spk_6: using reinforcement learning do basically dry long distance would flow salami janet you know what can be can be a great gonna do the done but the the design of still you know run them and nino and they do run them again and you to do the design badly and city but as can do that you know much more into much more matter mine
spk_3: go late to you know explore the design options and parameters
spk_6: and you know me and that lousy good he said and you know some some of that allow those on the endorsement for example dancing said they got eight percent following through men and it could be done in days loses money
spk_5: and when it is that said that they like ten percent improvement in frequency
spk_3: to be the definitely you know they brought us in his own them into still early you can do to do a good more more and more customers but so far we're happy with how will say this is performing and you know be that based on fundamental kind of new optimization mattered
spk_6: and one thing i would like to remind us that be a lot of expertise and combination of software and lot of it can be applied to a i so you know is still early days and i think these can be definitely applied to other idiot so for example the also announced and i like a couple months ago and that other hand new machine learning technology to to try and more automate in a plate and road
spk_3: for be funny fold fighting it's still early days but we're very pleased by what's that even as can do and application of the i am and a general to eighty eight and to the simulation and system today at j the second question that you have become of my she note under that we're very excited about this my generation wave at drive a lot of significant the guy and activity and i call it a of silicon venison and not because i think clearly about thirty five generation are driving a lot of innovation and one particular one call out a hyper skillet or because that you know a data is explosive and and then that hyper kill if the alberta tried to scale down infrastructure i'm on networks storage and the workload have changed and move to watch moin that domain specific at the application specific application so that a lot of thought the phone for set the require and and that's why a lot of innovation a lot of these i activity and that feet and vet he well with al qaeda and i ft intelligence system designed so that you that beside the silicon beside the ip the mop up into the system innovation that time very well two hundred and should not bow if whole ah
spk_0: if the modeling system analysis and in the eye of the packaging and august gonna be a lot of new requirement and if i well vetted opposition capture this opportunity and it's a double digit growth opportunity for
spk_2: your next question as with gary marbley with files haka securities everybody likes take my question of israel by congratulating the do near root for all that you've accomplished in your careers a cadence as a team and down and as well your next roles my i want scout with a multipart question on the backlog metric it was nice to see the improvement and i think you are expecting an improvement from where it ended in the first quarter might receive further improvement for the bouncer the year in their back on metric into what extent was that backlog metric helped or hurt by you know average license terms over in other words and duration adjusted backlog metric and down into what extent hazard than you know how back by
spk_7: summer the your decision back in late two thousand eighteen early two dozen twenty to renew some key accounts proud exploration
spk_3: yeah gary i can take on a taken a lot harder question first that the i don't think our decision to to of it thirty bucket the this like the start of twenty twenty had an impact typically our customers off or on like a three year run your cycles for their base contract
spk_7: in relation to the or fios think that are you're referring to out your bounce back a little bit that guy as you paul keyuan was
spk_8: with a like when you have quarter for software qt with a heavier renewals quarter for software put them but the annual value of those contracting choo choo
spk_2: jobs and i'm not allowed us to learn to read our guidance for ready for the yeah but damn get it online to get us were performing pretty well have you get it on the last call this a week we thought that the the decline in archaeology one with a temporary phenomenon a we expected to climb back and and improve throat ear jack in my second question relates to to china john i think you mentioned last earnings call that you would expect a server online level for you try to later revenue that twelve percentage of issues revenue which you implied not really a low double digit percent year over year decline in your china does
spk_7: this but it's trended well the second quarter so my question to you is are you still have a the cautious with respect to your your china revenue the sheer or is that fourteen percent china next in the second quarter perhaps indicative of where you might lane for the four year yeah
spk_3: think if the latter carrier i think i'm in a we we saw a very solid second quarter on an uptick in in china business i was cautious and the first quarter because last year we benefited from higher than average upfront read he makes from the second up in china and contributed to close to seventy percent growth last year which is a really tough com philip so as be careful with that with the guide but now you having seen that the strength in and que tu one of the felt i told me the qt with the best you for we've ever had that them and the really impressed with the strength of bookings of were coming through that the iraqi we got our confidence
spk_9: in that in the region and and stairs thought based strength across all the book in captivity in the into to sell them yeah i think that years probably going to be more like a church you think you want
spk_0: thanks the color
spk_6: you're an question is left galileo death from baron berg
spk_3: hi thank you for taking my cousin
spk_6: the plan is get out of like you know big and this trend that you've seen on the digit thought i'd specifically mentioned thirty new customers united and competitive replacement for that when it got a if you've been out below back and think about what's really driving the growth that and between the competitive the statement and to
spk_3: the baby out the band activity and been to the market tg half of them from us
spk_6: guy and his learned i'll take that that question film i think a question in the did the digital and find a good girl died so he gets humid gave out with the do you do performing well you know either
spk_3: like a dimension it grew about sixty percent from los que do and i believe in a faster than market
spk_6: and then and lot of the design activity each continues to to unite right in specially had advance knowledge you know maybe do particularly well as always lot of the nine activity at you know including it and five and entry and you know similarly
spk_2: in a word with foundry that and june so i think the the whole trend of people movie do more advanced lords is continuing and a strong faith and i think that helps us in our digital business
spk_3: and also we are getting more from florida option in i'm not display throughout the full flow mean synthesis living out sign up so customers are more and more comfortable the running our entire floor and that the again a trend that that the ever done for a while to get a fully integrated flawed blood digital customers
spk_5: and then there are the trend you know like through the i feel beginning or dry land in of cosmic signal get all with strong and a muzzle or all we are we are confident in our digital tradition and they're on top of that
spk_6: a weekend have city as to perform you know to give even better results than images does using a regular digital flow
spk_10: citing the somebody is that the the design activities strong and we glad to work with customers
spk_6: are these different
spk_11: gotcha but how how london movie the follow up
spk_6: banana i am even john million
spk_11: when i think about and of the like you to became on extremely strong it enables you to gonna go above and beyond the beat in order to raise the guidance for the year of get rid of confidence that the fact that gonna win over to that at it's due on because of the fact that you know others the a lot of hardware
spk_3: have come from last year and stuff about your kind of another three months and and and a more of it over the high that of the same thing to be a little bit more came to the reflect the up on the courtroom and beyond and about us that's a great question golf but some guy could take that the especially the the annual value of the contract that people think you to
spk_7: in a lot cases were significantly higher than the that the contract or expiring or not give us confidence that along with such as the physicality into the second after we have now that becomes clearer and clearer to get closer to that to the fact of effect of that that that that helps us alive or i would i would advise anyone
spk_3: not to look at any one quarter but maybe focus on that on the years numbers that them because the other quarter fifth for endemic started the quarter's country distorted a digital with great job growth that this quarter over last year to twenty twenty but i would like to remind you that and future twenty twenty
spk_7: we did back out and revenue for expected at that better that and from about we later recovered and cure for self esteem other
spk_3: quarters have been distorted shot at being hyper focus on here and when we look at the year a job at the annual value of contract has a has
spk_12: increased considerably and and enough for us to rate guidance by forty million at the midpoint for it
spk_0: a viking have been here
spk_13: ex
spk_2: your next question as the jackson eight or from j p morgan thank you can we just cut on we are for pineda be disclosed in the can queue i'm so that you don't just from reading the language account accuracy britain february and sell i'm just curious
spk_3: why he worked at companies never disclosed from this quarter and not in the previous clear or your that an hour kind of risk score work
spk_7: when eric operational your or any kind of penalties that was really imply get fit them get the that that was really just stay up at housework
spk_14: really i get sometimes of the nature the subpoena became okay with in a nap during the last quarter and we wanted to make sure that investors were aware of it
spk_2: we we don't think it's a hugely significant but we wanted to add documented in the queue in the interest of full time and in the interest of full transparency per barrel
spk_3: and then on the hardware side and that allows
spk_5: was it city new orders and sixty five repeat borders of a weekend or ontario of hardware owners how many of those were using one x one person teaching your ex to three electrical
spk_6: yeah i think i will like the under the and for the question and i would ship in it on
spk_3: as i say boo as as a good question so and we're very pleased that the performance on the to and exudes believe the him and game and and more and more of our business is transitioning to the new systems which is the to next do and me fill out the you know the ones and hm still perform well so we are continuing to to sell them depending on the customer situation
spk_7: but more and more we are telling the new systems which are performing their land and i think beyond mentioned last the expect about six months of overlap with the two systems to be a few months into that so i think that trend will continue but more of it is the new systems and the should be in i would expect by the
spk_0: via most of it would be the distance
spk_3: yeah we're very happy with of he asked you the to ramp and we're building and between us we can't meet demand
spk_2: thank you
spk_3: you're an actress not come from jennifer link red beard
spk_2: great on pay everyone and and percival that's what assurance and back and grabs at one hundred am
spk_5: you know just say i wouldn't expect i suppose much change in the strategy i am i trying like to imagine continuity that that's or and they changed to be the case but also as the question just get any that the leaders of changes and maybe you'd you'd see an opportunity and particular areas of the day
spk_3: last to accelerate like rabbits has banned yeah sorry my bad product announced that last week on a iger and design seems to be a big try not to for cadence but the industry are there things like that were over the next few years you would expect be used to be a much bigger
spk_6: or a contributor is and and ultimately help accelerate the the growth profile the company
spk_3: yeah thank you thank you joe and and i think gap
spk_6: i would like good say that cadences a new very strong position lightning as he gets the and and i work closely with liberal over the last four years ever since i became president of the company and nino yeah so did not he can give you the going forward
spk_3: and we're very confident in our intelligence is to design tragic know i'm a big believer that death
spk_2: computation software and i'll cross train you know edi a has done that for decades
spk_3: and this is the right time to not only do well in our goal of business of edi an ip but also expanded to
spk_15: the to other engaging in one and then being custom designing analysis and and you know the had a big included that and then thinking on being yeah and machine learning the also inherently you know computational so and i'd be had been a good business you know meeting it will continue to be a good business when i
spk_3: added with system design and analysis and a a machine learning in i provides other a gets and feed weaken growing too
spk_2: so we're truly excited i think the any a position then we look going forward good look at all the very i to accelerate on these trends and accelerate the growth and opportunity that b c and and decade and do you hike
spk_3: that's great and then just a follow up on the anticipated margin cadence i in the back at a lot by the i like complies maybe thirty border thirty five percent is that purely a reflection of hiring accelerating there any at any that might be
spk_7: a working back into the budget or he wasn't what's that that's why it as a just relatively young first half second half margins yeah joke i think that the for thing to note there if if we completed our annual salary review and promotional cycle joint your to in that part of the story
spk_2: the to someone trying things that can distort the margin picture the second half
spk_7: as part of our succession planning efforts we did a voluntary early severance program
spk_3: at the same time to the promotion round and they'll be some tempe overlap and expansion the second half as as your the impending retirees transition to the that rules to their replacements so we can double up an expense for six months there and that the temporary phenomenon think there's also the pushy the county treatment of the acquisitions we had in the for
spk_7: cough with me mac and pulling life big because her second half margins to be lower than they would otherwise be
spk_6: and yet where where parents do a lot of hiring in the in the second up i've a that into the guidance but my team and i will review all of that make sure it's absolutely necessary so that that could be some outside
spk_0: to that margin outlook following our view as i mentioned earlier the field the quarterly i'm quoting numbers can be a little bit distorted joined the pandemic it's better to look at the the annual do and i think when i look at the the be annual guys thirty six to thirty six point seven five percent you that closer to to the
spk_6: margin level that which the business is currently performing
spk_3: that's helpful thank you
spk_16: always
spk_6: your next question and smith case instantly know some key bank capital market
spk_7: wade into taking that constantly to intervene and your finger on the world of their promotions
spk_17: maybe for my my parents question
spk_2: ac me being big me you need being bigger and good it might be indicated a new customer budget is banned
spk_6: a john when we think about the guidance marines a you to prevent any more segment color and where you we've seen the take it sounds like the media perspective china picnic that corner about what else can can you are and yeah which was pretty broad based i would say china sorry fit with asia
spk_2: and then china with in asia with a part of that arm and then of course not make america thought they were or with a stronger performing reasons
spk_3: the term
spk_2: let's put it was pretty broad based strength or across all into business that some you know i think we're the kind of recurring revenue profile we have right now and what we protected in the guy for the second half of the year is it are typical average profile like except it's really about it's a pretty well for for go for next year
spk_7: can be and then any diving down in that a little bit no id you're going in single digits in the corner not entirely a surprise given the call outs from the last call but how are you feeling that the ip for the remainder of the year
spk_6: and today vs maybe three months ago and bought all it out of talk to the ip business i think it's is performing really well but only when i look at the numbers kind of them are to china last year i ip groove twenty five percent for the lab and some really tough comps and we did highlight last quarter that we thought you know that you to acutely might be a little bit late
spk_3: because of those coms but said put queue for we we thought we would our about can cure for and share shows up for growth for next year and it's it's you know that with another quarter under our belt or more confident that that's what the oh look look like
spk_6: and are you do what you want to a the about the i keep it was generally
spk_16: yeah thank john that's a that's a good summary and and did in that the that's true one thing i dislike glad added that
spk_0: you know they're all the we're pretty happy with the i'd be didn't you like don't mention that is some seasonality do it with you know that length is lumpy business and also the ivy bridge into them more based on projects to this business being a been a roller on the train daughter iraq
spk_5: a strong you know the whole outsourcing plan for a be continues as he would expect
spk_3: and neither did it more and more benign activity more find reactivity so the up they're be added the i'd be business that it will be have the right gonna start ip to say the customers
spk_18: excellent thank you
spk_3: yeah next question is the party or money from bs
spk_18: i think of any my question about not a little a job i begin to imagine that you're a comedian
spk_2: can you do with higher
spk_19: what is driving
spk_7: why did god and then i got the my buying up the thackeray he a function of the you buy
spk_3: even possible know we wouldn't be that the an incumbent compatibility how how do you want to think about going forward into the on while people
spk_7: sure yeah great question that forget what we saw i guess was that i mean to dine at qb with a strong and unfair the volume of the life as it of approaches where where higher than that the contract expiring contracts or the pricing and to prove a little bit that them
spk_20: and generally only when i look at like a look at the business that a very high level time i i'd like to look at the three year packers my put them in the second page of the she had commentary and and or the last for years we've seen consistently accelerating revenue growth year over year
spk_6: when you look at a three year tigers and and we're on track again for that for this year that to improve our last year that at so are generally i think with all of the with all of our accounts work we keep providing your greater value for customers that they're buying more products it's gets a virtuous cycle for the speaker i think a few years ago we often talked about in a week where least twenty significant new products in the previous two years we've we launched a new products in the last six months that i think the page filth up innovation answer
spk_2: and the release of new significant products decades has accelerated and that helped us approve our a tv
spk_6: across
spk_3: but are very very broad based the got our customers
spk_21: okay and oh i follow on on the location by on human humans bomb need more the wonder of in dumbo
spk_7: just thinking about it won't go about my br it in the pentagon he bargained the do would you say that will burn only day and you don't but you still had significant contribution been beaten you can do all or or was the kind of these are the do like some sort of
spk_0: but he doesn't belong to the
spk_3: oh gods i think it's a significant contribution dutch i don't know whether that if you know my my youth and an olympic style and allocate the didn't like a relay race you know in terms of handing over the baton the i think you to and que three the middle quarters of the year
spk_22: where were you see that transition that where were selling in l a x one and the one alongside x to nz to i think by the end of the about how we get the queue for will be off and sprinting with them with the new or systems and will have very little of the older systems left a cell phone thank you our final question comes from john make peak with mouth and black securities
spk_3: thanks for squeezing me and guys can hear me okay
spk_22: guess ideological greatest the against congratulations lead to and andrew it's it's been quite a run with poof amazing
spk_3: i'm i guess should be on some more calls went on to mention that so was the first first question i add is about them you know the high level of trends in the semiconductor industry you know that they're getting more competitive than they've ever been i mean you're seeing some share shares you're seeing some historically significant companies you know seeing major rethinks about their strategy and and i'm wondering if that potentially is freeing up budget in those companies to try new things that they historically may not have done with thought you know the prior management regimes that were in place because it seems like it could become a significant for cadence that's a that's my first one and i'll follow yeah i think that let me answer that john thank you so much and so clearly stated
spk_23: industry change
spk_24: enough by generation wave and a lot of ah in of data being generated and don't let them to facilitate up in a lifeguard into a humongous opportunity i income out the hype as killer and all the autonomous driving industrial automation for the industry group and or and under an autonomous driving cadet it
spk_3: in other parts i think those five area code the be driving a lot of neil applications and a new so your said needed so a lot of innovation needed and so in some way in our our i pizza that you will get playing very well up on the silicon order with of the system and how to pull the
spk_2: i some of this a solution at is pretty in the walk lot has changed a lot and so much of the cpl computing and it's a lot of neil a domain specific application driving the solution and that create a lot of fun new design so that's why we don't see any slowdown in the guy in the
spk_3: contrary to the with a lot of increase in the guy activity and i can me a lot of of going forward and right
spk_6: and then i guess so specifically it seems like when you get to three and under the potentially we're going the gate all around and i'm i'm curious as to what that might do for
spk_2: and route and and your digital strategy their and you've made some announcements a tree or something that's already maybe guys could talk about that little bit
spk_3: is joined by me let me dig that the another again you know the i'm quite a bit of activity at been enemy do as he could imagine lot of customers are already in a designing lighted clean enemy did anger of the we're happy to work with the major foundry so we do have solutions
spk_6: which are being optimized for gate on around and and we're happy with the the the progress there
spk_3: and and like if it only of he also starting work on and to so i think it's good for the industry in a tree should be a very very strong mode
spk_22: and also you know and to after that of this the between enemy to not after that and one key thing is that clean alameda would be noticed is that
spk_2: it's the good news for or edi and gate and xena than role of to than methodology becomes even more critical than actually seven of like that
spk_25: because there is a little bit off while you not slowing of the local farm and scaling from moore's law and a muslim still giving lot of eighty ad scaling or
spk_6: the in a number of transistors keep going up but the performance you get from each understood is not as much as before so then that is more demand for
spk_0: located in school than idiot solution the night be solutions to dillinger that that performance
spk_3: so i think the role of you to a will become more and more critical lower knowledge and then combined with added a grandson like sabres and machine learning so or i'll be a pretty pleased with our edition and be the grants nodes and i think it is over a good news for the industry thank you i mean we're just seen like a have a shortage of engineers and you guys are the ones making a more productive so like you
spk_26: if tank
spk_0: alec now like a can call back over to let the can for closing remarks at this time

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