Synopsys, Inc.

Ladies and gentlemen, welcome to the Synopsis Earnings Conference call for the fourth quarter and fiscal year 2023. At this time, all participants are in a listen-only mode. If you would like to ask a question during today's call, please press star 1 on your telephone keypad. To remove yourself from the queue, press star 1 again. If you should require assistance during the call today, please press star followed by 0. Today's call will last one hour, and as a reminder, today's call is being recorded. I would now like to turn the call over to Trey Campbell, Senior Vice President, Investor Relations. Please go ahead.

Thanks, Lisa. Good afternoon, everyone. With us today are Art DeGias, Chair and CEO of Synopsys, Sassine Ghazi, President and COO, and Sheila Glazer, CFO. Before we begin, I'd like to remind everyone that during the course of this conference call, Synopsys will discuss forecasts, targets, and other forward-looking statements regarding the company and its financial results. While these statements represent our best current judgment about future results and performance as of today, our actual results are subject to many risks and uncertainties. That could cause actual results to differ materially from what we expect. In addition to any risks that we highlight during this call, important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release. In addition, we will refer to certain non-GAAP financial measures during the discussion. Reconciliations to their most directly comparable GAAP financial measures and supplemental financial information can be found in the earnings press release, financial supplement, and 8K that we released earlier today. All of these items, plus the most recent investor presentation, are available on our website at www.synopsys.com. In addition, the prepared remarks will be posted on our website at the conclusion of the call. With that, I'll turn the call over to Art DeGias.

Good afternoon. In Q4, we exceeded the high end of all our guidance targets and delivered another quarterly revenue high at $1.599 billion. Q4 thus capped a record year, growing revenue by 15% to $5.84 billion, with strong orders expanding backlog by $1.5 billion to $8.6 billion. We further improved non-GAAP operating margin to 35.1%, increased non-GAAP EPS by 26%, generated 1.7 billion in operating cash flow while maintaining an exceptionally strong balance sheet. Clearly, Synopsys has moved forward with sustained momentum. Over the last five years, we've grown revenue at 13% CAGR, expanded non-GAAP operating margin by 13 points, and increased non-GAAP EPS at a 23% CAGR. Through the year, we also widened our differentiation by substantially expanding our AI-driven product capabilities, but also through unique collaborations that strengthen our customers' differentiation while cementing deep long-term relationships. We thank our employees for their passion and dedication, and our customers for their business and trust in Synopsys. Meanwhile, dark geopolitical clouds are inflicting unimaginable harm in multiple conflict zones. Our hearts hurt with deep compassion for our employees, families, colleagues, customers, and all others impacted by pain, loss, and uncertainty. Yet, we will never give up believing in the positive potential of humanity. It is thus heartwarming to see how fast our teams have turned compassion into caring, caring into action, and how respect and support for each other is an active norm at Synopsys. Let me now briefly share some thoughts on the state of the industry and our company before I pass the baton to Sassine. From the first days of Synopsys, 37 years ago, Synopsys has enabled and navigated the exponential ambition that came to be defining the semiconductor industry, and which in turn radically impacted the world. Our initial contribution, Synthesis, revolutionized digital design. We ushered in the transition from CAD, computer-aided design, to EDA, electronic design automation, so far delivering roughly a 10 million X increase in design productivity. During Synopsys' entire existence, the vast majority of our products have been the state of the art. Together with the leading foundries, we thus empowered digital age exponential, referred to as Moore's Law. And then, at the very moment that the economics of classic Moore's Law are slowing down in terms of transistor performance and cost improvements, The era of big data and AI becomes real, triggering enormous compute needs on the horizon. About eight years ago, Synopsys forecasted this age of smart everything would become the driver for the semiconductor growth to a trillion dollars in this decade. And here we are. This year's generative AI advances and furious adoption clearly fulfill our vision. As pervasive AI is now massively underway, The classic Moore's Law era, in turn, is morphing into the Sysmore era, systemic complexity, but still with a Moore's Law exponential ambition. Sysmore is happening in front of our eyes by reinventing architectures, not based on a single chip, but on multiple chips, tightly connected or even stacked on top of each other with extreme proximity. These so-called software-defined multi-die architectures will enable massive increases in the number of transistors available. And again, Synopsys is at the heart of the heart of catalyzing exponential impact. Our investments in multi-die design, our massive collection of IP building blocks in many silicon technologies, our prototyping and electronic digital twinning technology that lets customers run software before the hardware actually exists, are all essential enablers driving the new race into AI-driven computation. Adding one more spark to our technical leadership, Xenopsys also pioneered the use of deep learning AI in chip design. Applied to optimization, verification, and tests, production results are outstanding and adoption is broad and rapid. Most recently, our announcement of exciting GenAI capabilities adds yet another angle to driving the state-of-the-art forever. If nothing else, my enthusiasm for both the Sysmore opportunity and for our technology advances should give you a sense how Synopsys is on the move. Talking about on the move, we're also well on the way in our executive leadership transition. I have great confidence, expectations, and enthusiasm for Sassine Ghazi as our next CEO. Sassine, please give us your perspective, vision, and ambition for Synopsys.