Synopsys(SNPS)2025-02-27 09:13Financial Data and Key Metrics Changes - The company reported Q1 revenue of 3.03, down 10% due to one less work week compared to Q1 '24 [6][32] - Non-GAAP operating margin was 36.5%, with total GAAP costs and expenses at 924 million [31][32] - Cash flow from operations was approximately 1.6 billion [34] Business Line Data and Key Metrics Changes - Design Automation revenue increased by 4% year-over-year, despite one less week of revenue [11] - The EDA software segment saw strong design activity at advanced nodes, particularly with 2-nanometer projects accelerating [13] - Design IP revenue decreased by 17% year-over-year, but opportunities for IP continue to expand, especially in AI-related applications [23] Market Data and Key Metrics Changes - AI and HPC markets remained robust, while industrial, automotive, and consumer electronics faced challenges [7] - China sales accounted for 12% of total sales, with expectations of continued deceleration due to local economic conditions and restrictions [46][50] Company Strategy and Development Direction - The company is focused on AI-driven design solutions and is progressing with the acquisition of ANSYS, which is expected to enhance its offerings [9][10] - The company anticipates a paradigm shift in chip design workflows due to advancements in AI, particularly with generative AI capabilities [18][110] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilient business model and strong momentum driven by AI and other secular growth trends [29][30] - The company reaffirmed its full-year 2025 targets for revenue and non-GAAP EPS, expecting continued growth despite challenges in certain markets [31][36] Other Important Information - The backlog exiting Q1 was reported at $7.7 billion [67] - The company is experiencing strong demand for its new hardware solutions, with a focus on fulfilling customer needs in the second half of the year [63][98] Q&A Session Summary Question: Growth trends in AI and non-AI segments - Management noted a strong demand in the semiconductor market for AI and HPC, while consumer electronics and automotive sectors are slower to leverage AI [39][41] Question: Sales performance in China - Management indicated that sales in China are expected to decelerate below corporate average due to economic conditions and restrictions [50][120] Question: Design activity for non-AI customers - Management observed a stabilization in design activity for non-AI customers, particularly in mobile and PC sectors, while automotive and industrial sectors remain steady [58] Question: Cost control and guidance for next quarter - Management highlighted that Q1 costs were lower than anticipated due to timing, but Q2 typically sees a step-up due to annual performance budgets [112][115] Question: Backlog composition and customer engagement - Management confirmed no significant change in customer behavior regarding backlog duration, maintaining consistent contract durations [81][82]