01—Abstract
Summary
Summary of the 10-K filed December 20, 2012. Cited figures are marked; the original filing is the authoritative source.
Synopsys Inc. (SNPS) reported strong revenue growth of 14% in fiscal year 2012, reaching $1.76 billiona, driven by organic growth and strategic acquisitions.
The company completed the acquisitions of Magma Design Automation and Emulation & Verification Engineering S.A. (EVE), along with a controlling interest in SpringSoft, Inc., significantly expanding its product portfolio and market reach, particularly in IP and system-level solutions. Despite increased operating expenses and amortization related to these acquisitions, Synopsys maintained profitability, though net income saw a decrease due to these investments and a shift in tax benefits.
The company's recurring revenue model, with over 90%b derived from time-based licenses, maintenance, and services, provided stability. Synopsys continues to emphasize innovation and R&D, investing heavily in new product development to address the increasing complexity and time-to-market pressures faced by its customers in the semiconductor and electronics industries. The company's robust backlog and strong customer relationships position it well for continued growth, although global economic uncertainty remains a consideration.
02—Key points
Key Highlights
- Revenue increased by 14% to $1.76 billion in fiscal year 2012.
- Completed significant acquisitions: Magma Design Automation, EVE, and a controlling interest in SpringSoft, Inc.
- Over 90% of revenue is recurring, primarily from time-based licenses, maintenance, and services.
- Research and Development expenses increased by 18% to $581.6 million, reflecting continued investment in innovation.
- Backlog increased by 8% to $2.7 billion, indicating strong future revenue potential.
- Net income decreased by $39 million compared to the prior year, largely due to acquisition-related expenses and increased taxes.
- The company's stock price showed an upward trend throughout fiscal year 2012, ending around $34.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Synopsys kept $0.10.
- Revenue$1.76B100.0%
- Cost of revenue−$392.7M22.4%
- Gross profit$1.36B77.6%
- Operating costs−$1.17B66.8%
- Operating income$190.0M10.8%
- Interest, other & tax−$8.1M0.5%
- Net income$181.9M10.4%
Where FY2012 revenue went
$1.76B- Other operating costs: $591.7M, 34% of revenue
- R&D: $581.6M, 33% of revenue
- Cost of revenue: $392.7M, 22% of revenue
- Net income: $181.9M, 10% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed December 20, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $1.76B$1.54B | +14.4% |
| Cost of Revenue | $392.67M$340.45M | +15.3% |
| Gross Profit | $1.36B$1.20B | +14.1% |
| R&D Expenses | $581.63M$491.87M | +18.2% |
| Operating Expenses | $1.17B$982.35M | +19.4% |
| Operating Income | $190.02M$212.84M | −10.7% |
| Interest Expense | $1.99M$101K | +1871.3% |
| Net Income | $181.90M$221.36M | −17.8% |
| EPS (Basic) | $1.24$1.51 | −17.9% |
| EPS (Diluted) | $1.21$1.47 | −17.7% |
| Shares Outstanding (Basic) | 146.89M146.57M | +0.2% |
| Shares Outstanding (Diluted) | 150.28M150.37M | −0.1% |
05—Questions
Frequently Asked Questions
What were the key financial performance indicators for Synopsys in fiscal year 2012?
Synopsys reported a 14% increase in revenue to $1.76 billion. While gross margin remained strong, net income decreased by $39 million to $182.4 million due to increased operating expenses and amortization resulting from acquisitions, as well as higher income tax provisions.
How did acquisitions impact Synopsys's financial results?
Synopsys completed the acquisitions of Magma Design Automation, EVE, and gained a controlling interest in SpringSoft. These acquisitions significantly expanded the company's product offerings and market reach, contributing to revenue growth. However, they also led to increased operating expenses, amortization of intangible assets, and acquisition-related costs, which impacted net income.
What is Synopsys's revenue model, and how stable is it?
Synopsys operates on a recurring revenue model, with over 90% of its revenue coming from time-based licenses, maintenance, and services. This model provides significant stability and predictability, as a substantial majority of customers pay for licenses over time, and the company typically recognizes revenue over the life of the contract.
What are Synopsys's primary growth drivers and competitive advantages?
Key growth drivers include the increasing complexity of electronic designs, the demand for greater functionality and shorter time-to-market, and the company's strategy of strategic acquisitions to enhance its technology portfolio. Synopsys's competitive advantages lie in its comprehensive EDA software suite, its leading IP offerings, and its ability to provide integrated solutions across the design process.
06—Continue