Jason Celino: Hey, thanks, guys. Just two questions from me. Maybe my first one, John, you mentioned taking up the full year guidance based on some strength in system analysis. I’m curious, was this driven more from your existing business there, or was it from OpenEye? I guess, how is OpenEye doing relative to expectation?
John Wall: Yes, Jason, so we took up the year by about $20 million, about half of that was with hardware from Q1 because that was a big portion of the beat in Q1. And the other half of that was spread across our software business, mostly in the system design and analysis space and mostly organic. But there was some inorganic contribution as well.
Jason Celino: Okay. And then, my second — sorry, go ahead, Anirudh.
Anirudh Devgan: Go ahead, Jason.
Jason Celino: Oh, sorry, yes. And then, my second question on the guide, it looks like second quarter is going to decline sequentially by about 5%, consistent with what we saw last year too. So maybe just a quick refresher on what’s driving the seasonality here?
John Wall: Yes, Jason, when you look at it, it will be — it’ll show up in the functional verification number next quarter. I think the — when I look at — like Q1 was great. I mean, functional verification was up 30% year-over-year. The quarter was up low teens. When I look at Q2, Q2 also looks great. It’s going to be up low teens again compared to Q1 ’22, but functional verification will be up probably closer to 20% rather than 30%. But — so, it’s our expectation that in our guide, we’re assuming that the recurring revenue mix for the year stays at 85-15, 85% recurring, 15% upfront, same as what we experienced last year. Now, in Q1, it was 80%, 20%, so there was a lot of open revenue for the hardware deliveries that went out in Q1. In Q2 — we expect Q2, Q3, Q4 to be less than the 80-20, and it will average 85-15 for the year. So, you’re seeing that in the Q2 guide.
Jason Celino: Okay. Excellent…
Anirudh Devgan: Also, Jason, just to add on to what John said, if you look at the Q2 guide, we’re still up nicely from Q2 of last year.
Jason Celino: Okay. Awesome. Thanks for the clarification.
Operator: Your next question comes from the line of Vivek Arya with Bank of America. Your line is now open.
Vivek Arya: Thanks for taking my question. I had a near term and then kind of a bigger picture question. So near term, your IP sales have slowed down. I think, for three quarters now, I think they are actually down year-on-year. I’m curious on what’s — Anirudh, what’s driving the slowdown? And do you expect IP to grow in line with the 14% sales growth for the entire company? What will help those sales reaccelerate in the back half?
Anirudh Devgan: So, Vivek, in general, IP is still a good business, and we expect, in 2023, IP business to grow in the low teens compared to last year. So, there is some quarter-by-quarter fluctuation, but in general, we expect IP business to perform well in 2023, yes.
John Wall: And so, yes, and what I would add to that is that — and you know what, IP revenue generally can be lumpy because some of it’s upfront and it’s based on the timing of deliveries. Now last year, our IP revenue, we had more deliveries that fell into the first half compared to the second half. This year, it’s the other way around, we have more IP deliveries that fall into the second half compared to the first half. So, it kind of skewed the year-over-year numbers, but we’re very, very pleased with the performance of the IP business. As Anirudh says, we’re generally targeting increasingly profitable low-teen growth every year for our IP business, and we’re on track for that.
Vivek Arya: Got it. And then my bigger picture question is, what is the right kind of public metric to gauge how much benefit you’re getting from AI? Is it accretive to your pricing to your growth rate? So just what is the best public metric to appreciate how much benefit you’re getting from AI? And is there a scenario where just the improved productivity, right, or accuracy that AI provides, could it even cannibalize some of your hardware or software part of the business, or do you think it’s kind of net accretive longer term, just given the larger TAM size and the greater customer engagement? So, just what have you seen so far from AI? What is the best way for us to track how much incremental benefit? And do you expect it to be net accretive over time?
