Synopsys, Inc. · NASDAQ:SNPS
Synopsys — Investor Presentation (December 2015)
54 slides from Synopsys's investor presentation, December 2015
Slide 1: Corporate Overview for Investors
Corporate Overview for Investors December 2015 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. For a discussion of important factors that c
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 © 2015 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: ~10,280 Market Cap: ~$7.8B Founded: 1986 Patents Granted: 2,535 * These targets were p
Slide 6: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Dynamic markets • Clear technology leadership • Financial strength and growth © 2015 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 Es
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 Infrastructure Digital Home Internet of Things Industrial © 2015 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 © 2015 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% © 2015 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 300 FinFET 250 22 16 14 10 200 150 100 ~260 FinFET 50 designs and tape- outs worldwide 0 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 Synopsys is relied- Act
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 Primary Designs $600 Note: Primary Designs are new and more-complex design(s), typically $500 shipping in high-volumes, are developed on the next process node, require Software qualification on a whole new range of IP, and typically contain extensive software content
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 (Q415 & FY15) • For many years we have collaborated closely with market leaders, including top foundries, ID
Slide 17: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Dynamic markets • Clear technology leadership • Financial strength and growth © 2015 Synopsys, Inc. 17
Slide 18: Broadest Portfolio of Best-in-Class Technology
Broadest Portfolio of Best-in-Class Technology © 2015 Synopsys, Inc. 18
Slide 19: #1 in Core EDA
#1 in Core EDA • 61% of current revenue; 7.4% trailing twelve- month revenue growth* System Design • 95% of FinFET designs have relied on Synopsys and 42 of the 43 leading-edge Verification IP Implementation designs at 10nm are using our design tools • Long-time technology leader in digital Manufact
Slide 20: Synopsys IC Compiler II: Game-Changer in Digital Design
Synopsys IC Compiler II: Game-Changer in Digital Design V 10X © 2015 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 © 2015 Synopsys, Inc. 21
Slide 22: Fastest Product Ramp-up in Our History
Fastest Product Ramp-up in Our History 4 designs > 100 designs! 135 34 Production Completed Designs Tapeouts 16/14nm 51 19 Active Process 10nm Customers Nodes 28nm40nm Early in Multi-year Upgrade SNUG 2014 Oct. 2015 Cycle © 2015 Synopsys, Inc. 22
Slide 23: Industry's #1 Verification Continuum
Verification Industry’s #1 Continuum • Game-changing new platform launched in Planning & Coverage 2014 • Seamless integration • Built around best-in- Debug #1 class engines; adding unified debug, compile #1 #1 #1 #1 • Goal: speed software bring-up by Virtual Static & FPGA Simulation Emulation ~6 mon
Slide 24: 2014: Verification Compiler
2014: Verification Compiler Integration of Software Elements of Verification Continuum; Comprehensive, Best-in-Class Verification in One Product © 2015 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 • 8% of current revenue; 4.8% 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 • 27% of current revenue; 13% 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 to
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 Market Growing to $4.3B by 2018
IP Market Growing to $4.3B by 2018 $5,000 25.0% $4,500 $4,315 20.0% $3,836 $4,000 $3,441 15.0% $3,500 $3,119 $3,000 $2,683 Growth Revenue 10.0% $2,457 $2,500 $2,203 $1,913 5.0% $2,000 $1,624 $1,343 $1,500 0.0% $1,000 -5.0% $500 $- -10.0% 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E IP Reven
Slide 33: IP Business Models
IP Business Models Single Use Multi-Use Agreement Engineering Service • Customer buys IP for • Customer buys a pool • Customer pays for a specific project of IP that can be used porting IP to specific over a multi-year semiconductor • Revenue recognized period until the pool is process or up front e
Slide 34: Acquisitions Expand IP Portfolio
Acquisitions Expand IP Portfolio • Acquired Elliptic Technologies (June 29) o Complements DesignWare IP portfolio with Security IP • Acquired Bluetooth Smart IP from Silicon Vision (July 16) o Expands leading DesignWare IP portfolio with Wireless IP for IoT © 2015 Synopsys, Inc. 34
Slide 35: Optimized IP Solutions for IoT
Optimized IP Solutions…for IoT • Broadest IP portfolio IoT Platform • Recent acquisitions Interface & IoT Analog IP Processors Security IP add critical IP Devices • Pre-validated Sensor Memories IoT platform Bluetooth Subsystem & Libraries through TSMC collaboration © 2015 Synopsys, Inc. 35
Slide 36: #1 in Prototyping Solutions
#1 in Prototyping Solutions • #1 provider of virtual prototyping solutions (Virtualizer) • #1 provider of FPGA-based prototyping solutions (HAPS) Synopsys • Prototyping solutions used for: o Early SW development o HW/SW integration o System validation © 2015 Synopsys, Inc. 36
Slide 37: Software Megatrends
Software Megatrends Quality & Security Tools Market (~$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 $2.4B and growing ~20%; Security growing ~30% 2012 2013 2014 2015 2016 Security Quality Source: VDC, Gar
Slide 38: Software Integrity: Growing the Business
Software Integrity: Growing the Business Acquired in February 2014 Organic Development • Broader language coverage for enterprise needs • Compliance coverage for vertical market penetration Acquired in April 2015 Expand into Dynamic Security Testing • World-leading fuzzing technology covering more t
Slide 39: Growing the Business: Field Execution
Growing the Business: Field Execution Trusted Relationship Dedicated Enterprise with Existing Sales Team Customers • Leveraging core • Focused on enterprise Synopsys sales team to customers in key sell to embedded SW verticals customers Culture of Close Customer Collaboration Strong International Pr
Slide 40: Mobile / Consumer Devices, Enterprise
Mobile / Consumer Enterprise Devices Networking / ISV High Reliability Financial Services Devices © 2015 Synopsys, Inc. 40
Slide 41: Growing the Business: Industry Recognition
Growing the Business: Industry Recognition Synopsys Positioned as Visionary in 2015 Magic Quadrant for Application Security Testing Challengers Leaders 6 August 2015 G00268424 Ability to Execute *Gartner "Magic Quadrant for Application Security Testing" by Neil MacDonald, Joseph Feiman. August 6, 20
Slide 42: Acquisitions Expand Security Offering
Acquisitions Expand Security Offering • Acquired Codenomicon (June 29) – independent discoverer of Heartbleed bug; security testing for embedded SW • Acquired assets of Quotium (July 20) – interactive application security testing (IAST), a well-known method of testing applications during the softwar
Slide 43: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Dynamic markets • Clear technology leadership • Financial strength and growth © 2015 Synopsys, Inc. 43
Slide 44: Growth and Predictability
Growth and Predictability Revenue ($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 9% 5-yr CAGR NG EPS • Non-cancel
Slide 45: 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 46: 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) $100 • 2015 O
Slide 47: Efficient Resource Management
Efficient Resource Management 100% 90% 20% 23% • Most profitable ($) 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 48: 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 49: 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 50: Solid Balance Sheet
Solid Balance Sheet US Non US • $760M net cash at end of $1,004 $1,022 $986 $965 Q415 $1,000 • Split of U.S. vs. non-U.S. $800 cash can influence $700 investment decisions $ Millions $600 • Buybacks and debt repayments funded entirely $400 with U.S. cash $200 • Typically like to hold a minimum of ~$
Slide 51: Returning Cash to Shareholders
Returning Cash to Shareholders • Since 2010, spent $1.2B on Annual Share Buybacks buybacks $500 $435 • Plan to accelerate buybacks $400 in FY16 to slightly reduce share count* $ Millions $300 $280 $200 $185 • $500M remaining on our $145 $120 current share repurchase $100 authorization* $40 $0 • Goal
Slide 52: 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 53: 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 © 2015 Synopsys, Inc. 53
Slide 54: Thank You
Synopsys n to Software” Thank You