Synopsys, Inc.

Ladies and gentlemen, welcome to this Synopsis Earnings Conference call for the first quarter of fiscal year, 2026. 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. And to remove yourself from that queue, it is star 1 again. If you 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. 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 Ghazi.

Good afternoon. We're off to a strong start as we enter our 40th anniversary year with an expanded portfolio, leadership positions across the business, and the most compelling roadmap in our history. In Q1, we achieved revenue at the high end of our guidance and non-GAAP EPS exceeded guidance. 2025 was a year that transformed the company. 2026 is the year we begin delivering on the technology promise of Synopsys plus Ansys. Let me take a few minutes to address market trends shaping our opportunity and provide some highlights from the quarter. After that, Sheila will take you through the financials in more detail. First, the market trends, starting with AI. We continue to see a tale of two markets, On the one hand, the multi-trillion dollar AI infrastructure build out continues unabated. That's driving system level and semiconductor R&D with continued robust design start activity for AI compute. At the same time, design starts in markets like consumer, automotive, and industrial remain subdued despite signals of modest recovery. AI's rapid progress is also prompting healthy debate about whether it will disrupt established software companies. Let me explain why we're different. Our deep tech solutions power the world's most complex engineering efforts. Synopsis decades of deep domain expertise, proprietary code basis and solvers. and native foundry design technology co-optimizations deliver optimal, deterministic, silicon proven results that probabilistic AI models do not replicate. While AI will transform engineering software, Synopsys is already leading that transformation. We're pioneering AI driven design capabilities in our products, that deliver orders of magnitude productivity gains for our customers and pave the way for agent engineers with increasing levels of autonomy. One highlight among many this quarter was receiving World Economic Forum honors for our work with AMD to advance AI accelerated chip design. AI isn't disrupting our business. it's amplifying our strategic advantage. Another market trend and tailwind for Synopsys is the engineering transformation away from physical testing towards digital twins. To build more connected products at pace and at scale, companies are investing in advanced design automation simulation, and digital twins as a competitive imperative. There is incredible demand for silicon-to-system solutions that can enable holistic software-hardware co-design to accelerate, de-risk, and reduce the cost of building AI-powered products. Our combined Synopsys plus Ansys portfolio is increasingly mission-critical to the innovation of industries spanning semiconductors, aerospace, mobility, energy, and advanced manufacturing. We'll have a lot more to say about this in a couple weeks at our Synopsys Converge conference. Turning to Q1 business highlights, the global Synopsys team executed well against the backdrop of continued geopolitical and macro uncertainty as China headwinds persist. Let me share some segment highlights from the quarter. First, design automation. We saw continued strength in hardware with major competitive wins at both new and existing customers, including a marquee emulation win versus the incumbent at the leading AI HPC customer. With growing demand for software-defined, configurable systems supporting both emulation and prototyping, as well as a strong 2026 roadmap, we're well positioned to capture the expanding digital twin opportunity across industries. In EDA, we also saw sustained momentum across three trends. First, the application of AI across the stack. Major semi and hyperscale customers using Synopsys.ai have seen up to 50% faster knowledge assistance, up to 70% faster workflow assistance, and up to 5x faster formal test bench generation. Our agent engineer technology is advancing rapidly. And we have several customer engagements underway with agents across design and verification. Second, leadership in multi-die. Multi-die momentum accelerated as leading semiconductor and foundry customers adopted Synopsys' 3D IC compiler platform. leveraging automation and AI-driven optimization with our industry-leading multi-physics analysis tools to improve signal and power integrity quality of results, enhance thermal efficiency, and speed up design convergence. And third, sustain design wind momentum at advanced nodes with our digital flow including Fusion Compiler and Primetime, achieving 100% usage on critical tape-outs at 2 nanometer and below. Moving to ANSYS, which delivered a strong Q1 performance driven by robust demand for system-level digital engineering, multi-physics simulation, and AI-enabled design flows. We won large multi-year agreements across aerospace, hyperscale, industrial, and automotive. With ENSYS as part of Synopsys, we now support more than 90% of the top 100 automotive suppliers. And at CES in January, we showcased how AI-driven simulation is helping customers like Audi reduce physical prototyping and shorten development cycles. Our confidence in this business is only increasing as global demand for electrification, autonomy, digital twins, advanced semiconductor design, and mission engineering remains resilient and expanding. Turning to design IP, which performed in line with expectations. As we've said, 2026 is a transitional year for the IP business, and we're focused on aligning the fastest growing segments of the silicon market. We're making progress on this front. The planned sale of our processor IP solutions business to global foundries sharpens our focus on extending our leadership positions in interconnect and foundation IP. As interconnect standards evolve at an unprecedented pace, customers count on Synopsys' one generation ahead approach, and in Q1, we saw continued strong demand for high-speed protocol IP. We achieved more than 40 PCIe design wins in the quarter with HPC and automotive customers, achieved an industry-first demonstration of PCIe 8.0, and established first-to-market position with our 224-gig SERDs on advanced nodes and leading foundries with 10 lifetime wins. We continue to expect muted FY26 growth in IP with sequential improvement given our roadmap and sales pipeline. Longer term, several industry trends give us conviction in the growth trajectory of the business. This includes the global expansion of foundries and accelerated node transitions. Standards advancing at unprecedented pace and increasing demand for chiplets and subsystems. Our 40th anniversary year is off to a great start with operational excellence, financial discipline, and the most competitive, compelling roadmap ever. Our priority for FY26 remains on driving sustainable growth and margin expansion by advancing our technology leadership with holistic integrated silicon to system engineering solutions by pioneering AI driven engineering and focusing our IP portfolio for growth and efficiently scaling to accelerate our strategy. The ANSYS integration is well underway. It's great how our teams have come together at pace to solve engineering's biggest challenges. We'll have a lot more to say and show at Synopsys Converge in March, and I look forward to seeing many of you there. Now, over to Sheila.