EX-99.1 2 d411101dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

PRESS RELEASE

INVESTOR CONTACT:

Trey Campbell

Synopsys, Inc.

650-584-4289

Synopsys-ir@synopsys.com

EDITORIAL CONTACT:

Cara Walker

Synopsys, Inc.

650-584-5000

corp-pr@synopsys.com

Synopsys Posts Financial Results for Third Quarter Fiscal Year 2023

Announces Sassine Ghazi to Assume President and CEO Role Effective Jan. 1, 2024

Q3 FY 2023 Summary

 

   

Record quarterly revenue of $1.487 billion, up 19% year over year.

 

   

GAAP earnings per diluted share of $2.17; non-GAAP earnings per diluted share of $2.88, exceeded high end of guidance.

 

   

Raising full-year 2023 revenue, non-GAAP operating margin improvement, and earnings guidance; committed to long-term model of double-digit annual revenue growth.

SUNNYVALE, Calif. Aug. 16, 2023Synopsys, Inc. (Nasdaq: SNPS) today reported results for its third quarter of fiscal year 2023. Revenue for the third quarter of fiscal year 2023 was $1.487 billion, compared to $1.248 billion for the third quarter of fiscal year 2022. Also today, the company announced that its Board of Directors has appointed Sassine Ghazi as President and Chief Executive Officer effective on January 1, 2024.1

“We achieved another record quarter as semi design starts and R&D investments continue, unabated, to capitalize on the AI-driven, ‘Smart Everything’ era,” said Aart de Geus, chair and CEO of Synopsys. “Our relentless drive for innovation has made us a catalyst for our customers, with excellent forward momentum for Synopsys. Against this backdrop, I am thrilled with

Sassine’s transition into the CEO role. He’s a proven leader, innovator, and trusted partner who will further inspire and grow our company. Sassine has my full support!”

 

1 

https://news.synopsys.com/2023-08-16-Synopsys-Announces-Sassine-Ghazi-to-Assume-President-and-CEO-Role-Jan-1,-2024

 

1


“I am incredibly honored, humbled, and profoundly grateful to the board, and Aart, for placing their unwavering trust in me,” said Sassine Ghazi, president and COO of Synopsys. “Aart built Synopsys from a disruptive start-up into one of the world’s essential semiconductor ecosystem companies. I am so proud to have been a part of that journey for the last 25 years. I am determined to build upon our strong foundation, drive innovation, and propel Synopsys to even greater heights of success.”

Synopsys CFO, Shelagh Glaser, commented on the transition and the financial results: “I look forward to partnering with Aart and Sassine on this leadership transition as we continue to deliver value for shareholders and customers. We outperformed our financial guidance for the third quarter led by record revenue in design automation, which delivered its first billion-dollar-revenue quarter. Strong operational execution drove non-GAAP operating margin expansion of roughly four points year over year to 35.3%, and non-GAAP earnings per share were up an impressive 37% versus the prior year. We are raising our full-year guidance and expect revenue growth of 14-15%, and non-GAAP earnings per share growth of 24-25% year over year.”

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal year 2023 was $336.3 million, or $2.17 per diluted share, compared to $222.6 million, or $1.43 per diluted share, for the third quarter of fiscal year 2022.

Non-GAAP Results

On a non-GAAP basis, net income for the third quarter of fiscal year 2023 was $445.9 million, or $2.88 per diluted share, compared to non-GAAP net income of $327.4 million, or $2.10 per diluted share, for the third quarter of fiscal year 2022.

For a reconciliation of net income, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see “GAAP to Non-GAAP Reconciliation” in the accompanying tables below.

 

2


Business Segments

Synopsys reports revenue and operating income in three segments: (1) Design Automation, which includes digital and custom integrated circuit (IC) design software, verification hardware and software products, manufacturing-related design products, field-programmable gate array (FPGA) design software, optical products, professional services, and other; (2) Design IP, which includes our Synopsys IP portfolio; and (3) Software Integrity, which includes solutions that test software code for security vulnerabilities and quality defects, as well as professional and managed services. Further information regarding these segments is provided at the end of this press release.

Financial Targets

Synopsys also provided its consolidated financial targets for the fourth quarter and full fiscal year 2023. These financial targets assume no further changes to export control restrictions or the current U.S. government “Entity List” restrictions. These targets constitute forward-looking statements and are based on current expectations. For a discussion of factors that could cause actual results to differ materially from these targets, see “Forward-Looking Statements” below.

Fourth Quarter and Fiscal Year 2023 Financial Targets (1)

(in millions except per share amounts)

 

     Range for Three Months Ending
October 31, 2023
    Range for Fiscal Year Ending
October 31, 2023
 
     Low     High     Low     High  

Revenue

   $ 1,567     $ 1,597     $ 5,810     $ 5,840  

GAAP Expenses

   $ 1,184     $ 1,204     $ 4,544     $ 4,564  

Non-GAAP Expenses

   $ 1,005     $ 1,015     $ 3,780     $ 3,790  

Non-GAAP Other Income (Expense)

   $ 1     $ 3     $ 10     $ 12  

Non-GAAP Tax Rate

     16     16     16     16

Outstanding Shares (fully diluted)

     155       157       155       157  

GAAP EPS

   $ 2.17     $ 2.28     $ 7.85     $ 7.96  

Non-GAAP EPS

   $ 3.01     $ 3.06     $ 11.04     $ 11.09  

Operating Cash Flow

         ~ $1,650  

 

(1)

Synopsys’ fourth quarter of fiscal year 2023 and fiscal year 2023 will end on October 28, 2023. For presentation purposes, we refer to the closest calendar month end.

For a reconciliation of Synopsys’ fourth quarter and fiscal year 2023 targets, including expenses, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see “GAAP to Non-GAAP Reconciliation” in the accompanying tables below.

 

3


Earnings Call Open to Investors

Synopsys will hold a conference call for financial analysts and investors today at 2:00 p.m. Pacific Time. A live webcast of the call will be available on Synopsys’ corporate website at www.synopsys.com. A webcast replay will also be available on the corporate website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the fourth quarter and fiscal year 2023 in November 2023.

Effectiveness of Information

The targets included in this press release, the statements made during the earnings conference call, the information contained in the financial supplement and the corporate overview presentation, each of which are available on Synopsys’ corporate website at www.synopsys.com (collectively, the “Earnings Materials”), represent Synopsys’ expectations and beliefs as of August 16, 2023. Although these Earnings Materials will remain available on Synopsys’ website through the date of the earnings call for the fourth quarter and fiscal year 2023, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys undertakes no duty and does not intend to update any forward-looking statement, whether as a result of new information or future events, or otherwise update, the targets given in this press release unless required by law.

Availability of Final Financial Statements

Synopsys will include final financial statements for the third quarter of fiscal year 2023 in its quarterly report on Form 10-Q to be filed on or before September 7, 2023.

About Synopsys

Synopsys, Inc. (Nasdaq: SNPS) is the Silicon to Software partner for innovative companies developing the electronic products and software applications we rely on every day. As an S&P 500 company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP and offers the industry’s broadest portfolio of application security testing tools and services. Whether you’re a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing more secure, high-quality code, Synopsys has the solutions needed to deliver innovative products. Learn more at www.synopsys.com.

 

4


GAAP to Non-GAAP Reconciliation

Synopsys continues to provide all information required in accordance with GAAP, but acknowledges evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, Synopsys presents non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Synopsys’ operating results in a manner that focuses on what Synopsys believes to be its core business operations and what Synopsys uses to evaluate its business operations and for internal budgeting and resource allocation purposes. These non-GAAP measures may be different from non-GAAP measures used by other companies. Synopsys’ management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, as superior to, or as a substitute for, financial information prepared in accordance with GAAP. Synopsys’ management believes it is useful for itself and investors to review, as applicable, both GAAP financial measures that include: (i) the amortization of acquired intangible assets, (ii) the impact of stock compensation, (iii) acquisition-related items, (iv) restructuring charges, (v) the effects of certain settlements, final judgments and loss contingencies related to legal proceedings, and (vi) the income tax effect of non-GAAP pre-tax adjustments, in each case as described further in Item 2.02 of Synopsys’ Current Report on Form 8-K filed on August 16, 2023. In addition, the non-GAAP financial measures that exclude such information help facilitate internal comparisons to Synopsys’ historical operating results and forecasted targets, planning and forecasting in subsequent periods and comparisons to competitors’ operating results.

Synopsys utilizes an annual non-GAAP tax rate in calculating non-GAAP financial measures to provide better consistency across interim reporting periods by eliminating the effects of certain non-recurring and other period-specific items, which can vary in size and frequency and do not necessarily reflect Synopsys’ normal operations, and to more closely align its tax rate with its expected geographic earnings mix. This annual non-GAAP tax rate is based on an evaluation of Synopsys’ historical and projected mix of U.S. and international profit before tax, taking into account the impact of non-GAAP adjustments, U.S. tax law changes, as well as other factors such as our current tax structure, existing tax positions and expected recurring tax incentives.

On February 17, 2023, following a re-evaluation of federal tax laws that require research and development expense to be capitalized commencing in Synopsys’ first quarter of fiscal year 2023, Synopsys updated its annual non-GAAP tax rate for fiscal year 2023 to 16%. Synopsys does not currently anticipate any additional significant changes to U.S. corporate tax law, its geographic earnings mix, or significant tax law changes in major jurisdictions where it operates that would result in further adjustment to its fiscal year 2023 annual non-GAAP tax rate.

 

5


When possible, Synopsys provides a reconciliation of non-GAAP financial measures to their most closely applicable GAAP financial measures. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed below, as well as Item 2.02 of Synopsys’ Current Report on Form 8-K filed on August 16, 2023, for additional information about the measures Synopsys uses to evaluate its core business operations. Synopsys is unable to provide a reconciliation of certain non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis because doing so would not be possible without unreasonable effort due to, among other things, the potential variability and limited visibility of the excluded items. For the same reasons, Synopsys is unable to address the probable significance of the unavailable information.

Reconciliation of Third Quarter Fiscal Year 2023 Results

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP net income and earnings per diluted share for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Third Quarter Fiscal Year 2023 Results(1)

(unaudited and in thousands, except per share amounts)

 

     Three Months Ended
July 31,
     Nine Months Ended
July 31,
 
     2023      2022      2023      2022  

GAAP net income attributed to Synopsys

   $  336,252      $  222,626      $ 880,698      $ 831,094  

Adjustments:

           

Amortization of intangible assets

     24,014        26,454        71,841        70,181  

Stock compensation

     144,060        127,605        420,939        333,437  

Acquisition-related items

     4,540        5,232        9,846        11,332  

Restructuring charges

     33,385        —          78,384        12,057  

Tax settlement

     (23,752      —          (23,752      —    

Tax adjustments

     (72,620      (54,508      (192,131      (162,964
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP net income attributed to Synopsys

   $ 445,879      $ 327,409      $  1,245,825      $  1,095,137  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

6


     Three Months Ended
July 31,
     Nine Months Ended
July 31,
 
     2023      2022      2023      2022  

GAAP net income per diluted share attributed to Synopsys

   $ 2.17      $ 1.43      $ 5.68      $ 5.31  

Adjustments:

           

Amortization of intangible assets

     0.15        0.17        0.46        0.45  

Stock compensation

     0.93        0.82        2.71        2.13  

Acquisition-related items

     0.03        0.03        0.06        0.07  

Restructuring charges

     0.22        —          0.51        0.08  

Tax settlement

     (0.15      —          (0.15      —    

Tax adjustments

     (0.47      (0.35      (1.24      (1.04
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP net income per diluted share attributed to Synopsys

   $ 2.88      $ 2.10      $ 8.03      $ 7.00  
  

 

 

    

 

 

    

 

 

    

 

 

 

Shares used in computing net income per diluted share amounts:

     154,947        155,806        155,119        156,545  

 

(1)

Synopsys’ third quarter of fiscal year 2023 and 2022 ended on July 29, 2023 and July 30, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

Reconciliation of 2023 Targets

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP targets for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Fourth Quarter Fiscal Year 2023 Targets (1)

(in thousands, except per share amounts)

 

     Range for Three Months Ending
October 31, 2023
 
     Low      High  

Target GAAP expenses

   $  1,184,000      $  1,204,000  

Adjustments:

     

Amortization of intangible assets

     (25,000      (28,000

Stock compensation

     (154,000      (161,000
  

 

 

    

 

 

 

Target non-GAAP expenses

   $ 1,005,000      $ 1,015,000  
  

 

 

    

 

 

 

 

     Range for Three Months Ending
October 31, 2023
 
     Low      High  

Target GAAP earnings per diluted share attributed to Synopsys

   $ 2.17      $ 2.28  

Adjustments:

     

Amortization of intangible assets

     0.18        0.16  

Stock compensation

     1.03        0.99  

Tax adjustments

     (0.37      (0.37
  

 

 

    

 

 

 

Target non-GAAP earnings per diluted share attributed to Synopsys

   $ 3.01      $ 3.06  
  

 

 

    

 

 

 

Shares used in non-GAAP calculation (midpoint of target range)

     156,000        156,000  

 

7


GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2023 Targets (1)

(in thousands, except per share amounts)

 

     Range for Fiscal Year Ending
October 31, 2023
 
     Low      High  

Target GAAP expenses

   $  4,544,230      $  4,564,230  

Adjustments:

     

Amortization of intangible assets

     (100,000      (103,000

Stock compensation

     (576,000      (583,000

Acquisition-related items

     (9,846      (9,846

Restructuring charges

     (78,384      (78,384
  

 

 

    

 

 

 

Target non-GAAP expenses

   $ 3,780,000      $ 3,790,000  
  

 

 

    

 

 

 

 

     Range for Fiscal Year Ending
October 31, 2023
 
     Low      High  

Target GAAP earnings per diluted share attributed to Synopsys

   $ 7.85      $ 7.96  

Adjustments:

     

Amortization of intangible assets

     0.64        0.62  

Stock compensation

     3.74        3.70  

Acquisition-related items

     0.06        0.06  

Restructuring charges

     0.51        0.51  

Tax settlement

     (0.15      (0.15

Tax adjustments

     (1.61      (1.61
  

 

 

    

 

 

 

Target non-GAAP earnings per diluted share attributed to Synopsys

   $ 11.04      $ 11.09  
  

 

 

    

 

 

 

Shares used in non-GAAP calculation (midpoint of target range)

     156,000        156,000  

 

(1)

Synopsys’ fourth quarter of fiscal year 2023 and fiscal year 2023 will end on October 28, 2023. For presentation purposes, we refer to the closest calendar month end.

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements regarding Synopsys’ executive management transition, short-term and long-term financial targets, expectations and objectives; strategies related to our products, technology and services; business and market outlook, opportunities and strategies; the expected impact of U.S. and foreign government actions and regulatory changes, including export control restrictions on our financial results; the potential impact of the uncertain macroeconomic environment on our financial results; customer demand and market expansion; our planned product releases and capabilities; industry growth rates;

 

8


software trends; planned acquisitions and stock repurchases; our expected tax rate; and the impact and result of pending legal, administrative and tax proceedings. These statements involve risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in such forward-looking statements. Such risks, uncertainties and factors include, but are not limited to: macroeconomic conditions and uncertainty in the global economy; uncertainty in the growth of the semiconductor and electronics industries; the highly competitive industry we operate in; actions by the U.S. or foreign governments, such as the imposition of additional export restrictions or tariffs; consolidation among our customers and our dependence on a relatively small number of large customers; risks and compliance obligations relating to the global nature of our operations; and more. Additional information on potential risks, uncertainties and other factors that could affect Synopsys’ results is included in filings we make with the SEC from time to time, including in the sections entitled “Risk Factors” in our latest Annual Report on Form 10-K and in our latest Quarterly Report on Form 10-Q. The financial information contained in this press release should be read in conjunction with the consolidated financial statements and notes thereto included in Synopsys’ most recent reports on Forms 10-K and 10-Q, each as may be amended from time to time. Synopsys’ financial results for its third quarter of fiscal year 2023 are not necessarily indicative of Synopsys’ operating results for any future periods. The information provided herein is as of August 16, 2023. Synopsys undertakes no duty to, and does not intend to, update any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law.

 

9


SYNOPSYS, INC.

Unaudited Condensed Consolidated Statements of Income (1)

(in thousands, except per share amounts)

 

     Three Months Ended     Nine Months Ended  
     July 31,     July 31,  
     2023     2022     2023     2022  

Revenue:

        

Time-based products

   $ 922,874     $ 754,322     $ 2,513,383     $ 2,185,626  

Upfront products

     297,967       268,584       980,149       973,483  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total products revenue

     1,220,841       1,022,906       3,493,532       3,159,109  

Maintenance and service

     266,447       224,860       749,959       638,141  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     1,487,288       1,247,766       4,243,491       3,797,250  

Cost of revenue:

        

Products

     190,809       164,077       549,908       480,166  

Maintenance and service

     98,299       87,774       285,056       253,665  

Amortization of intangible assets

     18,374       19,330       54,886       47,145  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     307,482       271,181       889,850       780,976  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     1,179,806       976,585       3,353,641       3,016,274  

Operating expenses:

        

Research and development

     507,402       444,826       1,458,328       1,218,761  

Sales and marketing

     227,134       199,246       660,034       571,329  

General and administrative

     109,714       91,461       298,161       246,426  

Amortization of intangible assets

     6,697       7,124       19,996       23,036  

Restructuring charges

     33,385       —         78,384       12,057  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     884,332       742,657       2,514,903       2,071,609  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     295,474       233,928       838,738       944,665  

Other income (expense), net

     25,808       2,426       53,353       (41,280
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     321,282       236,354       892,091       903,385  

Provision (benefit) for income taxes

     (11,773     16,708       20,461       76,506  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     333,055       219,646       871,630       826,879  

Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest

     (3,197     (2,980     (9,068     (4,215
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributed to Synopsys

   $ 336,252     $ 222,626     $ 880,698     $ 831,094  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share attributed to Synopsys:

        

Basic

   $ 2.21     $ 1.46     $ 5.79     $ 5.43  

Diluted

   $ 2.17     $ 1.43     $ 5.68     $ 5.31  

Shares used in computing per share amounts:

        

Basic

     152,023       152,938       152,204       153,082  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     154,947       155,806       155,119       156,545  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Synopsys’ third quarter of fiscal year 2023 and 2022 ended on July 29, 2023 and July 30, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

 

10


SYNOPSYS, INC.

Unaudited Condensed Consolidated Balance Sheets (1)

(in thousands, except par value amounts)

 

     July 31, 2023     October 31, 2022  

ASSETS:

    

Current assets:

    

Cash and cash equivalents

   $ 1,686,144     $ 1,417,608  

Short-term investments

     148,443       147,913  
  

 

 

   

 

 

 

Total cash, cash equivalents and short-term investments

     1,834,587       1,565,521  

Accounts receivable, net

     666,577       796,091  

Inventories

     282,791       211,927  

Prepaid and other current assets

     484,357       439,130  
  

 

 

   

 

 

 

Total current assets

     3,268,312       3,012,669  

Property and equipment, net

     535,973       483,300  

Operating lease right-of-use assets, net

     574,727       559,090  

Goodwill

     3,887,860       3,842,234  

Intangible assets, net

     336,723       386,446  

Deferred income taxes

     813,810       670,653  

Other long-term assets

     505,826       463,695  
  

 

 

   

 

 

 

Total assets

   $ 9,923,231     $ 9,418,087  
  

 

 

   

 

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY:

    

Current liabilities:

    

Accounts payable and accrued liabilities

   $ 905,464     $ 809,403  

Operating lease liabilities

     80,192       54,274  

Deferred revenue

     1,744,326       1,910,822  
  

 

 

   

 

 

 

Total current liabilities

     2,729,982       2,774,499  

Long-term operating lease liabilities

     590,827       581,273  

Long-term deferred revenue

     194,860       154,472  

Long-term debt

     18,165       20,824  

Other long-term liabilities

     389,516       327,829  
  

 

 

   

 

 

 

Total liabilities

     3,923,350       3,858,897  
  

 

 

   

 

 

 

Redeemable non-controlling interest

     35,877       38,664  

Stockholders’ equity:

    

Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding

     —         —    

Common stock, $0.01 par value: 400,000 shares authorized; 152,125 and 152,375 shares outstanding, respectively

     1,521       1,524  

Capital in excess of par value

     1,257,382       1,487,126  

Retained earnings

     6,389,825       5,534,307  

Treasury stock, at cost: 5,136 and 4,886 shares, respectively

     (1,542,889     (1,272,955

Accumulated other comprehensive income (loss)

     (147,284     (234,277
  

 

 

   

 

 

 

Total Synopsys stockholders’ equity

     5,958,555       5,515,725  

Non-controlling interest

     5,449       4,801  
  

 

 

   

 

 

 

Total stockholders’ equity

     5,964,004       5,520,526  
  

 

 

   

 

 

 

Total liabilities, redeemable non-controlling interest and stockholders’ equity

   $ 9,923,231     $ 9,418,087  
  

 

 

   

 

 

 

 

(1)

Synopsys’ third quarter of fiscal year 2023 ended July 29, 2023 and its fiscal year 2022 ended on October 29, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

 

11


SYNOPSYS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows (1)

(in thousands)

 

     Nine Months Ended July 31,  
     2023     2022  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income

   $ 871,630     $ 826,879  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Amortization and depreciation

     180,033       169,708  

Reduction of operating lease right-of-use assets

     72,647       65,980  

Amortization of capitalized costs to obtain revenue contracts

     61,677       54,438  

Stock-based compensation

     421,949       333,437  

Allowance for credit losses

     11,937       (4,516

Deferred income taxes

     (166,061     5,843  

Other non-cash

     8,649       10,356  

Net changes in operating assets and liabilities, net of acquired assets and liabilities:

    

Accounts receivable

     112,511       (121,786

Inventories

     (77,919     118  

Prepaid and other current assets

     8,373       (56,075

Other long-term assets

     (116,487     (20,058

Accounts payable and accrued liabilities

     48,574       (46,356

Operating lease liabilities

     (52,914     (66,187

Income taxes

     123,924       (60,739

Deferred revenue

     (131,310     254,353  
  

 

 

   

 

 

 

Net cash provided by operating activities

     1,377,213       1,345,395  

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Proceeds from sales and maturities of short-term investments

     104,139       70,847  

Purchases of short-term investments

     (102,457     (73,330

Proceeds from sales of long-term investments

     7,248       582  

Purchases of long-term investments

     (435     (7,000

Purchases of property and equipment

     (136,520     (102,934

Acquisitions, net of cash acquired

     (51,324     (416,323

Capitalization of software development costs

     (2,204     (1,970

Other

     —         (1,200
  

 

 

   

 

 

 

Net cash used in investing activities

     (181,553     (531,328

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Repayment of debt

     (2,603     (76,838

Issuances of common stock

     164,841       161,416  

Payments for taxes related to net share settlement of equity awards

     (198,969     (149,130

Purchase of equity forward contract

     (45,000     (40,000

Purchases of treasury stock

     (860,724     (717,266

Other

     (122     (3,413
  

 

 

   

 

 

 

Net cash used in financing activities

     (942,577     (825,231

Effect of exchange rate changes on cash, cash equivalents and restricted cash

     14,997       (38,155
  

 

 

   

 

 

 

Net change in cash, cash equivalents and restricted cash

     268,080       (49,319

Cash, cash equivalents and restricted cash, beginning of year

     1,419,864       1,435,183  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of period

   $ 1,687,944     $ 1,385,864  
  

 

 

   

 

 

 

 

(1)

Synopsys’ third quarter of fiscal year 2023 and 2022 ended on July 29, 2023 and July 30, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

 

12


SYNOPSYS, INC.

Business Segment Reporting (1)(2)

(in millions)

 

     Three Months Ended
July 31, 2023
    Three Months Ended
July 31, 2022
    Nine Months Ended
July 31, 2023
    Nine Months Ended
July 31, 2022
 

Revenue by segment

        

- Design Automation

   $ 1,004.2     $ 816.5     $ 2,821.5     $ 2,438.1  

% of Total

     67.6     65.4     66.4     64.2

- Design IP

   $ 350.2     $ 313.0     $ 1,029.1     $ 1,020.4  

% of Total

     23.5     25.1     24.3     26.9

- Software Integrity

   $ 132.9     $ 118.3     $ 392.9     $ 338.8  

% of Total

     8.9     9.5     9.3     8.9

Total segment revenue

   $ 1,487.3     $ 1,247.8     $ 4,243.5     $ 3,797.3  

Adjusted operating income by segment

        

- Design Automation

   $ 415.7     $ 297.2     $ 1,121.8     $ 911.9  

- Design IP

   $ 86.7     $ 83.6     $ 290.6     $ 373.5  

- Software Integrity

   $ 22.4     $ 11.3     $ 56.3     $ 36.3  

Total adjusted segment operating income

   $ 524.8     $ 392.1     $ 1,468.6     $ 1,321.7  

Adjusted operating margin by segment

        

- Design Automation

     41.4     36.4     39.8     37.4

- Design IP

     24.7     26.7     28.2     36.6

- Software Integrity

     16.9     9.5     14.3     10.7

Total adjusted segment operating margin

     35.3     31.4     34.6     34.8

Total Adjusted Segment Operating Income Reconciliation (1)(2)(3)

(in millions)

 

     Three Months Ended
July 31, 2023
     Three Months Ended
July 31, 2022
    Nine Months Ended
July 31, 2023
     Nine Months Ended
July 31, 2022
 

GAAP total operating income – as reported

   $ 295.5      $ 233.9     $ 838.7      $ 944.7  

Other expenses managed at consolidated level

          

-Amortization of intangible assets (4)

     25.1        26.5       74.9        70.2  

-Stock compensation (4)

     144.5        127.6       421.9        333.4  

-Non-qualified deferred compensation plan

     21.8        (1.1     44.8        (50.0

-Acquisition-related items

     4.5        5.2       9.8        11.3  

-Restructuring charges

     33.4        —         78.4        12.1  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total adjusted segment operating income

   $ 524.8      $ 392.1     $ 1,468.6      $ 1,321.7  
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)

Synopsys manages the business on a long-term, annual basis, and considers quarterly fluctuations of revenue and profitability as normal elements of our business. Amounts may not foot due to rounding.

(2)

Synopsys’ third quarter of fiscal year 2023 and 2022 ended on July 29, 2023 and July 30, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

(3)

These segments results are consistent with the information required by ASC 280, Segment Reporting. Synopsys’ chief operating decision maker (CODM) is our Chief Executive Officer. The CODM does not allocate certain operating expenses managed at a consolidated level to our reportable segments and, as a result, the reported operating income and operating margin do not include these unallocated expenses as shown in the table above.

(4)

The adjustment includes non-GAAP expenses attributable to non-controlling interest and redeemable non-controlling interest.

 

13