Synopsys(SNPS)2025-05-28 22:02Financial Data and Key Metrics Changes - The company reported a strong second quarter with revenue of 3.67, reflecting strong execution and a resilient business model [14][16] - Backlog increased to 400 million quarter on quarter [14][16] Business Line Data and Key Metrics Changes - Design Automation segment revenue was 482 million, with an adjusted operating margin of 31.2% [17][10] Market Data and Key Metrics Changes - The company observed strength in Europe and South Korea, which offset headwinds from China [16] - The AI and HPC sectors remained robust, while non-AI end market demand was subdued [6][16] Company Strategy and Development Direction - The company is focused on addressing challenges in design complexity and costs driven by megatrends in AI, software-defined systems, and silicon proliferation [6][12] - The pending acquisition of Ensys is aimed at enhancing AI-powered silicon to systems design solutions [7][12] - The company is investing to maintain and extend its leadership position in AI for chip design [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a slowdown in China but reiterated confidence in full-year guidance due to strong execution in other regions [22][28] - The company is optimistic about the second half of the year, supported by strong demand in AI and HPC sectors [20][19] Other Important Information - The company is actively negotiating with SAMR for regulatory clearance in China regarding the Ensys acquisition [7][45] - Non-GAAP EPS targets have been increased to reflect Q2 outperformance, partly offset by net interest expenses from bond issuance [19] Q&A Session Summary Question: What is the expected impact of declining sales in China? - Management confirmed that they are anticipating a decline in China year over year but reiterated full-year guidance based on strong performance in other regions [26][28] Question: Can you clarify the bond payment structure? - The CFO confirmed that the first payment will include a catch-up for the first half month due to the bond's settlement timing [29] Question: What is the revenue mix in China? - Management stated that they do not split revenue by region but indicated it is similar to the rest of the world [35] Question: How is the largest customer’s R&D spend affecting growth? - Management noted that while there may be fluctuations, committed agreements generally protect EDA software revenue [42] Question: What is the plan if the ANSYS deal does not close? - Management emphasized that they are focused on completing the transaction and are confident based on received approvals [45][66] Question: What is the outlook for design activity in non-AI markets? - Management indicated signs of stabilization and new energy in industrial and automotive markets, with increased design activity expected [50] Question: How is pricing power being affected? - Management stated that pricing is based on the value delivered to customers, and they see opportunities to improve pricing as challenges increase for chip design [81] Question: What is the confidence level for achieving double-digit revenue growth? - Management expressed confidence in achieving industry-leading double-digit revenue growth, even with potential challenges in China [107]