Synopsys(US:SNPS)2023-02-16 01:43Financial Data and Key Metrics Changes - The company reported total revenue of $1.36 billion for Q1 2023, with a non-GAAP operating margin of 35.2% and GAAP earnings per share of $1.75, while non-GAAP earnings per share were $2.62, exceeding the high end of the target range [18][34][45] - The company is reiterating its fiscal 2023 revenue growth target of 14% to 15% and raising guidance for non-GAAP EPS growth to 18% to 19% [16][48] Business Line Data and Key Metrics Changes - The Design Automation segment, accounting for approximately 65% of revenue, generated $890 million with an adjusted operating margin of 38.9% [19] - The Design IP segment, making up about 25% of the business, reported revenue of $344 million and an adjusted operating margin of 34.2% [19] - The Software Integrity segment, which constitutes about 10% of revenue, achieved $128 million in revenue with an adjusted operating margin of 12.1% [46] Market Data and Key Metrics Changes - The company noted strong demand in high-performance computing, automotive, and mobile markets, driven by the trend of Smart Everything and increasing complexity in chip design [14][15] - The company has seen robust chip and system design activity despite lower semiconductor industry revenue growth, with a non-cancelable backlog of $6.9 billion [18] Company Strategy and Development Direction - The company is focusing on expanding its segment reporting to align with business management, now categorizing operations into Design Automation, Design IP, and Software Integrity [4][19] - The company is leveraging its leadership in design automation and machine learning to drive innovation and efficiency in chip design processes [10][11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business, citing ongoing design activity and customer investments in chips and systems despite macroeconomic challenges [43][48] - The company anticipates continued growth in the semiconductor industry, driven by the need for more sophisticated solutions and the adoption of advanced technologies [9][60] Other Important Information - The company generated $115 million in operating cash flow and used $306 million for stock buybacks, ending the quarter with $1.3 billion in cash and short-term investments [20] - The company is committed to improving non-GAAP operating margins by more than 100 basis points for the fiscal year [47][78] Q&A Session All Questions and Answers Question: How does the adoption of DSO.ai change customer relationships and project wallet share? - Management noted that the adoption of DSO.ai has led to faster engagements and significant production designs, indicating a positive shift in customer relationships and project wallet share [24][25] Question: What are the levers for improvement in Design Automation and Design IP margins? - Management highlighted that improvements are driven by scaling operations and enhancing processes, with a fertile horizon for IP due to increasing complexity in chip design [55][56] Question: Is the trend towards AI leading to more custom chip designs? - Management agreed that the race for innovation is on, with companies realizing the need for better algorithms and chips, indicating a positive outlook for custom chip designs [59][60] Question: What is the outlook for the second half of fiscal year 2023? - Management indicated that the second half is expected to be stronger, supported by backlog and design activity, despite some lumpiness in the business [87] Question: How is the adoption of silicon lifecycle management progressing? - Management reported strong growth potential in silicon lifecycle management, emphasizing its relevance across various industries [90] Question: What is the training time for engineers using DSO.ai? - Management stated that while there is a learning curve, the tool is designed to integrate well with existing workflows, facilitating adoption [122]