Synopsys Posts Financial Results for Third Quarter Fiscal Year 2018

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 at Synopsys' corporate website at www.synopsys.com. A recording of the call will be available by calling +1-800-475-6701
(+1-320-365-3844 for international callers), access code 452792, beginning at 4:00 p.m. Pacific Time today, until 11:59 p.m. Pacific Time on August 29, 2018. A webcast replay will also be available on the website from approximately 4:30 p.m. Pacific Time today through the time Synopsys announces its results for the fourth quarter and fiscal year 2018 in December 2018. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-chief executive officer, and Trac Pham, chief financial officer, on its website following the call. In addition, Synopsys makes additional information available in a financial supplement and corporate overview presentation, also posted on the corporate website.

Effectiveness of Information

The targets included in this release, the statements made during the earnings conference call and the information contained in the financial supplement and corporate overview presentation (available in the Investor Relations section of Synopsys' website at www.synopsys.com) represent Synopsys' expectations and beliefs as of the date of this release only. Although this press release, copies of the prepared remarks of the co-chief executive officer and chief financial officer made during the call, the financial supplement, and corporate overview presentation will remain available on Synopsys' website through the date of the fourth quarter and fiscal year 2018 earnings call in December 2018, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys does not currently intend to report on its progress during the fourth quarter of fiscal year 2018 or comment to analysts or investors on, or otherwise update, the targets given in this earnings release.

Availability of Final Financial Statements

Synopsys will include final financial statements for the third quarter of fiscal year 2018 in its quarterly report on Form 10-Q to be filed by September 13, 2018.

About Synopsys

Synopsys, Inc. (Nasdaq: SNPS) is the Silicon to Softwareâ„¢ partner for innovative companies developing the electronic products and software applications we rely on every day. As the world's 15th largest software company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP and is also growing its leadership in software security and quality solutions. Whether you're a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing applications that require the highest security and quality, Synopsys has the solutions needed to deliver innovative, high-quality, secure products. Learn more at www.synopsys.com.     

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, including, but not limited to, information in the sections titled "Financial Targets" and "GAAP to Non-GAAP Reconciliation" as well as statements related to our revenue and non-GAAP earnings growth, and increased operating leverage. These statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Accordingly, we caution stockholders and prospective investors not to place undue reliance on these statements. Such risks, uncertainties and factors include, but are not limited to: uncertainty in the growth of the semiconductor and electronics industry; consolidation among our customers and our dependence on a relatively small number of large customers; uncertainty in the global economy; our ability to realize the potential financial or strategic benefits of acquisitions we complete; fluctuation of our operating results; our highly competitive industries and our ability to meet our customers' demand for innovative technology at lower costs; our ability to carry out our new product and technology initiatives; cybersecurity threats or other security breaches; risks and compliance obligations relating to the global nature of our operations; our ability to protect our proprietary technology; investments of more resources in research and development than anticipated; increased risks resulting from an increase in sales of our hardware products; changes in accounting principles or standards; changes in our effective tax rate; liquidity requirements in our U.S. operations; claims that our products infringe on third-party intellectual property rights; litigation; product errors or defects; the ability to obtain licenses to third-party software and intellectual property on reasonable terms or at all; the ability to timely recruit and retain senior management and key employees; evolving corporate governance and public disclosure regulations; the inherent limitations on the effectiveness of our controls and compliance programs; the impairment of our investment portfolio by the deterioration of capital markets; the accuracy of certain assumptions, judgments and estimates that affect amounts reported in our financial statements; and the impact of catastrophic events. More information on potential risks, uncertainties and other factors that could affect Synopsys' results is included in filings it makes with the Securities and Exchange Commission from time to time, including in the sections entitled "Risk Factors" in its Annual Report on Form 10-K for the fiscal year ended October 31, 2017 and its latest Quarterly Report on Form 10-Q. The information provided herein is as of August 22, 2018.  Synopsys undertakes no duty, 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.

SYNOPSYS, INC.

Unaudited Consolidated Statements of Operations (1)

(in thousands, except per share amounts)


















Three Months Ended 


Nine Months Ended


July 31,


July 31,


2018


2017


2018


2017

Revenue:








  Time-based products

$ 570,053


$ 503,530


$ 1,697,756


$ 1,493,991

  Upfront products

99,579


100,251


291,143


263,310

  Maintenance and service

110,082


91,600


337,077


270,935

      Total revenue

779,714


695,381


2,325,976


2,028,236

Cost of revenue:








  Products

115,437


107,104


335,030


304,982

  Maintenance and service

49,790


43,828


150,674


122,618

  Amortization of intangible assets

20,154


18,614


59,612


59,720

     Total cost of revenue

185,381


169,546


545,316


487,320

Gross margin

594,333


525,835


1,780,660


1,540,916

Operating expenses:








  Research and development

277,402


228,663


793,947


664,326

  Sales and marketing

157,953


131,520


455,653


395,242

  General and administrative

84,336


46,350


199,517


170,654

  Amortization of intangible assets 

10,651


7,906


30,926


23,806

  Restructuring charges

23


6,026


1,917


31,038

     Total operating expenses

530,365


420,465


1,481,960


1,285,066

Operating income

63,968


105,370


298,700


255,850

Other income (expense), net

7,925


7,421


12,595


27,322

Income before income taxes

71,893


112,791


311,295


283,172

Provision (benefit) for income taxes

(7,516)


(3,960)


133,105


26,527

Net income

$   79,409


$ 116,751


$    178,190


$    256,645









Net income per share:








  Basic

$       0.53


$       0.78


$          1.20


$          1.71

  Diluted

$       0.52


$       0.75


$          1.16


$          1.66









Shares used in computing per share amounts:








  Basic

148,490


150,214


148,760


150,460

  Diluted

152,614


154,683


153,118


154,787


(1)  Synopsys' third quarter of fiscal year 2018 and 2017 ended on August 4, 2018 and July 29, 2017, respectively.  The first quarter of fiscal 2018 included an extra week. For presentation purposes, we refer to the closest calendar month end.


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