Synopsys Posts Financial Results for Third Quarter Fiscal Year 2024

Forward-Looking Statements
This press release and the investor conference call contain forward-looking statements, including, but not limited to, statements regarding short-term and long-term financial targets, expectations and objectives, including, among others, the anticipated effects of our pending acquisition of ANSYS, Inc. (the Ansys Merger); strategies related to our products, technology and services; business and market outlook, opportunities, strategies and technological trends, such as artificial intelligence; the Ansys Merger, including, among other things, its anticipated benefits; planned dispositions and their expected impact, such as the previously announced divestiture of our Software Integrity business (the Software Integrity Divestiture); the potential impact of the uncertain macroeconomic and geopolitical environment on our financial results; the expected impact of U.S. and foreign government actions and regulatory changes, including export control restrictions on our financial results; customer demand and market expansion; our planned product releases and capabilities; industry growth rates; the expected realization of our contracted but unsatisfied or partially unsatisfied performance obligations (backlog); software trends; planned 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 geopolitical 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; failure to complete the Ansys Merger on the terms described in our filings with the SEC, if at all; failure to obtain required governmental approvals related to the Ansys Merger or the imposition of conditions to such governmental approvals that may have an adverse effect on us; failure to realize the benefits expected from the Ansys Merger; failure to complete the Software Integrity Divestiture, or the Software Integrity Divestiture disrupting our business or failing to achieve its intended benefits, 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 2024 are not necessarily indicative of Synopsys' operating results for any future periods. The information provided herein is as of August 21, 2024. 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.

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,

 

2024

2023

 

2024

2023

Revenue:

         

  Time-based products

$             803,147

$             827,396

 

$          2,389,924

$          2,235,531

  Upfront products

442,528

292,653

 

1,281,283

958,631

    Total products revenue

1,245,675

1,120,049

 

3,671,207

3,194,162

  Maintenance and service

280,074

234,341

 

820,243

656,469

      Total revenue

1,525,749

1,354,390

 

4,491,450

3,850,631

Cost of revenue:

         

  Products

179,536

174,460

 

553,753

500,146

  Maintenance and service

96,630

74,978

 

275,348

211,833

  Amortization of acquired intangible assets

14,510

10,994

 

41,165

32,683

      Total cost of revenue

290,676

260,432

 

870,266

744,662

Gross margin

1,235,073

1,093,958

 

3,621,184

3,105,969

Operating expenses:

         

  Research and development

508,872

484,470

 

1,527,542

1,384,120

  Sales and marketing

211,491

185,769

 

640,117

537,981

  General and administrative

150,437

99,750

 

396,464

274,406

  Amortization of acquired intangible assets

4,062

2,014

 

12,152

5,949

  Restructuring charges

21,879

 

54,439

      Total operating expenses

874,862

793,882

 

2,576,275

2,256,895

Operating income

360,211

300,076

 

1,044,909

849,074

Interest and other income (expense), net

31,784

25,484

 

146,070

52,631

Income before income taxes

391,995

325,560

 

1,190,979

901,705

Provision (benefit) for income taxes

(30,712)

(6,951)

 

37,634

29,779

Net income from continuing operations

422,707

332,511

 

1,153,345

871,926

Income (loss) from discontinued operations, net of income taxes

(17,813)

544

 

(13,155)

(296)

Net income

404,894

333,055

 

1,140,190

871,630

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

(3,161)

(3,197)

 

(9,084)

(9,068)

Net income attributed to Synopsys

$             408,055

$             336,252

 

$          1,149,274

$             880,698

           

Net income (loss) attributed to Synopsys

         

 Continuing operations

$             425,868

$             335,708

 

$          1,162,429

$             880,994

 Discontinued operations

(17,813)

544

 

(13,155)

(296)

 Net income

$             408,055

$             336,252

 

$          1,149,274

$             880,698

           

Net income (loss) per share attributed to Synopsys - basic:

         

  Continuing operations

$                   2.78

$                   2.21

 

$                   7.60

$                   5.79

  Discontinued operations

(0.12)

 

(0.08)

  Basic net income per share

$                   2.66

$                   2.21

 

$                   7.52

$                   5.79

           

Net income (loss) per share attributed to Synopsys - diluted:

         

  Continuing operations

$                   2.73

$                   2.17

 

$                   7.46

$                   5.68

  Discontinued operations

(0.12)

 

(0.09)

  Diluted net income per share

$                   2.61

$                   2.17

 

$                   7.37

$                   5.68

           

Shares used in computing per share amounts:

         

  Basic

153,417

152,023

 

152,885

152,204

  Diluted

156,131

154,947

 

155,863

155,119

           

(1) Synopsys' third quarter of fiscal year 2024 and 2023 ended on August 3, 2024 and July 29, 2023, respectively. For presentation purposes, we refer to the
closest calendar month end. The first quarter of fiscal year 2024 included one extra week.


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