Thank you, Eric. Good afternoon, everyone.

And thanks for joining us. Speaking today, are Aart de Geus, Chairman, and Co-CEO of Synopsys, and Trac Pham, Chief Financial Officer.

Before we begin, I'd like to remind everyone that during the course of the conference call, Synopsys will discuss forecasts, targets, and other forward-looking statements regarding the Company and its financial results. While these statements represent our best current judgment about future results and performance as of today.

Our actual results are subject to many risks and uncertainties that could cause actual results to differ materially from what we expect. In addition to any risks that we highlight during the call, important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release.

In addition, we will refer to non-GAAP financial measures during the discussion. Reconciliations to their most directly comparable GAAP financial measures and supplemental financial information can be found in the earnings press release, financial supplement, and 8K that we released earlier today.

All of these items, plus the most recent investor presentation, are available on our website at synopsys.com. In addition, the prepared remarks will be posted on the site at the conclusion of the call.

With that, I will turn it over to Aart de Geus.

Good afternoon. Synopsys continues to execute very well, delivering record revenue and non - GAAP earnings in the third quarter.

Revenue was 1.057 billion with GAAP earnings per share of $1.27 and non - GAAP earnings of $1.81. We again made excellent progress on our margin expansion goals and generated 422 million of operating cash flow.

Thanks to the hard work of our entire Synopsys team, on a TTM basis, we have surpassed the major milestone we set our sights on a few years ago, 4 billion in revenue and a 30% operating margin. Reflecting our strong year-to-date results, the vibrant markets we serve, and technology innovations driving custom momentum in all product groups and all geographies.

We are raising fiscal 2021 revenue, non - GAAP ops margin, earnings, and cash flow targets. We are well on the way towards our next goal of crossing 5 billion in revenue by 2023, raising our long-term revenue objective to double-digit growth with continued margin expansion.

Trac will discuss the financials in more detail. Meanwhile, the market is not only strong, but it is also transforming in a way that is very positive for Synopsys, both consumer and business demand for Smart Everything continued to intensify and rolled.

Smart devices intersect many skills and technologies. Massive amounts of data are to be stored, transmitted, and processed.

Sophisticated machine learning and application software are specific to each market segment. In these megatrends, semiconductors are absolutely critical.

This means not just more chips, but more advanced chips, lower-power chips, and chips that can be abutted or stacked for tight implementations. In addition, security and safety are rapidly becoming must-haves, integrating more and more system requirements.

To make Smart Everything possible, companies need more automation while transforming the way they approach the development of their systems. New entrants such as large hyper scalers, increasingly designed their own specialized chips and our business with them are growing rapidly.

Other Systems Companies, such as automotive, increasingly exert heavy influence on their suppliers by specific -- specifying key elements of [Indiscernible] performance as well as functional safety and security. Synopsys is a crucial enabler and the broad economic pool is now augmented, augmenting the traditional Moore's Law push, thus driving more opportunity for us.

Synopsys is ideally suited to capitalize on these tailwinds. Over the past five years plus, we've invested heavily in breakthrough innovations that are now driving excellent customer results, and with it, accelerated business growth.

Let me highlight 3 areas. AI and autonomous design, Silicon IP, and security.

Let's start with AI. Designing today's most advanced chips with the additional vertical market requirements is among the most difficult engineering tasks, period.

As schedule pressured, designers reached the practical limits of human design efforts. We must use the power of AI to automate, not just design tasks, but the entire segments of the design flow.

This is exactly what's Synopsys pioneered a year and a half ago. AI-driven autonomous design.

Sitting on top of our Fusion Design Platform, we have built an AI solution that automatically explores, implements, and optimizes multi-month design efforts in a matter of a week. Called DSO.ai, which stands for design space optimization using AI, the system has been used by customers on real chips, gone through production tape-outs, and seen silicon back for manufacturing.

DSO.ai is a breakthrough technology. The results are great.

Through this, we've already achieved important customer renewals. Not only does it literally reduced design times from month to weeks, but it also improves performance, power, and area substantially beyond what our teams of experts achieved on their own.

In addition to early industry recognition, as it won a 2020 world electronics Achievement Award for innovative product of the year. Customer engagements have been exceptional with early endorsements by Samsung and our NSR.

In addition, this quarter, a large Asia-Pacific provider or events chips achieved with one engineer in one month were previously acquired Several experts over 3 months of manual work. One high-profile use customer using DSO.ai attained a better quality of results through a remarkable 20% reduction in power consumption.

Next Monday, our keynotes, the [Indiscernible] Conference, reporting on further great DSR advances and another exciting customer success. The impact of this AI brain is greatly leveraged by the powerful system that sits on top of our Fusion Design Platform.

We were tiny at the fusion concept several years ago by literally fusing together critical segments of the design flow into a single platform. The outcome best-in-class results in terms of chip speed, power, and area.

Today, fusion compiler is the only solution available that seamlessly integrates market-leading synthesis, place, and route with timing, power, and physical sign of all into a single tool. It's the fastest ramping new design solution in Synopsys ' history, already surpassing 500 tape-outs across multiple verticals, including AI, 5G, and high-performance computing for process nodes from 40-nanometer down to 3-nanometer.

Notably, our leading foundry partners are already actively leveraging Fusion Compiler towards 2-nanometer enablement. Our Fusion Design Platform is relied on by the world's largest influential and hard-driving Companies.

Production successes include advanced tape-out by Samsung Foundry for its next-generation chip and [Indiscernible] nanometer gate-all-around technology. In parallel to autonomous design.

Another way to reduce risk and speed time-to-market for complex chips is by using a ready-made IP. Our broad market-leading IP portfolio is delivering excellent double-digit growth towards what will be another outstanding year.

Demand is very strong with customers substantially expanding their reliance on us and renewing multi-year commitments faster than ever before. High-performance compute, automotive, and mobile markets are especially strong.

One thing, both more and more advanced IP. Let me highlight three areas.

First, with growth in cloud data, we're seeing high demand for faster high-performance interfaces, such as DDR5, PCI Express 5.0 and 6.0, and 800 gig Ethernet. We saw great momentum this quarter with multiple customers selecting our first-to-market, next-generation PCI Express 6.0 IP for advanced high-performance computer chips.

This is a testament to the success of our PCI Express 5.0 IP, which has nearly 200 design wins. This Quarter.

we also saw immediate traction for our 400-800 gig Ethernet IP solution through multiple designs wins that include our 112-gig studies. Second, the number of highly advanced chip designs across Cloud, AI, and 5G applications has been growing rapidly.

Our large and experienced R&D team remains at the forefront of delivering highly differentiated IP at the cutting edge of technology. In 5-nanometer, we've secured nearly 400 design-ins across 33 customers.

And this quarter, a significant driver of our physical IP business came from 5, 4, and 3 nanometers. Lastly, we're also seeing our customers integrating more security capabilities into their chips.

This is driving excellent momentum with our security IP Portfolio, including strong demand for, IDEIP to secure PCI Express and CXEL interfaces. Which is a natural segway to software integrity.

We're doing well with increasing momentum following the significant execution and operational improvements we've made. In fact, Q3 was our highest order Quarter ever, and we expect to eclipse our original revenue goal for the year.

As Matt said, ongoing security threats to business safety and health have become almost commonplace. Companies are rethinking their protection strategies.

It's no longer effective to pick and choose points tools with partial capabilities. Protection now requires a holistic, strategic approach.

Synopsys is at the forefront of this evolution with the industry's only portfolio that features the broadest set of application testing solutions. Strategic Consulting to assist executives and boards in charting their software security plan.

And now an innovative offering that elevates the impact of the Polaris platform. With the recent introduction of Intelligent Orchestration, our Polaris platform can seamlessly integrate and automate security testing within each Company's protocol.

We took another significant step in Q3 with the acquisition of Code Dx. They are the leading provider of application security risk management products that automate and accelerate the discovery, prioritization, and remediation of software vulnerabilities.

This combination elevates our capabilities beyond what competitors can provide, a comprehensive, easy to adopt, holistic solution. On the go-to-market side, we see very good progress from the enhancements we've made.

Our services business again did better than a plan with over 20 new logo wins in North America alone. Our win and renewal rates continue to improve.

and we are encouraged by the progress we have made. Industry Analysts continue to recognize the strengths of our strategy and Portfolio.

For the fifth year in a row. Synopsys was named a Leader in the Gartner Magic Quadrant for Application Security Testing.

And today we were again recognized as a leader in the Forrester Wave for software composition analysis. So far, I've highlighted 3 major areas, AI, IP, and security.

Let me point out a couple of other innovations that enable this new era. One of Synopsys ' strengths is focused on the intersection of hardware and software, which is inherently crucial in Smart Everything.

Our hardware-based verification systems continued to generate very strong business with year-to-year -- year-to-date, 36 new logos, and about 150 repeat orders. In addition, with innovation spending both emulation, FPGA -based prototyping, we're off to a solid start to a multiyear product upgrade cycle.

Over the last two quarters, we introduced new application-specific emulation products. The ZeBu Empower System enables early power analysis to reduce power-related risks.

And the ZeBu EP1 is the first of its kind, high-performance computing for mobile GPU, CPU, and AI Design. Both are substantially faster with higher capacity than any competitive solution in the market today.

And we are already seeing strong demand and deployments as large, influential customers around the world. Q3 was our largest orders quarter ever for our HAPS prototyping product line, fueled by the new HAPS-100.

With the highest performance and unmatched enterprise scalability, we closed multiple competitive wins in the Quarter. With the momentum in both emulation and prototyping, we expect another record revenue year extending our market and technology leadership.

With increasing chip and system complexity, growing reliability requirements are now demanding ongoing post-silicon analysis, maintenance, and optimization. Our new Silicon lifecycle management platform leverages our leadership in both EDA and IP as it monitors analyses, and optimizes chips, from design to manufacturing, to in-field adjustments.

This innovative approach opens up substantial new TAM for us, with business ramping ahead of expectations. Even at this early stage, we achieved 2 large expanded renewals this quarter.

In summary, Q3 results were excellent and we are raising our full-year objectives substantially. Vibrant markets, compelling innovations, and strong execution positioned us to continue to increase Shareholder and value going forward.

While we will provide specific long-term objectives next quarter, we aim to cross 5 billion in revenue by 2023. We are raising our annual revenue growth objectives to double-digits with continued margin expansion.

These results are not possible without our global team through the pandemic, they have demonstrated commitment, resilience, and compassion for others while executing very well. Lastly, I hope you and your families are vaccinated, healthy, and staying safe.

With that, I'll return it over to Trac.

Thanks, Aart. Good afternoon, everyone.

Third-quarter results, including record revenue and non - GAAP earnings reflect strong momentum across the Company. For the full year, we are on track to deliver mid-teens revenue growth.

An increase in non - GAAP Opening Margin of more than 200 Basis points, non - GAAP Earnings per share growth of more than 20%, and approximately 1.35 billion in operating cash flow. The combination of the dynamic markets we serve, the powerful impact of our products and solutions on customer results.

And our history of strong execution is the basis for our setting the goal of crossing 5 billion in revenue by 2023. Now to the third-quarter results.

All comparisons are year-over-year unless otherwise stated. We generated total revenue of 1.057 billion up 10% driven by broad-based strength across all product groups and geographies.

Semiconductor & System Design segment revenue was 959 million with solid growth in both EDA and IP. Software integrity segment revenue was 98 million and we are executing better than expected against our bookings plan for the year.

As a result, we project that software integrity revenue Growth will approach double-digits for the full year. And we are solidly on the path to accelerate revenue growth to the 15% to 20% range long-term.

Moving on to expenses, total GAAP costs and expenses were 865 million, which includes approximately 15 million in restructuring costs. Total non-GAAP costs and expenses were 720 million, resulting in a non-GAAP operating margin of 31.9%.

We are on track to deliver operating margin expansion to approximately 30.5% for the year. The adjusted operating margin for the semiconductor system design segment was 34% and the Software Integrity margin was 9%.

Wrapping up the income statement, GAAP earnings per share were $1.27. non-GAAP earnings per share were $1.81.

Turning to cash, we generated 422 million in operating cash flow. We recently completed a $175 million stock buyback, bringing the total to the fiscal year to 573 million.

We ended the quarter with a cash balance of 1.53 billion with total debt of 107 million. For fiscal 2021, we are raising our revenue and non - GAAP operating margin, and earnings guidance.

Our targets are revenue of 4.19 to 4.22 billion, an increase of 145 million at the midpoint, representing mid-teens growth. Total GAAP costs and expenses between 3.431 and 3.459 billion.

Total non-GAAP costs and expenses between 2.915 and 2.925 5 billion, a non-GAAP operating margin of approximately 30.5%. Other income and expenses, which are minus six and minus 4 million, the non-GAAP normalized tax rate of 16%, GAAP earnings of $4.63 to $4.79 per share.

Non - GAAP earnings of $6.78 to $6.83 per share, representing over 20% growth. Cash flow from operations of approximately 1.35 billion and capital expenditures of approximately 90 million.

Now to targets for the fourth quarter, revenue between 1.138 and 1.168 billion. Total GAAP costs and expenses between 924 and 952 million.

Total non-GAAP costs and expenses between 805815 million GAAP earnings of $1.09-$1.25 per share. And non-GAAP earnings of $1.75.

To $1.80 per share. We will provide detailed 2020 guidance and our updated long-term financial objectives and assumptions will report next quarter.

As part of that discussion. we will also provide an update of our three-year normalized non-GAAP tax rate, which is under review.

Although we have not completed the assessment, I want to highlight that the rate may increase in light of the assumptions under review. In conclusion, we delivered record revenue and non-GAAP earnings as strong operating cash flow.

Based on our excellent results year-to-date, and our outlook for Q4, we are substantially raising our targets for the full year and setting the goal of crossing 5 billion in revenue by 2023. This reflects an increase in our long-term revenue growth objectives to double-digits and is also complemented by ongoing margin expansion.

At the same time, we will continue to invest to further scale the business and drive an increase in Shareholder value going forward. With that, I'll turn it over to the Operator for questions.

Oh good. Hi, everyone.

I wanted to start on just kind of the recalibrated revenue growth framework. Can you maybe discuss some of the ways the composition of the growth profile is different than it has been in the past?

You spent a lot of time and prepared remarks highlighting new products, is vitality better today than it maybe was in the past, or is this a huge wave of domain-specific application-specific development? Is that just a magnitude proving to be much greater than it has been in the past?

Thanks for the question. It's a bit all of that.

I think that Sinatra's is a high degree of vitality right now, largely as a result of many years of complex investments that certainly are intersecting in a positive way. And so, you may recall the many times we talked about a Fusion Compiler for example, as a sort of AI Platform to do a very advanced design with.

Well, once you intersect that with the ability to automate some of that with other words put a sort of a brain on top of it, that brain if it functions well can do a lot because the fusion compiler is a very, very powerful tool. And so, all of these efforts took many years to get to this point.

And now they are showing results. And what is powerful about showing results is you learn very quickly from the results to get better results and improve.

And so, this is moving forward very rapidly. Simultaneously, you opened up a very good comment, which is that a number of efforts become, maybe not entirely domain-specific, but certainly more domain sensitive.

And so, when you talk about automotive or industrial, or other areas that require a certain degree of security and safety, well, those are additional demands that come in. And in general, if you buy into my picture of saying, hey, the whole world is heading towards Smart Everything, well, all the Smarts is applied in those verticals in different ways.

And so, some have a lot of data, others have very difficult data to deal with, and others just require instantaneous fast computing. Those are all a bit different.

And so yes, there will be an increase for gradual specializations in the vertical markets. But at the same time, you can only do that if you have an extremely strong and capable foundation.

And I think we are certainly in a good spot for that.

Okay, great. That's helpful.

And then maybe just more of a near-term focus question, the guidance for the fourth-quarter does imply a pretty big step-up just relative to where the implied guidance was last quarter. I'd imagine you touched on the strength of the hardware.

I would assume that's a contributor. Can you just talk about the expected performance of the software business into the fourth quarter and I'll leave it there?

Thank you.

Now, let me take that one, Joe, the sort of core fourth-quarter really flex continuing strength across all the businesses. We consider ramp up software, hardware better than expected, and the same with IP.

and then we are also seeing a progression on the software integrity business as well. So, it's coming from all areas of the business.

Okay. Great.

Thank you very much...

You're welcome.

Great. Thanks for taking my questions.

The first one is on DSO.ai. I'm just curious, can we get a little bit more color on maybe, how this is priced on a per-seat basis, and whether -- is it only available to those customers on better on the Fusion Compiler platform, or is it also available elsewhere?

Well, it's a bit of a complicated question because we are in the first wave of making them successful. And suddenly we have built one of its capabilities on Fusion Compiler.

And since we have pretty much all of the events, customers using Fusion Compiler, we have plenty of opportunities. to continue with that.

And there's a lot of runways in terms of what we can accomplish. What I did not mention is that DSO.ai is actually a capability that can also be applied in other domains.

And over time, we will use some of that technology and the ability to design better silicon technologies, for example, or in the clarification space. So, there are many directions that we can take with that.

And we are strongly engaged now with some of the most advanced design teams in the world. And maybe the only comment I want to make right now on pricing and so on is that it has already helped us see some growth in renewals.

And that is really the direction that we count on for technology that truly has a big impact on our customers.

Okay, great. And then to follow up on the regions.

Is there just a kind of second, third quarter on a rather than China had the same, big sequential jump and I'm just curious whether if there's a distinct seasonal purchasing pattern in China that might be different from the other regions that you, see?

To be honest, I think for the last 15 years, I've said we have never had really a seasonable pattern. It is just one continuous wave.

And when a certain region is not as big as another, it is more often than not just the fact that the renewals at that time are different than in other regions. Now commenting specifically about China, the very, very good results and continued good results are due to a very broad adoption so -- by many companies and, of course, many companies that themselves are investing heavily in the future and driving business very hard.

It's just a very active region and expect that to continue.

Okay, great. Thank you.

Yes. Good afternoon and thanks for the question.

Trac, I was hoping you could give me a little bit more about your view on operating leverage going forward, and what do you see as the key drivers, be it segments or product mix or moving to a hybrid office model, whatever you think is important.

I think all those things that you touched on John will [Indiscernible] will help the operating leverage. But really the two biggest ones are continuing to grow, Growth revenues and in fact, we're raising the outlook for revenue growth.

Secondly, the things that really move the needle are investments in the business and making sure that we're investing in the areas that are going to give us the biggest returns. You are also seeing strong results in the growth and revenues for this year because of changes and improvements that we've made on the go-to-market side, both on the semi and the six side.

Software [Indiscernible] side. Those big drivers, as well as a ton of work across the Company in so many different areas, including the items that you mentioned, are what is going to help us continue to drive operating margins up over the next several years.

Okay, thanks. That's helpful.

And then Aart, I was hoping you could give us a little bit more about the competitive landscape in the IP market and what you're seeing from a pricing point of view or just an overall competition point of view.

Well, I think we continue to outperform well others because of both the breadth and the complexity of our platform. I want to say, though ARM is also doing very, very well.

And we are sort of almost 100% complementary to what they do. And so, what I think we see is, A, that there are many more designs that there especially much more complex designs.

And that second comment is important because the value and the cost, but also the necessity for very advanced nodes is, has increased. And so, we observed that in multiple ways, and of course, by what's our customer's order.

But also, at the speed with which they absorb it. And in some of the numbers I gave in the preamble, you could see that a significant portion of our business is already at 5, 4, and 3 nanometers.

And these are invariably extremely sophisticated customers that need large, complex blocks and do a lot of design. So, in general for us, the market is doing extremely well and IP has definitely been a shining star at Synopsys for a number of quarters now.

Have you seen pricing strength [Indiscernible] along the way?

I don't think that that has changed. The more complex things are more expenses and customers expect that.

But fundamentally, it's a business of almost constant renewals. And I think we must be okay with our pricing because our customers consume what they buy often faster than the timeframe that they allocated and then they renew.

And a lot of this business is built on the trust that we will deliver something that they can count on at the right time. And so, a lot of it is very sophisticated repeat business.

All right. Thank you.

You're welcome.

Hey, everybody. Good afternoon.

Thanks for taking my question. Since you guys mentioned it in your prepared remarks and your press release, I, hopefully, you can give us some additional color on your long-term view of revenue, $5 billion in the Fiscal year 23.

You can get to double-digit percent Company on your growth depending on what your starting point is. If it's fiscal year 20, you can get there.

But are we talking about double-digit percent growth on average for the next 2 years? In other words, is this a preliminary view of double-digit percentage revenue growth for the next fiscal year?

Well, I want to be careful like getting into the details on next year, but the mask over the next couple of years really is off of the current guidance for '21, Gary.

Got you. That makes it very clear then, very bullish.

And then I'm surprised it hasn't been asked yet, but you're raising the implied fourth-quarter revenue guide or from the previous implied I guess I should say, by 11%, that's obviously perhaps supported by some stronger backlog. So, my question is, what is the backlog?

Can you share that with the 10-K filing?

Certainly the -- when we file the Q at the backlog, you'll see is 4.7 billion. And as we've -- we've cautioned, you and others on the past backlog, while it's a big number, will move from quarter-to-quarter by depending on what gets renewed and what gets recognized as revenue.

I think this Quarter is very emphatic supportive that we can raise the year by 135 million at the midpoint and see backlog move the other way. So overall, really the guidance and the outlook for the year as a reflection of the strong growth in the deals that we are booking and our confidence in our ability to continue to drive that too strong renewals.

Alright, great. Thank you, guys.

You're Welcome.

Thank you. Good evening.

With regard to that very interesting target now for 2023, a couple of things. Internally, how are you thinking about any structural or capacity, or operational changes that you might need to put in place with specter let's say R& D or go-to-market?

Similarly, you have one customer that is known as a matter of public record, is fairly consistently over 10% of your revenue but also has not grown necessarily every period, also a matter of public record. Does your Growth forecast to 2023 necessitate that -- those large customers keep pace, or can you grow the business to the degree you're talking about?

Even if that large one lags and you can grow with others or perhaps substantially increase the total number of customers, particularly in [Indiscernible] And then a follow-up for Trac.

Well so as you well know, we never comment about an individual customer, certainly not from a business point of view. But I would just highlight that the most advanced customers, the largest customers in the world are also far and away from the most aggressive in technology adoption.

And for good reason, that is why they are the most successful ones and continue to grow. And so, I expect that to be the case for multiple of our top customers.

In terms of structural changes, we've had the good fortune to be able to somewhat continually inside of Synopsys, evolve the structure as technologies either gained strength or are better put together with other

products. And we've continued to do quite a bit of that under [Indiscernible] our COO's leadership.

And I think that that has been very effective because not only does the high degree of vitality, it also opens up new doors. And you've seen, for example, out of the design effort, the SLM, the silicon lifecycle management certainly emerge, and a number of other capabilities.

A great example, of course, is DSO because it -- it intersects with really the entire Company. Primarily right now in design because they're -- their results are just fantastic and of very high value.

And so, we will continue in that, in that vein on the field side, there are two. We continue to optimize for the customers driving different technologies and making sure that the coverage is very good.

And in many ways, the good news is that despite all the restrictions with Covid, I think we have not really missed any bit and covering the needs of our customers well. And so right now I would consider that Synopsys is in actually a pretty good spot.

Trac [Indiscernible]

Can I just emphasize Aart's comment on the restructuring if I get your question because if you look at the operating margin results over the last few years, we've been increasing it by eight points since a low of 18, right? And so there has been a lot of changes across the Company.

And so, while we have been able to grow that business, reinvest in the business, we're simultaneously making a lot of that change and so there is a good opportunity for us to sustain that going forward. And so, it's not a new skill that we have to acquire, develop.

This is something that we have been working on for many years now. And so, this practice of driving to higher profitability in the next few years is going to be more of the same, but more hard work because we're working off on a pretty high base.

With regards to customer concentration, I think a lot of the reality is we're still working on finalizing the budgets for next year and the plans for the next couple of years. What we are seeing is really strong -- strength across the broad product sets and strength across the broadest -- broad customer base.

And there's enough confidence in our ability to execute against that. We feel willing to go out and commit to 5 billion by '23.

So, it's very, very much front base.

Okay, now, for Trac, you spoke more positively about [Indiscernible] performance and an outlook. What would seem to collaborate that is, there has been over the last few months a very significant increase in the number of open software security consulting positions you're looking to fill.

Q3 over Q2 and there's so fairly, fairly material, including the particular for Asia positions related to CIG. So, have you seen over the last quarter or so, therefore a material increases in the pipelines for say, engagements, and deployments to warrant that kind of opening of the aperture for [Indiscernible].

Short answer is yes. I might give you some color about how we're thinking about [Indiscernible].

You remember at beginning of the year, we said that we were going to make some changes and to get the business back on a Growth -- Growth path of 15% to 20%. And what we said was, for this current year, we would exit the year at double-digits [Indiscernible] because it will take time for the improvements and bookings to translate to revenue.

And that by Q4, our goal is to exit the year in double-digits. We are now in fact approaching double-digits for the full year, and I just exit.

So, I think the momentum clearly has been progressively improving. And I think if you call the tone throughout the year, I think it was kind of cautiously optimistic.

We're seeing good progress in an impact on the changes. But one quarter, two quarters, I think it's too early to call it.

Four quarters in, it does feel like we're really on the right path and if we continue executing this, the goal of 15-20% growth long-term feels very, very doable. With regards to the investments, I think the same thing there, we have been progressively feeling positive.

And again, if you remember the commentary on operating margins, we saw we would have to invest more this year and then bring margins down in order to drive growth. In fact, the team's done a really good job balancing the changes in the business while managing their investments to keep margins relatively flat.

And so, the hiring that you are seeing certainly reflects an emphasis on hiring in areas where we can get the most impact. And it's just very -- a very disciplined approach in terms of hiring.

Overall, just their results support continued investments in that business. But the outlook is very good Growth in next few years, as well as, margin improvements.

Thank you both.

Welcome.

Thank you.

Hey, thank you for taking my questions. The first one is just I'd like to go back on the full expense of the full-year guidance upgrade and just kind of thinking about it to make sure it's clear.

It's not just that you were surprised by the number of hardware orders that you are seeing in Q4, the mix of all different, some business segments that allowed you to raise the guidance by 145 million on the at the midpoint. Is that correct?

That's correct, yes.

Okay. That's it.

[Indiscernible] And then just as a follow-up to that, it's a big revenue number to raise with one quarter to go down. But at the same time when I look at the operating cash flow raised again it's just as impressive as it implies more than 50% incremental operating cash margin.

So that revenue base. So, can you just talk to me about how much of that is sustainable when you look at the operating cash flow, incremental, versus any one-offs that play and potentially help?

This year a little bit because of the fact that it's a little higher than the overall operating cash flow margin that you [Indiscernible] been generating recently. Thank you.

No, overall, both on the PML and the cash flows, I would characterize it as just very good, good results across the board as opposed to being driven by one-time items or any unusual items. But keep in mind the cash flow will be lumpy.

Just given that depending on the day the week that it comes in and can slip from one quarter to next or one year to next. But over the long term, as we continue to drive operating margins up and drive operating income growth.

Cash flow should track very well to EBITDA, with fewer cash taxes over time.

Got you. Okay.

That's great. Thank you.

You're welcome.

Hi, congrats on the Quarter and the guide. I just had a couple of questions on, first on the revenue piece, based on what you are saying, it feels like 1.15 is more of a -- sort of a new base to think about just looking into October and January.

First of all is that true? And then, if we do the math on your 5 billion targets over, let's say, a 2-year period.

That implies roughly 1.25 sort of run rate. So, my question really is that -- how -- can we sort of expect just given your sort of broad-based growth you're seeing, can we sort of expect a linear progression to -- from say, 1.15 to 1.25 a quarter over 2 years.

And I wouldn't look at it that way Pradeep. I think you're trying to impart seasonality on a business when there really isn't one.

know, our business is very much recurring. 9% of the business with recurring budgets.

It could be a little noisy from quarter-to-quarter action, but overall, I would look at the trend of our multi-year period and focus on what we're describing for the year. And then within the year, we'll give you very, very specific kind of feedback on what that chronic profile can look like.

And it will vary. And it doesn't really indicate -- it will vary depending on what the customer requirements are.

And I'll just remind you that last year we had a Q3 and Q4 that was unusual by historical standards. And then this year has trended out to be a little bit more linear.

And so, it will vary even within a two-year spend. But over time, as you look at the annual trend intensity is pretty, pretty steady.

Okay. And on the margin front, the Semi's and system design margins are approaching 34, 35%.

How can you think about the feeling, if any, 2 margins on the semi side and the progression of margins even simply backing out from your rule of 45, sort of that 10-11% revenue growth rate you're guiding to?

We could choose -- I'm sorry, let me start up and then add some color to it. But we'll continue to look for efficiencies and productivity across all layers of the business.

That will include the semi-side and the software integrity. The opportunities are too -- we're spending a lot in total as a Company and so the more dollars that we can put behind projects and initiatives are going to drive the best returns, will continue to do that.

There is no reason to not maintain that discipline. That served us well for the last few years because of those investments that we have made.

And as highlighted in our prepared remarks, our function of the big investments that we've made over the last 5-plus years. And so, we want to make sure that we're looking at that business as well to be more efficient.

But that does not at all implied that we won't continue with our [Indiscernible]. But we'll do that in a balanced way so that all areas in business are contributing to get growth and profitability improvements.

Maybe I think can I add something, you can look at it both outside and inside, starting outside. Of course, the semi and the systems industries have great opportunities right now because they are at this age of Smart Everything will actually touch everything.

And then some area is going to go very fast and others are more slowly, but it is unavoidable that electronics and within those semiconductors and software will add substantial value to every vertical that it will touch. And so that is one of the reasons why you see the semiconductor industry do so well and the fact that they are in some areas are shortages may have nothing to do with that because it's certain specific areas.

But in general, it doesn't have to do with the fact that demand is high and higher than the ability to satisfy it. We expect that the market and as we get overtime will stay very healthy for a while.

On the inside, we've always said that you need to have a Portfolio of things that are more mature and with more maturity hopefully comes sustainable product, productivity, and margin, and certain things that you have to invest that in and by definition, investing means putting money in. But on balance, I think that since we communicated to you about 2.5 years or so ago, that we were going after rural 40.

We've executed well without and in many ways, I would consider that episode is now over, and now, we have mentioned to you that the whole of 45 is next So the general recipe is clear and the hard work is always hard. But I think we're on a very good track.

Thank you.

You're welcome.

Thank you. Thanks for taking my question.

Nice work guys.

Yeah sure.

Just along the lines you just mentioned that a lot of your customers are mentioning component shortages. And you do have some hardware that has some components in it.

And I just like to ask if you feel like you have secured enough supply to components to share from?

I think for the time, the answer is yes. We have a sufficient which does not mean that we don't look for every part to see are their alternatives, what's the status, are there going to be some challenges?

Luckily enough for us, we bought the most important parts at the right time insufficient of magnitude that for right now we're covered. But right now, is right now, and so we'll keep being very diligent about this.

Although I expect that in some areas has the shortages will gradually manage.

One thing I've heard is the semi companies don't want to eat their seed corn. So, you could be a priority customer because they can't get, get their designs done without your products.

We're part of a circle. Absolutely.

Right. So, I guess my second one is on get all around.

I did see the tape-out at 3 with a customer. Do you see that as the future and relative to your IML enabled solution, things are getting pretty hairy down there?

Could you just talk about that maybe as a driver for different segments of the business placing out, timing, I don't know.

Sure. Let me make three comments.

First, is there have been a number of generations of semiconductor transistors playing hours for many years the way to do it. The thought to do Finest was heresy because these were difficult to do and impossible and then they became possible and we moved forward on that.

The way to look at data all around is essentially it's a sophisticated variation on FinFet. And a number of advanced customers and manufacturing partners are clearly investing in this and clearly going in this direction.

And we can absolutely support it all the way from the very beginnings of providing them with tools that allow them to actually stimulate and design individual transistors all the way to our design system, Fusion Compiler comparator is completely capable of handling this. So that's not going to be a problem.

The second comment is, what you are referring to when you say new types of the transistor is it, de facto a form of continuation of Moore's Law. Meaning still smaller transistors, still less powerful, still faster speed.

And while Moore's Law has slowed down, I will emphasize it is still continuing. And that too for many, many times was viewed as impossible, but it is absolutely continuing.

I would amend it with something which is you also see more talk of now bringing multiple chiplets, or sometimes called tiles, closely together, sometimes on top of other chips and on other pieces of semiconductor. And to me, that is a mega booster pack to Moore's Law.

Because if you cannot do more transistors on a chip, can you do 2 chips closely together? And there are a number of design issues that Synopsys is particularly well equipped for because when you do something in two chips instead of one, the biggest problem is the in-between, right?

Which is how quickly can you get the signals from one to the other. And that's why you want to have them very, very closely linked.

We have a complete 3D IC that designs a system for that. And as we see people, your combination of still smaller devices, but now also multiple chips closely together.

We will gradually see that growing. So, I'm very encouraged that for the next ten years we still going to see way more complex systems.

And in our case towards complexity is a good word.

And just one little follow-up there. I mean, you did raise the revenue growth target to double-digits.

You don't have to give a number, but EDA is assumed to be raised as well inside of that, is that fair?

Yes. Trac sort of alluded to the fact that all of our businesses are doing well.

And so absolutely, EDA is a very, very big piece of our business. It's the largest piece.

And so, you cannot get too double-digit and grow from there. If, if that were a boat anchor.

And in this context, it's actually the opposite, EDA is doing extremely well for us.

Excellent. All right.

Thanks. Thanks [Indiscernible]

You're.

Hey guys can you hear me? I'm just trying this again.

Yes, we can hear you.

Okay, sorry about that maybe in the essence of time, I'll just ask 1. You mentioned you're seeing your customers renew faster than they have ever before.

I'm trying to understand this a little bit. Is this because of the products and capabilities that you're adding and they're having to come to the table quicker?

maybe market appetite to move faster, go-to-market faster, et cetera? Thank you.

Well, yes. The answer is yes and yes.

Meaning that they see a lot of opportunities because there's a lot of demand for many of these new capabilities. And at the same time, because of the Continued growth in complexity, they have to rely on more reuse of IP blocks, on more automation in the design process.

And we are the ones providing that. And so, I'm super enthusiastic about this decade because I can see the value at the end of this journey for so many vertical markets.

Therefore, the economics from the end markets will come down into the systems semiconductor and in our world, because we are the enablers for that. And I'm also super enthusiastic because I feel that many of the investments that we've made have led Synopsys to be at -- just a unique point of new innovation.

And having had the opportunity to be part of the early beginnings of automation, we are synthesis many years ago. I would equate what we are doing right now with AI on not a design step, but a whole design flow to be very, very similar.

And therefore, a long-term high impact. And it's just very exciting to feel the push of the technology and the pool of the end-market and having those aligned, I think is just perfect for us.

Okay. Great.

Now that's helpful. Thank you.

Thank you.

Well, I guess the signifies that we're done for our first thank you as usual, for attending this and for following us. Hopefully, you read out of the discussion and the preambles that we feel that we're in a very strong, solid business situation, but also very excited about the capabilities that are rolling out, and their impact on the future.

And lastly, that we're in a market situation. And the market really needs the capabilities we have.

And so that leaves only the word execution to finish on, and that is our job. So, thank you very much.

I hope you all stay healthy in a time where unfortunately the delta waves are bigger than anybody expected. Please vaccinate and stay safe.

Thank you.