Corporate Overview for Investors - synopsys.com · Synopsys undertakes no duty, and does not intend, to update any forward-looking statement, whether as a result of new information,

© 2017 Synopsys, Inc. 1

May 2015

February 2018

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 outlook, opportunities, and strategies, customer and market

expansion, planned acquisitions, and the expected closing of the acquisition of Black Duck Software. 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: our ability to

consummate the acquisition in a timely manner or at all; the satisfaction of the conditions precedent to consummation of the acquisition, including the

ability to secure regulatory approvals in a timely manner or at all; our ability to operate or integrate Black Duck’s business and technologies with our

own successfully; uncertainty in the growth of the semiconductor and electronics industry; consolidation among our customers and our dependence on

a relatively small number of large customers; continued uncertainty in the global economy; our ability to realize the potential financial or strategic

benefits of acquisitions we complete; fluctuation of our operating results; our highly competitive industries and our ability to meet our customers’

demand for innovative technology at lower costs; our ability to carry out our new product and technology initiatives; our ability to protect our proprietary

technology; changes in accounting principles or standards; 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, 2017 and in its Quarterly Report on Form 10-Q for the

first quarter ended February 3, 2018. The information provided herein is as of February 21, 2018. 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 verbally to their most comparable GAAP measures are included in the table at the end of this

presentation, along with the fourth quarter and fiscal year 2017 earnings release and financial supplement, dated February 21,

2018, and available on Synopsys' website at https://www.synopsys.com/company/investor-relations/financial-news.html.

https://www.synopsys.com/company/investor-relations/financial-news.html


Synopsys: The Market & Technology Leader

Electronic Design

Automation (EDA)

Semiconductor

Intellectual Property (IP)

Software Security &

Quality

FY17 FY18 (Targets*)

Revenue: $2.72B $2.92B – $2.95B (7-8% growth)**

NG EPS: $3.42 $3.67 – $3.74 (7-9% growth)**

OCF: $635M $500M – $550M***

Business Model: Time-based, recurring revenue model

~3 years contract duration in ’18*

Non-Cancellable Backlog: $3.7B 3-yr backlog end of FY17

Entered ’18 with ~75% revenue in hand

* These targets were provided by Synopsys as of February 21, 2018, and are not being updated at this time; a

GAAP to non-GAAP reconciliation of FY18 EPS targets is included at the end of this presentation

** Includes the impact of the Black Duck acquisition, an extra fiscal week, and U.S. tax reform

Broad Product Portfolio

*** Reflects one-time cash payments totaling ~$100M (~$34M cash taxes associated with repatriation of ~$825M of

offshore cash; ~$66M payment to Hungarian tax authority in order to continue our appeal of a tax dispute)



High-impact outsourced IP

to enable fast time to

marketIP

• #2 market share

• 15+ years of investment

& execution

Leading Software Integrity

platform

SW Security

& Quality

• Emerging growth market

• 4 years of investment

& execution

EDA leadership with

state-of-the-art design and

verification platforms and

unmatched global 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

$415B

Foundry

$45.1B

Embedded Software*

$4.7B*

Electronic Systems

$1.5B

EDA & IP*

$10.3B

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 develop their own

chips or buy them from others

• Verification challenges are rapidly

growing at the intersection of

hardware and software

• Consists of virtually all semiconductor

companies in the world, including all of

the top 20

• One >10% customer in ‘17

• 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 segments

such as financial, medical, industrial

and energy

• Targeting the 20M+ SW developers

• Challenges: immense SW

complexity and security

vulnerabilities


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

Artificial Intelligence


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 Digital Intelligence

• We have collaborated with multiple foundries to enable their IoT-focused processes

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

Software

Sensors

Microprocessors

Storage

Communication

“Smart”

Power Buildings Cars Toasters Lamps…?


Automotive Opportunity: Product Breadth

Software

Silicon

IP

Design

Verification

• ISO26262-certified

Test

• High Reliability SoC

design

• Software Integrity for

Cybersecurity &

Quality

• Automotive-certified IP

• Verification Continuum

for ISO26262

Functional Safety

Automotive Opportunity: Software Cybersecurity & Quality

Automotive OEMs use

Synopsys Software Integrity.

11 of the top 15

Find critical defects and

vulnerabilities in code

Automotive compliance

(MISRA, ISO26262)

OWASP Top 10

and CWE Top 25

Supply chain total health with

SW BoM

Find known vulnerabilities in

Open Source & 3rd party code

Secure integration of

connected systems

Fuzzing for automotive

protocols

Find vulnerabilities before

hackers

Ethernet, WiFi, CAN,

Bluetooth, SMS, DHCP

Supply Chain

ManagementSecurity TestingStatic Analysis Security Services

Remediation plan

execution

Gap analysis /

remediation planning

On-going program

execution


ISO 26262 Automotive Safety Package

• Sensor Control

Subsystem

• ARC HS

• ARC EM SEP

• ARC Safety Islands

• EV Vision Processor

• Ethernet QoS

• DDR/LPDDR

• MIPI, HDMI

• USB, Mobile Storage

• PCI Express

• Data Converters

• Non-Volatile Memory

Embedded Memories with Integrated Test & Repair

Logic Libraries

Interface IP Processors Subsystems

Analog IP & NVM

Encryption - Decryption, &

Content Protection

Security

Silicon proven IP

Multiple nodes,

multiple foundries

ASIL B-D functional

safety certification

AEC-Q100 designed

& tested for reliability

Automotive quality

Automotive Opportunity: Broadest IP Portfolio


Moore’s Law Continues


* Source: Synopsys Design Group, February 2018

Active designs Taped-out designs

0

100

200

300

400

500

600Q

2'0

9

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

Q1

'16

Q2

'16

Q3

'16

Q4

'16

Q1

'17

Q2

'17

Q3

'17

Q4

'17

Q1

'18

Leading the Way in FinFET • Consistently recognized

as a mission-critical

partner for the most

advanced designs

• Relied on for >90% of

FinFET designs*

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 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 with unmatched global support

Leader in

EDA


Synopsys Design PlatformTrusted Anchor Products, Correlated Platform with Synergistic Value Links

Correlated

Platform with

Value Links

Trusted Anchor

Products

#1 Synthesis, #1 P&R, #1 Signoff

New Machine Learning Technologies

Massively Parallel Architecture

PT and StarRC inside ICC II

Shared DC & ICC II Technologies

In-Design Physical Signoff

Co-Design Custom Implementation

Custom Compiler

Layout

Design

IC Validator, StarRC

IC Compiler II

HS

PIC

E, C

usto

mS

im

Design Compiler

Prim

eT

ime

SYNOPSYS DESIGN PLATFORM


IC Compiler™ II: State-of-the-Art Digital Design

• State-of-the-art design platform that

delivers a 10X improvement in throughput

and better quality of results

• Market-leading solution instrumental in

enabling many “first designs” at the most

advanced processes

• Used on highly complex chips down to

7nm and even early 5nm research


Custom Compiler™ Custom Design 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

• 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 adoption is progressing


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

• Complete platform of interacting

verification techniques

• #1 in software, #1 in hardware verification

• Fastest engines across the board – critical

customer requirement

• Speeds software bring-up by ~6 months

• ZeBu emulation and HAPS prototyping

systems delivering strong growth and

broad-based customer adoption

• Continue to see excellent verification

results and delivered another record year

for hardware in 2017

Debug & Coverage

VIP, Models & Databases

EmulationFPGAProto.

Static & Formal

SimulationVirtualProto.


• #2 market share in IP, the reusable building

blocks that are used for chip designs –Leading supplier of interface, memory, analog and

physical IP

–~$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, Security, Cloud Computing) &

latest processes and protocols

• >15 years of investment and commitment

resulting in unmatched portfolio, quality and

reliability

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

* Small boxes are standard cell library elements

SATAPCIeUSB MIPIHDMI

Established Provider

>15 years of investment and

execution

Resource Commitment

>3,000 IP Engineers

Worldwide

Trusted IP Supplier

#1 in interface, analog,

memory & physical IP

BT


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


Growing the Software Integrity Platform - Acquisitions


Synopsys Acquires Black Duck Software• Privately held, established leader in automated solutions for securing and managing open source software

• Growth of open source software (60%+ of all applications) creates growing risk to customers

• Combination broadens and expands market and customer reach

• Expected to be ~12 cents dilutive to FY2018 non-GAAP EPS, and reach breakeven on a non-GAAP basis by the second half of FY2019*

Synopsys Completes Acquisition of Black Duck Software

MOUNTAIN VIEW, Calif., Dec. 11, 2017 /PRNewswire/

Synopsys, Inc. (Nasdaq: SNPS) has completed its acquisition of Black Duck Software, Inc., a

privately held leader in automated solutions for securing and managing open source software.

Software development is undergoing sweeping and rapid change, including the increasing use of

open source software (OSS), which makes up 60% or more of the code in today's applications.

While the use of open source code lowers development costs and speeds time to market, it has

been accompanied by significant security and license-compliance challenges, because most

organizations lack visibility into the OSS in use. Black Duck's industry-leading products automate

the process of identifying and inventorying the open source code, detecting known security

vulnerabilities and license compliance issues. It also provides automated alerts for any newly

discovered vulnerabilities affecting the open source code.

EDA IP SW SECURITY & QUALITY

* As of February 21, 2018


Growing the Software Integrity Platform - Investments

2017

• Good progress on Software Integrity Platform

• Strengthened our go-to-market approach and

channel

• Added critical consulting capability to elevate

conversation with customers and drive demand

2018 Strategy

• Continue to broaden and deploy our Software

Integrity Platform and strengthen our brand

• Accelerate our penetration of key verticals in

both the embedded and enterprise spaces

• Drive demand creation with services, ecosystem

partners and certification projects

Code Check-in

Compile & Build

Feature Readiness

Product Release


• Synopsys

Positioned as

‘Leader’

• Seeing increased

customer interest

as result

Gartner’s 2017 Magic Quadrant for

Application Security Testing

Source: Gartner (February 2017)


Large and Expanding Customer Base

• ~2,000 customers of Software Security & Quality tools*

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

medical, industrial and energy segments, including:

– 8 of the top 10 software companies

– 7 of the top 10 automotive OEMs

– 16 of the top 20 commercial banks

• Tools target the 20M+ software developers

• Seeing the number of large agreements grow, contract duration

expand, international business improve and renewals increase

• Addition of Cigital and Codiscope accelerates our ability to reach

customers and expand into new market segments

• Addition of Black Duck broadens portfolio and market reach,

addressing open source security issues

• Most comprehensive portfolio in the market today * As of February 21, 2018






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 February 21, 2018 and is not being updated at this time


Track Record of Steady Growth

• Time-based revenue model; anticipate more

variability as hardware business grows;

excluding hardware, expect ≥90%

time-based revenue on an annual basis

• Entered FY18 with ~75% of revenue in hand

• Non-cancellable backlog: $3.7B 3-yr backlog at

end of FY17

• 9.2% revenue 5-year CAGR

• 10.2% non-GAAP EPS 5-year CAGR

NG EPSRevenue ($M)10% 5-yr CAGR9% 5-yr CAGR

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

$2,242$2,423

$2,725

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

FY12 FY13 FY14 FY15 FY16 FY17

$2.10

$2.44 $2.53$2.77

$3.02

$3.42

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

FY12 FY13 FY14 FY15 FY16 FY17


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

• FY15 OCF affected by

VRP payouts and

outflows related to

acquisitions

$ M

illio

ns

Annual Operating Cash Flow

$497

$551

$495

$587$635

$0

$100

$200

$300

$400

$500

$600

$700

FY13 FY14 FY15 FY16 FY17


Returning Cash to Shareholders

• Spent ~$1.3B on

buybacks over last three

years

• Spent $400M on

buybacks in FY17,

keeping share count flat,

offsetting dilution from

higher stock price

• Initiated $200M ASR in

Q1’18

• $200M left on buyback

authorization*

$ M

illio

ns

$435

$40

$145$120

$280

$400 $400

$0

$100

$200

$300

$400

$500

FY11 FY12 FY13 FY14 FY15 FY16 FY17

Annual Stock Repurchases

* As of February 21, 2018


Market and technology

leader in:

• Electronic Design

Automation

• Semiconductor Intellectual

Property

• Software Security & Quality

Solid Financials:

• Time-based revenue model

• Large, non-cancellable

backlog

• Excellent execution


GAAP to Non-GAAP Reconciliation of Full Fiscal Year

2018 Targets

Range for Fiscal Year

Ending October 31, 2018 (1)

Low High

Target GAAP earnings per share $ 1.59 $ 1.69

Adjustments:

Estimated impact of amortization of intangible assets 0.78 0.74

Estimated impact of stock compensation 0.90 0.87

Acquisition-related costs 0.09 0.09

Income tax related to transition tax 0.47 0.47

Income tax related to tax rate change 0.29 0.29

Estimated impact of tax adjustments (0.45) (0.41)

Target non-GAAP earnings per share $ 3.67 $ 3.74

Shares used in non-GAAP calculation (midpoint of target range) 154,500 154,500

(1) Synopsys' second quarter and fiscal year end on May 5, 2018 and November 3, 2018, respectively. For presentation purposes, we refer to the closest calendar month end.

For additional information about the measures Synopsys uses to evaluate its core business operations, please review Item 2.02 of the Current Report on

Form 8-K filed on February 21, 2018.

Thank You

Documents

Corporate Overview for Investors - synopsys.com · Synopsys undertakes no duty, and does not intend, to update any forward-looking statement, whether as a result of new information,