Synopsys, Inc.

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. Please go ahead.

Thanks, Sarah. Good afternoon, everyone. With us today are Sassine Ghazi, President and CEO of Synopsys, 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 might 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 Saseen.

Thanks, Trey. Good afternoon. In Q2, we continued our strong execution and momentum. Semiconductor and systems companies continue to invest in synopsis solutions to maximize their R&D capabilities and productivity. Revenue was up 15% year over year and at the high end of our guided range. Non-gap operating margin was 37.3%, up approximately three points year over year. And non-GAAP EPS was up 26% year over year and above guidance. Given our momentum and continued confidence in our business, we are again raising our full year revenue and non-GAAP EPS guidance. Sheila will discuss the financials in more detail. First, I'll give some context for our confidence. and share some business highlights from the quarter. We are in an era of pervasive intelligence, fueled by the rise of artificial intelligence, silicon proliferation, and software-defined systems. These trends are driving systemic complexity for technology R&D, which in turn drives unprecedented opportunity for synopsis. our silicon customers are racing to design and manufacture complex, purpose-built silicon. And our customer set is expanding as systems companies are also either designing their own chips or defining and optimizing their system performance at the silicon level. In March, many of our semiconductor and systems customers attended SNUG, our yearly Synopsys user group conference in Silicon Valley. Thousands of passionate design engineers shared best practices and learned about the innovations we're driving. And we were honored to have a dozen key customers, including NVIDIA, Intel, AMD, AWS, Tesla, and others contribute their perspective regarding the mission-critical role Synopsys plays in their innovation. As a leading silicon-to-systems design solutions company, Synopsys' opportunity has never been greater. Today, we have best-in-class EDA tools and the broadest portfolio of silicon IP. Our planned acquisition of Ansys will expand our TAM and further our mission of empowering technology innovators everywhere. Let me provide a brief update on this important transaction. Our customers have overwhelmingly told us that they see tremendous potential for the combination to accelerate their innovation and address their rapidly increasing need for system design solutions that provide a deeper integration between electronics and physics. We're pleased to announce that Ansys stockholders approved the transaction this morning. Synopsys and Ansys are making progress towards securing the necessary regulatory approvals, and we remain confident in the regulatory review process given the clear and compelling benefits of this combination for customers and partners. We continue to expect the transaction to close in the first half of 2025. Let's move to segment business highlights, starting with design automation. Q2 design automation revenue was up 14% year over year. With strength across the business and continued rapid adoption of Synopsys.ai, customers realized impressive gains in performance, power, and area. In analog and mixed signal design, Customers are looking to Synopsys as they modernize their flows and move to more advanced process nodes. We saw 10 displacement design wins in the quarter and now have 20 displacements through the first half of the year. In Q2, we delivered the marquee win for full flow displacement at the leading US systems company. while a leading Asian memory company chose our analog design environment for their next generation memory designs. Our Synopsys.ai engine for analog, ASO.ai, allows analog customers to harness the power of AI to simplify node migration. A high-speed connectivity customer recently reported a 10x productivity gain using ASO.ai. Transitioning to digital, where we continue to expand our leadership across advanced node design flows. In Q2, Fusion Compiler continued to push boundaries in performance and power efficiency optimization, demonstrating 8% better power on a two nanometer based CPU at the US CPU company. And higher performance versus competition for the flagship mobile CPU at Samsung. Demonstrably, better PPA results such as these also led to Fusion compiler wins at a large US hyperscaler and a top US mobile CPU company. While the customer results from Fusion are exceptional, we believe the combination of Fusion and AI-based optimization is game-changing. In Q2, multiple Asian design services firms exceeded maximum frequency targets with DSO.AI, and a leading US GPU company deployed DSO.AI for improved productivity. In verification, our flagship VCS product delivered 15 competitive displacements in the quarter, led by wins at an Asian systems company a leading US hyperscaler, and a top US GPU company. The Synopsys.ai optimization engine that partners with VCS, VSO.ai, saw significant adoption as well. We are now engaged with over 30 customers, demonstrating up to 10x fast turnaround time and double digit increase in coverage. Shifting to hardware-assisted verification. Demand exceeded our expectations for the quarter with four new customer wins and over 50 repeat customer wins. At Snug, we announced Zebu EP2 and saw the first sales to a large Asian mobile SOC company in a competitive win for full SOC verification. We also saw significant customer pull for HAPS, including at a large US mobile company, which deployed multi-die designs on HAPS and reduced bring-up time by approximately 40%. On to Design IP, which delivered 19% revenue growth as the IP supplier of choice. for leading HPC, AI, automotive, and mobile chips at advanced nodes. Q2 was particularly strong quarter for automotive wins. Electrification, infotainment, and ADAS features continue to drive strong demand for our comprehensive automotive portfolio. Chip-level security continues to be a concern to chip designers. In Q2, We announced the acquisition of Intrinsic ID to add physical unclonable functions, or PUFF technology, to our extensive IP portfolio. More broadly, we gained over 10 secure interface IP wins in the quarter, including five new customers. Demand for interface IP for AI and data center applications is growing at a blistering pace. In the quarter, we launched the industry's first 1.6 terabyte Ethernet solution to meet the high bandwidth needs of AI and hyperscaler chips, securing design wins at two leading high-speed Ethernet customers. Additionally, we secured more than 10 design wins for PCIe 6.0 and CXL 3.0 solutions. We also have the industry's most expensive IP library for multi-die, starting with the standard for die-to-die interconnect, UCIE. We won five UCIE IP licenses in the quarter across end markets from memory to mobile to HPC. With these wins, we now have 50 lifetime wins for die-to-die connectivity. As silicon becomes foundational to innovation in nearly every industry, we've seen an infusion of government support and funding for chip manufacturing around the world. Synopsys plays a mission critical role as an on-ramp to the world's foundries, enabling manufacturing success for our mutual customers. In Q2, We want a significant enablement engagement with the emerging, leading-edge Japanese foundry, Rapidus Corporation, involving our leadership 2-nanometer interface IP. This builds on a major Rapidus design win for foundation. Having a portfolio of trusted IP is a requirement for every world-class foundry. As the leading provider of interface and foundation IP, Synopsys is often the first stop for foundry enablement. Synopsys IP provides a path for mutual customers to bring rapidest manufactured chips to market faster and with lower risk. The design and manufacturing of semiconductors is inextricably linked. and we engaged deeply with all the major foundries. At TSMC's symposium, we announced TSMC N2IP development and demonstrated silicon proof points for N3E and N3P IP. At Samsung, we secured multiple IP wins, enabling customers to confidently adopt Samsung's leading processes for AI, storage, automotive, and other applications. We also partnered with Intel Foundry to accelerate advanced chip designs with Synopsys IP and certified EDA flows for their 18A process. This quarter also marked another transformative milestone as we accelerate our silicon to systems strategy and prioritize growth investments in our core EDA and IP businesses. We recently announced the definitive agreement to sell the software integrity business to ClearLake Capital and Francisco Partners. This transaction, valued at up to $2.1 billion, will establish SIG as a newly independent leading application security testing software provider. and is expected to close in the second half of 2024, subject to customary closing conditions and regulatory approval. This agreement fulfilled the key priorities we had for the sale. Find our team and our customers great new owners that can care about nurturing and investing in the business to deliver to its full potential, focus on speed and certainty to close, and deliver financial value and smooth transition for Synopsys. We are proud to have started the business, grown it to be the application and security testing leader, and will partner with the new owners to ensure a seamless transition. We have strong continuing momentum across the business supported by multiple secular growth drivers. We have a resilient business model, and our customers continue to prioritize investments in the silicon and systems that position them for future growth. We are aligning our portfolio investment with the greatest return potential to accelerate our growth. Thank you to our employees, partners, and customers for their passion and commitment. With that, I'll turn it over to Sheila.