10-KPeriod: FY2009

SYNOPSYS INC Annual Report, Year Ended Oct 31, 2009

Filed December 18, 2009For Securities:SNPS

Summary

Synopsys, Inc. (SNPS) reported fiscal year 2009 revenues of $1.36 billion, a slight 2% increase from the previous year, demonstrating resilience despite the global economic downturn. The company's strong recurring revenue model, comprising over 90% of total revenue through time-based licenses and maintenance, provided stability. Net income for the year was $167.7 million, a decrease from fiscal 2008 primarily due to a one-time tax settlement benefit in the prior year and lower interest income. The company maintained a healthy cash position and continued to invest in research and development to maintain its leadership in electronic design automation (EDA) software and services. Despite economic headwinds, Synopsys managed its costs effectively, with sales and marketing expenses decreasing year-over-year. The company's strategy focuses on integrated platforms, manufacturing solutions, and intellectual property to help customers accelerate product development and time-to-market. While backlog decreased by 15% year-over-year, this was attributed to the timing of large contract renewals and customer bankruptcies, and the company highlighted that backlog fluctuations are not necessarily indicators of future sales. Synopsys remains a key player in the EDA market, navigating economic challenges with a focus on technological advancement and customer support.

Financial Highlights

50 data points
Beta

Revenue

$1.36B

79.9% Gross Margin

Net Income

$167.68M

12.3% Net Margin

EPS (Diluted)

$1.15

Total Assets

$2.94B

Cash & Equivalents

$701.61M

Free Cash Flow

$199.96M

Financial Statements
Beta
Revenue$1.36B
Cost of Revenue$273.65M
Gross Profit$1.09B
R&D Expenses$419.91M
Operating Expenses$878.14M
Operating Income$208.25M
Net Income$167.68M
EPS (Basic)$1.17
EPS (Diluted)$1.15
Shares Outstanding (Basic)143.75M
Shares Outstanding (Diluted)145.86M

Key Highlights

  • 1Revenue grew 2% to $1.36 billion in fiscal 2009, driven by time-based license and maintenance revenue, showing resilience during an economic downturn.
  • 2Net income was $167.7 million, a decrease from the prior year, mainly due to a one-time tax benefit recorded in fiscal 2008 and reduced interest income.
  • 3The company maintained a recurring revenue model, with over 90% of revenue coming from time-based licenses and maintenance, providing financial stability.
  • 4Sales and marketing expenses decreased by 3% year-over-year, reflecting effective cost management.
  • 5R&D expenses increased by 6% to $419.9 million, underscoring Synopsys' commitment to innovation and product development.
  • 6Backlog decreased by 15% to $2.2 billion, attributed to the timing of contract renewals and customer bankruptcies.
  • 7The company ended the fiscal year with a strong cash and cash equivalents balance of $701.6 million.

Frequently Asked Questions

In fiscal year 2009, Synopsys reported total revenue of $1.36 billion, a slight 2% increase from the prior year, demonstrating stability despite economic challenges. Net income was $167.7 million. The company's recurring revenue model, which accounts for over 90% of its total revenue, provided a strong foundation.

The global economic recession impacted Synopsys' customers, leading to some postponements in decision-making, decreased spending, and delayed payments. However, the company's recurring revenue model and cost management efforts helped to mitigate some of these effects, allowing for revenue growth and continued profitability. The company also noted customer bankruptcies as a factor affecting backlog.

Synopsys' strategy involves continuous investment in research and development to stay at the leading edge of EDA technology. They focus on integrating design and verification platforms, expanding manufacturing solutions, and offering a broad portfolio of high-quality IP. The company also emphasizes providing excellent customer support globally and may pursue targeted acquisitions to augment its R&D efforts.

The company's business model relies heavily on recurring revenue, with over 90% generated from time-based licenses (like TSLs) and maintenance. This model provides stability and predictability in revenue recognition, as a substantial portion of revenue in any given period is typically from contracts signed in prior periods, smoothing out the impact of short-term fluctuations in customer orders.