Synopsys, Inc. · NASDAQ:SNPS
Synopsys — Investor Presentation (August 2019)
45 slides from Synopsys's investor presentation, August 2019
Slide 1: Corporate Overview for Investors
Corporate Overview for Investors August 2019
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, but not limited to, financial targets for the fourth quarter and full fiscal year 2019, their comparative metrics under
Slide 3: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader FY18(1) FY19 Targets(2) (ASC 605) (ASC 606)(3) Broad Product Portfolio Revenue: $3.121B $3.34B - $3.37B Electronic Design Growth Rate: 7% - 8% Automation (EDA) Non-GAAP EPS: $3.91 $4.52 - $4.57 Semiconductor Operating CF: $424M(4) ~$750M(5) Intellectual Prope
Slide 4: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader Software 5 years Integrity Emerging Leader, ~10% of revenue Broadest Portfolio Growth: ~20% Semiconductor >15 years IP 20%+ of revenue #2 IP Vendor Growth: low double digits >30 years of Electronic investment and Market Leader Design execution Growth: mid-hig
Slide 5: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Electronics complexity driving growth • Clear technology leadership • Financial strength and growth © 2019 Synopsys, Inc. 5
Slide 6: Global Value Chain – 2019E
Global Value Chain – 2019E EDA & IP – at the Heart of Accelerating Electronics Innovation EDA & IP $11.8B Embedded Software $10.8B Foundry $72.7B Semiconductors $443.8B Electronic Systems $1,680B Source: IC Insights, VDC Research, Synopsys Internal Estimates © 2019 Synopsys, Inc. 6
Slide 7: Blue Chip, Diversified Customer Base
Blue Chip, Diversified Customer Base Semiconductors Systems Software Developers • Consists of virtually all semiconductor • ~40% of our revenue comes from • Key function across all industries: companies in the world, including all of systems companies semis and systems, to enterprises the top 20 • S
Slide 8: New Technology is Impacting Every Vertical
New Technology is Impacting Every Vertical Automotive Manufacturing Banking AI Cloud Secure IoT Health Robotics 5G Compute Household Agriculture Goods © 2019 Synopsys, Inc. 8
Slide 9: Artificial Intelligence Market Growth
Artificial Intelligence Market Growth • Mobile - All premier smartphones will Chipsets across all markets will include Deep Learning integrate AI Processing Capabilities Capabilities by 2021 • Data Center - More than 50% of enterprises will deploy AI accelerators in their server infrastructure by 20
Slide 10: Enabling and Leveraging the Potential of AI
Enabling and Leveraging the Potential of AI Synopsys tools incorporate AI/ML technologies while enabling AI processor development Inference Algorithm Model Optimization ARC EV Processors Processors Optimization Memory Bandwidth/ Video Input Storage Capacity HBM2 USB/eDP DDR/LPDDR Chip-to-Chip Bandwi
Slide 11: Automotive
Secure OWNERSHIP & INFRASTRUCTURE Entire Ecosystem AUTONOMOUS DRIVING Systems of systems Automotive ARTIFICIAL INTELLIGENCE Big Data, Capture, Analyze, Decision Making SOFTWARE >150M Lines of Code per vehicle SYSTEMS Infotainment, GPS, Drivetrain, Sensors CHIPS 4 Billion transistors © 2019 Synopsys,
Slide 12: IP Enabling Critical Functions in Automotive SoCs
IP Enabling Critical Functions in Automotive SoCs USB Data Converters ARC Processors Ethernet TSN Embedded Vision Processors CONNECTIVITY HDMI GATEWAY Security IP LPDDR4 ADAS COMFORT Embedded Memory Sensor & Control Subsystem INFOTAINMENT Logic Library MIPI CSI/DSI POWERTRAIN Security IP Mobile Stor
Slide 13: Automotive Opportunity: Software Security & Quality
Automotive Opportunity: Software Security & Quality 11 of the top 15 Automotive OEMs use Synopsys Software Integrity Supply Chain Static Analysis Security Testing Security Services Management Find critical defects and Find vulnerabilities before Find known vulnerabilities in Gap analysis / vulnerabi
Slide 14: Advanced Process Development Continues
Advanced Process Development Continues © 2019 Synopsys, Inc. 14
Slide 15: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Electronics complexity driving growth • Clear technology leadership • Financial strength and growth © 2019 Synopsys, Inc. 15
Slide 16: EDA
• Market and technology leader in EDA, the tools and technologies used to design semiconductor chips ~$6.9 billion market*; generally tracks semiconductor R&D spend over time Leader in • All leading semiconductor companies in the world use Synopsys technology EDA • State-of-the-art design and verifi
Slide 17: Synopsys Fusion Design Platform
Synopsys Fusion Design Platform™ Trusted Anchor Products, Correlated Platform with Synergistic Value Links Trusted Anchor #1 Synthesis, #1 P&R, #1 Signoff Products Machine Learning Technologies Massively Parallel Architecture Correlated Platform with Deep Integrations Across Platform Value Links In-
Slide 18: Introducing Synopsys Fusion Compiler
Introducing Synopsys Fusion Compiler™ • Only single product on market that integrates synthesis, place & route and key signoff technologies • Built with market-leading products • Redefines conventional product boundaries; sharing of algorithms, code and data model • New synthesis engine, developed f
Slide 19: Synopsys Custom Compiler Adoption Growing
Synopsys Custom Compiler™ Adoption Growing Custom Compiler Adoption DRC Fusion HSPICE Custom FineSim Compiler CustomSim Extraction Fusion StarRC, IC Validator © 2019 Synopsys, Inc. 19
Slide 20: #1 in Digital/Functional Verification
#1 in Digital/Functional Verification Verification Continuum™ Platform • Complete platform with #1 products Verification Continuum in all categories Planning Planning & & Coverage Coverage • Industry’s highest-performance engines #1 Verdi • Uniquely positioned for early software bring-up #1 #1 #1 #1
Slide 21: Verification Hardware: Introducing ZeBu Server
Verification Hardware: Introducing ZeBu® Server 4 Leading system for software bring-up Only modern system to allow software-on-hardware validation Industry’s fastest emulation system Now 2x higher performance Industry’s largest capacity Scalable to 19B+ gates Industry’s lowest total cost of ownershi
Slide 22: #1 in Analog/Mixed Signal Simulation
#1 in Analog/Mixed Signal Simulation Circuit Simulation Leadership Foundry CPU GPU Auto FLASH DRAM DRC Fusion HSPICE Custom FineSim Compiler CustomSim • Market leader for >20 years Extraction Fusion • Close collaboration with leaders in memory, automotive IC and StarRC, IC Validator high-performance
Slide 23: Semi IP
• #2 market share in IP, the reusable building Leading Provider blocks that are used for chip designs – Leading supplier of interface, memory, analog and physical IP – ~$4.3 billion market*, benefitting from our Semi IP customers’ move to outsourcing more and more complex IP • IP reuse reduces our c
Slide 24: Synopsys DesignWare IP
Synopsys DesignWare® IP Specialty I/O Application CPU Embedded CPU RAM RAM ROM Graphic Core(s) • Broadest portfolio available in the market Flash • Covers vast majority of chip RAM RAM RAM RAM Interface • Growing demand for more On-Chip Bus DDR Interface integrated subsystems Basic Peripherals (UART
Slide 25: New Markets: More Functionality in Key Markets
New Markets: More Functionality in Key Markets Driving New Technology Requirements AI AUTOMOTIVE CLOUD IoT Machine Learning, ADAS, Networking, Smart Home, Deep Neural Infotainment, Servers AI Industrial, Networks Connected Vehicle Accelerators Wearables © 2019 Synopsys, Inc. 25
Slide 26: Software
• Entered the software security & quality space in 2014 – Since then, have assembled the broadest portfolio of solutions on the market; >$300M revenue annually – Solutions allow software code developers to fix security or quality defects early in development – Approximately $2.5 billion+ market: fra
Slide 27: Software Security & Quality Market
Software Security & Quality Market • Evolving, nascent market TAM: ~$4.5-6.5B • Growth drivers: • Omnipresence of software • Widespread connectivity exacerbates security issues • Significant business risk from SAM: breaches ~$2-2.5B • Large development teams • ~20% growth segment Sources: Gartner, F
Slide 28: Growing the Software Integrity Platform - Acquisitions
Growing the Software Integrity Platform - Acquisitions © 2019 Synopsys, Inc. 28
Slide 29: Addressing Security & Quality Holistically
Addressing Security & Quality Holistically Strategy & Building Security in Maturity Action Plan (MAP) Planning Maturity Model (BSIMM) Professional Architecture Security DevSecOps Cloud Industry Services and Design Training Integration Security Solutions Static Mobile Dynamic Managed Penetration Appl
Slide 30: Synopsys Polaris Software Integrity Platform
Synopsys Polaris Software Integrity PlatformTM Polaris • Platform that integrates all products Centralized Consolidated Alerting & and managed services Management Reporting Workflow • Cloud-based Integrated Analysis Engines • Enterprise scale Coverity Black Duck Seeker Managed • Single user interfac
Slide 31: Recognized Leader in End-to-End Application Security
Recognized Leader in End-to-End Application Security Synopsys is the only vendor recognized as the leader in both SAST and Open Source (SCA) Gartner Magic Quadrant Application Security Testing Download a free copy of the 2019 Magic Quadrant for Application Security Testing. © 2019 Synopsys, Inc. 31
Slide 32: Recognized Leader in End-to-End Application Security
Recognized Leader in End-to-End Application Security Synopsys is the only vendor recognized as the leader in both SAST and Open Source (SCA) Forrester Wave Static Application Security Testing Forrester Wave Software Composition Analysis Source: Forrester (December 2017) Source: Forrester (April 2019
Slide 33: Trusted Partner to >4,000 Companies
Trusted Partner to >4,000 Companies 16 of top 20 Commercial Banks 7 of top 10 Aerospace & Defense Firms 8 of top 10 Global Brands 6 of top 10 Semiconductor Companies 9 of top 10 ISVs © 2019 Synopsys, Inc. 33
Slide 34: Growth Strategy
Growth Strategy • Continue to scale business and extend our lead in this emerging market • Land in core and new verticals with best-in-class capabilities in each tool • Expand through suite of additional solutions delivered via integrated Polaris Software Integrity PlatformTM • Leverage existing int
Slide 35: Synopsys: The Market & Technology Leader
Synopsys: The Market & Technology Leader Uniquely Positioned for Stability and Growth • Electronics complexity driving growth • Clear technology leadership • Financial strength and growth © 2019 Synopsys, Inc. 35
Slide 36: Long-Term Financial Objectives
Long-Term Financial Objectives* • While the results in any given period may vary due to acquisitions or other near-term priorities, our primary long-term objective is to drive double-digit non-GAAP EPS growth on a multi- year basis, through a mix of the following elements: • Grow total revenue gener
Slide 37: Excellent Financial Execution
Excellent Financial Execution Revenue ($M) $3,340 - Non-GAAP EPS* $3,370 $4.52 - $3,121 $4.57 $2,725 $3.91 $2,423 $3.42 $2,242 $3.02 $2.77 FY15 FY16 FY17 FY18 FY19E** FY15 FY16 FY17 FY18 FY19E** ~90% recurring revenue model with Strong financial execution while investing $4.3B noncancelable backlog
Slide 38: Cash Flow & Capital Allocation
Cash Flow & Capital Allocation Operating Cash Flow ($M) Stock Repurchases ($M) ~$750 $400 $400 $400 $635 $587 $495 $280 $424 $229 FY15 FY16 FY17 FY18* FY19E** FY15 FY16 FY17 FY18 FY19 YTD Roughly tracks EBITDA less cash taxes on Repurchased ~$1.7B in stock since 2015, multi-year basis reducing share
Slide 39: Market & Technology Leader; Solid Financials
Market & Technology Leader: • Electronic Design Automation • Semiconductor Intellectual Property • Software Security & Quality Solid Financials: • Recurring revenue model • Large, non-cancellable backlog • Excellent execution © 2019 Synopsys, Inc. 39
Slide 40: ASC Topic 606 – Description of Changes
ASC TOPIC 606 – DESCRIPTION OF CHANGES In May 2014, the Financial Accounting Standards Board issued new revenue recognition requirements that became effective for Synopsys in FY19. We adopted these changes using the “modified retrospective method,” under which the cumulative effect of initially appl
Slide 41: ASC Topic 606 – Description of Changes, continued
ASC TOPIC 606 – DESCRIPTION OF CHANGES, continued Primary Accounting Treatment Metric ASC 605 ASC 606 Impact Software License Time-based Time-based n/m* Revenue Recognized on delivery IP License Revenue Majority time-based throughout contract term; Moderate recorded as Upfront (see below example) Ha
Slide 42: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Earnings Per Share – Full Fiscal Year 2019 Targets(1) ASC 606 Range for Fiscal Year October 31, 2019 (2) Low High Target GAAP earnings per share $ 3.11 $ 3.24 Adjustments: Estimated impact of amortization of intangible assets 0.67 0.65 Estimated impact of stock compen
Slide 43: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Earnings Per Share – Full Fiscal Years 2015 to 2018 Actual Results ASC 605 ASC 605 ASC 605 ASC 605 FY 2015 FY 2016 FY 2017 FY 2018 GAAP net income per share $ 1.43 $ 1.73 $ 0.88 $ 2.82 Adjustments: Amortization of intangible assets 0.86 0.84 0.70 0.82 Stock compensati
Slide 44: Thank You
Silicon to Software Thank You
Slide 45: Synopsys
Synopsys n to Softwa