Synopsys, Inc.

Synopsys had a strong start to the year and managed to meet the revenue expectations of Wall Street driven by its execution and robust technology portfolio. The company saw $6.9 billion in noncancelable backlog despite slower revenue growth in the semiconductor industry and robust, steady, time-based business models. The management further observes ongoing technological advancements leading to complex silicon and system designs. Synopsys has a wide IP portfolio and they expect a continuance of designs, requiring more communication bandwidth, processing, storage, and security in ever more sophisticated silicon technologies. The management made a number of advances in node design during the quarter, including a significant win at a sizable hyper scaler and a 3-nanometer node design at a top mobile provider. Synopsys also continue to have outstanding hardware growth with both its ZeBu emulation and HAPS prototyping products. This quarter, they expanded their ZeBu EP1 and HAPS-100 hardware at several of the biggest semiconductor systems and hyper scaler businesses. We give Synopsys an ‘Outperform’ rating with a revised target price.