01—Abstract
Summary
Summary of the 10-K filed December 20, 2013. Cited figures are marked; the original filing is the authoritative source.
Synopsys Inc. (SNPS) reported a strong fiscal year ending October 31, 2013, with revenue increasing by 12% to $1.96 billiona and net income growing by 36% to $247.8 million.
This growth was driven by a combination of organic expansion and strategic acquisitions made in the prior year, particularly in the IP and system-level solutions sectors. The company's business model, which relies heavily on time-based revenue (approximately 90% of total revenue), provides a degree of revenue predictability, as a substantial portion of revenue is recognized over the contract term. The company demonstrated solid financial health with robust cash flow generation and a strengthening balance sheet, ending the year with $1.02 billionb in cash and cash equivalents.
Synopsys continued to invest significantly in research and development ($669.2 millionc), underscoring its commitment to innovation and maintaining its competitive edge in the dynamic electronic design automation (EDA) market. The company also actively managed its capital structure through stock repurchases and prudent debt management.
Key risks highlighted include continued global economic uncertainty impacting customer spending, intense competition, and the need for successful integration of acquired businesses. However, Synopsys's diversified product portfolio, strong customer relationships, and focus on advanced technology position it well for continued growth in the semiconductor and electronics industries.
02—Key points
Key Highlights
- Total revenue increased 12% to $1.96 billion for fiscal year 2013.
- Net income grew significantly by 36% to $247.8 million.
- The company's business model emphasizes time-based revenue (90%), providing predictable revenue streams.
- Research and development expenses increased to $669.2 million, reflecting continued investment in innovation.
- Synopsys maintained a strong liquidity position with $1.02 billion in cash and cash equivalents at year-end.
- The company actively repurchased stock, with $127.4 million available under its program at year-end.
- Significant acquisitions in the prior year contributed to revenue growth and portfolio expansion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Synopsys kept $0.13.
- Revenue$1.96B100.0%
- Cost of revenue−$453.6M23.1%
- Gross profit$1.51B76.9%
- Operating costs−$1.26B64.3%
- Operating income$246.5M12.6%
- Interest, other & tax$1.3M0.1%
- Net income$247.8M12.6%
Where FY2013 revenue went
$1.96B- R&D: $669.2M, 34% of revenue
- Other operating costs: $593.0M, 30% of revenue
- Cost of revenue: $453.6M, 23% of revenue
- Operating income: $246.5M, 13% of revenue
Kept 13% as operating incomeOperating income $246.5M · 13%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed December 20, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $1.96B$1.76B | +11.7% |
| Cost of Revenue | $453.55M$392.67M | +15.5% |
| Gross Profit | $1.51B$1.36B | +10.7% |
| R&D Expenses | $669.20M$581.63M | +15.1% |
| Operating Expenses | $1.26B$1.17B | +7.6% |
| Operating Income | $246.49M$190.02M | +29.7% |
| Interest Expense | $1.70M$1.99M | −14.8% |
| Net Income | $247.80M$181.90M | +36.2% |
| EPS (Basic) | $1.62$1.24 | +30.6% |
| EPS (Diluted) | $1.58$1.21 | +30.6% |
| Shares Outstanding (Basic) | 153.32M146.89M | +4.4% |
| Shares Outstanding (Diluted) | 156.60M150.28M | +4.2% |
05—Questions
Frequently Asked Questions
What were Synopsys's main revenue drivers in fiscal year 2013?
Synopsys's revenue drivers in fiscal year 2013 were primarily its time-based license revenue, which accounted for 82% of total revenue, and maintenance and service revenue, which grew by 14%. The company also saw growth in upfront license revenue, up 26%, often tied to hardware and IP/system-level product sales.
How did acquisitions impact Synopsys's financial performance in fiscal year 2013?
Acquisitions completed in the prior fiscal year (2012), such as SpringSoft and Magma Design Automation, significantly contributed to Synopsys's revenue growth in fiscal year 2013. These acquisitions expanded the company's technology offerings and market reach, particularly in IP and system-level solutions, and also led to increased amortization expenses related to acquired intangible assets.
What is Synopsys's strategy regarding capital allocation, specifically share repurchases?
Synopsys utilizes its stock repurchase program to offset dilution from equity issuances and when management deems it a good use of cash. As of October 31, 2013, the company had $127.4 million available for repurchases, and the program was replenished to $500 million shortly thereafter, indicating an ongoing commitment to returning value to shareholders.
What are the key risks Synopsys identified in its 2013 10-K filing?
Key risks identified include the impact of global economic uncertainty on customer spending in the semiconductor industry, intense competition requiring continuous innovation and cost management, potential difficulties in realizing benefits from acquisitions, and the reliance on a few large customers. Additionally, the company highlighted risks related to protecting its intellectual property and the evolving regulatory landscape.
06—Continue