Synopsys, Inc.

Ladies and gentlemen, welcome to the Synopsis Earnings Conference call for the fourth quarter and fiscal year 2025. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question at that time, please press star 1 on your telephone keypad. To remove yourself from the queue, it's star 1 again. If you should require assistance during the call, please press star 0 and an operator will assist you. Today's call will last one hour. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Tushar Jain, Head of Investor Relations. Please go ahead.

Good afternoon, everyone. With us today are Saseen 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 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. As shown in today's financial statements, all of ANSYS' revenue appears under the ANSYS product group, including the ANSYS semiconductor products. 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 8 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 Ghazi. Good afternoon.

In 2025, we redefined Synopsys. With ANSYS, Synopsys has transformed from an EDA leader to the leader in engineering solutions from silicon to systems. We achieved a record annual revenue of $7.05 billion and exited FY25 with more than $11 billion in backlog. In Q4, we made strong progress executing the actions we identified to accelerate our strategy and drive long-term growth. More specifically, Ansys integration is well underway following completion of the planned divestitures of the optical solutions and power artist businesses. We've also initiated restructuring actions to drive efficiency and accelerate our committed synergies. And recently, we welcomed industry veteran Mike Ello as our new chief revenue officer. Fourth quarter revenue was in line with our guidance, and EPS came in slightly ahead of guidance. Looking ahead to FY26, we're guiding revenue of $9.61 billion at the midpoint, which factors the addition of EMSIS, the completed divestitures, and continued pragmatism around China. Zooming out, We are operating amidst the multi-trillion dollar AI infrastructure build out, which is driving robust semiconductor demand and design starts for both specialized and general purpose compute. We're also seeing stronger semiconductor demand in mobile and automotive, while markets like industrial and China broadly remain subdued. AI will revolutionize every industry, demanding more compute performance while compounding engineering complexity. AI is driving chips to the atomic level while scaling from factory to edge to intelligent devices everywhere. As AI evolves from large language models to world models, engineering AI's future is not just a software challenge, it's a physics challenge. AI makes it both possible and imperative that we re-engineer how engineering is done. Building complex AI-powered systems with the right performance, scale, and efficiency requires new tools with multi-domain integration and new workflows to enable tight software and hardware co-design. That's why we're so excited about the combination of Synopsys and ANSYS. Ansys diversified our revenue, expanded our customer base, and supercharged our opportunity. Together, we can bridge digital and physical design to help engineering teams across industries deliver better products faster and at lower cost. Our recently announced strategic partnership with NVIDIA further positions us to revolutionize design and engineering with AI and accelerated computing. Now more than ever, Synopsys is mission critical to technology innovation. I'll briefly share some Q4 business highlights, and then Sheila will provide the financial details. First, design automation. In Q4, we saw continued strong demand in hardware-assisted verification driven by the increasing engineering complexity of AI and high-performance computing. Our HAV business ended a record year with 12 competitive wins in the fourth quarter. We're also seeing continued demand for virtual prototyping among automotive and high-performance compute customers looking to accelerate their software development. Our leadership on advanced node, multi-die, and AI design drove steady demand and growth in the fourth quarter. Last week's AWS Graviton5 launch is a great example. For years, we've collaborated with AWS to enable their custom silicon development and synopsis tools including VCS, Primetime, Fusion Compiler, and IC Validator were critical to the design of this new custom chip with impressive gen-on-gen performance gains. Importantly, Synopsys continues to pioneer AI-driven chip design. Nearly 5,000 active users among our Tier 1 semi-customers are applying Synopsys.ai's assistive and creative capabilities to increase their engineering productivity. We also continue to advance agent-engineered technology with partners like NVIDIA and Microsoft. Agentech AI capabilities promise to transform engineering workflows and unlock new business models. The Ansys business continues to demonstrate robust growth across key industries. including industrial, where customers are using simulation to virtualize and optimize production, saving time and money. At Microsoft Ignite, we partnered with Microsoft, NVIDIA, and Cronus, a leader in packaging and bottling, to show what's possible. Using Ansys accelerated physics solvers, NVIDIA Omniverse, and Microsoft Azure, Cronus built a digital twin of its bottle filling line to simulate and optimize operations in real time. A powerful example of how open ecosystems and cross-industry collaboration are redefining industrial innovation. Turning to Design IP, which performed in line with our adjusted expectations. As interconnect standards evolve at an unprecedented pace, customers count on Synopsys' one-generation-ahead approach. We saw strong momentum in the quarter for PCIe, 224GB, and UCIe IP. Notably, we secured 13 PCIe 7.0 design wins during FY25, and established first to market position with our silicon proven 224 gig IP and the new standard UA link. We also had 10 competitive wins in FY25 for LPDDR6 and MRDIMM2 memory IP. which address two critical challenges in AI hardware, data throughput and power efficiency, while also improving reliability and security. As stated last quarter, 2026 is a transitional year for the IP business, and we expect growth to be muted. However, given our leadership position in essential interconnect and foundation IP, our healthy sales pipeline, and a renewed focus on the highest value opportunities, we are confident in our long-term mid-teens growth target. To sum it up, we continue to transform and drive our strategy forward with a focus on technology leadership, operational excellence, and financial discipline. Our priorities for FY26 include Advancing our technology leadership by continuing to pioneer the use of AI for engineering workloads. And delivering our first synopsis-ensis joint solutions in the first half of 2026. And efficiently scaling to accelerate our strategy through disciplined cost and portfolio management. Resulting in sustainable growth and margin expansion. I want to thank our global team for their commitment and adaptability navigating an unprecedented year of transformation. Together, we've built the foundation for our future success. I'm also grateful to our shareholders, partners, and customers for your continued support, and I look forward to seeing many of you at CES in January. Now over to Sheila.