Synopsys, Inc. · NASDAQ:SNPS
Synopsys — Investor Presentation (February 2016)
56 slides from Synopsys's investor presentation, February 2016
Slide 1: Corporate Overview for Investors
Corporate Overview for Investors February 2016 May 2015
Slide 2: Forward-Looking Statements
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 statements regarding projected financial results and long- term growth rates. These statements involve known and unknown
Slide 3: Synopsys Introduction
Synopsys Introduction • Global leader in Electronic Design Automation (EDA), the tools and technologies used to design chips • Leading provider of semiconductor Intellectual Property (IP), the reusable building blocks that are used for chip designs • The market & technology leader: Virtually all lea
Slide 4: Strategic Priorities – Next Several Years
Strategic Priorities – Next Several Years • Maintain our clear technical, business and support leadership in core EDA • Drive continued growth in IP and Systems • Expand our presence in the software quality and security space © 2016 Synopsys, Inc. 4
Slide 5: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader FY15 FY16 (Target*) Revenue: $2.242B $2.350 – $2.390B (5-7%) NG EPS: $2.77 $2.93 – $3.00 (6-8%) Business Model: ~90% time-based Revenue Sources: ~½ International Employees: ~10,290 Market Cap: ~$6.6B Founded: 1986 Patents Granted: 2,578 * These targets were p
Slide 6: Uniquely Positioned for Stability and Growth
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Dynamic markets • Clear technology leadership • Financial strength and growth © 2016 Synopsys, Inc. 6
Slide 7: Global Value Chain
Global Value Chain EDA & IP – At the Heart of Accelerating Electronics Innovation EDA & IP* $9.3B Embedded Software* $4.3B** Foundry $42.1B Semiconductors $362B Electronic Systems $1,531B *Estimates are provided for EDA/IP/Embedded Software. **2014 value. Source: IC Insights, VDC Research, Synopsys
Slide 8: Helping Design the Chips Inside
Helping Design the Chips Inside Impacting Everyone, Everything, Everywhere, Every Day Mobile Computing & Peripherals Medical Data Center & Networking Automotive Military / Aerospace Cloud InfrastructureDigital Home Internet of Things Industrial © 2016 Synopsys, Inc. 8
Slide 9: Data, Data, Data – Cloud Infrastructure
Data, Data, Data – Cloud Infrastructure Smartphone PC Tablet Data Access Smart TV By 2017, the annual global IP traffic will surpass the zettabyte threshold (1.4 zettabytes). Source: Cisco Systems, VNI Global Mobile Data Traffic Forecast Update 2013 © 2016 Synopsys, Inc. 9
Slide 10: Internet of Things
Internet of Things Power Buildings Cars Toasters Lamps…? SW & E/E Software Lines of % Vehicle Code Cost Sensors Example 1970 100K <9% “Smart” Microprocessors Storage 1990 1M 33% Communication 2010 100M >40% © 2016 Synopsys, Inc. 10
Slide 11: Significant Growth in Sensors
Sensors Are Everywhere Significant Growth in Sensors Sensor Units to Grow to 30 Billion Units in 2017 Consumer 30B Units 30000 Automotive Computing 25000 Smartphones Feature Phones 20000 Industrial Other Communications 15000 10B Units 10000 5000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source:
Slide 12: Semiconductor Design Complexity
Semiconductor Design Complexity • An advanced design today will take 18-24 months to complete, and can cost up to $200M • Complexity of designs has increased exponentially, requiring more, and more advanced, EDA tools • As IC design complexity grows, there is the need to embed an increasing amount o
Slide 13: Leading the Way in FinFET
Leading the Way in FinFET 286 FinFET designs and tape- 350 outs worldwide 300 22nm 250 200 16nm 150 14nm 100 10nm 50 7nm… 0 Q3'09 Q4'11 Q1'14 Q2'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Synopsys
Slide 14: Comprehensive FinFET Solution
Comprehensive FinFET Solution Synopsys’ FinFET “Clearly, from a technical point of view, Moore’s Law is alive and Leadership well, and Synopsys is central in driving it forward,” Aart de Geus, Synopsys Chairman and Co-CEO • Have invested in the fast- growing FinFET segment for almost a decade • Comp
Slide 15: Designs Are Becoming More Costly
Designs Are Becoming More Costly Advanced Designs $1,000 $900 Note: Advanced designs are the initial high volume designs in new technologies such as integrated modems and application processors. Software $800 $700 Prototype $600 Cost ($M) Validation $500 Physical $400 $300 Verification $200 Architec
Slide 16: Blue Chip Customer Base
Blue Chip Customer Base • Customer base consists of virtually all semiconductor companies in the world, including all of the top 20, with a large base of systems companies • One >10% customer (Q116) • For many years we have collaborated closely with market leaders, including top foundries, IDMs and
Slide 17: Uniquely Positioned for Stability and Growth
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Dynamic markets • Clear technology leadership • Financial strength and growth © 2016 Synopsys, Inc. 17
Slide 18: Broadest Portfolio of Best-in-Class Technology
Broadest Portfolio of Best-in-Class Technology © 2016 Synopsys, Inc. 18
Slide 19: #1 in Core EDA
#1 in Core EDA • 60% of current revenue; 8.4% trailing twelve- month revenue growth* System Design • 100% of the 10nm and 7nm tape-outs completed thus far utilized Synopsys design Verification IP Implementation tools* • Long-time technology leader in digital Manufacturing implementation • Technology
Slide 20: Synopsys IC Compiler II: Game-Changer in Digital Design
Synopsys IC Compiler II: Game-Changer in Digital Design V 10X © 2016 Synopsys, Inc. 20
Slide 21: Synopsys IC Compiler II: Staying Ahead
Synopsys IC Compiler II: Staying Ahead 10X Productivity ICC II Throughput Competitor Industry-leading performance Earlier-to-market ICC I Competitor Before ‘14 ‘14 ‘15 Time © 2016 Synopsys, Inc. 21
Slide 22: Fastest Product Ramp-up in Our History
Fastest Product Ramp-up in Our History ~150 Production Designs 19 Process Nodes >100 Designs 4 Designs SNUG 2014 Oct. 2015 Today © 2016 Synopsys, Inc. 22
Slide 23: Industry's #1 Verification Continuum
Verification Industry’s #1 Continuum • Built around best- in-class engines Planning & Coverage • Goal: speed software bring-up by ~6 months Debug #1 • Atrenta acquisition brings leading #1 #1 #1 #1 static & formal analysis solution Virtual Static & Simulation Emulation FPGA • Key technology Prototyp
Slide 24: 2014: Verification Compiler
2014: Verification Compiler Integration of Software Elements of Verification Continuum; Comprehensive, Best-in-Class Verification in One Product © 2016 Synopsys, Inc. 24
Slide 25: ZeBu Server-3
ZeBu Server-3 Industry’s Fastest Emulation System Debug Comprehensive debug Performance with full signal visibility Speeds HW/SW bring-up and Verdi3 integration and SoC verification up to 4X for faster time-to-market \ Architecture Advanced architecture for Hybrid Emulation lower total cost of owner
Slide 26: #1 in Manufacturing
#1 in Manufacturing • 9% of current revenue; 7.4% trailing twelve- month revenue growth* System Design • Mask data prep tools used by 8 of the top 10 semiconductor manufacturers Verification IP Implementation • TCAD tools used by 9 of the top 10 semiconductor manufacturers • Yield management solutio
Slide 27: Growth in Core EDA + Manufacturing
Growth in Core EDA + Manufacturing Estimated Long-Term Organic Growth Rate • Generally in the low-to-mid single digit range* • Growth drivers: ‒Segment growth + market share gains Segment Growth Drivers • Semi R&D growth • Demand for new designs, new devices • Increasing complexity requiring new, ad
Slide 28: Growth in IP/Systems/Software Integrity
Growth in IP/Systems/Software Integrity • 29% of current revenue; 3.3% trailing twelve- month revenue growth* System Design • Estimated long-term organic revenue growth: generally in the low double-digits** Verification IP Implementation • Top-20 semiconductor vendors continue to outsource more IP t
Slide 29: #2 IP Vendor
#2 IP Vendor Leader in Interface, Analog & Memory IP Leadership Enables Investment in Quality, Support, Features and Processes Design IP Revenue, Worldwide (in Millions)* Design IP Revenue, Wired Interface Design IP Revenue, Wired Interface 2014 2013 Rank Company Rank Company 20142013 ShareShare 1 1
Slide 30: Third-Party IP – Synopsys Differentiator
Third-Party IP – Synopsys Differentiator Specialty I/O Application Application Graphic CPU CPU RAM RAM ROM Core(s) LVDS, Etc Established Provider 15+ years of investment and Flash Flash Storage execution RAM RAM RAM RAM Interface Resource On-Chip Bus DDR DDR memory Commitment Interface (UARTs/Timers
Slide 31: 3rd Party IP Usage Will Continue to Double Through 2018
3rd Party IP Usage Will Continue to Double Through 2018 Wireless communication 2018 2013 Increasing Design Consume Complexity Escalating Design Costs Data processing Shorter Time Window for Automotive New Product Launch Overall 3rd party design Wired communication IP use in 2013 Overall 3rd party de
Slide 32: IP Forecasted to Grow to $4.3B by 2018
IP Forecasted to Grow to $4.3B by 2018 4500 14.0% 4000 12.0% 3500 10.0% 3000 2500 8.0% 2000 6.0% 1500 4.0% 1000 2.0% 500 0 0.0% 2013 2014 2015 2016 2017 2018 IP Revenue Growth Source: Gartner June 2014 © 2016 Synopsys, Inc. 32
Slide 33: IP Business Models
IP Business Models Single Use Multi-Use Agreement Engineering Service • Customer buys IP for • Customer buys a pool • Customer pays for a specific project of IP that can be used porting IP to specific over a multi-year semiconductor • Revenue recognized period until the pool is process or up front e
Slide 34: Acquisitions Expand IP Portfolio
Acquisitions Expand IP Portfolio • Acquired Elliptic Technologies (June 29) o Complements DesignWare IP portfolio with Security IP • Acquired Bluetooth Smart IP from Silicon Vision (July 16) o Expands leading DesignWare IP portfolio with Wireless IP for IoT © 2016 Synopsys, Inc. 34
Slide 35: Optimized IP Solutions for IoT
Optimized IP Solutions…for IoT • Broadest IP portfolio IoT Platform • Recent acquisitions Interface & IoT Analog IP Processors Security IP add critical IP Devices • Pre-validated Sensor Memories IoT platform Bluetooth Subsystem & Libraries through TSMC collaboration © 2016 Synopsys, Inc. 35
Slide 36: Broad Portfolio of IP for Automotive SoCs
Broad Portfolio of IP for Automotive SoCs • Accelerate functional safety assessments • Reduce risk & development time • Meet quality levels required for automotive applications © 2016 Synopsys, Inc. 36
Slide 37: #1 in Prototyping Solutions
#1 in Prototyping Solutions • #1 provider of virtual prototyping solutions (Virtualizer) Synopsys • #1 provider of FPGA-based prototyping solutions (HAPS) • Prototyping solutions used for: o Early SW development o HW/SW integration o System validation © 2016 Synopsys, Inc. 37
Slide 38: Software Megatrends
Software Megatrends Quality & Security Tools Market (~$B) 1.6 1.5 1.4 1.2 1.3 1.2 • Size of applications continues to grow 0.9 • Number of developers 0.7 increases steadily 0.6 0.4 • Total market $2.4B and growing ~20%; Security growing ~30% 2012 2013 2014 2015 2016 Security Quality Source: VDC, Gar
Slide 39: Synopsys Software Integrity: Growing the Business
Synopsys Software Integrity: Growing the Business February 2014 Leader in Static Quality Testing April 2015 Expand into Dynamic Security Testing May 2015 Expand into Dynamic Web Application Security November 2015 Expand into Software Composition Analysis © 2016 Synopsys, Inc. 39
Slide 40: Our Business Vision
Our Business Vision Software Software Software Platform Sign-Off Certification Quality Security Safety & Privacy + + © 2016 Synopsys, Inc. 40
Slide 41: Growing the Business: Field Execution
Growing the Business: Field Execution Trusted Relationship Dedicated Enterprise with Existing Sales Team Customers • Leveraging core • Focused on enterprise Synopsys sales team to customers in key sell to embedded SW verticals customers Culture of Close Customer Collaboration Strong International Pr
Slide 42: Target Customer Verticals
Enterprise Financial Services Networking / ISV Mobile / Consumer High Reliability Devices Devices © 2016 Synopsys, Inc. 42
Slide 43: Growing the Business: Industry Recognition
Growing the Business: Industry Recognition Synopsys Positioned as Visionary in 2015 Magic Quadrant for Application Security Testing Challengers Leaders 6 August 2015 G00268424 Ability to Execute *Gartner "Magic Quadrant for Application Security Testing" by Neil MacDonald, Joseph Feiman. August 6, 20
Slide 44: Acquisitions Expand Security Offering
Acquisitions Expand Security Offering • Acquired Codenomicon (June 29) – independent discoverer of Heartbleed bug; security testing for embedded SW • Acquired assets of Quotium (July 20) – interactive application security testing (IAST), a well-known method of testing applications during the softwar
Slide 45: Uniquely Positioned for Stability and Growth
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Dynamic markets • Clear technology leadership • Financial strength and growth © 2016 Synopsys, Inc. 45
Slide 46: Growth and Predictability
Growth and Predictability Revenue ($M) $2,500 $2,242 $2,370 $1,962 $2,057 $2,000 $1,756 $1,500 • Predictable, time-based $1,000 revenue model $500 • Entered FY16 with ~80% of $0 FY12 FY13 FY14 FY15 FY16 Guide-Mid* revenue in hand; enter each quarter with ~90% in hand NG EPS 9% 5-yr CAGR $2.97 • Non-
Slide 47: Predictable Time-Based Revenue
Predictable Time-Based Revenue 3-Year Backlog • Significant Non-cancellable $3,500 $3,000 $3.6B 3-year Backlog $3.1B $3.5B $2,500 – $3.6B at end of FY15 $2,000 – More backlog than next 2 largest $1,500 $1,000 EDA players combined $500 $0 • Predictable, time-based FY13 FY14 FY15 revenue model – Time-
Slide 48: Strong Operating Cash Flow
Strong Operating Cash Flow Annual Operating Cash Flow $600 $551 At least • Roughly tracks EBITDA less $500 $497 $495 $500 cash taxes over time $400 • OCF is lumpy ‒ Difficult to forecast period $ Millions $300 to period ‒ Timing of large contracts $200 ‒ Disbursements (affected by M&A) $100 • 2015 O
Slide 49: Efficient Resource Management
Efficient Resource Management 100% 90% 20% 23% • Most profitable ($) in EDA 80% 7% 70% 6% • Have reduced G&A and S&M spending (as % of revenue) 60% 27% 20% 50% • Expect to maintain NG R&D 40% spend at ~30% of revenue 33% 30% 29% • Goal is to focus on global 20% operational efficiency to 10% 17% 18%
Slide 50: Technologically & Geographically Diversified
Technologically & Geographically Diversified 3% 3% 3% 100% 100% 90% 9% 9% 8% 90% 23% 25% 25% 80% 80% 25% 26% 27% 70% 70% 14% 12% 10% $ Millions $ Millions 60% 60% 13% 14% 13% 50% 50% 40% 40% 30% 63% 62% 61% 30% 52% 50% 51% 20% 20% 10% 10% 0% 0% FY13 FY14 FY15 FY13 FY14 FY15 Core EDA IP/Systems/SW In
Slide 51: Capital Allocation Strategy
Capital Allocation Strategy Disciplined resource management and allocation Actively explore TAM-expanding R&D and M&A opportunities to maximize long-term shareholder value Optimize the use of our strong cash flow and utilize our balance sheet effectively, through a balance of M&A, stock buybacks and
Slide 52: Solid Balance Sheet
Solid Balance Sheet US Non US • $478M net cash at end of $1,022 $986 $965 Q116 $1,000 • Split of U.S. vs. non-U.S. $800 $706 cash can influence $700 investment decisions $ Millions $600 • Buybacks and debt repayments funded entirely $400 with U.S. cash $200 • Typically like to hold a minimum of ~$10
Slide 53: Returning Cash to Shareholders
Returning Cash to Shareholders • Spent $1.2B on buybacks Annual Share Buybacks since 2011 $500 $435 • Plan to accelerate buybacks $400 in FY16 to slightly reduce fully diluted share count* $ Millions $300 $280 $200 $200 • $300M remaining on our $145 $120 current share repurchase $100 authorization*
Slide 54: Long-term Operating Model
Long-term Operating Model* Primary long-term objective is to drive high-single- digit EPS growth through a mix of the following elements: • Organically grow traditional EDA revenue generally in the low-to-mid single digit range • Organically grow IP/Systems/SW Integrity revenue generally in the low
Slide 55: Summary
Summary • Dynamic markets – World’s leading EDA supplier and #2 IP vendor • Clear technology leadership – Broadest portfolio of best-in-class technology with multi-year upgrade cycle • Financial strength and growth – Excellent financial position and execution © 2016 Synopsys, Inc. 55
Slide 56: Thank You!
THANK YOU! © 2016 Synopsys, Inc. 56