Ansys Acquisition Regulatory Approval
Q: What is the status of the Ansys acquisition approval process?
A: Synopsys confirmed that while the transaction falls below China's merger notification threshold, Chinese regulators have indicated they wish to review the deal. Synopsys is currently evaluating the notice and plans to work collaboratively with regulators to address any concerns.

Guidance Raise and Drivers
Q: What drove the strength that led to raising guidance this quarter?
A: Continued momentum in the core business, with strong demand for faster and energy-efficient compute from semiconductor companies and hyperscalers, increased demand for EDA technology and IP portfolio. Additionally, the hardware segment outperformed expectations. This confidence led to raising the midpoint of guidance to 15% growth, adding roughly $30 million for the year.

Operating Margin Expansion Goals
Q: How is operating margin expansion progressing post-SIG divestiture?
A: The 2 percentage point operating margin expansion is within continuing operations. Synopsys aims to drive operating margins to the mid-40s long-term by scaling the business, leveraging R&D and core infrastructure, and infusing AI into internal processes to drive innovation.

AI Adoption and Financial Impact
Q: How are the newer AI products impacting financials and adoption rates?
A: For DSO.ai, Synopsys is still in early stages with about 20% of the TAM addressed and around 15% adoption within that. ASO.ai and VSO.ai are in early stages, making it difficult to provide average ACV uplift figures. As customers adopt these technologies, Synopsys monetizes them through the same approach as DSO.ai, with uplifts based on consumption.

IP Business Growth Outlook
Q: What is the outlook for the IP business this year?
A: IP revenue can be lumpy due to customer design timelines. After a strong 53% growth in Q1 and 19% year-over-year growth in Q2, Synopsys anticipates continued growth throughout Q3 and Q4, expecting a strong Q4.

China Revenue Outlook
Q: How is China revenue expected to perform this year?
A: Despite macroeconomic challenges and restrictions, Synopsys had a good first half in China and anticipates growth for the year. However, the company remains cautious and is taking a balanced approach due to the overall macro environment.

Sale of Software Integrity Group (SIG) Proceeds
Q: What are the expected net proceeds from the SIG sale?
A: The SIG transaction will provide up to $2.1 billion in consideration. Synopsys expects a $1.5 billion payment at close in the second half of 2024, with an additional $125 million over the subsequent five quarters, totaling $1.625 billion in cash. There is potential for an additional $475 million based on agreed-upon returns through a future liquidity event.

Competitive Wins in Analog Design
Q: What is driving competitive displacements in analog design?
A: Customers are seeking to modernize analog design workflows to be more efficient and digitized. Synopsys's introduction of ASO.ai helps customers migrate between nodes or foundries, and the company's full analog flow offers a modern competitive platform, leading to increased momentum and competitive wins.

Adoption by Memory Companies
Q: How are memory companies adopting Synopsys tools?
A: Memory companies are increasingly adopting Synopsys's fast SPICE simulation tools to handle the complexity of modern memory designs like HBM3. Over the past years, this market has become a growth area as these companies seek to leverage latest technologies to deal with design complexities.

Hardware Growth Potential
Q: What is the outlook for hardware-assisted verification?
A: Synopsys sees continued growth in hardware use cases, especially in software bring-up before silicon is ready. With the increasing software content in chips, customers need to bring up software as early as possible, driving demand for Synopsys's hardware solutions suited for this purpose.