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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
MILAN LAZICH, VP, CORPORATE MARKETING, MAGMA DESIGN AUTOMATION: Good morning, everyone. Thank you for coming to see Magma at the AeA Classic. My name is Milan Lazich with Magma Design Automation; and presenting or speaking in a few minutes will be Pete Teshima, our Chief Financial Officer.
For Reg FD purposes, I need to let you know that the following discussion contains forward-looking statements and the actual results may differ. Additional information concerning factors that could cause such differences can be found in Magma's public filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the earlier of the date first published or the date hereof.
Magma disclaims any obligation to update forward-looking statements. Magma's non-GAAP results are discussed in this presentation. A reconciliation of non-GAAP to GAAP results appears on Magma's Web site.
It's going to get better from that. All right, a few key points about Magma. I know some of you are more familiar with the Company than with others, but throughout the presentation and the discussion, we'll be addressing these four points.
First, we're serving growing markets. Magma Design's chips are in a lot of products that you're very familiar with, including cell phones, games, MP3 players, et cetera.
This is something of a transition for the Company. Early in the Company's history, our products were used principally to design ASICs and other chips used in networking. With the explosion of wireless and consumer products and the convergence of those, it's created a great opportunity for Magma.
Revenue has been increasing. We have projected growth for our current year fiscal '08 to grow at actually two times or better our competitors.
We went through a significant investment period in our R&D during our fiscal '07, which enabled us to prepare to rollout products that are targeting new segments and new customer bases.
The third point here, profitability. Again, back to our guidance for fiscal '08, we're projecting EPS and operating margin to more than double over the prior fiscal year.
And it's the final point here, visibility. As we entered fiscal '08, our backlog exceeded $420 million. We have excellent visibility, and we consistently have been meeting or beating our guidance.
A quick look at our company history. This is the revenue path since our 2001 IPO. You can see consistent growth here. In fiscal '07, we were just over $178 million in total revenue.
A quick look at our product lines. I won't expect you to read this eye chart too carefully, but look at the different colored segments just to get a sense of where Magma has competed and where we're competing today.
Traditionally, we competed in that dark region in the center, digital design, the so-called IP implementation flow, front end and back end. We started off in placing the physical design, which is [placing routes]. We moved into synthesis, and from there we've moved into other segments. The red border on the left, which is custom design, which includes circuit simulation, we moved into with some product announcements last year.
The [sign-off] portion on the right, in blue, we announced products over the last couple of years which have allowed us to address that. And then the various regions in green at the bottom are segments we've moved into with different product announcements over the recent years, including physical verification and yield management, which actually we moved into with the acquisition of a company called Knights Technology about a year ago. We'll drill down in some of these as we more forward.
Just to give you a sense of history as to the different segments Magma has competed in, the first product shipment was in 1999 with our core product Blast Fusion. This addressed the physical design segment I mentioned earlier, placement and routing. We were competing primarily with Avanti and Cadence at that time and we were addressing a total market on the order of $425 million.
This remained the bulk of our revenue source for a number of years. Then in 2003 we announced a new product, Blast Create. This allowed us to address the synthesis market, which we had previously not addressed. We were competing primarily with Synopsys, which had a very strong franchise position in synthesis. And this allowed us to roughly double the addressable market to just under $1 billion.
Now, our first big push outside implementation was into physical verification, and this came in 2005 with the announcement of Quartz DRC and Quartz LVS. With these digital verification products, we were competing with Mentor Graphics, which has a very strong franchise position in that segment. This expanded our addressable market to about $1.4 billion.
Now, we've continued to develop products over the last year. I mentioned a ramp up during our fiscal '07, where we expanded R&D staff significantly to complete some projects that were in the works, and among those were some products in circuit simulation.
We announced last year two products, FineSim Pro and FineSim SPICE; again, principal competitor, Synopsys. This expanded our addressable market. This along with a number of other products that we worked on during that period brought us to an addressable market on the order of $2.7 billion.
Now, to put that into perspective, here's a look at the total [IC] design segment of EDA. This data comes from the EDA Consortium, by the way, and reflects market size segments for calendar 2006. So where EDA in the aggregate was on the order of $5 billion, the bulk of it was this IC design segment, which totaled about $3.4 billion.
And you can see that it...
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