Corporate Overview for Investors - Synopsys...companies in the world, including all of the top 20 • One >10% customer • Investment in developing highly complex chips is a clear

© 2016 Synopsys, Inc. 1

May 2015

November 2016

Corporate Overview for Investors


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 opportunities, 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; customer consolidation; global economic uncertainty; the ability to consummate the announced acquisitions

in a timely manner or at all; the satisfaction of the conditions precedent to consummation of the announced

acquisitions; our ability to realize the potential financial or strategic benefits of acquisitions; changes in accounting

principles or standards; fluctuation of our operating results; our highly competitive industries and our ability to meet

customers’ demands for innovative technology at lower costs; 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 to be filed with the SEC by December 28, 2016. The information

provided herein is as of November 30, 2016. 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 fourth quarter and fiscal year 2016 earnings release and financial supplement, dated November 30,

2016, and available on Synopsys' website at

www.synopsys.com/Company/InvestorRelations/Pages/FinancialNews.aspx.

http://www.synopsys.com/Company/InvestorRelations/Pages/FinancialNews.aspx


Synopsys: The Market & Technology Leader

Electronic Design

Automation (EDA)

Semiconductor

Intellectual Property (IP)

Software Quality &

Security

FY16 FY17 (Target*)

Revenue: $2.42B $2.57B – $2.60B (6-7%)

NG EPS: $3.02 $3.16 – $3.23 (5-7%)**

OCF: $587M ~$500M

Business Model: ~90% time-based revenue

~3 years contract duration in ’17*

Non-Cancellable Backlog: $3.54B 3-yr backlog end of FY16

Entered ’17 with ~80% revenue in hand

* These targets were provided by Synopsys as of November 30, 2016, and are not being updated at this time

** Cigital and Codiscope acquisitions are expected to be modestly dilutive to 2017 non-GAAP EPS



High-impact outsourced IP

to enable fast time to

marketIP

• #2 market share

• 15+ years of investment

& execution

Leading SW quality &

security platform

SW Quality

& Security

• Emerging growth market

• ~3 years of investment

& execution

EDA leadership with

state-of-the-art design and

verification platforms and

best support

EDA• #1 market share

• 30 years of investment

& execution



Uniquely Positioned for

Stability and Growth

• Electronics complexity

driving growth

• Clear technology

leadership

• Financial strength and

growth


Semiconductors

$354B

Foundry

$45.1B

Embedded Software*

$4.7B*

Electronic Systems

$1,423B

EDA & IP*

$8.5B

Global Value ChainEDA & IP – at the Heart of Accelerating Electronics Innovation

*Estimates are provided for EDA/IP/Embedded Software.

Source: IC Insights, VDC Research, Synopsys Estimates


Blue Chip, Diversified Customer Base

Semiconductors Systems Software Developers

• ~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 November 2016

• 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

• 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


Ecosystem Partnerships • 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 6th

consecutive year

IP Vendors

Foundries

Semi Equipment

Vendors

Research

Institutions


Helping Design the Chips InsideImpacting Everyone, Everything, Everywhere, Every Day

Industrial

Digital Home

Automotive

Mobile

Internet of Things

Data Center & Networking

Military / Aerospace

Computing & Peripherals

Cloud Infrastructure

Medical


Automotive Opportunity • Automotive industry is dramatically accelerating digital intelligence

• Over the past couple of 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 customersPowertrainEngine Controls LightingBrakes / Chassis

Infotainment V2V Comms. AutonomousADAS


Internet of Things (IoT) Opportunity • 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-low-power process

• We have a comprehensive IoT platform built around our very broad IP portfolio

Software

Sensors

Microprocessors

Storage

Communication

“Smart”

Power Buildings Cars Toasters Lamps…?


Moore’s Law Continues


* Source: Synopsys Global Technical Services, November 2016

Active designs Taped-out designs

0

50

100

150

200

250

300

350

400

450Q

2'0

9

Q3'0

9

Q4'0

9

Q1'1

0

Q2'1

0

Q3'1

0

Q4'1

0

Q1'1

1

Q2'1

1

Q3'1

1

Q4'1

1

Q1'1

2

Q2'1

2

Q3'1

2

Q4'1

2

Q1'1

3

Q2'1

3

Q3'1

3

Q4'1

3

Q1'1

4

Q2'1

4

Q3'1

4

Q4'1

4

Q1'1

5

Q2'1

5

Q3'1

5

Q4'1

5

Q1'1

6

Q2'1

6

Q3'1

6

Q4'1

6

Leading the Way in FinFET• Cumulative # of

completed FinFETdesigns approaching 300*

• Synopsys relied on for >95% of those chips

• 48 of the 49 leading-edge tape-outs at 10nm and below are using Synopsys design tools

22nm

16nm

14nm

10nm

7nm…






driving growth


leadership


growth


• 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

• State-of-the-art design and verification

platforms and best support

–Recently launched game-changing design and

verification tools

Leader in

EDA


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

• Has been used in ~250 production

designs on >25 different foundry

processes*



Verification™ Continuum PlatformIndustry’s #1, Industry’s Fastest

• Complete platform of interacting

verification techniques, built around

fastest engines

• Goal: speed software bring-up

by ~6 months

• Key technology advancements in

emulation, next-generation prototyping

and simulation

• Delivered outstanding growth in FY16

• Synopsys is the fastest-growing emulation

vendor in the industry*

Debug & Coverage

VIP, Models & Databases

EmulationFPGAProto.

Static & Formal

SimulationVirtualProto.

#1#1 #1 #1

#1



Custom Compiler™ Custom SolutionVisually-Assisted Automation

Layout

Assistants

Place

Route

Co-Design

Assistants

Digital

P&R

Custom

Edits

IC C

om

pil

er

I &

II

Template

Assistants

Create

Find &

Realize

In-Design Assistants

DRC EM / IR RCx

• New custom design solution features an

innovative approach that accelerates key

parts of design from weeks to days,

targeted specifically at FinFET

• Already in production use on the most

advanced nodes with support from leading

FinFET foundries

• Customers are showing a high level of

interest and we are seeing some good

initial adoption


• #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

• IP reuse reduces our customers’ chip design

costs, lowers risk and speeds time-to-market

• We’re investing in new markets (IoT,

Automotive) & latest processes and protocols

Leading Provider

Semi IP


Third-Party IP – Synopsys Differentiator

Application

CPU

Application

CPU

Graphic

Core(s)

On-Chip Bus

ROM

Analog

Audio

/ Video

I/FData

Converters

RAM RAM

RAM RAM RAM RAM

RAM

RAMRAM

DDR

Interface

Flash

Interface

Sp

ecia

lty I/O

Bas

ic

Pe

rip

he

rals

(UA

RT

s/T

ime

rs)

RAM

Headset Jack

Microphone

Video Codecs

Audio Codecs

Flash Storage

DDR memory

LVDS, Etc

Interface

USB PCIe SATA HDMI MIPI

* Small boxes are standard cell library elements

Established Provider

15+ years of investment and

execution

Resource Commitment

>2,900 IP Engineers

Worldwide

Trusted IP Supplier

Broad portfolio of high-

quality, production-proven IP


Multi-Use AgreementSingle Use Engineering Service

IP Business Models

• Customer buys IP for a specific

project

• Revenue recognized up front

• Customer pays for porting IP to

specific semiconductor process or

customization work

• Revenue recognized over time,

primarily on % of completion basis

• 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


• Through several acquisitions, entered the

software quality & security space a couple of

years ago–Tools allow software code developers to fix

quality or security 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 good progress on a Software Sign-

Off platform aimed at code quality and

security certification–Offers the most advanced and complete set of tools

for every step of the software lifecycle

Leading

SoftwareQuality & Security

Platform


Growing the Software Quality & Security Platform Through

Acquisitions

Nov

2015

April

2015

Dec

2015

Feb

2014

May

2015

Expand into Software Composition

Analysis

Expand into Dynamic Security Testing

Expand Static Code Analysis

Leader in Static Quality Testing

Expand into Dynamic Web

Application Security

http://www.protecode.com/


Synopsys Acquired Cigital & Codiscope• 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 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.

EDA IP SOFTWARE


Growing the Software Quality & Security Platform Through

Investments

2015

• Scaling and operational integration

• Fully implemented sales strategy, including a

dedicated enterprise sales team focused on

application SW firms in areas such as finance

and health

• Significantly broadened language coverage

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

Code Check-in

Compile & Build

Feature Readiness

Product Release


Synopsys

Positioned as

‘Visionary’

Cigital

Positioned as

‘Challenger’

Gartner’s 2015 Magic Quadrant for

Application Security Testing

Ab

ilit

y t

o E

xe

cu

te

Completeness of Vision

Niche Players Visionaries

Challengers Leaders

As of August 2015


Large and Expanding Customer Base

• 1,300 customers*

– Range from semis and systems, to enterprise companies in the financial,

medical, industrial and energy segments

• 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







driving growth


leadership


growth


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 November 30, 2016 and is not being updated at this time


Growth and Predictability

• Predictable, time-based revenue model;

anticipate more quarterly variability as

hardware business grows; continue to expect

~90% time-based 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

NG EPS

$2.10

$2.44 $2.53$2.77

$3.02

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

FY12 FY13 FY14 FY15 FY16

$1,756$1,962 $2,057

$2,242$2,423

$0

$500

$1,000

$1,500

$2,000

$2,500

FY12 FY13 FY14 FY15 FY16

Revenue ($M) 9.5% 5-yr CAGR8% 5-yr CAGR


Strong Operating Cash Flow

• 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)

• 2015 OCF affected by

1-time VRP payouts and

outflows related to

acquisitions

$ M

illio

ns

Annual Operating Cash Flow

$497$551

$495

$587

$0

$100

$200

$300

$400

$500

$600

FY13 FY14 FY15 FY16


Returning Cash to Shareholders• Spent $1.42B on

buybacks since 2011

• Reduced FY16 fully

diluted share count by

3.3M shares

• Intend to slightly reduce

2017 fully diluted share

count from 2016 levels

through expected

buybacks in FY17*

• Goal is to optimize the

use of our strong cash

flow, through a balance

of stock buybacks, M&A,

and debt repayment

$ M

illio

ns

$435

$40

$145$120

$280

$400

$0

$100

$200

$300

$400

$500

FY11 FY12 FY13 FY14 FY15 FY16

* These targets were provided by Synopsys as of November 30, 2016, and are not being updated at this time


Market and technology

leader in:

• Electronic Design

Automation

• Semiconductor Intellectual

Property

• Software Quality & Security

Solid Financials:

• Time-based revenue model

• Large, non-cancellable

backlog

• Excellent execution

Thank You

Documents

Corporate Overview for Investors - Synopsys...companies in the world, including all of the top 20 • One >10% customer • Investment in developing highly complex chips is a clear