Ladies and gentlemen, welcome to the Synopsys Earnings Conference Call for the fourth quarter and fiscal year 2025. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you would like to ask a question at that time, please press star one on your telephone keypad. To remove yourself from the queue, hit star one again. If you should require assistance during the call, please press star zero, and an operator will assist you. Today's call will last one hour. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Tushar Jain, Head of Investor Relations. Please go ahead. Good afternoon, everyone. With us today are Sassine Ghazi, President and CEO of Synopsys, and Shelagh Glaser, CFO. Before we begin, I'd like to remind everyone that during the course of this conference call, Synopsys will discuss forecasts, targets, and other forward-looking statements regarding the company and its financial results. While these statements represent our best current judgment about future results and performance as of today, our actual results are subject to many risks and uncertainties that could cause actual results to differ materially from what we expect. In addition to any risks that we highlight during this call, important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release. As shown in today's financial statements, all of Ansys' revenue appears under the Ansys product group, including the Ansys semiconductor products. In addition, we will refer to certain non-GAAP financial measures during the discussion. Reconciliations to their most directly comparable GAAP financial measures and supplemental financial information can be found in the earnings press release, financial supplement, and 8-K that we released earlier today. All of these items, plus the most recent investor presentation, are available on our website at www.Synopsys.com. In addition, the prepared remarks will be posted on our website at the conclusion of the call. With that, I'll turn the call over to Sassine Ghazi. Good afternoon. In 2025, we redefined Synopsys. With Ansys, Synopsys has transformed from an EDA leader to the leader in engineering solutions from silicon to systems. We achieved record annual revenue of $7.05 billion and exited FY 2025 with more than $11 billion in backlog. In Q4, we made strong progress executing the actions we identified to accelerate our strategy and drive long-term growth. More specifically, Ansys integration is well underway following completion of the planned divestitures of the Optical Solutions and PowerArtist businesses. We've also initiated restructuring actions to drive efficiency and accelerate our committed synergies, and recently, we welcomed industry veteran Mike Ellow as our new Chief Revenue Officer. Fourth quarter revenue was in line with our guidance, and EPS came in slightly ahead of guidance. Looking ahead to FY 2026, we're guiding revenue of $9.61 billion at the midpoint, which factors the addition of Ansys, the completed divestitures, and continued pragmatism around China. Zooming out, we are operating amidst a multi-trillion-dollar AI infrastructure build-out, which is driving robust semiconductor demand and design starts for both specialized and general-purpose compute. We're also seeing stronger semiconductor demand in mobile and automotive, while markets like industrial and China broadly remain subdued. AI will revolutionize every industry, demanding more compute performance while compounding engineering complexity. AI is driving chips to the atomic level while scaling from factory to edge to intelligent devices everywhere. As AI evolves from large language models to world models, engineering AI's future is not just a software challenge. It's a physics challenge. AI makes it both possible and imperative that we re-engineer how engineering is done. Building complex AI-powered systems with the right performance, scale, and efficiency requires new tools with multi-domain integration and new workflows to enable tight software and hardware co-design. That's why we're so excited about the combination of Synopsys and Ansys. Ansys diversified our revenue, expanded our customer base, and supercharged our opportunity. Together, we can bridge digital and physical design to help engineering teams across industries deliver better products faster and at lower cost. Our recently announced strategic partnership with NVIDIA further positions us to revolutionize design and engineering with AI and accelerated computing. Now more than ever, Synopsys is mission-critical to technology innovation. I'll briefly share some Q4 business highlights, and then Shelagh will provide the financial details. First, Design Automation. In Q4, we saw continued strong demand in hardware-assisted verification driven by the increasing engineering complexity of AI and high-performance computing. Our HAV business ended a record year with 12 competitive wins in the fourth quarter. We're also seeing continued demand for virtual prototyping among automotive and high-performance compute customers looking to accelerate their software development. Our leadership on advanced node, multi-die, and AI design drove steady demand and growth in the fourth quarter. Last week's AWS Graviton5 launch is a great example. For years, we've collaborated with AWS to enable their custom silicon development, and Synopsys tools, including VCS, PrimeTime, Fusion Compiler, and IC Validator, were critical to the design of this new custom chip with impressive gen-on-gen performance gains. Importantly, Synopsys continues to pioneer AI-driven chip design. Nearly 5,000 active users among our tier-one semi-customers are applying Synopsys.AI's assistive and creative capabilities to increase their engineering productivity. We also continue to advance agent-engineered technology with partners like NVIDIA and Microsoft. Agentic AI capabilities promise to transform engineering workflows and unlock new business models. The Ansys business continues to demonstrate robust growth across key industries, including industrial, where customers are using simulation to virtualize and optimize production, saving time and money. At Microsoft Ignite, we partnered with Microsoft, NVIDIA, and Krones, a leader in packaging and bottling, to show what's possible. Using Ansys accelerated physics solvers, NVIDIA Omniverse, and Microsoft Azure, Krones built a digital twin of its bottle-filling line to simulate and optimize operations in real time, a powerful example of how open ecosystems and cross-industry collaboration are redefining industrial innovation. Turning to Design IP, which performed in line with our adjusted expectations. As interconnect standards evolved at an unprecedented pace, customers count on Synopsys' one-generation-ahead approach. We saw strong momentum in the quarter for PCIe, 224G, and UCIe IP. Notably, we secured 13 PCIe 7.0 design wins during FY25 and established first-to-market position with our silicon-proven 224 gig IP and the new standard UALink. We also had 10 competitive wins in FY25 for LPDDR6 and MRDIMM memory IP, which addressed two critical challenges in AI hardware: data throughput and power efficiency, while also improving reliability and security. As stated last quarter, 2026 is a transitional year for the IP business, and we expect growth to be muted. However, given our leadership position in essential interconnect and foundation IP, our healthy sales pipeline, and a renewed focus on the highest value opportunities, we are confident in our long-term mid-teens growth target. To sum it up, we continue to transform and drive our strategy forward with a focus on technology leadership, operational excellence, and financial discipline. Our priorities for FY26 include advancing our technology leadership by continuing to pioneer the use of AI for engineering workloads and delivering our first Synopsys-Ansys joint solutions in the first half of 2026, and efficiently scaling to accelerate our strategy through disciplined cost and portfolio management, resulting in sustainable growth and margin expansion. I want to thank our global team for their commitment and adaptability navigating an unprecedented year of transformation. Together, we've built the foundation for our future success. I'm also grateful to our shareholders, partners, and customers for your continued support, and I look forward to seeing many of you at CES in January. Now, over to Shelagh. Thank you. As Sassine said, 2025 was a transformational year highlighted by the close of the Ansys acquisition, record revenue, and strong backlog. Backlog came in at $11.4 billion, up from $10.1 billion last quarter, driven by strength and bookings across the business. We are acutely focusing on executing with financial discipline as we head into fiscal year 2026. We are well into delivering on our plan to improve efficiency with the previously announced workforce reductions. These decisions are never easy, and I'm thankful to the Synopsys team as we execute these actions and accelerate realizing our cost synergy commitment. Let me provide some highlights of our fourth quarter and full year 2025. All comparisons are year-over-year unless otherwise noted. As a reminder, full-year comparisons do not adjust for the eight extra days in fiscal 2024. In 2025, we generated total revenue of $7.05 billion, up approximately 15%, which included $757 million of Ansys revenue. Q4 revenue was $2.25 billion, coming in at the high end of our guidance. Ansys Q4 revenue was $668 million. Geographically, China continued to be challenged, consistent with our commentary last quarter. China ended 2025 down 18%. Excluding Ansys, China was down 22% this year. 2025 total GAAP costs and expenses were $6.14 billion, and total non-GAAP costs and expenses were $4.42 billion, resulting in non-GAAP operating margin of 37.3%. Q4 GAAP costs and expenses were $2.13 billion, and total non-GAAP costs and expenses were $1.43 billion, resulting in non-GAAP operating margin of 36.5%. Q4 and full year 2025 GAAP earnings per share were $2.39 and $8.07 respectively, which included the gain on the sales from the recent divestitures. Q4 and full year non-GAAP earnings per share were $2.90 and $12.91 respectively, ahead of our guidance on lower expenses. Now, onto our segments. Full year 2025 Design Automation segment revenue, which includes EDA, Ansys, and other, was $5.3 billion, up 26%. Excluding Ansys, Design Automation revenue grew approximately 8%, with steady growth in EDA software and a record year in hardware. Design Automation adjusted operating margin was approximately 42% in 2025. Full year Design IP segment revenue was $1.75 billion, down 8% due to the challenging second half, with the headwinds highlighted last quarter. The IP business performed in line with our revised Q3 expectations. Design IP adjusted operating margin was 24% in 2025. Moving to cash, free cash flow for 2025 was approximately $1.35 billion and came in ahead of expectations, primarily due to the accelerated timing of collections. We ended the quarter with cash and short-term investments of $2.96 billion, which includes approximately $600 million in proceeds from the sale of the Optical Solutions Group and Ansys PowerArtist business. Total debt ended at $13.5 billion. We repaid approximately $850 million of our term loans in Q4 2025 and $900 million in November, and plan to prepay the balance of $2.55 billion in the first half of 2026. We have incorporated this in our guidance that I will now discuss. For 2026, the full year targets are total revenue of $9.56 billion-$9.66 billion. Within that, Ansys revenue contribution is expected to be $2.9 billion at the midpoint, growing double digits. Following the close of the Optical Solutions Group and PowerArtist divestiture in October, our fiscal year 2026 guidance excludes revenue associated with those groups, resulting in an impact of approximately $110 million. We expect the first half-second half revenue split to be approximately 48%, 52%. We expect Ansys revenue to be strongest in Q1, given their historical strength in the December quarter, driving the sequential revenue increase. Total GAAP costs and expenses between $8.47 billion and $8.61 billion. Total non-GAAP costs and expenses between $5.69 billion and $5.75 billion, resulting in non-GAAP operating margin of 40.5% at the midpoint, up approximately 320 basis points versus 2025, driven by the inclusion of Ansys and cost synergy acceleration. We are adopting a normalized non-GAAP tax rate of 18% projected through 2028 to provide consistency across future periods. The two-point increase is driven by geographic mix of earnings, inclusive of Ansys and recent tax law changes. GAAP earnings of $2.49-$2.90 per share, non-GAAP earnings of $14.32-$14.40 per share. We expect the first half-second half EPS split to be 46.54, with the second half benefiting from the debt repayment. Cash flow from operations of approximately $2.2 billion, up approximately $700 million year-on-year. The cash flow guide includes the impact of certain non-recurring outflows, such as restructuring costs of approximately $225 million and $135 million of incremental cash taxes from recent divestitures. We expect CapEx of approximately $300 million, up $130 million versus 2025, driven by investments primarily in compute infrastructure, resulting in free cash flow of approximately $1.9 billion. Fully diluted shares outstanding are expected to be between 192 and 194 million shares. This includes the impact of the recent share issuance to NVIDIA as part of our strategic partnership. With our plans to accelerate our term loan repayment, we expect the net impact to be accretive to EPS in fiscal year 2026, which is incorporated in the guidance. Now to targets for the first quarter. Total revenue between $2.365 and $2.415 billion. Total GAAP costs and expenses between $2.165 billion and $2.23 billion. Total non-GAAP costs and expenses between $1.395 billion and $1.425 billion. GAAP earnings of $0.22 to $0.41 per share, and non-GAAP earnings of $3.52 to $3.58 per share. Our press release and financial supplement include additional targets and GAAP to non-GAAP reconciliation. Before we take your questions, I'd like to reiterate our focus on driving sustainable growth and margin expansion through unmatched innovation and disciplined execution. 2025 was a transformational year that redefined Synopsys. In 2026, we will expand our position as a leader in engineering solutions from silicon to systems. With that, I'll turn it over to the operator for questions. Thank you. Thank you, and if you would like to ask a question, please press star one on your telephone keypad. Before we begin the Q&A session, I would like to ask everyone to please limit yourself to one question and one brief follow-up to allow us to accommodate all participants. If you have additional questions, please re-enter the queue, and we'll take as many as time permits. The first question today will come from Jason Celino from KeyBanc Capital Markets. Great. Thank you for taking my question. Maybe my first one for Shelagh. The embedded organic growth rate in the 2026 guide, I don't know if there's a way for us to understand what that might be and what that might imply for IP growth. I'm okay at math, but I'm just a sell-side analyst. I mean, if we adjust for the Ansys and the divestitures, I'm getting like 8% growth organic. I asked the question because I'm just trying to understand the level of conservatism. Yeah, it's definitely in that ballpark. And I think two things that I would highlight. One is, and I had it in my prepared remarks, we did have the disposition of the Optical Solutions Group and the PowerArtist Group. It's $110 million, so that's about a point and a half. So just point that out to you. And as we talked about in Q3, we do anticipate a muted year of growth for IP. We are very much well into repositioning workforce to build out the HPC titles so that we've got those fully available for customers. But we do expect the group to be in transition this year. And so we factored in muted growth for the IP business. So you're seeing that. And as I talked about Ansys, our guide for Ansys is $2.9 billion at the midpoint, and that's double-digit growth for Ansys. So we're trying to be pragmatic with our forecast in light of the body of work that the IP team needs to do in 2026 to be able to get us back to the long-term growth rate in IP. Okay. And then the operating margin EPS guide is pretty fabulous, even when considering the extra dilution from the NVIDIA investment. I don't know if I heard you talk about a specific synergy number, but curious if there's any extra details there. Thank you. Sure. So one of the things we had talked about last time that we're well on way to do is the 10% workforce reduction that encompasses a body of work that we've been doing on synergies. We've already done an action November timeframe. We anticipate that we're largely complete with that in 2026. So we're very much on the path of working to accelerate those synergies as quickly as possible. And as you know, Jason, we've been very focused on driving margin expansion over multiple years with this guide. It's about a 12-point margin expansion since 2020. So we're very focused on that, very focused on driving both sustainable growth and expansion of margin. Great. Thank you. Thank you. The next question is from Harlan Sur, J.P. Morgan. Good afternoon. Thanks for taking my question. If I exclude Ansys to the person that asked the question before me, the core EDA plus IP is going about 8%-8.5% year-over-year in the fiscal year guidance. Can you just help us understand what you're embedding for growth in EDA and IP in the guidance? For example, if I assume IP is going modestly, as you guys say, let's say 5%, then your EDA business is growing around 9%, which is still below kind of your forward target of like 12%-13%. Is that kind of the way to think about it? And if so, why is the EDA business still undergrowing your long-term sort of forward target, CAGRs? Yes. Thank you, Harlan, for the question. Your math is in the ballpark. What we're taking into account for the EDA growth, because on IP, you captured it well, we're guiding a muted growth for IP. In EDA, we're taking a couple of things into account. One, the China environment, where the cumulative impact of restrictions is something that we are seeing and have seen in 2025 that has had an impact, is different than, say, 2020, 2021 timeframe, where many startups and significant spending was happening in China, and the other factor is we're still operating in a tale of two markets. There are a number of companies that they're building chips for industrial, automotive, and anything outside the AI infrastructure build. Their roadmap is somewhat muted. They're not driving at the same pace as what we're seeing with the other group of customers that they're delivering chips for the AI infrastructure. Then, as you know, with EDA, there are a number of components. There is the software and the hardware-assisted verification. On HAV, we continue on seeing a significant demand due to the complexity of verification. The long-term view is double digits, but that's what we have took into account in terms of the guide for 2026. And the other thing that I would add that's just a mechanical item, Harlan, is the divestiture of the Optical Solutions Group and the PowerArtist Group. So that's a $110 million headwind. But that's just a mechanical thing, just to add that into what's been outlined. Got it. No, got it. Thank you. That was insightful. And then, Shelagh, the question for you. Total expenses exiting Q4 was about $1.43 billion. You're guiding that to roughly about $1.41 billion in the first quarter. But if I look at your average quarterly expense run rate to the year on the full year guidance, it's still averaging about $1.43 billion per quarter. So it kind of doesn't seem like there's much in the way of synergy unlocking fiscal 2026, or are cost synergies being offset by increased spending in other areas? And where do you expect that total expense to be run rating sort of exiting fiscal 2026? Yeah. So our commitment on the cost synergies, you're really seeing that flow through kind of back to Jason's question on the op margin, the 40.5%. Obviously, we've committed to mid-40s long-term, so we're well on the way to that. And when we think about kind of the profile of expense structure, it is changing a little bit just because of the ingestion of Ansys as to how the quarterly splits run. But our expectation is throughout the pace of the year, we're going to continue to have reductions in workforce, but we're still going to focus our main investment on driving innovation and driving the roadmap. And so the reductions will still allow us to have significant investment in R&D. Great. Thank you. Thanks, Harlan. Next up is James Schneider from Goldman Sachs. Good afternoon. Thanks for taking my question. I was wondering if you could maybe give us a bit of an update on the IP business and your expectations that you laid out last quarter around some of the headwinds that you're seeing, whether that be your foundry customer, China, and the execution on custom IP blocks. Can you maybe give us an update on sort of the level of progress you've had in each of those three dimensions and how that sort of plays into the overall IP outlook for the year? You expect it to be sort of low single-digit or you think mid-single digit is possible? Thank you. Thank you, James. I want to start with, as we zoom out, my confidence in our long-term mid-teens for our IP business only gets stronger. I know when we talked 90 days ago, we have focused on some of the headwinds, but the overall strength of the portfolio we have is such a privilege to have the portfolio as we engage our customers in various markets, not only AI, HPC, because, as you know, the market of semiconductor is much broader. Today, we are the leader in providing the IP for automotive, for mobile, for many other segments. In the AI, HPC, we have a very strong position, and our customers are constantly reminding us how mission-critical we are to their roadmap and development. We outlined 90 days ago three headwinds: China and the whole foundry uptake. We're assuming in our guide that not much change is going into FY 2026. In other words, we are being balanced and pragmatic the way we're taking into account in our guide for IP these two factors. In terms of resources and prioritization, we made a number of changes. We made changes in our development leadership. We made some changes in the sales leadership as it relates to IP. And we are well on our way to close some of the gaps. You're going to see from a customer engagement point of view on a couple of the titles that we are being pressed on timing of delivery is that we will close these gaps by mid-year 2026, FY 2026. So all in all, we're looking at 2026 as a transitional year, muted growth with the long-term objective of mid-teens, and that we feel very strongly about. That's helpful. Thank you. And then maybe just as a follow-up, obviously last week you had your announcement of the NVIDIA partnership and the investment in the company. Can you maybe give us a little bit more color on sort of the rationale for why an investment made sense? What could have been done with an investment that couldn't have been done simply through a strategic partnership and maybe kind of walk us through the logic around that? Thank you. Sure. I'm happy to walk through how it ended up being an investment. Where the discussion started with NVIDIA is enthusiasm and excitement about the new Synopsys, the silicon-to-systems engineering solutions that addresses not only the silicon part. It's going up to the whole physical AI and delivering solutions to the future of engineering in every industry. So the discussion with NVIDIA started around how do we accelerate at the computational level with the GPU, and that's something that is already a number of our products. We have a roadmap for that acceleration. Then it went up to the Omniverse level, how to modernize, or the way we refer to it, how do we re-engineer engineering for intelligent systems, and this is where the Ansys portfolio is very unique as they bring in a multi-physics simulation leadership to bring that physical simulation, physical AI into effect and providing that modernization of engineering. The third element is our go-to-market reach. Ansys has built a very strong channel partnership and direct sales channel that we touched thousands and thousands of customers in many industries, so as the discussion with NVIDIA started evolving on defining the technology partnership, the discussion with Jensen moved to, "I want to endorse it with an investment because I know we can make money," and I know you heard his own words as we announced the partnership. So the financial aspect was second because, as you can see, we have a very strong balance sheet. And we welcome the $2 billion investment. And as Shelagh outlined, we will accelerate some of the debt payment and help us with accelerating some of the strategy we have. So that's how it really came about. The next question comes from Kelsey Chia from Citi. Hi. Hi, Sassine and Shelagh. Thanks for taking my question. So I would like to tap on the EDA growth rate again. So you mentioned that the lower EDA growth in fiscal year 2026 is due to slower chip design momentum in China. Is that the same reason for the lower growth rate this year as well? And are there any share shift dynamics happening over there? And if synergies with Ansys could drive that revenue growth back to target? Yeah. As it relates to China, there is some share shift happening inside China because when you restrict the sale of EDA or IP, the customers in China are looking for alternatives. And that is happening, and it's happening at an accelerated rate. The customers we can serve, we're fine selling to, and they're buying from Synopsys or others. But the companies we cannot sell to, they're looking for alternatives, and these alternatives are typically organic, local EDA or IP companies. In terms of the longer-term growth opportunities for EDA, and that's why we're still standing behind double-digit growth for EDA, is going to come from the joint solutions between Synopsys and Ansys. We are targeting the first half of 2026 to deliver the first wave of these solutions. There's a need from customers to address the current challenges they're facing as they're designing the most advanced chips, advanced package, 3D-IC, where they need the physics analysis to be taken into account during the design phase of the chip. And this is something we're very excited about. The team is already working toward the goal of delivering the first wave of the solution, and that's a monetization opportunity. But of course, that opportunity in terms of monetization will happen over time as customers adopt, etc. The second monetization opportunity is as the Agentic AI solutions start maturing and start changing the workflow. That's another opportunity for our industry to rethink how do we sell our solution for the value and impact. So again, the China impact, we're taking it into account in our guide. The upside opportunity as we look at the long term is joint solutions and the AI changing the workflow. Got it. Thank you. So on the IP business, so I know that Synopsys provides several IPs for a large foundry customer, including the EMIB advanced packaging technology. It seems that there are several customers evaluating that using that technology from a large foundry customer. Will that be incrementally positive for Synopsys given the muted growth that you have provided? And also relating to that on the operating margins, I believe all the expenses related to those IPs have been consistently recognized over the prior quarters despite the lack of customers. So does that imply that operating margins for that segment could come back to historical average when the revenue for that large foundry customers are being recognized? Yeah. Let me address the first part of your question, then I'll turn it to Shelagh. The way we monetize our IP, the first step is to build it, and what you build on Foundry A is not the same on what you build on Foundry B, even though it's the same protocol, the same title. It does require what's called porting, and that's not a simple effort. It requires quite a bit of an R&D effort to achieve the same performance, power, etc. Now, that's one part of the monetization, but where we look for the incremental monetization is when that foundry starts on-ramping customers, and if whichever foundry has expansion of customers that are using the technology that we already developed the IP, that's an incremental opportunity for us, and there we sell to the end customer who is on-ramping to the foundry customer. And for us, as we're looking at FY 2026 for that particular foundry that we talked about in Q3, we're assuming a status quo in terms of new customers being on-ramped. Shelagh, if you want to address the operating margin. Yeah, sure. So in terms of operating margin, Kelsey, you're right. We still are investing and building the tiles out. We've repositioned the workforce to be able to build the HPC tiles out that Sassine talked about. And so it is really we're going to have muted growth in 2026, which will mean there'll be some pressure on the operating margins. But as we get back to that mid-teens growth long term, we'll see expansion in the margins. And I do expect that IP margins are always slightly below the corporate average because it's such a people-intensive body of work to deliver. But it's really a short-term effect just because of kind of the headwinds on revenue of the up-margin challenge through 2026 on IP. Okay. Got it. Thank you. Thank you. Thank you. We'll now hear from Siti Panigrahi from Mizuho. Thanks for taking my question. I want to drill into the Ansys. Double-digit growth for next year is pretty good. So I would love to hear what's baked into that in terms of adjustments there. It's been now more than four months since you closed Ansys. Do you expect in terms of business model or contract, which are different, do you expect them to convert to subscription? And if you do so, what kind of uplift or any kind of multiplier effect we should expect there? And Sassine, in terms of integration, where are you so far? Any color would be helpful. Sure. Thank you, Siti, for the question. In terms of what's driving our confidence in double-digits growth for Ansys, the way we look at it, there are two markets we're serving with the Ansys portfolio. There is the semiconductor market that the joint solutions will bring an opportunity to uplift our pricing as we integrate the Ansys solution into the EDA solution that we offer today, then the rest of the Ansys market, if you look at the significant transformation that's happening on how to develop a modern car, robot, any industrial applications, drones, etc., aerospace, those are all customers of Ansys, and the demand, the increase in R&D investment that we are seeing in those markets is giving us the confidence to continue on expanding the growth opportunity. In terms of the business that Ansys has, they've always had a mix of subscription and perpetual. And that will continue based on the customer need, requirement, demand. So that's what's driving the double-digit growth assumption for the portfolio, which, by the way, is no different than what the legacy Ansys team has delivered in the prior years. So it's consistent in line with prior expectations. In terms of integration, since we finalized the divestitures in October, we're full force ahead in terms of integrating the teams. Our R&D teams right now, they're one team. They're delivering on the joint solutions I just mentioned. From a go-to-market point of view, we are maintaining a separate go-to-market engagement, the one that they deal with semiconductor. Those are integrated given the relationship Synopsys has with semiconductor companies. And the slew of other customers, and I'm talking multiple factors larger than the classic Synopsys in terms of the space that the legacy Ansys has served, that will remain separate so we don't miss a beat in terms of how to go-to-market with the existing portfolio that we have. Yeah, and I would just add, Siti, that the portion that Sassine talked about of Ansys that's in lockstep with the EDA business, that is moving to a similar ratable, and that's included in our guidance. Okay. And then just want to clarify that we need the same customers now using Synopsys, EDA, and Ansys. When you launch your combined product, should we expect any kind of uplift there? Or what kind of uplift should we expect? I mean, is that one plus one would be more than two or less than two dollar there? And Sassine, quickly, any update on that royalty model for IP you talked about in tracks in your team? Sure. Yeah. When we talk about joint solutions, the customers have the options. They have the choice. If they don't have a need for that new joint solution, they can continue buying the classic Synopsys and legacy Ansys products, and we'll negotiate those based on value and usage and need, etc. If the customer is looking for the joint solutions because we're solving a new problem, one plus one is greater than two for sure. And that's where we will capture that monetization opportunity over time as they start adopting the technology. As I stated, the first wave where the customers start using, feeling the technology and evaluating it is the first half of 2026. In terms of the IP value capture, the focus we put together in Q4 that I'm very pleased with, we looked at it from, I want to say, two pathways. The first one is just a discipline in pricing and guardrails because we have a differentiated IP portfolio, and I was very pleased with the go-to-market team in monetizing around the newly established, I want to say, guardrail and disciplines we put in place, then the second aspect of it, and that's where we spent quite a bit of time 90 days ago talking about, there's an increase in customization in IP, and we're having discussions with a number of strategic customers that we're happy to allocate resources to deliver on that work, but we need to change the business model from an NRE plus a use fee to NRE plus use fee plus royalty and upside. And these discussions are happening, and I feel very good that in FY26, we'll be able to lock up some customers in that new business model where they see the value of bringing that customization and portfolio to their roadmap. Thank you. You're welcome. And everyone, just a reminder, please limit yourself to one question and one quick follow-up. We'll go next to Vivek Arya from Bank of America. Thanks for taking my question. For the first one, Sassine, I'm trying to gauge whether the IP business is de-risked because if I look at your Q4 IP and I just annualize that, that's about $1.6 billion and change. But if I assume that it grows modestly, that's more like $1.8 billion, right, or so. So from a year-on-year perspective, it seems de-risked, but off of Q4 levels, not as much. And I wanted to get your sense. Is that a fair pushback? Just how are you thinking about the sequential recovery in your IP business? And if, Shelagh, you have a number for Q1, that would be very helpful also. Yeah. I really urge you not to look at it from a quarter basis because the IP business, as we often refer to, can be lumpy. I am very confident, very confident in our portfolio as well as the market position we have. We were very transparent in Q3 that there were a couple of titles that we needed to do some work to accelerate our roadmap to deliver to customers, and for those titles, we're having ongoing engagement with the customers with our revised roadmap, and I have no doubt that we will capture the opportunity for these couple of titles. The rest of the portfolio is performing incredibly well, so yes, I feel very good that we have de-risked the headwinds that we communicated last quarter as we look into 2026. And Vivek, what I give you with a sort of flavor for the year is IP will be back half loaded. And that's really got to do with the availability of all the HPC titles. So the team is actively working, hitting all the milestones to be able to deliver that. But a few of them are not going to be available until the second part of the year. And so that's really kind of how we built the forecast. As Sassine said, the demand is there from the customers and very solid, but some of our delivery is more back half weighted. For my follow-up, what are you assuming for your China sales on an absolute dollar basis relative to the $814 million or so that you're doing in fiscal 2025? I guess, Sassine, the broader question there is, can your EDA and IP business get back to double-digit growth if we continue to see these China restrictions or if you kind of proactively de-risk your business from China engagements? Thank you. Thank you, Vivek. So we expect the environment to remain challenging in China. That's why, when we look at FY 2026 compared to 2025, what we are taking into account in our forecast and guide is truly a pragmatic balanced view. We're not assuming that the environment is going to change in the next one or two quarters to the positive. So therefore, we continue on de-risking it in our guide for FY 2026. In terms of the double-digits growth for EDA, we still feel strongly about the opportunity to achieve double digits from a long-term basis. And it's driven by the complexity and the need for the joint solutions. And as AI evolves from generative to agentic, it will change the workflow. And that's a great opportunity for our industry to find a new way to monetize for the value that we will be delivering to the customers. So again, from a China point of view, we continue on de-risking with an assumption of the environment remains the same. And the long-term for EDA double digits is something we're holding for that commitment. Thank you. Thank you, Vivek. The next question is from Joe Vruwink from Baird. Great. Thanks for taking my question. I just wanted to say on the IP topic and given everything that's come up so far in terms of the titles you're seeking availability on mid-year and some of the other strategic elements, the custom IP and potentially changing the business model, that mid-year timeframe, would you expect to know by then the magnitude of commitments you have in hand so that FY 2027, you can maybe make the statement it will be back to mid-teens growth? I guess my question is, mid-teens growth, is that capable for FY 2027 based on the pipeline of opportunities you see today? Yeah. Just let me clarify the mid-year. We're not waiting for us to talk to the customer until mid-year. We talk to the customer. We have active engagement and even in contract phases with customers based on their roadmap and based on our roadmap of delivery. We have established very strong trust with those customers, and they build their roadmap based on our ability and delivery. So the other thing I'll point out in terms of IP and in general is the strength of the backlog we're entering the year. Entering the year at $11.4 billion in backlog, that shows the strength of the bookings, the commitment we've had with customers, and it's all about execution and delivery. So Joe, in general, as I keep repeating, my confidence in our IP portfolio is driven by the discussions we're having with customers and the essentialness of what we're delivering here. Okay. No. Thanks for that clarification. I guess I'll next ask about cash flow performance. I looked at your adjusted EBIT margins, better than 40%. That's nearing the mid-40s goal. Cash flow, I think the guide implies something closer to 20%. So obviously, a lot of upside still to the margin framework there. Just would you expect some of these one-time cash items restructuring, do those start to settle out of the model as we think forward into the out years? Yeah. Absolutely, Joe. That's why I called them out because I very much think they're one-time kind of one-off items. The two that I called out was the restructuring. And then obviously, as a part of the OSC PowerArtist, there's gain. And so there's the tax on the gain. But those are not recurring. And we're very much focused, and it's a $700 million improvement year on year. We're very much focused on driving to the long-term commit of unlevered free cash flow in the mid-30s margin. Great. Thank you. Thanks for the question, Joe. Charles Shi from Needham & Company has the next question. Hi, yeah. Thanks for taking my question. Hey, Sassine, maybe a question for you a little bit longer term, a little bit beyond fiscal 2026. A lot of the pushbacks I'm hearing from the investment community on Synopsys, and actually not just Synopsys, but the entire EDA industry, entire group is AI is doing very well, but the sector you're in continues to show, I mean, continues to show deceleration, I would say, since 2022. And it's kind of hard for a lot of folks to understand, given you have all the exposures to all the AI players there, but your business didn't really turn up over the past few years. Is that a monetization problem? And if yes, how do you plan to solve the monetization problem? Thank you. Charles, if I understood your question correctly, when you look at the AI from a semiconductor roadmap development point of view, it continues on being very strong. If you're a hyperscaler and pretty much every hyperscaler, they have three parts to satisfy their infrastructure buildout. They're buying merchant chips. They're engaging ASIC. And pretty much each one of them, they have their own COT where the customer-owned tooling, where they're developing their own semiconductor chips. And the reason they're counting on all three, it's because of the optimization they need to do for different workloads from a cost and power consumption and the overall ownership of the consumption. It makes sense for them to have a strategy based on these three vectors. From a Synopsys point of view, that's a great opportunity because remember, we don't sell based on volume. We sell based on chip start. So if the chip is coming from a merchant or coming from ASIC or the customer themselves building it, for us and the industry, that's an upside. So we don't see that changing, actually. And we see these hyperscalers are doubling down on that strategy. Yeah. So Sassine, maybe I should make my question clear because I think all the trends you described, I think that's pretty well understood, but at the same time, folks are looking at your revenue growth, and especially the EDA IP part, maybe not just the Synopsys, but also Cadence and some of your peers. This whole EDA/IP industry seems to have quite a bit of a deceleration, a growth deceleration over the last couple of years, and this is kind of in the opposite way of semis, which has seen a very strong AI uplift, so kind of led us to kind of think maybe the problem you have is not exposure, not that you don't have exposure to AI, but that you have a little bit of difficulty to monetize AI. And I think one of the things you mentioned about maybe opening up a third avenue of monetization for IP business, basically getting into the royalty, is the right direction. But we're still kind of curious, what do you do about that on the EDA side? It has been a segment that's kind of growing in the single-digit range for a couple of years. It looks like it's going to be another single-digit growth year again. Thanks. Yeah. Yeah, Charles, thank you for clarifying. Absolutely, as an industry, we can do better in capturing more value for the impact we're delivering to our customers, no question. Given the complexity of these chips, what these customers are building is not possible without Synopsys and the industry to deliver to the complexity of what we're building. If you look at it from an EDA point of view, the hardware part of EDA is growing at a pace that each year we're saying we're breaking the prior record. And so customers are willing to pay in order to deal with that complexity. On the EDA software, there is a challenge in terms of the inflection point of monetization. From a Synopsys perspective, every one of these advanced customers are looking for that joint solutions between Ansys and Synopsys. That's an opportunity, one plus one to be greater than two. As we move to a different workflow for agentic AI, that's another opportunity for the industry to rethink how do we sell that solution. From an IP standpoint, the conversations are happening, and that's why when we talked about it 90 days ago, we were talking about it from a position of strength and an opportunity that those customers are expecting and wanting to engage differently, and we're having the right conversations right now to say we're happy to do it, but we need a different monetization upside for these engagements, so good observation, Charles, and I hope the way I'm describing where we've been, where we are, where we're going, it's giving you confidence and shedding some light to it. Thanks, Sassine. Our final question today comes from Ruben Roy from Stifel. Thank you. Sassine, you spent a lot of time talking about China, but I do have one question on sort of where you are with China revenue. It's still meaningful, exit rate around 10% of overall revenue. And I'm wondering if you could talk about the mix there and if the headwinds that you're sort of seeing and the pragmatism is across the mix, meaning is it core EDA plus IP plus hardware and Ansys, or are there specific areas that you're more concerned about as you think about this year or even longer term relative to China? And I guess I'm trying to get to, is this a reasonable floor once you get past maybe some of the IP issues that you have there, or are there other shoes to maybe drop in China as we think about the longer-term model? Thank you. Yeah. Thank you, Ruben. I want to clarify, and I know Shelagh mentioned it in her prepared remarks. The Synopsys classic had a decline in China. The Ansys portfolio performed fairly well in China because they sell to a very broad market that is not restricted. And we believe a lot of those customers will continue on seeing the value in the legacy Ansys portfolio, and that will continue on growing. On the classic Synopsys side, what we're facing in China is primarily our inability to sell to the market that needs the most advanced solution. And you're familiar not only with entity lists, but with technology restrictions. From a Synopsys standpoint, where it impacts us the most is in IP, given the proportion of our business and our leadership in IP, not only in China broadly, but in China that has a fairly big impact on Synopsys. From EDA in general, as I answered it earlier, we're not losing share to our standard or the peers that you think about when we're losing share in China are for customers our industry cannot sell to. And therefore, there's an erosion that is happening on the EDA side on customers that we cannot deliver or support due to entity restriction or technology. So we believe we have de-risked it in our guide for 2026. And of course, when you pass 2026 and assuming the environment is the same, meaning no additional restrictions, then the comps get easier in terms of comparing year- over- year. And everyone, that does conclude our question and answer session. I would like to hand the conference to Tushar Jain for any additional or closing remarks. Thank you all for joining the call. We look forward to talking to you during the quarter and meeting you at CES. Lisa, you can go and close us out. Thanks. Thank you. Thank you. Thank you. And once again, everyone, that does conclude today's conference. Thank you all for your participation today. You may now disconnect.