Corporate Overview for Investors

Transcription

1 Corporate Overview for Investors May 2015 November Synopsys, Inc. 1

2 Forward-Looking Statements This presentation contains forward-looking statements under the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, including but not limited to statements regarding projected financial results, longterm growth rates, expected share count, revenue variability and hardware growth, industry growth rates, software trends, long-term objectives, business opportunities, and planned acquisitions. These statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied. Accordingly, we caution stockholders and prospective investors not to place undue reliance on these statements. Such risks include, but are not limited to: uncertainty in the growth of the semiconductor and electronics industry; customer consolidation; global economic uncertainty; the ability to consummate the announced acquisitions in a timely manner or at all; the satisfaction of the conditions precedent to consummation of the announced acquisitions; our ability to realize the potential financial or strategic benefits of acquisitions; changes in accounting principles or standards; fluctuation of our operating results; our highly competitive industries and our ability to meet customers demands for innovative technology at lower costs; and others. More information on potential risks, uncertainties and other factors that could affect Synopsys' results is included in filings it makes with the Securities and Exchange Commission from time to time, including in the sections entitled "Risk Factors" in its Annual Report on Form 10-K for the fiscal year ended October 31, 2016 to be filed with the SEC by December 28, The information provided herein is as of November 30, Synopsys undertakes no duty, and does not intend, to update any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law. Regulation G In addition to financial results prepared in accordance with Generally Accepted Accounting Principles, or GAAP, this presentation will also contain certain non-gaap financial measures. Except for certain forward-looking non-gaap financial measures for which a reconciliation is not possible without unreasonable efforts, reconciliations of the non- GAAP financial measures contained in this presentation or given orally to their most comparable GAAP measures are included in the fourth quarter and fiscal year 2016 earnings release and financial supplement, dated November 30, 2016, and available on Synopsys' website at Synopsys, Inc. 2

3 Synopsys: The Market & Technology Leader FY16 FY17 (Target*) Electronic Design Automation (EDA) Semiconductor Intellectual Property (IP) Revenue: $2.42B $2.57B $2.60B (6-7%) NG EPS: $3.02 $3.16 $3.23 (5-7%)** OCF: $587M ~$500M Software Quality & Security Business Model: Non-Cancellable Backlog: ~90% time-based revenue ~3 years contract duration in 17* $3.54B 3-yr backlog end of FY16 Entered 17 with ~80% revenue in hand * These targets were provided by Synopsys as of November 30, 2016, and are not being updated at this time ** Cigital and Codiscope acquisitions are expected to be modestly dilutive to 2017 non-gaap EPS 2016 Synopsys, Inc. 3

4 Synopsys: The Market & Technology Leader SW Quality & Security Emerging growth market ~3 years of investment & execution Leading SW quality & security platform IP #2 market share 15+ years of investment & execution High-impact outsourced IP to enable fast time to market EDA #1 market share 30 years of investment & execution EDA leadership with state-of-the-art design and verification platforms and best support 2016 Synopsys, Inc. 4

5 Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth Electronics complexity driving growth Clear technology leadership Financial strength and growth 2016 Synopsys, Inc. 5

6 Global Value Chain EDA & IP at the Heart of Accelerating Electronics Innovation EDA & IP* $8.5B Embedded Software* $4.7B* Foundry $45.1B Semiconductors $354B *Estimates are provided for EDA/IP/Embedded Software. Source: IC Insights, VDC Research, Synopsys Estimates Electronic Systems $1,423B 2016 Synopsys, Inc. 6

7 Blue Chip, Diversified Customer Base Semiconductors Systems Software Developers Consists of virtually all semiconductor companies in the world, including all of the top 20 One >10% customer Investment in developing highly complex chips is a clear priority for customers, with migration to advanced process nodes being a key strategy ~40% of our revenue comes from systems companies* Systems houses either develop their chips or buy them from others Verification challenges are rapidly growing at the intersection of hardware and software * As of November 2016 Range from semis and systems, to enterprise companies in the financial, medical, industrial and energy segments Targeting the 20M+ SW developers Challenges: immense SW complexity and security vulnerabilities 2016 Synopsys, Inc. 7

8 Ecosystem Partnerships Research Institutions IP Vendors Semi Equipment Vendors Foundries Partnerships with all of the key players across the broader ecosystem Established relationships and collaborations with all the leading IP suppliers and foundries ensure that our tools, flows and IP are fully and broadly enabled across the industry We have been collaborating with ARM for 20+ years to enable mutual customer success TSMC selected us as its "Partner of the Year" for interface IP and tool enablement for the 6 th consecutive year 2016 Synopsys, Inc. 8

9 Helping Design the Chips Inside Impacting Everyone, Everything, Everywhere, Every Day Cloud Infrastructure Medical Automotive Data Center & Networking Computing & Peripherals Mobile Digital Home Internet of Things Industrial Military / Aerospace 2016 Synopsys, Inc. 9

10 Automotive Opportunity Infotainment V2V Comms. ADAS Autonomous Engine Controls Brakes / Chassis Powertrain Lighting Automotive industry is dramatically accelerating digital intelligence Over the past couple of years, we have substantially grown our portfolio including design, verification, IP and security in the auto market segment Excellent progress in automotive standards certification 9 of the top 10 OEMs, 17 of the world s 20 top tier-1 suppliers, and majority of the semi tier-2 suppliers are Synopsys customers 2016 Synopsys, Inc. 10

11 Internet of Things (IoT) Opportunity Power Buildings Cars Toasters Lamps? Software Sensors Smart Microprocessors Storage Communication The ability to connect multiple smart devices to the cloud and to each other is fueling great application innovation Semi companies are restructuring their businesses and targeting investments to attack the emerging opportunity wave of smart everything We collaborated with TSMC to develop an integrated IoT platform for TSMC's 40nm ultra-lowpower process We have a comprehensive IoT platform built around our very broad IP portfolio 2016 Synopsys, Inc. 11

12 Moore s Law Continues 2016 Synopsys, Inc. 12

13 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Leading the Way in FinFET Active designs Taped-out designs * Source: Synopsys Global Technical Services, November 2016 Cumulative # of completed FinFET designs approaching 300* Synopsys relied on for >95% of those chips 22nm 16nm 14nm 10nm 7nm 48 of the 49 leading-edge tape-outs at 10nm and below are using Synopsys design tools 2016 Synopsys, Inc. 13

14 Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth Electronics complexity driving growth Clear technology leadership Financial strength and growth 2016 Synopsys, Inc. 14

15 Market and technology leader in EDA, the tools and technologies used to design semiconductor chips $6.1 billion market; generally tracks semiconductor R&D spend over time Virtually all leading-edge semiconductor designs in the world use Synopsys technology Leader in EDA State-of-the-art design and verification platforms and best support Recently launched game-changing design and verification tools 2016 Synopsys, Inc. 15

16 IC Compiler II: Game-Changer in Digital Design Breakthrough in implementation that delivers a 10X improvement in throughput and better quality of results Fastest-ramping product in our history, including a record second half FY16 Has been used in ~250 production designs on >25 different foundry processes* * As of November Synopsys, Inc. 16

17 Verification Continuum Platform Industry s #1, Industry s Fastest Virtual Proto. Debug & Coverage #1 #1 #1 #1 Static & Formal Simulation Emulation VIP, Models & Databases FPGA Proto. #1 Complete platform of interacting verification techniques, built around fastest engines Goal: speed software bring-up by ~6 months Key technology advancements in emulation, next-generation prototyping and simulation Delivered outstanding growth in FY16 Synopsys is the fastest-growing emulation vendor in the industry* * As of November Synopsys, Inc. 17

18 IC Compiler I & II Custom Compiler Custom Solution Visually-Assisted Automation Co-Design Assistants Digital P&R Layout Assistants Place Template Assistants Create New custom design solution features an innovative approach that accelerates key parts of design from weeks to days, targeted specifically at FinFET Custom Edits Route Find & Realize Already in production use on the most advanced nodes with support from leading FinFET foundries DRC EM / IR RCx In-Design Assistants Customers are showing a high level of interest and we are seeing some good initial adoption 2016 Synopsys, Inc. 18

19 Leading Provider #2 market share in IP, the reusable building blocks that are used for chip designs Leading supplier of interface, memory, analog and physical IP $2.4 billion market, benefitting from our customers move to outsourcing more and more complex IP Semi IP IP reuse reduces our customers chip design costs, lowers risk and speeds time-to-market We re investing in new markets (IoT, Automotive) & latest processes and protocols 2016 Synopsys, Inc. 19

20 Basic Peripherals (UARTs/Timers) Specialty I/O Third-Party IP Synopsys Differentiator Established Provider Application CPU Application CPU RAM RAM ROM Graphic Core(s) LVDS, Etc 15+ years of investment and execution RAM RAM RAM RAM Flash Interface Flash Storage Resource Commitment On-Chip Bus DDR Interface DDR memory >2,900 IP Engineers Worldwide RAM RAM RAM RAM Interface Data Converters Analog Audio / Video I/F Headset Jack Microphone Audio Codecs Video Codecs Trusted IP Supplier Broad portfolio of highquality, production-proven IP USB PCIe SATA HDMI MIPI * Small boxes are standard cell library elements 2016 Synopsys, Inc. 20

21 IP Business Models Single Use Multi-Use Agreement Engineering Service Customer buys IP for a specific project Revenue recognized up front Customer buys a pool of IP that can be used over a multi-year period until the pool is exhausted or the contract expires Revenue recognized over time Customer pays for porting IP to specific semiconductor process or customization work Revenue recognized over time, primarily on % of completion basis 2016 Synopsys, Inc. 21

22 Through several acquisitions, entered the software quality & security space a couple of years ago Tools allow software code developers to fix quality or security defects early in the process Approximately $2 billion market: fragmented and in need of a platform solution strategy as cost of software failure has gone up dramatically Making good progress on a Software Sign- Off platform aimed at code quality and security certification Offers the most advanced and complete set of tools for every step of the software lifecycle 2016 Synopsys, Inc. 22 Leading Software Quality & Security Platform

23 Growing the Software Quality & Security Platform Through Acquisitions Leader in Static Quality Testing Feb 2014 April 2015 Expand into Dynamic Security Testing Expand into Dynamic Web Application Security May 2015 Nov 2015 Expand into Software Composition Analysis Expand Static Code Analysis Dec Synopsys, Inc. 23

24 Cigital specializes in security consulting services; Codiscope, a spinoff of Cigital, offers related security tools for developers Combination will accelerate our efforts in the software security market by broadening our offering and expanding our market and customer reach Expected to be modestly dilutive to 2017 non-gaap EPS, and reach breakeven on a non-gaap basis by the second half of 2018 Synopsys Acquired Cigital & Codiscope EDA IP SOFTWARE Synopsys Completes Acquisitions of Cigital and Codiscope MOUNTAIN VIEW, Calif., November 30, 2016 /PRNewswire/ Synopsys, Inc. (Nasdaq: SNPS) has completed its acquisitions of Cigital, a privately held provider of software security managed and professional services, and Codiscope, a 2015 spinoff of Cigital and provider of complementary security tools. Cigital is a large, global application security firm specializing in professional and managed services for identifying, remediating and preventing vulnerabilities in software applications. Codiscope has transformed the tools and intellectual property created by Cigital into a suite of accessible and streamlined products for a broad population of developers Synopsys, Inc. 24

25 Growing the Software Quality & Security Platform Through Investments Product Release Feature Readiness Compile & Build Code Check-in 2015 Scaling and operational integration Fully implemented sales strategy, including a dedicated enterprise sales team focused on application SW firms in areas such as finance and health Significantly broadened language coverage 2016 Good progress on Software Sign-Off Platform Our security tools used in Underwriters Laboratories (UL) new UL Cybersecurity Assurance Program Strengthened our go-to-market approach and channel 2016 Synopsys, Inc. 25

26 Ability to Execute Gartner s 2015 Magic Quadrant for Application Security Testing Challengers Leaders Synopsys Positioned as Visionary Cigital Positioned as Challenger Niche Players Completeness of Vision Visionaries As of August Synopsys, Inc. 26

27 Large and Expanding Customer Base 1,300 customers* Range from semis and systems, to enterprise companies in the financial, medical, industrial and energy segments Tools target the 20M+ software developers Seeing the number of large agreements grow, contract duration expand, international business improve and renewals increase Combination of Cigital and Codiscope will accelerate our ability to reach customers and expand our market in new segments Most comprehensive portfolio in the market today * As of November Synopsys, Inc. 27

28 Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth Electronics complexity driving growth Clear technology leadership Financial strength and growth 2016 Synopsys, Inc. 28

29 Long-Term Operating Model* Primary long-term objective is to drive high-single-digit, non-gaap EPS growth on a multi-year basis, through a mix of the following elements: Grow traditional EDA revenue generally in the low-to-mid single digit range Grow revenue in IP/Systems and Software Integrity generally in the low double-digits Actively explore TAM-expanding R&D and M&A opportunities Focus on global operational efficiency to deliver solid non-gaap operating margin in the mid-20s range Optimize the use of our strong cash flow, through a balance of stock buybacks, M&A, and debt repayment Note: While the results in any given period may vary, based on acquisitions or other near-term priorities, our long-term driving principles remain consistent. * This multi-year objective is provided as of November 30, 2016 and is not being updated at this time 2016 Synopsys, Inc. 29

30 Growth and Predictability Revenue ($M) 8% 5-yr CAGR NG EPS 9.5% 5-yr CAGR $2,500 $2,000 $1,500 $1,000 $500 $0 $2,423 $2,242 $1,962 $2,057 $1,756 FY12 FY13 FY14 FY15 FY16 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 $3.02 $2.77 $2.44 $2.53 $2.10 FY12 FY13 FY14 FY15 FY16 Predictable, time-based revenue model; anticipate more quarterly variability as hardware business grows; continue to expect ~90% time-based on an annual basis Entered FY17 with ~80% of revenue in hand; enter each quarter with ~90% in hand Non-cancellable backlog: $3.54B 3-yr backlog end of FY16 8% revenue 5-year CAGR 9.5% non-gaap EPS 5-year CAGR 2016 Synopsys, Inc. 30

31 $ Millions Strong Operating Cash Flow $600 $500 $400 $300 $200 $100 $0 Annual Operating Cash Flow $551 $587 $497 $495 FY13 FY14 FY15 FY16 Roughly tracks EBITDA less cash taxes over time OCF is lumpy Difficult to forecast period to period Timing of large contracts Disbursements (affected by M&A) 2015 OCF affected by 1-time VRP payouts and outflows related to acquisitions 2016 Synopsys, Inc. 31

32 $ Millions Returning Cash to Shareholders $500 $435 $400 $400 $300 $280 $200 $145 $120 $100 $40 $0 FY11 FY12 FY13 FY14 FY15 FY16 Spent $1.42B on buybacks since 2011 Reduced FY16 fully diluted share count by 3.3M shares Intend to slightly reduce 2017 fully diluted share count from 2016 levels through expected buybacks in FY17* Goal is to optimize the use of our strong cash flow, through a balance of stock buybacks, M&A, and debt repayment * These targets were provided by Synopsys as of November 30, 2016, and are not being updated at this time 2016 Synopsys, Inc. 32

33 Market and technology leader in: Electronic Design Automation Semiconductor Intellectual Property Software Quality & Security Solid Financials: Time-based revenue model Large, non-cancellable backlog Excellent execution 2016 Synopsys, Inc. 33

34 Thank You

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