01—Abstract
Summary
Summary of the 10-K filed December 16, 2011. Cited figures are marked; the original filing is the authoritative source.
Synopsys Inc. (SNPS) reported solid revenue growth of 11% in fiscal year 2011, reaching $1.54 billiona, primarily driven by its core Electronic Design Automation (EDA) software business and contributions from strategic acquisitions.
The company's recurring revenue model, comprising over 90%b of total revenue through time-based licenses and maintenance, provided stability. Despite increased operating expenses due to acquisitions and employee-related costs, Synopsys maintained profitability.
The company's financial position remained strong with significant cash reserves, although it also announced plans to acquire Magma Design Automation for approximately $507 millionc. Investors should note the company's ongoing investment in research and development and its active stock repurchase program.
02—Key points
Key Highlights
- Revenue increased by 11% to $1.54 billion in fiscal year 2011, driven by strong performance in EDA software and IP solutions.
- Over 90% of revenue is recurring, primarily from time-based licenses and maintenance, indicating a stable business model.
- The company demonstrated profitability with income before taxes of $219.1 million.
- Synopsys announced a definitive agreement to acquire Magma Design Automation for approximately $507 million, subject to regulatory and stockholder approvals.
- Research and development expenses increased by 10% to $491.9 million, reflecting continued investment in product enhancement and innovation.
- The company repurchased $401.8 million of its common stock during the fiscal year.
- Synopsys reported substantial international revenue, with 54% of total revenue derived from sales outside the United States.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Synopsys kept $0.14.
- Revenue$1.54B100.0%
- Cost of revenue−$340.4M22.2%
- Gross profit$1.20B77.8%
- Operating costs−$982.4M64.0%
- Operating income$212.8M13.9%
- Interest, other & tax$8.5M0.6%
- Net income$221.4M14.4%
Where FY2011 revenue went
$1.54B- R&D: $491.9M, 32% of revenue
- Other operating costs: $490.5M, 32% of revenue
- Cost of revenue: $340.4M, 22% of revenue
- Operating income: $212.8M, 14% of revenue
Kept 14% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed December 16, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $1.54B$1.38B | +11.2% |
| Cost of Revenue | $340.45M$281.09M | +21.1% |
| Gross Profit | $1.20B$1.10B | +8.7% |
| R&D Expenses | $491.87M$449.23M | +9.5% |
| Operating Expenses | $982.35M$915.46M | +7.3% |
| Operating Income | $212.84M$184.11M | +15.6% |
| Interest Expense | $101K$251K | −59.8% |
| Net Income | $221.36M$237.06M | −6.6% |
| EPS (Basic) | $1.51$1.60 | −5.6% |
| EPS (Diluted) | $1.47$1.56 | −5.8% |
| Shares Outstanding (Basic) | 146.57M148.01M | −1.0% |
| Shares Outstanding (Diluted) | 150.37M151.91M | −1.0% |
05—Questions
Frequently Asked Questions
What is Synopsys' core business and how does it generate revenue?
Synopsys is a leader in Electronic Design Automation (EDA) software, which engineers use to design, prototype, and test integrated circuits (ICs). They also provide IP products (pre-designed circuits) and technical services. The majority of their revenue (over 90%) is recurring, generated from time-based licenses, maintenance contracts, and professional services.
What is the company's financial performance in fiscal year 2011?
Synopsys reported an 11% increase in total revenue to $1.54 billion in fiscal year 2011. Income before provision for income taxes was $219.1 million. Operating expenses increased due to acquisitions and higher employee costs, but the company remained profitable. They also generated strong cash flow from operations.
What significant strategic moves did Synopsys make in 2011?
The most significant strategic move was the announcement of a definitive agreement to acquire Magma Design Automation for approximately $507 million. This acquisition, subject to approvals, aims to expand Synopsys' market position. The company also continued to invest in R&D and actively repurchased its own stock.
How does Synopsys manage its international operations and currency risk?
Synopsys derives a significant portion of its revenue from international sales (54% in FY2011). The company has international operations and financial reporting for its foreign subsidiaries. To manage currency risk, Synopsys engages in hedging activities using foreign currency forward contracts to mitigate exposure to fluctuations in exchange rates.
06—Continue