Synopsys Inc Q2 2021 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : Great. Aart, first one is for you. You talked about the chip differentiation by vertical as a nice tailwind for the company. I'm just curious, how do we scale the benefits of those -- I'm sorry, not scale -- square the benefits of those differentiations with the fact that there's -- there tends to be more increased IP usage from some of these newer entrants? And so I'm just curious, with differentiation seeming to lead to more custom design, what does that mean for those IP blocks that get designed once and used by many? Aart J. de Geus - Synopsys, Inc. - Co-Founder, Chairman & Co-CEO Okay. Well, there's 2 ways to look at this, from the perspective of the vertical or from the perspective of the pure semiconductor companies. From the vertical, the first thing that people need to choose is, will they design their own chips, yes or no. And if you take the example of the hyperscalers, some, not all, but some of the automotive companies, the hyperscalers clearly are doing more and more of their own chip design. And automotive are either sort of dabbling in it or looking at some of their suppliers, the Tier 1s. In all cases, they are doing more chip design. And so that is good news for us. And absolutely, you're right that a lot of that design is done by substantial IP reuse, and you saw that our IP business is strong. Now if you sit on the other side of the fence as a semiconductor provider, you look at these customers are -- each of them as opportunities to take sort of a core architecture and then say, "Well, how do I take my architecture and do different derivatives that are particularly good for different submarkets and essentially reuse some IP or add some that are just -- that is just necessary for that vertical?" And so I think there's no doubt that, therefore, we will see more chips of different type and more design. In all cases, consumption of IP will continue to grow.

Question: Gal Munda - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : The first one is just when I look at your performance in H1 actually in total, like you said, it's really the opposite of what we had last year when it was very, very back-end loaded. So nice recovery there. But then also looking at the Q3 guide, which is very solid, I'm thinking when you look at for the rest of the year and you have a pretty good visibility now, especially into Q3, is it fair to say that if -- especially some of the hardware orders, some other stuff comes in, you could consider the guidance as fairly conservative still at this stage? Or do you think that's kind of a fair representation of what you're seeing?

Question: Gal Munda - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Right. Yes, that makes sense. And yes, that's what I was thinking. And then the second one, you talked again about double-digit growth for this year now implied in the new guidance. Last year, we were virtually at that level as well. How do we think about Synopsys as an effectively sustainable double-digit growth company now, especially if I'm thinking potentially Software Integrity ramping up growth a little bit and starts contributing incremental -- maybe a few bps of growth? Like is that a profile that you're happy with when you're kind of thinking about the midterm planning? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 19, 2021 / 9:00PM, SNPS.OQ - Q2 2021 Synopsys Inc Earnings Call

Question: Gal Munda - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Right. No, that's why I was thinking, right? It's 10%. So it's growing 5 to 10 points faster. Obviously, that's a nice contribution. Congrats again.