Good morning, everybody. How are you? Good to see you. I'm Lisa Eubank. I'm Head of Investor Relations at Synopsys.
We're really happy to have you here today. Just a couple of quick words before we get started. It's been a few years since we've had our last Investor Day here in New York, about 3.5% or so, and we've got some really exciting things to share with you, we think. We're able to bring you, I think, a really solid group of presenters that you'll meet shortly. I wanted to say that we do have a mix of familiarity with the company and with the space.
So what we've tried to do is provide a little bit of information for all levels of familiarity in the hopes that it will be valuable for you. To that end, this is our agenda for today. So we're going to start off and have Art de Geus, our Chairman and Co CEO of the company, talk about some dynamic markets that are fueling our growth. And he'll hand it over to some of our technology. So Andreas Kuhlman, who is co GM of our Software Security and Quality Business or Software Integrity, We'll do a little bit of a deep dive on software integrity and some of the drivers and some of the numbers.
And we're also very honored to have with us Graham Holmes from Cisco, who is a long time partner of the Software Integrity folks, and he'll talk about the Cisco software security posture and our long term partnership. So we're very happy to have him here. We will then have a short break and hand it over to John Cooter, who will give us an update on our semiconductor IP space, the markets, the drivers and some of the numbers there. And then, Sasin Ghazi, who is co GM of our design group, will give us a download, if you will, on electronic design automation. Again, there are some people here who are more familiar with the software security side, others who are more familiar with EDA.
So we'll provide a rounding out of both of those. And then of course, we have Trac Pham, our CFO, who will give a financial update. And we'll bring everybody up here as a panel and we'll have a good Q and A session, after which we'll have lunch. And we'll have each of our executives at a different table, so you're welcome to sit with whomever you'd like and grill them to your heart's content. There are bios in your handout.
Before we start, I'm obligated to provide a Safe Harbor statement, of course. We will make forward looking statements that are subject to many risks and uncertainties that could cause results to differ materially from what we expect. Please take a look at our lists of risks and uncertainties in our SEC filings and also in the back of your handout and in the slides that are posted on our website. We are being webcast, so keep that in mind when you're asking questions. We'll have microphones so that everybody on the webcast can hear you.
And finally, we will be referring to non GAAP financial measures. Reconciliations to their most comparable GAAP financial measures are in the back of your handout and also in the slides that are posted on our website. And with that, I will hand it over to Art De Gea.
Good morning. Real pleasure to see so many of you here. A number of you have followed us from literally a decade. Some of you are new to Synopsys. So we'll try to provide a good overview of the company.
And it's a great time to do that because we are in a situation of an extremely interesting fast moving market at a time where Synopsys is fast moving as well and has a real sense of momentum after a number of years of quite substantial investments in broadening our position in those markets. And so today, we'd like to split the presentation of the company really in 3 themes. One is the overall environment, the landscape, what it feels like, why technologies will drive the future, how we play into that, and I'll do that. And then you have 3 people that very much can focus on technology as much as you want or can give the perspective from their respective businesses. Last but not least, give a sense of the financials from the perspective of the long term, from the perspective of the themes that you care about, which are growth and profitability, things that we pay a high degree of attention to.
And so what makes the first topic particularly interesting is that especially if you look at it from the perspective of our existence, which is a bit over 30 years, we've had the privilege to literally participate in immense waves. And the first wave you're quite familiar with, communications. And now we have this wave of cognition, artificial intelligence, which are big words, but they are words that are very profound because they fundamentally change the nature of virtually all the verticals. So we are sitting in the midst of that. And a number of years ago, we foresaw that there was this movement that was enabled by hardware, by silicon that was suddenly going to enable a whole new wave of computation.
Problem? Yes, yes, I can see it. A whole wave of new capabilities and the notion of cognition or AI or machine learning, the different terms for that, which a mere decade ago felt very far away suddenly became very practical. When you have a situation like that, that brings a whole new set of dynamics to the market because profound change bring about other changes that are sometimes and sometimes not predictable at all. But be it as it may, we started to invest on this intersection between hardware and software and then even in the software side because we had discovered that our own customers had more than 50% of their engineers were not hardware engineers, they were software engineers.
And in other words, the value was delivered through the functionality of the combination of the 2. Now with this whole wave towards essentially making literally everything smart in some form or another comes also some new challenges such as making everything secure. And so these are themes that for Synopsys we have invested in, we are moving forward on and we're seeing great opportunities. And when we say everything, it is literally everything, meaning from your home, from your car to agriculture, to health, to financial world. All the way to yesterday on the radio, I heard that a couple of undergrad students had done some project on looking at astronomy data and had found 2 planets.
That's pretty cool if you're an undergrad student and you find 2 planets. Machine learning just took a lot of data and found some perturbations on it. So not that we are in the astronomy field all that much, but it's just an illustration that everything will be touched in unexpected ways. Before we go there, a quick snapshot of where Synopsys is today. Last year, we passed the $3,000,000,000 mark and that feels so yesterday, of course.
Now the next challenge is the $4,000,000,000 mark. We have somewhere between 13,014,000 employees, very much distributed in the world and very much high-tech employees. We have a very large component of engineers, mostly master level, many PhDs. And so the investment in high-tech and in R and D has been profound since the beginning of the days. And we are spread all over the world, both in terms of the R and D centers, but also just as importantly to be close to the customers.
Our business model has been quite successful at not only delivering very consistent growth, but also do it in a fashion that has a fairly high degree of predictability to the business model. And this is largely due to something that Synopsys pioneered already around the early 2000s, which is a mostly ratable business model. In other words, we sell the software in roughly 3 year increments. We recognize the revenue ratably over that time. And that time frame gives us a stability of prediction of the numbers that is quite remarkably good, even if some portions of the sales are more extremely international.
This is for multiple reasons. The first reason is proximity to the customer. The close link to the customer is actually important in how we deliver the value and how we help customers solve the problems that they encounter invariably by being at the state of the art. And by the way, that's not all negative. That's actually very positive because the fact that they can't count on us is simultaneously our opportunity to learn from them and see the directions that they are taking.
The second reason is we distributed our workforce also to take advantage of different compensation scales and cost areas. And so we have large contingents in China, India, Armenia, a number of research and development centers in Europe and of course in the U. S. If we look at our business, fundamentally, there are 3 positions that you should consider us about. The first one, which is the one that we started with is EDA, electronic design automation.
So those are all the tools that you use to design chips and we are far and away the number 1 and continue to actually press the state of the art quite ferociously. We've always benefited from being at the leading edge and our customers have been able to do unbelievable feats by using our tools. We've also discovered already about 20 years ago that if you could just reuse something instead of designing it, it's a massive saving, it's very high efficiency. So we have a fabulous catalog of building blocks that go on a chip that essentially ready to go and done. And actually, John Kuder, a little bit later, will be giving you some insights to that.
But that business has grown fabulously well also by virtue of becoming more and more complex. In other words, the building blocks have become more sophisticated. And then lastly, we entered the field of software integrity. Think of it as looking at software quality and software security 5 years ago. It's been pretty much exactly 5 years that we did the first acquisition of a company called Coverity.
We made some more acquisitions and have grown that business substantially. And what's most important is that we have in that time been able to already build a brand that's after eradicating as much as possible issues or at least diagnosing them when they become diagnosable. So if we look at it from the sizes of the business, EDA, as you would expect, is the largest one, roughly speaking, about 65% of the business. And today, we would say it's growing at mid to high single digit growth rate. It's also the most profitable part of Synopsys.
It is amended by the IP business that literally sits on top of that and our tools are very effective at getting good results out of the IP. It's already past the 20% of our business. And 15 years into it, it started very much like a build or buy of small things. Now it is extremely sophisticated building blocks. I always like to use something that all of you know well, which is the USB you have on the back of your computer.
The vast majority, 90% plus come from Synopsys, if not more. And we do many of these type of interfaces that continually go through a growth in complexity and in speed. And then last but certainly not least, the software integrity business, and this has been a particularly interesting entry for us because while it sits right on top of what we do today, it's already grown to about 10% of our business. At least we will pass the 10% point this year. And it's an area that is emerging with quite high speed because as you will see in a minute, high complexity of circuits and of systems brings about growth of vulnerabilities that needs to be managed.
Now this is all put in the backdrop of a history that some of you are extremely familiar with. What you see here is the semiconductor history in terms of its revenue on a quarter by quarter basis, very rapid initial growth. The 2,001 downturn, you see also the 'eight, 'nine downturn. By the way, we did not see that much of it as a company, partially because of our rate small business model. And then the consolidation, the up and down and then the preparation for what is now hypothesis, of course, continued growth as AI manifests itself in every product segment.
Well, if you look at it from a major impact wave, clearly computation where PC was the killer app that then got connected via Internet and then a whole set of technologies essentially amplified that all the way to today seeing massive growth in both privates and public clouds. Well, this all changed when somebody took the computer and essentially added communication capability to it, but most importantly, from a technical point of view, really focused on low power. Can you make this work on low power? It was interesting talking to one of the CTO of 1 of the large phone companies in the early 2000s who looked at the first Apple phone and said, what is this thing? It's not even a good phone.
Who wants to touch the screen with the finger? Not realizing that this was a communication machine and just witness when you were all walking around, while you were getting food, you were checking on updates on life, right? It has completely changed everything because that communication, any place, any time in a fashion that is sustainable on a battery for at least a day is quite remarkable. And that was the focus on the early 2000 to make this technically possible. Well, if you now add to that, the fact that, that computation and the low power have continued at a very rapid speed, This has now opened up the door to all kinds of things.
And yes, initially IoT was sort of the word, then AI sort of started to come up, cloud started to aggregate things. But fundamentally, it is the age of cognition or the age of smart everything that has opened up. And it is absolutely the intersection of chip technology, systems technology and software technology. And so when you bring all of these things together, it brings me to one of my favorite pictures because this is sort of how we describe our thinking of what Synopsys should do, is that we're sitting in the midst of 2 forces, a continuation of silicon technology and yes, Moore's Law economically has slowed down, technically is still moving very rapidly and the implication of Moore's Law, which is deliver more computation in some form or another via bright engineering will absolutely continue. Well, because of that, you reach these plateaus where things suddenly become possible and the suddenly possible is really the machine learning, the deep learning, the using large deductive computation, but do pattern matching.
And if you look at the human brain, we are good at both. We can actually prove things. We can do computations, but we can also recognize patterns. And finally, the computer is starting to mimic this from both sides. And we're still far, far, far away from what the human brain can do.
Therefore, there's a road map, which is, okay, how fast can we get there? And I want to emphasize why that roadmap is important because that roadmap says that everything that sits in the software side and the AI side will say, give me more computation, drive the silicon harder, which is great for the silicon world. At the same time, every advance on the silicon on the systems technology side will enable AI faster. And that is precisely what happens when you have these growth phases in technology, which is that they nurture themselves with the requirements driving the technology and the technology enabling new requirements. And so not surprisingly, around all of this, we have the good fortune to sit in the middle and you will have noticed that we systematically invested up from silicon for the 1st 20 years.
In the last 10 years, we have been looking at how do we get closer to this hardware software interface. And in the last 5 years, as mentioned, we invested on the software side down under really the label of security and quality. If you look at what is around this fundamental computation, of course, IoT has an enormous amount of promise, maybe economically, certainly from the point of view of connecting everything to the real world. So enormous numbers of sensors creating a vast amount of data. This is going to be accelerated by the coming about of 5 gs, which is the next generation of high bandwidth, low latency computation that many people see as again opening a wave of different ways of connecting things going forward.
And then on top of that, as mentioned, AI and machine learning, and that's rapidly already pushing itself in the cloud because AI has at a minimum the learning part and the interpretation part. Interpretation tends to be closer to the IoT. The learning is more inside of the cloud. And then last but not least, this challenge of making this systemic sophistication not victim to the fact that it can be touched and maybe intruded on at many different places. So to give a sense of that, you have literally these capabilities now touching every business that you can think of, Some are already highly visible because they're so demonstrative.
So in a minute, we'll talk about automotive, but the very fact that a car could be driving on its own when you think about it is actually quite close to ultimate science fiction, yet it's happening in front of us. But as you well know, in every year domain, including yours, the notion of machine learning on broad sets of data that come from many different sources, which is difficult to do for humans, will have major impact and that can range from agriculture to robotics to you name it, it should be on that list. So have a look at one of those that is particularly interesting because it both is a collection of quite remarkable technologies, but it's also an extremely sophisticated existing value chain. And if you look at automotive, not that automotive has not used electronics. Automotive has had electronics really since the '80s, mostly around electronic controllers for the engine.
But now the amount of electronics that is moving into the car is truly astonishing. What is also astonishing is that traditionally, cars used pretty well established chip types that are not the leading, leading edge. Well, by the time you throw the word in it, you want to be at the leading edge because the faster think and think, the better it will recognize what's in front of you. And so that changes the very behavior of the car industry because the car manufacturers that in the past delegated to the Tier 1s that in term delegated to the chip manufacturers are now suddenly very interested in what the chips can actually do and what to expect from that. And so on top of this has traditionally sat the car and the car is now rapidly being decomposed in a set of subsystems.
Those subsystems themselves talk together through a gateway that in turn has an interconnect set to the outside world, be it through sensors, also through communication to cloud environments. Each one of those is really in a revolutionary path of change. And you can already sense one of the challenges. Cars have a long life cycle, both in terms of development and utilization. Electronics is changing really, really fast.
And so one of the questions is, how will you keep these things up to date? And we actually play a role in that because we will help these manufacturers simulate their car, meaning create a fake program that allows you to try out the software before the hardware is ready with our tools and so it's actually quite advanced in that. Which brings me to the software. The most advanced cars are 150,000,000 lines of code. And as we all know, there must be 0 bugs in this, and I'm sure they do, but that code will continue to grow massively.
And with it is not only that there's more to be done, but also every few years there will be updates and replacements. Each one of those need to be verified for security and safety before they actually arrive at the car, a non trivial task. That brings us now to what STATCO does. Well, there are different layers, of course, all the things that control the car and assess the situation and then the layers above that, that actually provide the reasoning and on top of that, the reasoning towards objective to actually drive and make decisions on where the car can go. And last but not least, there's a whole top layer on top of that, which is if you can do that, the whole notion of ownership and infrastructure will substantially change.
And if you threw into this picture one more change, which is the electrification of the car, you can see that the intersection between automotive and infrastructure is actually going to be a substantial change vector in the years to come, because it's one thing to say we're going to have a lot of electric cars, another thing to say so and where are you going to plug them in and how do you get energy there? And how can you make sure it's clean energy, etcetera? Now there's one thing on top of this picture that you should realize is this is an enormously sophisticated large supply chain that has been orchestrated literally for 100 years. And now inside of the supply chain are non traditional vendors that's only provided the biggest rate of change. So we are going to see quite a renewal of how this operates.
And this is where we are very fortunate because literally we touch people at every one of these layers. In the 1st 25 plus years of Synopsys, I may have had 3 visits to car manufacturers. Now we talk to them multiple times per quarter. That is a very radical change. And the car manufacturer sits in the middle of this and delegates to Tier 1s, delegates to chip companies, delegates to software providers, delegates to works with apps providers.
So it is becoming a hub and a model of a sophisticated value chain. The one challenge that sits on top of that is security, of course, because when you have very high systemically complex issues, that means you have many different touch points. We've really grown up with scale complexity, more transistors, more transistors, more transistors and that was enormously sophisticated from a technical point of view. Systemic complexity multiplies this. With other words, it adds multiple dimensions to the problems, multiple fields that intersect.
And for us, this is a great opportunity to broaden our business. It was one of the reasons to go more towards the software. And at the same time, it does bring challenges for the world and for most industries. Security is one of them. And this is one of the reasons we have invested substantially there, which brings me to a little bit of the strategy of Synopsys.
We've always viewed things as there's a technology aspect to your business and a business aspect. I always like to call this techonomics. It's not used much in Wall Street, but it's meaningful to us because as much as you think that we are driven by technology, all technology is completely subject to the economic impact, the ROI in the context of its utilization. And so making the right choices is not so difficult. Making the right choices at the right time is where most of the strategy decision making sits.
And so innovation comes about when the economics actually look promising. And then suddenly the race is on and the minute somebody is successful, you find many other people that chase this. And so it takes both the innovation capability and the ability to financially stay initially above water at a small company and then gradually keep doing well and have essentially a funding machine that can invest in itself for the long term and can be amended by acquisitions, mergers, etcetera. And so leadership and vision are important in this, but they have to be very much complemented by having the market be ready at the right time and most importantly, working closely with the customers that matter. So since the early days, we put a high emphasis on our customer relationships.
We are privileged to be on the inside of all the large companies, every single one of them at the closest places to where the most advanced chips are done in the world. And that learning machine is essential to the health of Synopsys. At the same time, from an economic point of view, at the end of the day, it's all about execution and growth. And growth, of course, has the potential to bring profitability and margin. And as you know, we have put a strong emphasis right now on a balance of growth and margin and Trak will be talking more to you about that.
Last but not least, every so often, it does take some courage because the courage is to make some bets that are further out in the future. I would say that's the going into the software integrity business was one of those decisions. We looked at many adjacencies that could be powerful to us. That's the one that we decided on. I'm very happy to do that because it augmented our TAM substantially with many, many customers we'd never touched before.
And by the way, those are exactly the customers that now are becoming systemically more complex down because they need the advanced technologies to change their outlook. So if we look at the construction of Synopsys, let me just give you the rationale for the 5 business units that we have. We started in design, meaning start with a high level description of what the chips should do and then build what it takes to actually go down to manufacture. And the L shape mirrors a little bit the silicon and you'll see the rest in just a second. At the same time, when you design things, yes, it is possible mistakes would happen, not necessarily by our tools, but it can be mistakes in the description of what one tries to do, in how one applied things and so on.
But in other words, we added a verification business and the verification business looks upward, which is it asked the question, is the thing that you designed doing what it was supposed to do? So it looks from the functionality point of view, whereas the design looks down to the physics point of view of implementation. The hole in the middle is actually not a hole. This is where we put our IP business, because IP is pre designed things, pre designed and by the way massively pre verified, so that the customer can trust what they're getting. And then since then, we have one deeply specialized business that looks at the actual manufacturing because the physics there have become substantially more complex.
And on top of that, the software integrity business that I mentioned before. If we briefly look at some of the highlights that the different speakers will bring about, in the software area, we have now grown sufficiently to have multiple products that are being assembled in a coherent platform so that we can not only sell to the individual software developer that uses these tools while developing to minimize the number of potential issues, but also can be used top down by the people that look at whole companies, that look at vulnerabilities in aggregate and that need to have a sense if there's a danger to the company.
On the
verification, the main push in the last 2 years has really been be at this intersection of hardware, software. If you can run the software before you have the chips, that is great, because that means you can find issues earlier in the process. And that is precisely what we're doing. And the example of automotive is particularly interesting, automotive is particularly interesting because automotive is doing that in aggregate for the building of a car. Can you have electronic model that they can run the software on already before the car is ready?
The IP sophistication of the building blocks has really been our growth path. And in some way, it's happening on its own because the blocks themselves are becoming much more demanding and the silicon technology is more demanding. So much so that today, there are a number of customers that couldn't do the blocks that we do and they rely on us and therefore, there's a high confidence relationship. Design, this has been a very exciting and demanding area and exciting because in the last 5 years, we've made a massive investment in our next generation platform, our Fusion platform. And the term Fusion in simply terms is bring technologies from multiple areas together and make them work in such a fashion that you get better results and that you can get the better results sooner and potentially even that you can make the chips cheaper.
Last but not least, going down into the silicon has been the journey of learning a lot about deeper and deeper physics. And literally here, we can now do simulation at the atomic level because things are that small. Summarizing all of this, it follows what I think in business school is called the S curve. We started with EDA and so you can see that the building blocks, the BUs that are part of EDA, very rapid growth, still growing actually quite well. But at some point in time, you say, oh, well, you're not sort of an S curve, what's the next one you're going to do?
Well, the next one we did was actually to go into the IP space. And that is now about 15, 20 years ago and it has grown quite substantially. And about 7, 8 years ago, we started to look again and we landed on the software space. So I hope that I gave you a little bit of a sense that we are surrounded by opportunities. And biggest challenge for us is really to choose which ones have the highest ROI, invest in them as fast as we possibly can, make sure that we are in a leadership position with the companies that count on us.
And I would say so far so good. It feels like we have a lot of momentum right now with the new technologies and there's certainly plenty of demand for us to fulfill. With that, the next speaker would be Andreas.
Thank you, Art.
And good morning, Erik, everybody. It's an honor to be here and talk about the Software Integrity Group. As Art just mentioned, actually last week, we had our 5th anniversary on the 24th March 2014, we closed the acquisition of Coverity, which was really the beginning of the Software Integrity Group. What we really are all about is we are about helping our customers to build secure high quality software faster, if I would have to summarize that in one sentence. And we do this with a combination of tools and consulting services, tools that really help development organization to address quality and security issues early on while the code is being developed.
And that being complemented with consulting services on various levels from strategic engagements, program development to really individual consulting engagements. Over the last years, we built our business to $299,000,000 trailing 12 of revenue. We have about 4,000 customers now acquired. And we are also global similar to Synopsys. So we have our field resources where our customers are in the different regions.
Over the last 5 years, we grew the business from $27,000,000 to $280,000,000 in 2018. And what you see in late 2016, services business. And the reason for that was very simple. Up to then, we were a pure product company, meaning we had tools that helped our customers to build better software. And we realized that the state of the maturity of our customers is very, very diverse.
Some customers are very advanced. They know exactly what to do with tools. They know exactly how to use the tools. And they're just shopping for the best tool in the market. Other and many, many other potential customers, they're very early in the maturity cycle.
They really start, they may have a mandate from the board, they may have had a security incident and they really start the journey and ask the question, what should I actually do so far from being ready to actually utilize tools or technology. So they want to start really with a simple assessment. Where am I actually currently and where do I need to go? So that's why the services business for us was a critical element to add to our profile. So before we go into any details,
I want to step back for a
second and quote here Satya Nadella saying, every company is a software company. And there are many similar quotes out there. You can take Mark Anderson, who said, a software is eating the world a few years ago. And I think you all are aware of that. I mean, Arthur is talking about 150,000,000 lines of code in the car, which is a ridiculous amount of code, if you think about it.
I mean, and every company today really has some form of software. This point was driven home to me personally when I visited one of our customer, which is one of the larger container shipping companies and I had dinner with the Head of Software. And I was talking to him and just asking him casually, who's your main competitor? And I was very surprised about the answer. He said Amazon.
Amazon is really not into container shipping. He said it's all about the logistics today. It's all about the logistics. If you think about Amazon, their business model where you want to have a product or package being shipped from Europe to North America, of course, without any shipping costs. It's all about how do you put all these little boxes together into containers, how do you compose all these containers into that it fits on a ship and then drive the ship from Europe to North America.
So he's essentially saying this logistic, if we don't take control of that, which is really software, you're going to be demoted as a guy who's driving the ship. And it's almost like become API and the API is saying, well, these are all the containers you have over there, put them on the ship and take that ship from A to B. So for them, it was a very serious threat and they needed to invest into software in order to stay competitive. So if you look at now from a security point of view, if you look historically, computer security was really traditionally a network security, endpoint security. And network security in the early days, in the '80s '90s was really about a firewall.
So when we talked about security, we essentially say, we put a firewall around our IT network of a company and the firewall, what it really does, it hides your servers inside from the outside, meaning nobody can really see the servers. And that means any application that you run actually behind the firewall is not visible. So the applications don't really have to be secure, so at least we thought. And that really led to software development where as long as we find the firewall, we didn't really care too much about security. So the fact is now the days of firewalls are pretty much gone.
The applications are moving into the cloud. They become web applications. They become mobile applications. Applications in embedded, they move into devices like a car that are connected now today. So they don't have the traditional production of a firewall.
So the application itself becomes the attack surface. And as a result now is that the developers who used to just develop functional code, they become suddenly in the center, they turn into the center of addressing security in the application. And what's really interesting if you see on that chart, still the most of the investment is still done on the network layer. So you go out to the large trade shows like RSA or Blackhead. So the big booths are still really from network security, all the traditional.
But application security is really the area that is growing very fast and this is the area that we are playing on. Besides security, there is really the other items that are very important and that is whether it's quality, whether it's cost and time to market. This is today, it's not as sexy as security. Security is really on the forefront. But on the business side, it's equally important.
And some of you probably have seen yesterday, there was a major disruption in airline traffic, particularly in Southwest, because it was an application actually not working. That is one of the last application that a pilot is using that is checking on the weight of the plane. So massive disruption because a computer network was actually down. So quality, also if you look at automotive, for example, compliance in the software, EMA actually have the right to use the software in terms of open sources is equally important as security. Even as I said, it's not necessarily on the forefront of the newspapers that we are reading today.
So this was the why. So it's really an important space. So let's talk for a moment about the how. And I have to give you a little bit of background. Probably many of you have seen the term DevOps.
And the background of that, that the software development itself is actually going through a major retooling phase. And I compare that to when the automotive manufacturing really went from assembling 1 car at a time to line production of a car, where what you actually did is you split the individual steps into minor into very small steps and you iterated over these steps very fast and you automated that. So it's similar happening in software where instead of what used to be called a waterfall process, which may take half a year or a year to develop a piece of code where you start with the requirement, you do the design, you do the implementation, you do the testing. It's now replaced by a much more agile process. They iterate very fast about features.
In fact, some of the web application development, you may release a new feature many times a day. In this entire process from a developer sitting at his or her desk, developing a new feature, testing that feature, automatically testing that, automatically putting the build together, automatically delivering it to the web, automatically essentially putting it production is now all automated in what's called DevOps. So think about DevOps as fast iterating and automating the entire process. And that has a whole number of advantages. I think the biggest one is continuous feedback.
You can essentially keep the customer in the loop. You can try a little thing and you can do on a web application AB testing, meaning a small subset you test it out versus a larger subset you can ask the customers. You can, for example, do updates on in a car today, very fast and Tesla has shown this multiple times when you need to react to some incident. It reduces the friction. It gets higher speed, notably in the software development itself.
And overall, it lowers the cost. So what's now interesting that what is called DevOps has really over the last years moved into what's called Dev SecOps. And that is a real where the security teams, which used to be more an afterthought. Security was done in a separate team from the development. The development team responsible for the features, responsible delivering the code.
The security team thinking afterwards, how do we make this secure? That's naturally actually conflict of interest. And we have seen quite often that sometimes there's an organizational conflict. So the security really realized that if we move our approach right in the middle of the development process, right in the middle of the automation of DevOps, now called DevSecOps. It really becomes an integral part of the development process itself and we call this security built in, meaning actually every time you ship a feature, you test for all the security, you test and make sure that it actually complies with what you need.
And you see I got my quote here. That is really something we see very rapidly evolving. And this is something where we actually help development organizations or security organizations to develop the corresponding processes. So if you look at the market that we are currently addressing, the serviceable market that we play in right now, we estimate between $2,000,000 $2,500,000 in the different areas that I'm going to show you in a second. But people believe the actual TAM is much larger.
I mean, it's actually at least twice to 3 times as large. And that is really driven by multiple things. Number 1 is really the omnipresence of software. I just mentioned that. I mean, there's more and more software developed.
And the software is now connected, whether it's your web application in the cloud, whether it's your mobile application or what we mentioned earlier, all the embedded devices are meanwhile connected, your refrigerator is connected to the internet, whether it's a good idea or not. And as a result, security becomes a primary business issue, meaning if you don't address security, you really have a risk that a breach can actually harm you. And then development teams are getting larger and larger. It's amazing. Some of our customers have development teams that are 1,000, if not tens of 1,000 of developers.
And so the need for these developers to have actually the right tools, the right processes, the right workflows is critical to actually scale the development up. So our segment, we have a growth of about 20%. This is combined of the market growth, which is in the mid teens and then a bit of growing our market share. If you look at now at the market landscape, so one thing you will realize if you look at security and quality, it's a highly fractured market. There are many, many players in that domain.
Some are larger, some are smaller. Most of them have one product or 2 products or have one service or suite of services. And the different areas, so we separate that between static testing, dynamic testing, open source, interactive testing and then managed services and professional services. And what you see over the last years, we have actually built a portfolio out of these different technologies and services that are really critical, we feel, to serve our customers in a way that they can address security and quality while they develop the code. If you look at the portfolio that we built together, and I mentioned this earlier that in 2016, we came to the realization just tools is not good enough.
Just tools are good enough for the most advanced development shops, but that's not good enough for prospects that we have that are much earlier in the journey. So we built a portfolio of tools and services together that really helps our customers from a strategy point of view, assessing where am I actually in terms of my journey to security, where am I in terms of the quality journey. And the roadmap then, which can be a year, which can be multiple years, how can I improve? How can I get to a posture that ensures I can actually build security into my development, into my products as well as quality? That is complemented with a broad suite of professional services.
So think about anything of an architectural risk analysis, think about us building a software security initiative, think about us helping customers to train the development shop, think about us helping customers to build a DevOps operation, Think about us also doing very simple things like what's called penetration testing. Penetration testing is a customer's asking us, can you hack us and show us how you hacked us so that you can fix problem. So really broad suite of professional services. I would also like to mention that the professional services piece really helps us to stay sharp, because we learn through the professional services engagement, always the latest what customer problems are. And that helps us to understand where the market is going.
That helps us to understand what other technology we need to build for the future when other customers need that. That is complemented with a set of managed services. Managed services means we do actually the testing for the customers. And that is often for customers that either don't have the resources or they don't have the expertise or they want to ramp up security testing very fast. We do this remotely.
That is delivered through a web portal and it's also integrated actually in a DevOps workflow for customers. It's just essentially different mode of delivering the technology that we have. And then last but not least, and this is really the core of our business is the tools that we So we have Coverity for static code analysis, Black Duck for open source analysis and Seeker in Defensix for dynamic analysis. Okay. So now I want to give one example and that's what we call BSIM.
This is really if you think about the stack that I just showed, it's really often in the beginning of the journey of a customer. BSIM stands for Build Security and Maturity Model. So this is when a customer comes to us and says, Mr. Synopsis, we don't really know where we are in our journey. We don't really know how we stack up to our peers.
Can you help us assessing that? So think about it a very early assessment where we through multiple interviews of all the different stakeholders, we do an assessment of more than 100 metrics and compile this into a report where we compare the maturity of these different activities to the peers in the industry. That comes with a community, the BSIM community, where there are 2 conferences a year. In fact, today is the conference in Europe is starting. And the conference is a community where the security leaders come together and just talk to each other about best practice, tremendously valuable and tremendously helpful for customers to really start their journey.
It's very often complemented by what we call a maturity action plan that is really a road map where we draw for the customer, you are here right now in your maturity. In 2, 3, 4 years, we're going to help you driving your maturity to a higher state. And that can involve services, that can involve our technology and our tools, that can involve technology of open source or technology from other providers. I would like to talk a little bit about the Polaris Software Integrity platform. Aart mentioned that earlier.
So this really came from Our customers were asking over the last few years, you acquired and you built all these different technologies and services. When am I seeing the benefit that actually you integrate them all into one offering? And the way we see this really from the different personas that a customer has in their shop. The developers want to really see one user interface. They want to see one workflow.
They want to see one way of dealing with issues, whether it's in security, whether it's in quality, whether it's compliance. They don't want to play these various different tools that have a different look and feel and a different workflow. From an executive point of view, whether it's a CISO, whether it's a VP of Engineering or whether it's the Head of Security, they would like to see one way of reporting the different results. They would like to see one way of having dashboards where they can essentially now take actions and allocate different resources. And then last but not least, from the DevOps engineer and the term is CICD that's related to that stands for continuous integration, continuous deployment.
The person who actually has to the technology into the workflow, that person really would like to see it in one way of doing that. He doesn't want to integrate various tools and different services. It's really a question of efficiency for our customers. But it's equally important for us. It's also delivery platforms.
We see this as a platform where a customer may acquire or may buy Coverity on Polaris. But already it's very easy now once he's a Coverity user to try out Black Dog or to try out Seeker or to try out in the future our managed services. So it's very easy actually to do upselling and cross selling as we build this platform out. We had our first launch of the product of the platform just a few weeks ago in March and we have lots of engagements with customers, lots of interest in that platform. Particularly it's currently cloud based.
And we're actually very surprised how fast the move is for customers to move their development into the cloud. So if we now look at various examples, I would like to share one example of a customer for the journey that is very typical that we see these customers. And I'm just going to click through this. This is really a large health care provider, also has medical devices and pharmaceuticals. And that journey really started in 2016.
There was a mandate coming. We have to address software security. A team was formed and they came to us at the time and said, can you do some penetration testing for us? As I mentioned, penetration testing means, can you try to hack us and then essentially show us how you could hack us and we can fix it. Unfortunately, at the time, they had only a budget of $10,000 So we of course, we still engage, but what we really did, we did the training session how they can do penetration testing themselves.
This was really followed a few months later where they said, well, we have a little bit more budget. So we have some open source tools that are free. Can you help us integrating these open source tools into our development process? And can you customize them for us? We also introduced BSIM at the time.
We did a BSIM assessment, which was very interesting for them. They came to the BSIM conference, learned now from all the peers in the conference what others did and started really taking security more seriously, meaning I allocated more budget. And we then together with them developed an entire program. That program included a maturity action plan. It included various POCs, proof of concepts for the different tools.
And then in 2018, we started rolling out that program and that program is still expanding. Just to give you an idea how this falls. So in 2016, that was a deal of $10,000 in 20.70, we had a deal of 130 $1,000 And 3 years later in 2018, we had already $500,000 deal. So this is a very typical journey that we see with customers where we really accompany the customers in their past to become more mature. All right.
So if you look at the profile of our customers, we have more than 4,000 customers, as I mentioned, and customers really in all different domains. First of all, a lot of customers that actually share this synopsis that are embedded customers very often. We have customers in scientific computing like NASA is a very customer we are very proud of, the Mars Rover. It's actually all checked with our technology. We have customers in the gaming industry.
We have customers in the financial services industry. We have customers in the medical device industry. So we have really wherever software is being developed, we can help the customers in that domain. One thing that we are particularly proud of and Aart mentioned that earlier, the Gartner Magic Quadrant for application security testing, that's really kind of a fairly high bar to get recognition from the analysts. And literally 4 years ago, we were nowhere.
And so we moved ourselves now in the leader quadrant. And in fact, as there is any moment a new version of the Magic Quadrant coming out, we got a little bit of preview, which I cannot share with you. But we are super excited about the progress that we are making. So this is something you may want to check out a little bit later. Similarly, the Forrester Wave on static application security testing as well as Forrester Wave on software composition analysis, we worked ourselves fairly quickly up in a leader part, really attesting to the fact that we built some good technology here.
I would like to step back a little bit and some of you probably were part of the discussion in 2015 when we just launched the Software Integrity Group. At that time, we had about half of our customers were in the traditional Synopsys space in systems segment and about half of our customers were outside in the enterprise space like banks and so on. So over the last years, we have actually grown both segments very well. On the Semiconductor and Systems side, we really utilize the collaboration with the EDA and IP sales team and gives us really access to very trusted relationships in the customers building out this, but then also a really good growth outside of the SIMM and systems in the enterprise space. As I mentioned, this is banks, this is insurance companies, this is really the container shipping companies, as I mentioned earlier.
All right. Similarly, the growth geographically, as I mentioned earlier, we are in all the different regions and we have really nice growth in all the different regions. The largest fraction is really coming from North America here. This chart is kind of interesting I would like to share with you. This is really attesting to the fact that our portfolio is start getting stickiness with our customers.
So what you see there is how many customer logos actually adopt multiple of our solutions. And the solution could be any one of our 4 products or could be services engagement. And what you see is on we have already 23% of the logos use at least 2 of our solutions. And from a revenue perspective, this 23% of logos is actually compounding 65% of our revenue. And more interesting is if you just look at this from a service leading perspective, 41% of that revenue is actually coming from engagement that started with the services engagement.
This is similar to the journey that I mentioned earlier. So the services piece is really very important for us to essentially start an engagement, start the conversation with the customer and then help them build out an entire program. All right. So I would like to finish out the presentation by just talking about our growth strategy is a classical land and expand strategy, meaning landing with our core yes, our technology in our core verticals as well as in new verticals. There are really new verticals that are very interesting.
Medical automotive is now a very, very interesting vertical for us with all the issues that Art mentioned. And then expand that through additional services, through additional products. And that's something we see really nicely growing. I showed this on the previous chart. For example, Coverity and Black Dog, I mean, it's a lot of pull in both directions that we see from customers.
Customers just trust us as a brand, not only from what we built over the last 5 years, but also Synopsys as a known brand in this area. And then really leveraging our international presence on the backbone of all the offices that we mentioned earlier in Art's presentation. On the margin side, I mean, you saw the reports for Q1. I mean, we are prudent in terms of our margins. So we're improving our margin over time.
But that's, of course, always also looking at the growth, taking advantage of the growth. So this is something we actively looking at over time. So that concludes my presentation. It's now a great pleasure for me to introduce Graeme Holmes, who is the Senior Director of Advanced Security Initiative Group at Cisco. Graeme and I are working together for many years.
So Cisco has been a long term customer for us. So we have had several battles together, right? So it's really great that Graeme can share with you here some of his experience.
Thank you.
Good morning, everyone. And thank you Andreas and Arthur for having me here to share our journey in security and also the partnership importance and partnership you've played in that role. I've been at Cisco for nearly 21 years. And one of the most one of the things I take the most pride in is our vision statement of changing the way we work, live, learn and play, because it's not only a great aspirational goal and provides focus for our innovation, but it's also a good reminder of our responsibility of the seriousness of what we do and what we need to think about as we develop products that change the way people work, live, learn and play. So it's a call to responsibility and reminder that trust is important for us to ensure for our customers.
And so the second most important thing as a security professional at Cisco that I love seeing is Chuck Robbins' statement about the value of security and our brand promise with regards to security. Because what Chuck is saying essentially is that it's not about building security products. It's about ensuring that products are secure. All of our products have security built into them in order to ensure the trust
of our customers, ensure that the integrity
of what we ship them, what they use, types of concerns that we have in an evolving threat landscape today. Our journey began in security nearly 2 decades ago as we thought about the problems of economic attacks against Cisco, the counterfeit capabilities that were showing up. And the issue that counterfeit really raised was could our customers trust that we were shipping them authentic and reliable and integrity in our software and in our products. And so our initial focus become to ensure that trust was maintained and we continue to rebuild that trust. And we designed our first products initially to counter the counterfeiters and provide trustworthy capabilities in that product, so the customer could be assured that they were receiving an authentic product through authentic channels.
That quickly identified that we need to ensure that basic security requirements were in all of our products. And beginning in 2,008, we launched a corporate wide effort, an initiative that define what are all the standards and practices that we expect every product, every offer to have in their product in order to deliver on the promise of building in security into the product. So our Cisco security development life cycle was all about defining that standard for the company. And then it's also was beyond went beyond just the development of it is how do you ensure that the components are authentic from where the sources that you get them, that the operating software that you might OEM or ODM is authentic, that the distribution ensures the integrity of the delivery of that product to our customers as well. So value chain security came hand in hand with development security as well.
Late 2000s early 2010, we began to see that trust was becoming an essential critical value to our customers that we had to continuously build and maintain. The news, the issues of breaches that violated customer trust, consumer trust, product trust were critical issues that every company is seeking to address. I think Cisco had a head start. We began thinking about this 2002 and earlier about how do we ensure that trust, the most important thing we do, is done correctly, so that we're providing security and transparency about what we do so that our customers can understand what we have done and what we are doing to assure the security in their products and the things that we do to change the way people work, live, learn and play. So this is our journey.
And it began with understanding how do we build in security, how do we make sure security is not an afterthought as Andreas talked about later and bolt it on, but security is part of an integral part of the process of which we do work in building our products. So it spans security spans a multitude of things that we must do to deliver on that promise of trust and transparency. It's about defining standards and securities that you expect every product and every offer to do. It's about ensuring that there are inherent trustworthy technologies, hardware components, software components that ensure that the outcome is secure as well. Things like trust anchors, secure boot capabilities, hardened crypto.
It's also about not only making sure that we meet our rigid internal and rigorous internal standards, but it's also about ensuring that we are meeting the kinds of standards and certifications that our customers expect as well. FIPS compliance, common criteria and other standards that are issued by governments and expected by customers. As I mentioned, it's also about ensuring that you're not just developing securely, you're also acquiring securely. You're bringing in secure components, your supply chain, that your distribution chain, that the way you sell, the partners that you work with are also part of your security offer as well. They have to be just as rigorous in their security standards, and we have to be just as rigorous in our security standards for those components as we do in developing the software itself.
And finally, it's also about other things you need to be doing beyond just the things customers expect. It's about privacy by design and it's about secure partnerships. So I really want to talk about how we do this because the outcome that we're focusing on here is being able to do this at the speed of business to deliver secure solutions. How do you do that? As Andreas mentioned, how do you make sure that we build in security?
How do you make sure that the things that people, the engineers need are there when they need it, how they need it, and they can have effective security outcomes. And what we have done it through our partnership and our automation focus over the last few years is really that issue of delivering at the speed, building in security, and we call that digitization. Simplifying things we do, automating it so it can be done over and over again reliably, and most importantly, integrating that into the workflow so that the engineer has what they need, when they need and where they need it, so the outcome is what we expect it to be. So I realize not all of you are secretly coding Android or iOS. So give me half a second to explain a little high level of the development process.
So I can explain show you also where we integrate best in class tools through our partnerships, for example, with Synopsys, with tools that we need to also deliver on these promises of how we build in security in our process. So if you put on your developer half for a second, the first place you start is design. What is it I want to build? How do I code it? What are the requirements I need to code?
How do I then put that all together and integrate it and build it, so I now have a unit that I can test? And then I build more components and I add that into the software package and that becomes something I integrate. I didn't want to validate that I did it right. And ideally, I'd like someone to independently audit that and say, yes, you did comply with all the requirements I expect before we release that software into the wild. So our SDL, our secure development lifecycle really is that.
At the very beginning, providing tools that developers can say, what are the threat what's the threats to this product? What are the trust boundaries? How do I protect those trust boundaries? How do I mitigate those? Next part is, if I'm going to code, what are the security standards I need to have?
What are the security specifications I have to meet in order to mitigate the threats that identified and deliver a secure product. Next is, how do I build that? And when I integrate that into my compiler or whether I'm using a Docker server, a Docker system to be able to integrate my code, I want to make sure that it's secure, that results in secure outputs, has hardened buffer overflow, memory protections or uses hardened images that I expect to see secure configurations in building them. Finally, I want to integrate that and start and unit test that and I want to use static analysis. I want to make sure that the code as design is actually working the way I expect it to be.
It's not only producing quality results, there's no quality defects, but there's also no security defects that I need to address as well. I want to put that all together, test it again at an integrated system, but then I want to do some other additional hardening checks and validations. I want to fuzz it. I want to know whether it's going to perform when I give it malicious input or input it doesn't expect for example. I want to make sure that it is actually running all the code I expect and then I know all the software that's in there that's maybe I built or maybe that I integrated in from an open source or a third party as well.
I want to make sure I know what their vulnerabilities are as well as my own vulnerabilities. And then I want to basically take that and use that capability again to automatically validate every image that I'm going to hand off to a customer or deliver for their use. And that last check should be done independently so that that process says, yes, everything that you said you did has been done, the product meets our needs, and we can now release that into the wild. So the way we do that, again is through partnerships. We leverage Synopsys over the years to help us with providing the right types of security tools into our system.
Through partnerships and professional services, we work with Synopsys to understand what we need to improve upon, where we can use them to help improve the defect understand the defect density in our software and tune our static analysis so that we get more productive and less false positives in our results. And finally, the benchmarking, the b sim process that Andreas mentioned a few minutes ago helps us to understand how are we doing, not only against our customers, but against our competitors, against those people in the industry who are also using our product. And we've used them to understand not only where we're going or how we've done, but when we start to project forward what we want to do, whether those plans are going to be effective as well. So that together gives you a picture of how you take best in class tools and practices, make them available to users, the developers in a simplified way, automate that into their system, automate it so that can be integrated into their system and deliver results at the speed at which they're working today. And that part is our been our story about how we do digitization through our partnership with Synopsys.
Thank you.
Thank you, Graham. It's time for a short break. We will start again at 9:55 sharp. Coffee Okay. We'll get started with John Cooter.
Hello. Good morning. My name is John Cooter. I'm the Vice President of Marketing for Synopsys' Semiconductor IP Group. When Art was showing you the corporate diagram here earlier, there was a reason why IP is in the middle, because it extends down into the silicon processes and up into the software space.
So let me tell you a little bit about what is semiconductor IP. So semiconductor IP is predesigned blocks of logic, predesigned and pre verified blocks of logic that get integrated into a customer's larger system on a chip or SoC design. I like to make an analogy of building a house, for example, something I've done three times here in Texas. And a little fun fact, every one of those three houses have been hit by lightning here. So but as I've gone through that house building process here, you've had a foundation, you pour the concrete there, you have the 2 by 4s and you put them together with the dales and stuff.
But you know what the general contractor has never done? He's never really built an oven. He's never really built a refrigerator. Why? Because there's a lot of great suppliers that can build that can create just exactly what we're looking for.
And that's really an analogy that I use for the semiconductor IP. It's common functions that go on lots of different chips that we can that our customers can then integrate into their larger SoCs. So let's talk a little bit about it. As Art mentioned, it's 20% of the overall business, a little bit more, our IP business. It has been growing very nicely and we expect it to continue to grow very nicely at low double digit growth rates here.
We are the number 2 largest IP provider in the world behind ARM and we're the market leaders in the area of embedded memories, in the area of process specific or foundry specific IP, which we call physical IP and in analog IP. And we're seeing a lot of opportunities here to continue to grow in IP. And I'm going to give you a couple of reasons why that is. One of the reasons is that new market opportunities being driven by some of the trends that Art highlighted about smart everything, automotive, AI, cloud and so forth. And our customers really appreciate the fact that we invest so much in quality that we derisk creating the IP, because one of the reasons you buy IP is to accelerate your SoC and to derisk it.
And so the investment in quality and in risk is very, very important to our customers. Our customers also value having a very broad portfolio of IP to buy from 1 supplier. So now what I'd like to do is talk a little bit more about the market. So according to a market analyst, Ip nest, the overall semiconductor IP market is $3,600,000,000 in size here. And again, the number one player is ARM and the number one segment in the area of semiconductor IP is in the area of processors and the related functions like DSPs and GPUs.
So within the largest segment there, which is microprocessors, we are the number 2 vendor behind ARM. And in the 2nd largest segment, which is wired interfaces, wired interfaces are things you use every day, USB, HDMI, Ethernet, so on and so forth. We're the number one provider of IP in that wired interface segment. We're also number 1 provider in memories, embedded memories. Now you'll also notice that those blocks are colored green here because in the industry those three green blocks are what's known as Foundation IP.
And so we have a very, very good position in Foundation IP, which is the 3rd largest of the building blocks in semiconductor IP. And then we're also number 1 in a couple of other areas, analog IP and digital IP. Now there are a number of things that are driving the semiconductor IP market. I'm going to really focus on 3. 1 is increasing shift from make to buy, so more outsourcing as our customers are focused on their core differentiation.
There's also the complexity that Art talked about, the complexity in the standards, the complexity in the chips and that drives more demand for our IP. And lastly, there's new markets and new market entrants and that drives demand for our IP. So let's talk first about make versus buy, insourcing versus outsourcing. And we have been looking at this data over a very long period of time. This chart happens to come from what we call our global user survey that we do on a yearly basis right here.
And it shows the percentage of IP that is in sourced versus outsourced. And you can see in a couple of the common categories things like verification IP, wired interfaces, memories, the amount that is outsourced to 3rd party IP providers like Synopsys is on the neighborhood of 60% to 70%. And this percentage keeps going up by a few percent every year as we have done these surveys over a number of years. So as I mentioned on the previous slide, the overall size of the IP market according to IPNEST is 3,600,000,000. If the IP market was 100 percent fully outsourced, it would be in the neighborhood, I believe, of about $5,500,000,000 TAM.
And so that SAM, that $3,600,000,000 SAM continues to grow as more and more customers choose to buy versus to make. Now I wanted to talk a little bit about complexity. So complexity is a great trend for us in IP because let's just take something as simple that we all know about USB. So USB 2.0, USB 3.0, which is 10 gigabits per second going up to USB 4.0, which is 40 gigabits per second, 40 gigabits per second. So in the span of a few years, the USB standard has increased in its complexity from a data rate perspective by a matter of 4x.
And that comes with a much more complex implementation and with more complex verification. All of that is good for us as an IP provider. Why is it good for us as an IP provider? Well, number 1, it's because more and more causes customers to ask themselves, does this make sense? And more and more the answer is no.
Let's buy it from a trusted IP provider like Synopsys. And also as the complexity increases, so does the average selling price of this IP. Now another trend that I want to focus on, which is the bottom trend. As Art was saying earlier, Moore's Law is certainly alive and well. And we're continuing to see very, very strong demand in the most advanced processes, whether it's FinFET processes like 16 and 14 or whether you're talking about advanced 7 nanometer or 5 nanometer FinFET processes or even the next generation, we're starting to work on some areas there in aspects of our company.
And I mentioned this keeping up with Moore's Law for a reason because as the chips go down Moore's Law, they become more complex and complexity is good for us, again drives higher ASPs from an IP perspective. And the other thing if you look at from the middle, I mentioned that our customers really value from us getting a broad portfolio of IP. And so 20 years ago, 15, 20 years ago when we started this journey, we started it in interfaces and we've been continuously expanding our IP portfolio since then into foundation IP, into processors, into security IP as we provide more and more IP that goes on to an SoC. So I next wanted to talk about a market research report from a company called SEMICO, which is done in October of 2018. And you can see we're in the middle here.
If you look at 2018 or so, you'll see the number of blocks according to SEMICO. The number of IP blocks on an SoC is 150 heading towards 200 blocks. And again, this is an area which says with these number of functions, this complexity on a chip, again, our customers are always saying, does it make sense to make or does it make sense to buy? And as they focus their precious engineering resources on their core differentiation, they're saying, yes, it makes sense to buy this from a trusted company like Synopsys. The other thing that they're asking us to do is they're asking us to buy not just individual pieces of IP like in the EDA world, this would be analogous to kind of point tools.
They're asking us to put those pieces of IP into a bigger function, which in the industry is called IP subsystems. And so this is a trend that's been starting over the last couple of years and customers are asking us to provide a bigger and deeper solution, which then just increases their trust and collaboration that we have with our customers. Now I wanted to talk about some of the new markets that are really starting to drive our business and have been for a number of years. So the big buzzword, you can't go anywhere without saying artificial intelligence. So artificial intelligence is, of course, a horizontal technology that's being built into every market segment, but it also is a vertical market segment.
So when I talk about artificial intelligence here, I'm talking about the accelerator chips that go into the data center for things like a video transcoding or maybe it's artificial intelligence inferencing or training chips. Today according to Intel that's a I think it's a $2,000,000,000 or $3,000,000,000 semiconductor TAM that they expect in the next few years to grow by a factor of about $5,000,000,000 to $10,000,000,000 So there are a lot of new design starts that are coming into the accelerator market. As the data gets more specialized, you need specialized processing units, accelerators are called in the industry to attack that problem. And you're seeing a lot of customers developing those chips. And by the way, many of these customers are brand new.
Some of them are coming down from the system level. And when you start a brand new design, what's the first thing you do? You don't have a legacy design group that's been around for 30 years or so. You just say, well, it's natural. Of course, I'm going to buy VIP, right?
I have to get this chip out to market quickly. So it's a natural decision in these new greenfields to buy IP. Okay. Automotive, computer on wheels some people call it, right? I'll go into it more size, but that's also creating a lot of opportunities for us, whether it's in ADAS systems or infotainment or connected cars.
There's a lot of innovation going on in this space creating new opportunities for us and for our IP. In the cloud, everybody's heard of the term hyperscale data center. It's more data going through it. So again, that drives more business for us, whether it's in the networking space, the server space, the storage space. And lastly, but certainly not least in the IoT space as well, things like smart homes and smart cities are increasing their electronic content and therefore creating opportunities for us.
So I just wanted to delve into a couple of those segments in particular. So the first is, this is a car here and as I said, cars are becoming more and more computers on wheels here, whether it's ADAS, automotive, automated driver assistance systems or whether it's infotainment or whether it's what they call V2X or which is in other words vehicles communicating to each other. So if the car in front of you is breaking, it tells your car to break, things like that. That whole thing is called VDAX or Vida infrastructure. So these things are happening in cars right now.
And whether it's the gateway, the connectivity, the infotainment, the ADAS systems, the powertrain, whatever, all of that requires a lot of our IP. I'm not going to highlight all of the IP here that's surrounding the car, but it's a significant opportunity, whether it's things like HDMI or sensor and control interfaces or mobile storage for map updates or different processors for specialized processing in the car. We have a broad portfolio of IP that is certified for use in automotive and certified to automotive standards. So let me talk about some of the new entrants to these fields, which are new greenfield opportunities. So this is a startup called Fabu, who is based in Arizona.
And they are making ADAS and autonomous driving SoC designs. Again, this is a company that just started. They're starting their first chip. They chose to go with Synopsys IP in a very broad portfolio of Synopsys IP. And this is not an isolated story.
Last earnings call, we talked about how we had more than 25 customers in the automotive space here. So again, a lot of opportunity for us in automotive as a company and a lot of opportunities for us in automotive as an IP vendor. I mentioned accelerators going into the data center and how that market was exploding and expected according to Intel by growing to 5x. Well, one of the emerging leaders in this space is in a small Israeli company called Habana Labs that we've been working with closely for a number of different years. They just introduced their accelerator chip for AI training and inferencing and it got great reviews.
It was 4x according to Lindley report, it was 4x faster than other solutions out there in the marketplace. And this is just again another example of how these type of chips are creating opportunities for us. Again this is a startup company, a greenfield opportunity. They didn't think about making their IP. They bought it from the first get go and they chose Synopsys because of our broad portfolio, because of our quality and because of the way that we have collaborated with them as they to get their market to chip their chip to market, I should say.
Okay. So just to wrap up and talk about Synopsys Designware IP. So just a couple of highlights here. So we have a very broad portfolio of IP. We focus on the functions that go on to many, many different type of SoC chips.
We are very focused on a lot of the new market segments as we mentioned here. That's definitely growing the demand in AI and automotive and cloud computing and IoT all creating great opportunities for us. Our customers are buying more and more IP from Synopsys and they're also asking us to put together larger functions of IP here into what are called complex well integrated subsystems here. And as I mentioned several times in this presentation, IP is all about quality and about low risk. And we have a reputation for this.
It's been earned over 15 years. Our customers trust us. We have very deep partnerships with them. We have very deep collaborations with them. We're working with them on the absolute bleeding edge of the technology, the standards and whatever they need, we're in there as their partner for the long haul to make them successful.
So with that, I will thank you very much for your time. And I will introduce Sasim Ghazi here.
Thank you, John. Good morning. My name is Sassine Ghazi. Thank you for joining us. I'm the co GM of our design group.
I'll be in the next 20 minutes or so walking you through our electronic design automation part of the portfolio. What is EDA for us? It's the combination of silicon design and verification product line. That's roughly about 65% of our business. The way I structured the presentation, I'll spend the first section of the presentation talking about the macro level drivers for EDA.
Then I'll dive very quickly into the innovation we're driving in each segment of the portfolio. What drives EDA? As John mentioned, design complexity. For us, we run towards customers that they are being challenged and designing complex SoCs, complex chips. Think of design complexity and what's driving it along 3 vectors.
There is the advanced processes. This is what is referred to pushing Moore's law or the more than more as you go from 7 nanometer, 5 nanometer and beyond. With that, it requires a lot of innovation between process technology and manufacturing along with design. The second vector is the established nodes. There are still plenty of customers pushing technology on established nodes.
I don't want you to assume that if you're a customer on established nodes, your growth or your opportunity to move to the latest technology from Synopsys is less attractive. That's not the case. These are customers that they're making a choice not to move to advanced nodes and optimize their design because of the cost trade off that they constantly make. And the 3rd vector is the massive illustration of that. So if you look at the cost per chip and the ramp up as you go from 10, 7 and 5 nanometer is significant.
The cost of a 5 nanometer chip design is about $550,000,000 to develop the chip. Now the other point I would like to make is look at the software cost as part of the overall cost. It's more than 50% of that €550,000,000 For us, we about 7 years ago, we could see the trend as our customers started hiring more and more software engineers to develop their chips. And we made significant investment on how do we verify and design hardware and software together. And I'll speak to it during the verification section of the presentation.
And as you look at this trend, our customers when they're making these significant investments, they want to make sure that the tools they're using to design and verify these chips are coming from a supplier that is not only reliable and been around, but can provide technology that is safe to develop these complex chips and not have to re spin them. Imagine if you have an error on that chip and you have to redo it once or twice, you go out of business. This slide right here, actually our customers love to see this slide. And this is a data of about 15 years' worth of tracking and shows the trend between different technology nodes. And if you see the blue colors are planar transistor or before the FinFET.
So if you think of Moore's Law, it really went through 3 transformations: the planar transistor, which think of it as a horizontal transistor or device then it moved to FinFET, which is more vertical And the gate all around, which is the latest generation of Moore's Law, is wrapping the fins, think of it as in a cylinder. The ramp up of the technology in the planar transistor was fairly consistent. Customers moved from one node to another in a very consistent way. If you look at the green, yellow and orange, that was the transition to FinFET. It took much longer to transition to the 22 nanometer and 20 nanometer, because one, it was not a simple decision for customers to make that transition.
It was expensive and costly for them. And 2, the complexity to design a chip at that node was very difficult. So that was a transition that took longer. But don't take me wrong, plenty of customers already on FinFET at this point. And you look at that little orange at the bottom of the graph is the are the 5 nanometer customers today.
The technology innovation that we drive to push Moore's Law and provide solution on the advanced technology applies to established nodes as well. It's not that we need to provide something different for advanced versus established nodes. The same innovation can benefit both customers. We are absolutely the industry favorite at 28 nanometer and we are driving the FinFAT leadership. Actually, we've been very fortunate through our collaboration with customers and the customer who introduced the FinFAT were very embedded in their design and their environment in order for us to have that head start in that transition.
Now you may ask how accurate is this data? When I say its Synopsys is used at 99% of the 12 nanometer designs and below, that can be somewhat conservative. I mean, we can say we're used everywhere on every chip on not only advanced node, on any process technology, because we touch a chip in any shape or form, it will be at the sign off level, at the simulation level, etcetera. So we have a very strong visibility in terms of what's happening in our customer base and their design environment. With that talking about technology leadership, let me transition to the what you see on the right part of the which one is on you?
The left part of the slide is the leadership on 7 nanometer. In here, we have number of provide in order for them to deliver their chips on the different market segments they're in. On the right side of the slide, you'll see we had an announcement about a month or so ago where Samsung introduced the first version of the next device, which is the gate all around. Remember the Moore's Law Transformation, planar, FinFET, the next one is the gate all around. And they used our complete solution to develop that test chip, not a sliver point tools here and there.
It was a complete solution from us in order to enable the development of the gate all around. Now with that, let me transition to our portfolio and how do we work with our customers to provide the sophistication of technology to enable them. First, let me start with silicon. Our customers here in silicon are the foundries, the manufacturers of the chips, the guys that actually manufacture and build the chips. With the portfolio in here and I want to point one technology in particular TCAD, it simulates devices way before anybody else sees them, meaning way before the customer or anybody in EDA sees the devices.
The foundries and the manufacturers are trying to simulate what's possible as they transition to the next technology node. For us, this is a very strong and unique position we're in, because really the bridge between manufacturing and design is so critical as you move to advanced technology that visibility we get early on is very important. And with TCAD, we have a significant market share and is being used pretty much with every manufacturer and foundries out there. Now as we bridge from silicon to design, what is design? Design are the set of tools that our customers use to actually develop the chip.
So as they start thinking from an architecture point of view, what is it they're trying to build and they want to implement it, they use our product to actually develop the chip. And think of design has 2 big elements, digital and analog, in order to develop the SoC. In digital, we are the undisputed number 1 leader in digital. 14 out of the 15 companies or top semiconductor companies use us as the primary partner for digital design. And in here, the complexity continues and drives our innovation in a significant way.
Then there's the analog portion of the design, where we have a portfolio that we took an advantage of the transition from planar to FinFET and focused primarily on design productivity around analog and I'll touch on it in few slides. At the highest level, when you think of digital design, it really consists of 3 pillars. You have synthesis, place and route and sign off. These are the 3 pillars or 3 design flow practices that our customers go through. They start with synthesis, then they go to place and route and then they sign off their chip.
And Synopsys has a number one position in each one of these segments. Now from this position of strength, we thought what will be the next level of impact that we can provide our customers. With that, we introduced our Fusion Design platform. And I would like to make few points here at a high level to illustrate why this is important. So we moved the 3 pillars, the synthesis, place and route and sign off on the same data model.
And that's a modern data model that's AI enabled and is cloud ready. What does that mean? For us, it's a huge benefit from a productivity point of view. It means our developers are able to share code and share algorithms along these 3 separate pillars, where historically they were completely 3 different steps of the design. So not only it gives us productivity, it gives us the it provides our customers the best results, the best outcome as they're developing the SoC.
If you talk to any of the semiconductor companies, they're constantly in a race to compete for power, for performance and for cost. So these are really the three measurements that they measure themselves against their competition. And that platform will enable them to get there in a much faster time given we blended the lines between the 3 pillars. As a result of this investment, which was about actually 5 plus years type of an investment to move this technology on that data model, we introduced a new product, Fusion Compiler, and we introduced this product in November last year, just about 5 months ago. I cannot say enough about Fusion Compiler and I'll be overstating it.
This is truly something revolutionary in our market. We're changing the way our customers do digital design. Instead of thinking of this design as 3 different steps, they can think of it and we're providing them a product that they can go between the 3 steps in one product. The feedback from the customer are along two lines. 1, it provides them a significant time to market advantage.
And 2, the benefit for power performance and area or cost is significant as a result. Because when you design along 3 different steps, you lose that benefit, because you either over design or you have to build margins as you hand off from one step to another. So with Fusion Compiler, it's the 1st and only product today in the market that enables our customers to do design from synthesis to sign off in a single product. And this is not something that you can anticipate in a quarter or 2 that somebody else will come up and say, I have a similar product. The reason it's not possible is 1 or in the timeframe that I'm describing is not possible.
One, it's the investment that we've made to move the technology. But more importantly, number 2, is the position and the trust that our customers have in our sign off technology, in our synthesis technology and in our place and route as the backbone of that product is something that took many decades for us to get to that learning and that innovation and that position. With the introduction of Fusion Compiler, as I mentioned earlier, we introduced it in November. We've had so far 16 logos adopting the product, 38 tape outs, which is truly unprecedented for a product that was just released. 8 different process nodes is being used on and 150 plus active designs.
And it's been adopted in 3 different market segments mobile, server and GPU. And again, these are the type of customers that they really do care greatly about time to market and the best performance, power and cost possible to achieve their design. With that, let me transition to the second part of our design platform, which is our custom analog design. Unfortunately, in that area, there hasn't been as much innovation as has happened in digital, I'll say, over the last decade or so. So we took advantage of 2 things.
1, that point that there was hunger toward more innovation in analog. And 2, we have a significant actually one of the largest analog houses today, analog design houses sits inside Synopsys is our IP team. So our we partnered with our IP team to figure out what's the fastest and best way to improve analog design productivity. So we came with a custom compiler as the product that is focused on advanced technology and design productivity, which is very important because if your digital part is moving fast and you're able to be productive, but your analog part is not competitive or productive, then you slow down your entire development. And the graph that you're seeing is the trend of increase of adoption of custom compiler.
Now granted you can argue these are small numbers compared to what's available out there. But to me, I look at it as a fantastic opportunity to be able to constantly grow and continuously grow along that curve. There's a very well known TAM and the differentiation we're providing is something we're incredibly excited about to grow our revenue in that space. Now with that, let me transition to verification. Think of verification, it has 3 layers.
There is the analog verification, there is a digital verification and then there is the hardware emulation or verification. With the analog verification, even though we don't have a number one position in analog design, in analog verification, we are absolutely the number one leader in that space. In the digital verification, as it states in here, 12 out of the top 15 semiconductor companies uses our digital verification tool called VCS in that space and we've been the market leader since 2,008. And on the 3rd layer, the hardware emulation, we've been the market leader since 2016. With that, let me dive into each one of them separately.
As I mentioned, in analog and mixed signal simulation, we've been the number one for many, many years. Maybe some of you have heard the H Spice or anybody who has done any engineering background have used it. This has been the golden reference for, I believe, 38 some years. For more than almost 4 decades has been the industry golden reference. Why is that important?
Everything has to reference to 8 Spice. We own 8 Spice. It's been that standard for many years. Then we built on top of it a different level of abstraction for analog and circuit simulation to run much faster while maintaining the accuracy of the Golden. Now with that, let me move to the whole digital verification complexity.
Actually, this graph is really are the steps our customers go through in developing a chip. It starts with architecting the chip. Then after that step is done, you move into actually developing the hardware. This is where the design tool comes in and some of the verification. Then when you're well into the hardware design, you start your verification development.
Then when you're almost done with your software development, you'll start the validation of the software and the hardware and how well are they working together. Are they working together and meet the intent or the architecture of what you've developed? I remember about 7, 8 years ago, sitting with 1 of the leading customers and they challenged us, can we shift left that development where we can do hardware software development in parallel? So if you look at the picture, it's really essentially pulling forward, so the customer can ship and go into production at least 6 to 9 months earlier than the previous method of developing a chip. And here we have some unique differentiation that enabled us to enable that shift of the hardware software co verification.
Let me explain it a little bit. As you start with an architecture, we have a technology that allows you to prototype the hardware before the hardware design even starts. So you prototype what's the intention of the hardware and then we provide that intention per se to the software developers, so they can start writing software before the hardware design starts. And as you advance into the hardware development, we enable through the emulation the ability to run the software on an early version of your hardware, okay? So this enablement was possible because of our unique and strong position in every step of the whole verification cycle.
And here is just a set of the who's who customers that they came forward with our relationship with them as it comes to the verification portfolio. And you see some of the numbers. I mean, top 5 of the mobile SoC vendors are using our digital verification tool, 18 of the top 20 uses it as well, etcetera. So our strength in that number one position allows us allowed us to integrate and shift left the productivity for our customers so they can ship their chips sooner and validate the functionality as soon as the hardware development starts. There's the 3rd element that is actually playing a significant role in that whole shift left of the development, which is our hardware emulation business.
The name of the our product here is called Zebu. And we're in early production and deployment of the Server 4. And two key points. It's the only system today in the market that allows you and enables you to run your software on an emulation system. And the reason it's a completely different architecture than what's available in the market.
It has the highest speed, which when you run software, you need the high speed in order to do so. And the other point is the capacity is fairly significant of the system, which enables the for that system to bring up the software early and to validate the whole hardware software development and ensure that the €550,000,000 plus investment that our customers are making on these advanced chips, 1, they'll work and 2, enables them to get it done much faster. So just to summarize, the EDA business for Synopsys, as I stated earlier, about 65% of our business, we I want to say we're fortunate that we have a strong bridge from silicon to design that gives us an early visibility into the complexity of advanced technology and bring that learning to design. In design, we introduced Fusion Compiler, which is a breakthrough in how customers do the digital design, which provides them much higher speed and time to market advantage along with more competitive chip. On the analog side of the design, we're focused on productivity of analog design.
Then as you move to verification, as I just mentioned, the whole hardware software co verification is something we invested in about 7 years ago and it's an incredible part of our portfolio that continues on growing very nicely. So thank you for your attention. And with that, I'll move it to Trac.
Thanks, Hassane. Good morning, everyone. I am Trac Pham, the CFO for Synopsys. I appreciate the chance to share our story today. As you've heard this morning, clearly the markets that we're in are very healthy.
They're growing and present a lot of opportunity for us. And so over the last several years, we've been making very significant investments in the entire portfolio. So we feel like after this phase, we're well positioned to capture that opportunity that's ahead of us. Let me describe a little bit of the financial results that have helped us get here and also how we see it evolving over the next few years. Okay.
So as I mentioned, over the last 5 years, it has been a tremendous amount of investments and innovation within Synopsys. But against that backdrop, we have also delivered very strong results, very consistent growth on the top line and also on earnings. It's very rare when you can talk about a business that's investing and you typically when you think about a company that's investing, you don't normally see the kind of results that we're showing here. And if you were to actually extrapolate over 10 years or 20 years, very similar trend over a long period of time. Now there's 2 things that really help us achieve these results, 2 significant areas.
1 is just the business model. We mentioned it earlier in terms of the time based model that we have. Over 90% of our business is recurring is via recurring revenue. So to prevent that provides a really high level of visibility and stability throughout different cycles. So that visibility can you can see that in Q1 where we showed about 4,300,000,000 of backlog.
This is non cancelable backlog that if we just stopped everything today, would continue to click off in terms of revenue and cash that we received. The second thing that's really remarkable about how we're able to execute against this is an execution discipline. One thing that we've done consistently over the years and we touched a little bit on it earlier, as we talked about our expansion to IP and more recently in software integrity, is this focus on delivering both near term commitments while simultaneously investing for the long term. So these consistent results are really a function of us really managing throughout different horizons.
Okay.
If I go down to the next level, you can really get a sense of the strength of the business. Whether you look at it from a product perspective as a function of the investments we've made or you look at by geographic or by geographies, over the last few years, you can see a very broad based growth in the business. So the diversity of the business we talked about, but just the consistency and the depth of the strength of the business, This really allows us to manage through multiple business cycles. I touched a little bit on the business model, but the fact that there's such strength across the business allows us to weather very well. And you go back over the past decade, whether you look at the global recession in 2008, 2009 or you think about the large amount, significant amount of M and A activity in the semi space in 2015, 2016, we were not only able to weather it, but in some cases came out of those situations much stronger than we did coming in.
From a balance sheet perspective, we've actually been very proactive over the last few years in terms of managing our balance sheet. This is certainly a competitive strength for us. This business with a model and with the discipline driving generates a tremendous amount of cash. Over the last 4 plus years, we've generated over $2,000,000,000 about $2,000,000,000 of cash. And we've augmented that with some additional debt over that period of time.
And we've used that cash and the debt to fund much of the organic investments that you've seen that's driving the results. We've also invested in acquisitions to expand the TAM. And we've also returned a significant amount of cash to shareholders via buyback. Our view here is want to manage this very proactively, be a little bit more aggressive on it. But the key always is when you look at this balance sheet and you look at the P and L, it really is being balanced, managed in a way that we feel is sustainable over time.
As I've talked about for us to continue to deliver the results that we have delivered and that we want to deliver long term, it has to be done in a way that we feel like we can repeat the cycle and sustain the cycle effectively. A little bit more, our cash over the last few years, we really have been seeing you've seen a very strong increase on our cash. We've talked much about the 2018 cash flows, a number of one time items that we've previously disclosed in our financial supplements. But overall, the trend is very positive in terms of cash flow increases. For those who are not familiar with the company, this cash flows over the long term can be very lumpy depending on the renewals of the business, but typically will track very closely to EBITDA less cash taxes.
And then from a stock buyback perspective, you saw the $1,600,000,000 over the last 4 plus years. And this is about 100% of free cash flows. So pretty significant amount of cash that we've returned to investors. This balance between organic investments, buybacks and M and A has created a lot of value over last few years and we expect to continue a similar balance going forward. Now, I think in the next few slides, I'm going to fill in some of the blanks that you're going to see in your presentation, our outlook for the next few years.
The we crossed $3,000,000,000 last year. And we took it was a pretty significant milestone for us in terms of crossing $3,000,000,000 But our mindset and our focus is definitely on $4,000,000,000 as a next milestone. We've talked a lot about the market opportunity. We talked about the investments that we've made to really position ourselves to scale up and get to the next $1,000,000,000 What we haven't talked much about and let me touch on a little bit is that when I talk about our mindset, we really are trying to build a company that endures, a company that can get to the next level. And that means our management team, our management and the leadership team that have gotten us here, but also evolving our capabilities so that we can get to that next level.
When you look at our back offices, the infrastructure support behind that, the management systems to support that. So across the board, we're looking at how to build the not only the technology, but the infrastructure that can help us be successful at that next level. We've touched on the revenue model. Over the last few years, last couple of years in particular, we've grown in the low double digits. The model that we highlight here in terms of EDA in the mid to high single digits, IP in the low double digits and software integrity in the roughly 20% range is a model that we believe can be managed through different cycles.
And we've talked about we've recently raised the EDA model from low to mid to mid to high. And depending on where we are on the cycle, it may be higher or on the low end of that range, but this is something that we believe can be sustained over multiple periods and through multiple cycles. On a margin perspective, the investments we've made is the investments we've made highlights where we've been over the last couple of years. And it really presents an opportunity for us to continue to grow and scale the business. And what as we look forward, there's definitely an opportunity for us to continue to grow the business, while also improving profitability.
Structurally, there's an opportunity for us to manage the business on a path to Rule 40, some combination of revenue growth and margin expansion that can get close to 40. Now as you can see, we've done a pretty good job balancing both revenue growth over the last 5 years of revenue growth and investments in the business. And we believe that going forward, we should be able to continue to leverage those investments to drive growth, while also driving profitability with a long term goal in mind of something in the 30% range. Now recently, we've talked about driving operating margins up to 26% in 2021. But we can see here looking at our where we are with our product portfolio, where we are in terms of thinking about how to scale the business, we're definitely raising the long term 'twenty one objectives of high '20s for operating margins.
Now the combination of very solid growth outlook and a focus an increased focus on operating margins should allow us to drive double digits in the low earnings growth in the low double digits. And this again is an increase of where we've been historically. We've done a great job over the past 5 years of positioning ourselves for long term growth by investing in the business, while also delivering high single digit earnings growth and meeting that commitment. Given where we are in terms of our investments and the focus going ahead and the combination of revenue growth and operating margins, we're very optimistic about our ability to drive EPS in the low double digits. Now as I've talked about, it certainly can start with revenues.
The outlook for the business is very strong. We'll get some operating leverage based on our revenue growth. And then I talked a little bit about the productivity metrics and where we're focused in terms of the rest of the business. The technology platforms that we use to run the business, the management practices and management processes that we're evolving to manage this business at the next billion. And the other part is scaling up the software integrity business.
Andreas talked about the Polaris platform and how we should be able to get some go to market leverage there. And also our ability to drive revenue growth through the platform. There's also an opportunity to drive leverage in that business in the back office. Over the past 18 months, we've spent a significant amount of energy and time and money I'm making sure that we're building a business structure, business processes and a technology platform that can scale up a business that is different from the traditional EV and IP business. We're going we're making a shift from a low volume but high dollar business with a very concentrated set of customers different price point.
And so making sure that we can build the business practices and business processes to scale that business and getting operating leverage there on a very high growth business. That should be where we allow that business to both grow and increase profitability over time. Now we're still in the middle of Q1. We'll end the quarter in just over a month. We reported Q1 results Q2, sorry, thank you.
We reported Q1 results a few weeks ago, very strong start to the year, really gives us a strong outlook for the year. And so that point and today, we're reaffirming guidance for Q2 and the full year. So and I'll conclude it and say that, as you've heard today, the market opportunity for us is tremendous. It's growing, it's healthy, it's very dynamic. We've been very deliberate over the last 5 years in terms of making investments across the entire portfolio to position ourselves to win in this market.
And you can see that our commitment in terms of continuing to drive the business for growth and operating margins over the long term, we believe can create a lot of value for investors. And we're excited about the we're excited and very optimistic about the outlook for the
company. Okay. We can invite the speakers up to whatever you call those things up there. Would you mind turning off the projector for us? You all can do me a favor and wait till you get the microphone to ask questions.
We've got Roberta over here and Lisa over here. And raise your hand and we'll The
question is behind you, behind you.
Sorry. 1 and then
Thank you. Rich Valera from Needham. Track would love to get any more color you can provide on your increased target of non GAAP OIM from 26 percent to high 20s. Is that mainly a better revenue outlook than you thought before? Or are there other factors driving that improved outlook?
Thank you. Hi, Rich. Hello.
Hello? Yes, Tom. Okay. Sorry. Rich, it's going to be a combination
of both, Rich, both the revenue growth and driven by the strong position that we have in the product portfolio and also an increased focus on the operating side of it?
Hey, Mr. Shee, it's Marbisi. So I think that the kind of the high level numbers you put out there suggests kind of mid teens EPS growth. So I'm guessing there's a little bit of wiggle room there. So maybe you could walk us through that.
And then secondly, for Art, I think it's pretty difficult to paint it bare case in terms of computing. So I'm wondering what the impact actually of Intel's announcements of cutting some of their headcount is, if that's something you guys expected or if that will impact you guys long term?
Let me start with the EPS. Mitch, thanks for clarifying that. The Mitch's question is around the EPS growth, and you're right, it's somewhere in the double digit range. Yes. So there's some flex on that depending on where we are with the combination of revenue growth and margin expansion, but it's certainly comfortably in the double digit range.
Regarding any cuts or changes, while we don't like to comment about any individual companies, in general, our markets do this all the time. And in most cases is that people readjust their emphasis from an employee point of view on those area that has have the biggest promises. And more often than not, when companies make changes, they also look at how can they become more efficient, more effective and what are the new technologies that they should invest in. And so from our perspective, our responsibility is especially during these times of changes to be a really good supplier and supporter of a company because A, it will be remembered, but B, because there's an opportunity often to automate certain things. IP reuse is a perfect case in many of these companies or acceleration towards a new technology.
And so we've been in arguably the most dynamic market in history of mankind in terms of rate of change. That implies that companies change all the time and we've survived very well under that.
Hi, Matt Caffino from Morningstar Investment Management. A couple of questions for you. I wonder if you could talk about China's homegrown semi industry and the extent to which they're going to be using your EDA tools or the extent to which they might be developing their own tools in the long run? And then Art, I heard you talking outside about ASICs and AI and maybe just some thoughts on what you think the end state of that industry is. Are we going going to end up with 100 different chip types for every application?
Or are we going to eventually have the intel or the arm of AI?
Okay. Well, starting with China, we're extremely familiar with that because we had the good fortune to be in China very, very early on. So in the mid '90s and actually I visited in the mid '80s. And so we have actually lived the rate of change of that industry literally every, every quarter and have seen its evolution. And the most important part of that evolution is not only an increasing commitment of the country to high technology, to chips as an underlying set of capabilities, but also to the education of the people to become competent.
And so China is an important part of our market. It is we look at it in the context of Asia Pacific that has grown in general and you can see it in the numbers that we release on that. We don't disclose China specifically, but certainly we communicate well about Asia Pacific. And so we see a continuation of that, notwithstanding maybe some of the political challenges that are in play today that we don't control, but have been somewhat far away from us so far. It's interesting in that context also connected to your second question, which is AI, because China has invested substantially in that direction, anticipating that AI would be not only a driver for technology, but also a driver for the verticals of the different markets.
And AI is an interesting space because you say, will it gradually consolidate? Well, we're talking at the very beginning of this. And the beginning, I think, is measured in decades, not in quarters at this point in time. And so yes, we're seeing a massive broadening of the number of people doing chips. Some of those are clearly going to be winners.
Some of those, there may be some question marks. But in this case, I have no doubt that as some companies may not do as well with chips, they will be absorbed very rapidly into other companies because the talent set is highly valuable and will be reused to do then the next generation and the next generation. And by the way to also split the market up that certain types of AI will become more directed at verticals because the impact is so high if you have something that matches well the type of data. So there's really a lot of opportunity in that space and it's a market we are touching quite well.
Thanks, Jeff. Lisa Howard, a couple of technology questions for Art and Sasim. In core EDA, we often hear about the lifespan of a hardware platform like Zebu and others lasting several years. The question has to do with the lifespan of software platform in core EDA. If you go back to the years after you bought Avanti, took you about 4 or 5 years to fully integrate that, that culminated in ICC.
That took you through the next 10 years or so. And now you've got Fusion as a platform. How do you think about the longevity and extensibility of that as your new platform over the next number of years. Additionally, many of the new opportunities you talked about like 5 gs, IoT, automotive and so forth, would seem to be inherently custom and analog mixed signal problems to solve at the chip and systems level. Yet you are a distant number 2 in custom overall.
The question is, do you think that customers will increasingly lead their tool and vendor selections with custom, where perhaps in the past it was led by digital. So do you think this kind of customer selection dynamic might be led more by custom given these new opportunities rather than what we've seen in the past?
Maybe I'll answer the longevity and then as Hassane can give you the exciting parts that we're specifically encountering right now. It's actually a very good observation that in hardware, just as in software, you have sort of phases. And in software, the first thing to not forget, we're in a very strange field, where you cannot forget a single lesson you ever learned. If there's some technology insight that happened in 1997, if we forget that insight, no chip will work today because everything is cumulative. At the same time, the notion of fundamental architectural shifts is a necessity because every so often you need to rethink how you do the learning, especially in the context right now of having machine learning possible, of having very massive amounts of data possible in a computation, I.
E, very broad platform and in the context of this notion of fusion that I think is remarkably innovative because it takes different tools and says, let me take the different sub pieces of it and see by mixing them up in a different recipe, can I create a better meal, can I create better chips more rapidly and that's what we're doing? So we have entered now this fusion platform, which I think is at least a decade, if not more of runway for us. Have, by the way, the same in verification. We have a platform there that started a couple of years ago that includes the hardware. Andreas has started the Polaris platform.
I think these investments that were massive, both in pieces and in assembling something, I think are all looking at at least a decade of runway.
Yes. It's exactly what Art said. By putting everything on the same data model, it's enabling us to innovate and bring in more technology on that data model. For example, test. We announced something incredibly exciting around test, which is essential for the automotive market.
How do you do functional safety design built on top of that fusion platform? So yes, I do see it as for the next decade type of platform to innovate and build on top of. Your second part of your question was around analog design. If you look today, analog design, it really lags behind digital from a process technology evolution and push. And as I stated, there hasn't been much innovation or well needed innovation to bring analog design productivity faster.
And that's what we're focused on. Custom compiler for us, we had 2 transition: the transition to FinFET, that's where we focused and the productivity of analog. So do we see a tramping and more content of analog on advanced technology? The answer is yes.
I think the other part of that question was, will customer decisions be led by analog design? And also you want to bring in the analog simulation leadership as well? Yes. I don't think it's led by analog
design.
No, it hasn't. And I don't fear that it's happening. But the productivity of analog still care about for our customer. As far as simulation, bringing the verification of the SoC together, that's really very complex, even though each one of them, analog versus digital, are developed on different technology. The verification happens simultaneously.
You want to verify the entire SoC together. And this is where we lead in terms of the verification of both analog and digital.
Maybe if I can add a macro generalization on top of that. If nothing else, you should take away from today that Synopsys has invested in a whole bunch of fundamental technologies deep down up from the physics to the silicon, but also now from the software applications down from the intersection of hardware and software. And the it sounds like a little of an analytical expression, but this notion of moving from scale complexity, meaning you do the same thing, but more and more and more and more and more with 1 or 2 O's, depending on how you want to look at it, meaning more and more transistors, has now moved into a realm of systemic complexity, the intersection of fundamental technologies. And what is exciting for us about that is by being very proficient in these different areas, there are certain intersections that are certainly going to turn into the make or break of entire product families, because if one aspect doesn't work well with the other, the product is not going to go to market or will not be safe or will not be viable. And that is how Synopsys is sort of broadening its overall TAM as it's coming about, while at the same time remaining technology very deep and leadership.
And hopefully, that came across a little bit by virtue of seeing and hearing the diversity of the pieces that we have today.
Tom Diffely with D. A. Davidson. A couple of software integrity questions. So how do you move from the $2,000,000,000 SAM today to the $5,000,000,000 $6,000,000,000 TAM over time?
Is that acquisitions or can you do that with your portfolio? And then because you started to focus on the margins, what do you think that's done to the growth rate for you in that space?
Okay. So to the first question, I mean, we certainly look at our portfolio, which portfolio itself has really a lot of momentum to gain. There are a lot of opportunities out there, customers that don't do anything in terms of software security or software quality. So we see really that as one opportunity. But of course, we always look at organically and non organically how we can invest and grow the portfolio.
This is something we constantly do and that is something you will see going forward. To the second question in terms of the margin, I think we constantly feel really about the balance, the drive opportunity as well as driving the margin forward. So right now you saw the number in terms of 20% that we are aiming for. If there's more opportunity, do we take this? Maybe this is also something Trevor will comment on.
Yes. I do want to comment on that because over the last 18 to 24 months, Andreas and I have been working very closely on how we scale up that business. And so when we ask when you ask the question about margin, it's as if you're trading off growth and margin. And actually over the recent period, what we've been trying to do is accelerate both, right? This focus on removing friction from our processes.
Keep in mind, we've spent 25 years in a certain space with a certain business model and trying to build this within in house, there's a lot of friction that's not well suited for that business. So removing the friction in terms of how we operate internally from our business processes, putting in a completely new technology platform to
run that business, and thinking
about how we growth and operating margins. So we're very confident about how we're going to scale that up. Now going forward, as we see the opportunities for both the market evolving and as we see margins improving, we will look closely at it to find out what is the right balance to manage that to create the most value. But I feel like it is we've made investments both in the product side and technology side and on the business side that will allow us and put us in position where we can make that trade off effectively.
Jason Celina from KeyBanc Capital Markets. Kind of building off that last question, as we kind of think about the profitability of the SIG business, it looks like at least a quarter of kind of the SIG business revenue comes from some sort of consulting services. As we think of kind of the gross margin structure of that services business, would that resemble typical services gross margins?
Just first of all, I mean, if you look at scaling up the business on the services part, and as outlined in the talk, really think about it as a grease, right? Think about that as an enabler essentially, how we can essentially sell more technology and broader solutions on that. So that does not mean that the services will necessarily grow in the same ratio as on the product side. Ultimately, when you look at the maturing process of customers, the most mature customers really use automation in their DevSecOps ops operations. I mean, they're focused on products.
They're focused really getting the automation piece. Whereas the earlier
Andreas, your mic is not working really well. Can you pull it up, see if it's connected?
We're holding.
Use this, that's better. Sorry.
So while on the earlier stage of the maturing process, this is really customers where they need more help, right, in terms of consulting.
Yes. I'll add to that. That's a conversation that we have on an ongoing basis, right? Where is, again, putting in the infrastructure to support the services business. Again, this business was the acquisition that we made in the services side.
The business had a long history, was doing very well, very well recognized and a great brand name, but it was operating as a startup. So building that infrastructure to support and scale up the services businesses is one focus. The other part Andreas highlighted is as we grow the business, it is intended to really come in there in a very specific way, both strategically to drive to have that conversation, to drive products and also engage with the customers at a much more strategic level. We'll manage the services in order to grow it profitably, but it's the real emphasis is on making sure of how it fits in with a broader portfolio in terms of how it drives the product side.
This is Francois from Berenberg. I had one question for John about the IP business. So you talk about the building blocks and also creating subsystems for your customers. From their perspective, is the real value you provide to them these building blocks or the subsystems you make for them? And if it is the latter, is that a more capital intensive process?
And is that margin dilutive at all?
Okay.
Yes.
So in terms of where we are in that transition here, just the individual protocols themselves are getting more and more complex, as I mentioned, going from USB 3.1 or whatever to USB 4.0 gets intrinsically more complex. So the standards are evolving. They're getting more complex. And that's good for us for multiple reasons, as I said in our presentation. Now we also they are also asking us to provide larger blocks of IP that are more integrated.
And to answer your questions, of course, we don't comment about specific margins or anything like that. But it's what we do along those lines is very tightly integrated to our IP and is therefore has a same kind of value profile, I would say.
Jon Pitzer with Credit Suisse. Just going back to the op margins. On the 2021 target of high 20s, what do you see the software integrity margins at that point? At scale, how do you think about that business 5, 10 years down the road from an operating margin perspective? And then just holistically at the overall business, raising targets of 30% is good.
But if I look at the value that you bring, why isn't that number significantly higher? And if I look at the R and D spend, I don't think anyone in audience would fault you in reinvesting in R and D. But why isn't there more leverage in the SG and A business? Especially if I add back stock based comp, even at 30% target, you're really at sort of a mid-20s. You look at some of your chip company customers and they're sitting at 35%, 40%, 45% op margins, why isn't there significantly more leverage in the model longer term?
Okay. Let me start with the first part of that, which is software integrity. Structurally, this business is an enterprise software company offering with a focus on security. Long term, I would expect it to be at the corporate average or higher, right, similar to what you would see in other enterprise software companies. Where it is in 'twenty one, that really will depend on what will deliver the most value in terms of where the growth profile is, right?
Because as I said, we are managing to a combination of revenue growth and operating margins. We happen to be in a very high growth area that and we're well positioned for that. And so we will continue to look at that balance. But structurally long term, we think this could be a very profitable business. As far as ARPAN leverage, we do if you look at the portfolio and the challenge that we're managing, right, we're managing along a time dimension, delivering today, delivering for tomorrow, many years from now, right?
So, managing that time horizon. We're managing a very complex portfolio of EDA, IP and software integrity, right? With different growth profiles and with different and they are at different points in their life cycle, right? So the goal there is we believe we can get to this margin profile that we discussed. We're certainly on a path to that progressing from last year to this year, and you could see that trajectory.
As our evolves and that can improve, we'll certainly look at it. But it is a our one thing that you should take out of this presentation today, it's really a balance. It's a balanced portfolio. It's a balance over horizon. We're trying to manage that in a way that we will create the most value.
We are looking very closely at all elements of the company to drive more productivity, more efficiencies. Hence, we're increasing our outlook for 2021. And as if we can make improvements on that and it's faster than we'll certainly talk to it. But right now, we feel like that's the best balance of creating value for our shareholders.
Just one quick follow-up kind of with the strategy. So one of the interesting slides you had in there is how you basically build out a new portfolio every time you kind of see the growth rate get to mid single digits from EDA to semi IP and now it's in software integrity. So I'm not expecting you guys to give me exactly what you're going to do in 5 years. But if I were to look out 3 to 5 years, what type of technologies do you think would be ancillary or interesting because it's clear that you guys have been good predictors in the past? So what type of technology would be ancillary for the EDA space?
Or would it be more software integrity and so on and so forth?
Well, we have borne these type of questions with a certain degree of caution, obviously, because, A, we don't want to signal what we would be doing, but also because right now, we have just started a journey in an area that has enormous promise and also many, many side ramifications. By the time you touch the software world, you can look at many things from productivity to the quality of the software, to the embedding into the hardware, to the security questions, how they relate to both and most importantly to the intersection between the 2. In all of those, there's at least one common point, which is faster computation is still unbelievably valuable. And so when I described earlier that we're now in the midst of this engine that says, I'm an AI algorithm, what do I want? A faster computer.
I'm a faster computer, what am I looking for? A AI algorithm that can use me. That says there's going to be a narrowing down to many different architectures for AI that will have direct impact over this part of our thinking guided forward will be, I think part of our thinking guided forward will be to look at which verticals can actually adopt this really fast and benefit from it and which verticals are very large in terms of the impact it would have. And fast adoption and large size are not always the same. And so it's going to be a balancing of looking how do we move up from where we are, which is the natural growth of any company, do something for your customer that you didn't choose to do before.
And customers sometimes resist that, no, that's my job. But IP, they said that and then it became less of their job because we're moving up the value chain. And so in that sense, the picture we're painting for the first time in the last 3, 4 years, we've actually have people that are specialized for verticals to understand those. And some are in the SIG area, be it in the finance area or health or so, some are across the company, such as automotive. We always had the computation, communication.
And that is how we're going to continue to look at that picture. And that ties directly to the previous question, which is this balance between maximizing our profitability while assuring that on the multiple time constants, we invest well for the future that's ahead. And having just come out literally out of 5 years of fairly massive investments, both in terms of acquisitions and significant platform development, we feel that now we're in a good stage to say, okay, let's run with that, tighten up the company every possible way from a profitability point of view, but never forget that we're building for the long term. And the long term, and that's one of the nice things. We have many, many different time constants.
We're more diversified. We're more stable. We have a business model that has a majority of ratability. All of these say, well, it's a very solid company moving forward at the heart of the intersection of all these wonderful technologies.
Thanks, Lisa.
Jay, please, Howard. Two questions for Art and Track. First, a number of your peers in software, including in particular design software, speak about the eventuality of consumption based models beyond subscription models. And my question is therefore, excluding IP for which there was already some component of consumption in the model. Do you see any room whether for core EDA or perhaps for SIG that you might eventually over time layer in a kind of consumption or on the meter type of model as opposed to just a straight subscription you spoke about account based profitability as a management tool, something that you looked at closely.
This is long before SIG and it was an EDA reference at the time. But now all these years later, is that something that you think is important, will become increasingly important, particularly when you look at the resource and services requirements associated with SICK?
Well, so at any point in time, looking again and again at business models is important. Some of that is being also suggested in the context of having more cloud adoption, which is really an elaboration on the compute environment for the customers. Cloud is not free, meaning if you use more computers, you spend more time on it. The question is more does that shift the utilization model to go more towards spikes rather than an ongoing utilization? And that will probably bring about some evolution of the pricing packaging model, although customers are going to be very careful before they do that, because they themselves will be worried that some engineering groups only is going to have these huge spikes that were unexpected.
And so while initially that sounds all great, gradually they will enforce their own economic models. Regarding the notion of account profitability, we're quite careful with that because accounts have many different dimensions of goodness to us. Of course, if you continually lose money with some customers because you have to support them no end, you will gradually decide, well, can we evolve the model so that it's a little more balanced. Sometimes we also do things for customers because they actually teach us or they drive us into the next generation in a fashion that's positive. But in general, the bigger customers and the customers that drive more of the state of the art are economically well balanced with us.
So actually, I can point to customers where I would be in complaining mode. We're in thankful mode for what we can do. But we move our resources where we see the opportunities, and we've always done so both economically and technically.
Yes. Jay Hock from Edgerton. Quick question on you haven't spoken much about pricing today. And can you talk about how that's evolved, if at all, in your model? And also what component, if at all, does that factor into the higher margin targets you've laid out today?
Sure. Well, pricing is actually de facto linked to how sophisticated are you in terms of what you offer? Do you have that something that's better than the competition? And so in the history of EDA, fundamentally, it's always been, well, here's the next release, it's so much better. The price will go up somewhat for that.
And then over time, the customer buys more and more and more copies. There's some discounting that occurs. And so we have pushed for essentially run rate increases with our customers as we de facto provide way more value. Now that value has to be commensurate to how they can fund their own projects. And so there's a somewhat of a natural balance that occurs there.
But if you don't have unique capabilities, then you don't have pricing power with the customer. And so that race is always on. Fortunately, we have a number of products that are quite unique, that are well established. And keeping a balanced relationship for multiple years with the customer is actually as important as optimizing in the moment. But again, for Synaptis, I don't have any complaints from our customers.
Next question. I think this is first seen on Fusion Compiler. You mentioned that it had an unprecedented customer ramp up. So I'm wondering if you can put any context around that relative to IC Compiler 2 or IC Compiler? And then also, 10 years in the making sounds like some pretty huge technological innovations.
Can you give us a sense of what this does for you guys competitively? If you can give us any sense of the how that might change the competitive landscape? Thanks.
Yes, absolutely. As I mentioned, it's really transforming digital design, meaning the way our customers today develop digital SoC, they develop it along 3 pillars, the synthesis, place and route and sign off. This is the only product available in the industry today that enables the customer to blend these lines and go from synthesis to sign off back and forth as they're developing their SoC. So the adoption when we engage customers, as I mentioned, the number of logos, number of tape outs, they saw it as a huge productivity tool for them to bring their SOC time to market shorter and deliver to better power performance and area. So from a ramp up point of view, I do see it as the platform today that will we've seen some revenue growth, some adoption growth, etcetera, due to the introduction of it.
But it will ramp up absolutely over time for the next number of years. And that's where we're going to add a number of technologies on top of that platform to deliver to it. Did I answer your question? Thank you. ICC2 was the next generation of Place and Laut, right?
So there was a natural transition from the previous generation to the next generation. So we still have very strong investment in ICC2 as a place on route technology. This is a whole new category of products. So the ramp up is very different than I'm going from one place and route to the next place and route versus I'm transforming the way I'm doing my digital design.
Any other questions?
Maybe one more quick question for Graeme and maybe for Andreas as well. Graeme, I guess I'm assuming you've had a long relationship with Synopsys in both designing hardware and now writing software as well. And I'm just wondering given the importance of software and I think software integrity is going to be extremely important going forward, especially as more software gets embedded in hardware and their safety requirements, etcetera. But I'm just wondering is software integrity and the things you do with Synopsys, is that something that you would look to bring on additional vendors so that you can not have a sole source? Would you want to have multiple software integrity vendors so you can verify your software from multiple dimensions?
And for Andreas, are there any holes do you think in your software verification offerings that you need to fill? Thank you.
Shall I start? Yes. Thank you. As a software security guy, I totally agree that software security is a security is a very important thing for us to be focused on and will be part of what we do. I tried to mention in my presentation that we look to best in class tools for to meet our needs to develop solutions, secure solutions and deliver at speed.
Often what we try to do is we have 2 challenges. 1 is we have over 400 products that we release every year, 70 clouds that we're operating. We're acquiring new companies every year. So we have both things that we've invested in and things that other teams have invested in when they as they were acquired. Part of what we do is constantly evaluate what's best in class.
There are certain parts of software development that are consistent across whatever we do from an offer model perspective. And therefore, there are there's going to be consistency in the tools that we use there. New technologies, new ways to deliver product are always introducing new capabilities that are needed or identifying new capabilities that are needed and new products that help solve that from everything from open source to commercially available products. It's our responsibility to constantly look for what's the best in class. Our long history with Synopsys has been there are things that we believe that they continue to deliver on because their investment on that are critical and vital to our basic secure development.
Yes. Touching on the second part of the question. I mean, first of all, this is an think about this as an emerging industry and it's a very vibrant industry. It's almost like the early days of EDA, right? In the early days, you just had a simulator, right, to validate a chip.
And then we developed many more technologies that complement. We see that the same way in the software integrity, right? I mean that essentially the emerging technologies as they come, we constantly look at these technologies, whether we develop them organically, whether we look at them externally. But I think one point that is very important, and I tried to mention that in the talk, is our consulting service as well as the deep partnership with our customers keeps us really on the frontier of understanding the problems and understanding the problems and trying to solve solutions. In a consulting business, it could be in the beginning to do something you can do manually, right?
But then if you see the same problems 3 times, it sounds like a good idea to put in some product, right? But then working with partners, I mean, deep partners like Cisco, we also understand where they are going and where their needs are. So this is critical for us to really stay ahead of everybody.
If I add may add one comment. Many things are very similar to EDA. And actually, in the field of software, just like in EDA, we have to move much more towards correct by construction, meaning you don't write software and then you figure out things after the fact was wrong, but at least anything that can be automated, that can be checked formally, completely should be done so. There is one difference though. When EDA came about, there were no there were a lot of physical challenges, complexity challenges, but there were no bad guys that would proactively figure out a way to screw up your circuit.
We're surrounded by incredibly intelligent people that have as a mission to do something to your system, to invade it, perturb it or what have you. And so that gives a very interesting dynamic, which says, hey, with Cisco, with Graham, for example, we better stay pretty close in figuring out what's happening, what's new, what new dangers are about and how do we either protect or diagnose them when they happen and then fix them after the fact quickly. This has its own spark, so to speak.
We are at the bottom of the hour. So we want to thank everybody on the web cast who's listening. We're going to continue to have lunch here. What we're going to do is move together 2 tables and have one exact at each table. You're welcome to go out, grab lunch, drinks, coffee and bring it back in and sit with whomever you like.
We'll put the place cards where they're going to be. Okay. Thank you.