Corporate Overview for Investors

Transcription

1 Corporate Overview for Investors May 2015 May 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, long-term growth rates, expected share count, revenue variability and hardware growth, industry growth rates, software trends, long-term objectives, business outlook, opportunities, and strategies, customer and market expansion, 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; consolidation among our customers and our dependence on a relatively small number of large customers; continued uncertainty in the global economy; our ability to realize the potential financial or strategic benefits of acquisitions we complete; fluctuation of our operating results; our highly competitive industries and our ability to meet our customers demand for innovative technology at lower costs; our ability to carry out our new product and technology initiatives; our ability to protect our proprietary technology; changes in accounting principles or standards; 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 and in its Quarterly Report on Form 10-Q for the second quarter ended April 30, 2017 to be filed with the SEC by June 8, The information provided herein is as of May 17, 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 table at the end of this presentation, along with the second quarter fiscal year 2017 earnings release and financial supplement, dated May 17, 2017, and available on Synopsys' website at Synopsys, Inc. 2

3 Synopsys: The Market & Technology Leader Broad Product Portfolio Electronic Design Automation (EDA) Semiconductor Intellectual Property (IP) FY16 FY17 (Target*) Revenue: $2.42B $2.65B $2.67B (9-10%) NG EPS: $3.02 $3.24 $3.29 (7-9%)** OCF: $587M $580M $600M Raised 2017 targets in February and May Software Security & Quality Business Model: Non-Cancellable Backlog: Predictable, time-based revenue model Slightly <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 May 17, 2017, and are not being updated at this time; a GAAP to non-gaap reconciliation of FY17 EPS targets is included at the end of this presentation ** Includes the modestly dilutive impact to 2017 non-gaap EPS from the recent Cigital and Codiscope acquisitions 2017 Synopsys, Inc. 3

4 Synopsys: The Market & Technology Leader SW Security & Quality Emerging growth market ~3 years of investment & execution Leading SW security & quality 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 2017 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 2017 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 2017 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 May 2017 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 2017 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 2017 Synopsys, Inc. 8

9 ARM and Synopsys Collaborate for Customer Success Early Adopters of ARM Cortex-A73 CPU and Mali-G71 GPU Successfully Tape-out Using Synopsys' IC Compiler II Optimized Reference Implementation Using Galaxy Design Platform Available for New ARM Cortex-A73 Processor May 29, 2016 Synopsys' New HAPS Adaptor for Juno ARM Development Platform Accelerates Software Bring-up Adaptor Connects HAPS Prototyping System with Juno ARM Versatile Express Board to Speed SoC Prototyping and Integration for ARMv8-A based Designs July 6, 2016 Synopsys Expands Collaboration with ARM to Deliver Artisan Physical Libraries and POP IP Support for IC Compiler II Solution Enables Maximum Benefits of Leading Process Technologies with High QoR Sept. 8, 2016 Synopsys Accelerates Development of Safety-Critical Products with Design Solutions for ARM Cortex-R52 Synopsys Tools Enable Design and Safety Certification of Automotive, Industrial and Health Care SoCs Based on New ARMv8-R Architecture CPU Sept. 19, 2016 Synopsys Tools Enable Secure, Efficient IoT Designs Based On New ARM Cortex-M23 and Cortex-M33 Processors Oct. 25, Synopsys, Inc. 9

10 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 2017 Synopsys, Inc. 10

11 Automotive Opportunity Infotainment V2V Comms. ADAS Autonomous Engine Controls Brakes / Chassis Powertrain Lighting Automotive industry is dramatically accelerating digital intelligence Over the past few 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 2017 Synopsys, Inc. 11

12 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 2017 Synopsys, Inc. 12

13 Moore s Law Continues 2017 Synopsys, Inc. 13

14 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 Q1'17 Q2'17 Leading the Way in FinFET Consistently recognized as a mission-critical partner for the most advanced designs 22nm 16nm 14nm 10nm nm Active designs Taped-out designs Relied on for >95% of FinFET designs* * Source: Synopsys Global Technical Services, May Synopsys, Inc. 14

15 Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth Electronics complexity driving growth Clear technology leadership Financial strength and growth 2017 Synopsys, Inc. 15

16 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 with the best support 2017 Synopsys, Inc. 16

17 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 Used on highly complex chips down to 7nm 2017 Synopsys, Inc. 17

18 Verification Continuum Platform Industry s #1, Industry s Fastest Complete platform of interacting verification techniques, built around fastest engines Debug & Coverage #1 Goal: speed software bring-up by ~6 months Virtual Proto. #1 #1 #1 #1 Static & Formal Simulation Emulation VIP, Models & Databases FPGA Proto. Broad demand for our ZeBu emulation system; in Q217, added six new logos and expanded in top accounts Continue to see excellent verification results and a strong outlook for the year* o We expect another record year for hardware revenue in FY17, driven by industry demand and robustness of our solution* * As of May Synopsys, Inc. 18

19 Verification Continuum Momentum NEWS RELEASE Synopsys Selected as Primary Emulation Provider for NXP Semiconductors 4X emulation performance enables fast software schedules for next-generation SoCs NEWS RELEASE NXP Selects Synopsys As Primary SoC Verification Solution Comprehensive Synopsys Solution Enables Accelerated Verification of Next-Generation SoCs including Automotive, Secure Connectivity and Smart Connected Products NEWS RELEASE Synopsys Delivers Industry's First Verification IP for Ethernet 200G Native SystemVerilog VIP Features Built-in Coverage, Verification Planning, Protocol-Aware Debug and Source Code Test Suites NEWS RELEASE Synopsys' SpyGlass Solution Delivers Critical Technology to Enable Compliance with DO-254 Aviation Safety Standard 2017 Synopsys, Inc. 19

20 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 adoption is progressing 2017 Synopsys, Inc. 20

21 #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 Leading Provider 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, Security, Cloud Computing) & latest processes and protocols 15+ years of investment and commitment resulting in unmatched portfolio, quality and reliability 2017 Synopsys, Inc. 21

22 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 >3,000 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 2017 Synopsys, Inc. 22

23 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 2017 Synopsys, Inc. 23

24 Through several acquisitions, entered the software security & quality space a few years ago Solutions allow software code developers to fix security or quality 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 great progress on a Software Sign-Off platform aimed at code security & quality certification Offers the most advanced and complete set of tools for every step of the software lifecycle 2017 Synopsys, Inc. 24 Leading Software Security & Quality Platform

25 Growing the Software Security & Quality 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 2015 Nov 2016 A spinoff of Cigital, offers related security tools for developers Specializes in security consulting services Nov 2016 Dec 2016 Static analysis tool for Fortran applications 2017 Synopsys, Inc. 25

26 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 SW SECURITY & QUALITY 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. 26

27 Growing the Software Security & Quality Platform through Investments Product Release Feature Readiness Compile & Build Code Check-in 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 2017 Strategy Broaden and deploy our Software Sign-off Platform Accelerate our penetration of key verticals in both the embedded and enterprise spaces Drive demand creation with services, ecosystem partners and certification projects 2017 Synopsys, Inc. 27

28 Gartner s 2017 Magic Quadrant for Application Security Testing Synopsys Positioned as Leader Seeing increased customer interest as result Source: Gartner (February 2017) 2017 Synopsys, Inc. 28

29 Large and Expanding Customer Base ~2,000 customers of Software Security & Quality tools* Range from semis and systems, to enterprise companies in the financial, medical, industrial and energy segments, including: 8 of the top 10 software companies 7 of the top 10 automotive OEMs 16 of the top 20 commercial banks 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 May Synopsys, Inc. 29

30 Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth Electronics complexity driving growth Clear technology leadership Financial strength and growth 2017 Synopsys, Inc. 30

31 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 May 17, 2017 and is not being updated at this time 2017 Synopsys, Inc. 31

32 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 variability as hardware business grows; excluding hardware, expect at least 90% time-based revenue 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 2017 Synopsys, Inc. 32

33 $ Millions Strong Operating Cash Flow $600 $500 $400 $300 $497 Annual Operating Cash Flow $551 $495 $587 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) $200 $100 $0 FY13 FY14 FY15 FY16 FY15 OCF affected by 1-time VRP payouts and outflows related to acquisitions 2017 Synopsys, Inc. 33

34 $ Millions Returning Cash to Shareholders $500 $400 $300 $435 Annual Stock Repurchases $280 $400 Spent $1.62B on buybacks since 2011* Reduced FY16 fully diluted share count by 3.3M shares $200 $100 $40 $145 $120 Repurchased $200M worth of stock YTD 2017; $235M left on buyback authorization* $0 FY11 FY12 FY13 FY14 FY15 FY16 * As of May Synopsys, Inc. 34

35 Market and technology leader in: Electronic Design Automation Semiconductor Intellectual Property Software Security & Quality Solid Financials: Time-based revenue model Large, non-cancellable backlog Excellent execution 2017 Synopsys, Inc. 35

36 GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2017 Targets Range for Fiscal Year Ending October 31, 2017 (1) Low High Target GAAP earnings per share $ 1.84 $ 1.97 Adjustments: Estimated impact of amortization of intangible assets Estimated impact of stock compensation Estimated impact of acquisition-related costs Estimated impact of restructuring Estimated impact of legal matters Estimated impact of tax adjustments (0.53) (0.53) Target non-gaap earnings per share $ 3.24 $ 3.29 Shares used in non-gaap calculation (midpoint of target range) 154, ,500 (1) Synopsys' third quarter and fiscal year end on July 29, 2017 and October 28, 2017, respectively. For presentation purposes, we refer to the closest calendar month end Synopsys, Inc. 36

37 Thank You

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