Joe Vruwink: Okay. That’s clear. Thank you. And then just on the topic of Generative AI, I did want to maybe get your take, if it’s possible to contrast just the pace of product development incorporating such a technology relative to what you’ve done in the past? And I guess the context for this question, as I think back to DAC in July, there were actually members of the Microsoft verification team speaking about how they wanted more robust tools from their EDA vendors that incorporated GenAI and we’re not very far from July. And here you are with a product in conjunction with Microsoft and now Microsoft verification is using this in their workflows. So it seems like a very quick turnaround. Is it that much quicker than maybe what Synopsys was able to do in the past?
Sassine Ghazi: Maybe we made it look too easy, Joe, but there was a lot of work that started well ahead of the DAC time frame. If I take a quick step back, when we talk about Synopys.ai, there are really four pillars under it. The one that we — the first one we did produce was DSO.ai in the 2020 time frame. That was focused mostly on optimizing the — our product and using every opportunity to leverage machine learning and AI in the product and around the product. The second pillar, which is what we’re calling a collaborative capability using Gen AI, and that’s what we announced with Microsoft, which is using a CoPilot approach for supporting our users for knowledge-based or workflow-based or results co-pilot and assistance.
And that’s in our announcement where AMD, Intel, Microsoft were some of the early users of the technology. Then we talked a little bit about what’s coming down the path, which is around both generative and autonomous capability using Gen AI and natural language. We’re super excited actually about the early results we’re seeing with the co-pilot in terms of the productivity of our customers and users.
Joe Vruwink: Great. Thank you very much.
Sassine Ghazi: Thanks, Joe.
Operator: We’ll take our next question from Vivek Arya with Bank of America Securities.
Vivek Arya: Thank you for taking my questions. If I remove the — I think you said about $17 million or so impact of the extra week, you’re guiding to roughly 12% sales growth right, which seems to be very conservative relative to the strong backlog that you have built up. So I’m curious, Sassine, I think you mentioned the impact of China and enterprise software and AI is kind of neutral, but then when I look at the 12% growth that is lower than what you had in the last three years, even though there is all this AI excitement that’s starting now, so is it conservative? How should we kind of put this 12% in the context of the kind of growth rates we are used to seeing from Synopsys over the last three years?
Shelagh Glaser: So, Vik, thanks for the question. This is Shelagh. I’ll jump in on that. So we’re obviously taking a balanced stance as Sassine had talked about at the we’re at a 13% growth year-over-year. And we’re seeing design automation, Design IP have incredibly strong momentum. You mentioned the $8.6 billion backlog. We’re seeing that growth in line with our long-term targets. And we’re seeing AI as a catalyst, but it’s in its early inning. So we think it’s a long-term growth catalyst. And we’re looking forward to having it be able to help drive our business over the horizon. But the two headwinds are China, as we’ve talked about the macro situation in China and the restrictions that have been imposed on China, are having some dampening effect.
We expect China to grow in ’24, but at a lesser rate than it grew in ’23. And the other headwind that we have is we are expecting a muted environment for enterprise software spend to impact our software integrity business, and we’re assuming that, that business will be single-digit growth in 2024. So it’s the combination of those headwinds and tailwinds that’s leading to our 13% growth rate at the midpoint.
Vivek Arya: Got it. And for my follow-up, the AI Copilot seems like a very interesting new product. I’m curious what is the right way to track how you are able to monetize it? Are you selling it as incremental feature? Are you selling it as a separate tool? What is the right way to just kind of track how successful you are with this capability?
Sassine Ghazi: So the way we’re thinking and we expect this over the last few calls, which is AI will be offered to our customers through a subscription license, meaning, if a customer wants to use an AI capability, be it a DSO.ai or VSO.ai, it will be offered as an incremental spend for the customer to get access to that technology. And in some early adopter cases where they’re still not ready to make the long-term commitment, we’re offering it as well in terms of consumption base. They may be looking for one project to use it, et cetera. And the Copilot in particular case, it’s still be early, fairly maybe early stage in terms of us to talk about monetization and how is it contributing overall. But those are the flexibility tools per se, we’re providing the customer to get access to it.
Vivek Arya: Thank you.
Sassine Ghazi: Thank you, Vivek.
Operator: We’ll take our next question from Jason Celino with KeyBanc.
