A：The key market trends shaping Synopsys's opportunity include the continued multi-infrastructure buildout driving system level and semiconductor R&D with robust design start activity for AI compute, as well as the engineering transformation away from physical testing towards digital twins to build smarter, more connected products.

A：AI is transforming engineering software, with AI-driven design capabilities in Synopsys's products delivering orders of magnitude productivity gains for customers and advancing the autonomy of engineering professionals. AI is seen as a complementary force that amplifies Synopsys's strategic advantage rather than a disruptive one.

A：The recent business highlights for Synopsys in the first quarter include strong performance across design automation with major wins, sustained momentum in the application of AI across the stack, continued leadership in multi-momentum accelerated by AI-driven optimization, and growing design win momentum at advanced nodes with the digital flow.

A：The integration of Ansys is well underway, and the teams are working together to solve engineering's biggest challenges. The priority for the fiscal year (FY) remains on driving sustainable growth and margins by advancing technology leadership with holistic integrated silicon to system engineering solutions, pioneering AI-driven engineering, and focusing the IP portfolio for growth. There are plans to discuss and showcase more at the upcoming Synopsis Converge conference in March.

A：The financial results for the first quarter included total revenue of $2.41 billion at the high end of guidance, a non GAAP operating margin of 42.1%, and non GAAP EPS above guidance. The company had a backlog of $11.3 billion, a GAAP loss per share of 34 cents, and non GAAP earnings per share of 3 dollars and 77 cents.

A：The company is reiterating its full year revenue, non GAAP operating margin, and cash flow guidance while raising its non GAAP EPS guidance for the full year. The changes are attributed to strong execution, financial discipline, and better-than-expected revenue and expense timing, along with lower net, other, and interest expenses.

A：The divestiture of the optical solutions group had a geographically diverse impact, with China growing approximately 21% year over year due to the inclusion of Ansys exquis answers, while China revenue declined slightly year over year.

A：The design automation segment revenue was approximately $2 billion, with strong growth in hardware assisted verification partially offset by the divestiture of the optical solutions group. Design IP segment revenue was down approximately script year over year and flat sequentially. The company expects fiscal year 2026 to be a transitional year with design IP adjusted operating margin at 16.2%.

A：The outlook for the second quarter includes total revenue between 2.225 and $2.275 billion, total GAAP costs and expenses between 2.02 and $2.085 billion, GAAP earnings of 23 cents to 43 cents per share, and non GAAP earnings of 3 dollars 11 cents to 3 dollars 17 cents per share.

A：The IP segment is expected to have sequential improvement and see some pickup in the second half, with visibility in development milestone-based IP revenue coming from some foundry customers. The pace and time in which standards are evolving have changed, and customers are looking for foundry optionality. The company is confident about the delivery schedule and monetization towards the latter part of the year, with availability being more Q4 weighted.

A：The company has clarified that it has the right skills and resources to capture IP opportunities for hyperscalers. The change is in prioritization of these resources to deliver on the schedule required for these hyperscalers. The company is confident about the progress on its roadmap and schedule for delivering to these opportunities.

A：The Arc business has undergone transformations from the architecture to the risk 5 Isa architecture, providing opportunities for customers to develop their own process IP using Synopsis' EDA software for embedded applications. This creates a great opportunity for Synopsis to enable and support their customers in developing their own processors and to capture growth opportunities in interface IP, with a partner like TSMC.

A：Until the divestiture of the Arc business closes, its revenues are included in Synopsis' financials, and thus, they are part of the sequential improvement reported.

A：The integration progress includes the delivery of the first wave of joint solutions in the first half of 2026, with visibility on market and customer impacts expected at the Converge conference. Revenue synergies are expected to reach $400 million run rate by year 4, with some acceleration expected in years 1 and 2. Although specific amounts have not been disclosed, the revenue from joint solutions is anticipated to start in fiscal year 2027.

A：In China, the performance of Synopsis is affected by the restrictions in the entity list and technology, causing a shift in customer commitment and demand. The impact is more pronounced in the IP business due to a leadership position in that segment; however, the hardware and EDA businesses may be less affected. Domestic competitors are becoming more visible as customers seek alternatives they can use, but there is still a preference for Synopsis' technology among customers who can utilize it.

A：The risk of missing customer design starts or causing customers to shift away depends on the alignment of customer schedules and when they need the IP to be ready for tape-out. Synopsis is engaged with customers who need certain titles like Pcie, 224, Hpm, LPDDR, and Ucie for high-end HPC chips, and they are selling their portfolio based on aligning with these schedules. The company is prioritizing specific customers and focusing on delivering on these titles.

A：IP operating margins have been muted this year due to the investment in building out new titles. The operating margins are expected to be more muted and compressed this year due to muted revenue growth. However, as the company reaches the stage where titles are delivered on time, the expectation is for the operating margin to improve and return to a more normal level. The operating margin will always be below the corporate average due to the business being more people-intensive, but it is anticipated that once the revenue growth stabilizes, the operating margin will normalize.

A：The inflection point the company is focusing on is the high demand for customization and acceleration in delivering intellectual property (IP) titles, particularly for hyperscalers who lack their own IP team. The company expects to close conversations with partners and move them into actual business in FY 26, aiming to improve monetization through these partnerships.

A：The new agent engineer is expected to change the workflow by shifting towards a value-based or token-based monetization model. The company has communicated this change for about a year, and the workflow shift is seen as an opportunity to adjust monetization accordingly. The customers are receptive to this conversation, recognizing the need to adapt as the workflow changes.

A：The company has formed a deep partnership with Nvidia that is not just a press release but a commitment to a shared market opportunity. The partnership will bring several products, including Eda and legacy ESS products, into GPU acceleration, aiming to deliver significant multiples of acceleration. This is expected to result in a new business model with an uplift in value for customers using products on GPUs instead of CPUs. Additionally, the partnership will explore the monetization of GPU acceleration and digital twin opportunities for physical AI, leveraging the Ansys portfolio.

A：The company is addressing the increased computational needs of customers scaling designs with more agents by leveraging the agent engineer to tackle specific tasks and a series of agents to orchestrate and accelerate test coverage and verification. They are working on both the front-end and back-end areas, with early opportunities being addressed and a roadmap for further enhancements to be communicated at their Converge event.

A：The difference between GAAP and non-GAAP earnings lies in the amortization schedule, particularly with respect to restructuring costs which are one-time expenses. The non-GAAP expenses are lower than GAAP expenses due to this restructuring being a one-time event. The GAAP EPS guide is lower because of the GAAP accounting treatment of these restructuring costs, which have a longer-term impact through an amortization schedule.

A：The joint solution with Ansys aims to address industry problems where the current offerings struggle to solve issues like thermal or structural problems during the design phase of a multidevice system, which often leads to time-consuming and risky iterations.

A：The business growth anticipated for the remainder of the year is expected to come from the Ansys business segment, with a focus on delivering strong performance across all business lines.

A：The strength in the EDA software business is contributed to by a significant increase in AI build-out and a strong focus on technology deployment. The company anticipates that the renewal cycle for the EDA software business will be influenced by the monetization and renewal exploration of these AI investments. Additionally, the company is excited about the opportunities created by the joint solution with Ansys, which is expected to further drive growth.