01—Abstract
Summary
Summary of the 10-K filed December 15, 2014. Cited figures are marked; the original filing is the authoritative source.
Synopsys, Inc. (SNPS) reported solid financial performance for the fiscal year ending October 31, 2014, with total revenue reaching $2.1 billiona, a 5% increase compared to the prior year.
This growth was driven primarily by its time-based license revenue, which continued to represent the majority of its revenue. The company also saw a 13%b increase in non-cancellable backlog, indicating strong future revenue potential, and generated robust cash flow from operations. The acquisition of Coverity, Inc. in March 2014 expanded Synopsys' offerings into software quality, testing, and security tools, broadening its market reach.
While this acquisition had a short-term negative impact on net income due to fair value adjustments and amortization, it is expected to contribute to long-term growth. The company continued its focus on innovation, investing significantly in research and development to maintain its leadership in the Electronic Design Automation (EDA) industry. Financially, Synopsys demonstrated a strong balance sheet with increasing stockholders' equity and manageable debt levels.
The company also continued its share repurchase program, returning value to shareholders. Overall, the report indicates a company with a stable business model, strategic growth initiatives through acquisitions, and a continued commitment to technological advancement in the complex semiconductor design landscape.
02—Key points
Key Highlights
- Total revenue increased by 5% to $2.1 billion in fiscal year 2014.
- Time-based license revenue, a core component of Synopsys' business model, accounted for approximately 90% of total revenue.
- Non-cancellable backlog grew by 13% to $3.5 billion, signaling strong future revenue.
- Cash flow from operations increased by 11% to $551.0 million, demonstrating operational efficiency.
- Acquisition of Coverity, Inc. expanded the company's software quality, testing, and security offerings.
- Research and development expenses increased by 7% to $718.8 million, reflecting continued investment in innovation.
- The company repurchased $119.7 million of its common stock in fiscal year 2014 and entered into an accelerated share repurchase agreement in December 2014.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Synopsys kept $0.13.
- Revenue$2.06B100.0%
- Cost of revenue−$456.9M22.2%
- Gross profit$1.60B77.8%
- Operating costs−$1.35B65.7%
- Operating income$248.7M12.1%
- Interest, other & tax$10.4M0.5%
- Net income$259.1M12.6%
Where FY2014 revenue went
$2.06B- R&D: $718.8M, 35% of revenue
- Other operating costs: $633.1M, 31% of revenue
- Cost of revenue: $456.9M, 22% of revenue
- Operating income: $248.7M, 12% of revenue
Kept 12% as operating incomeOperating income $248.7M · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed December 15, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $2.06B$1.96B | +4.9% |
| Cost of Revenue | $456.88M$453.55M | +0.7% |
| Gross Profit | $1.60B$1.51B | +6.1% |
| R&D Expenses | $718.77M$669.20M | +7.4% |
| Operating Expenses | $1.35B$1.26B | +7.1% |
| Operating Income | $248.72M$246.49M | +0.9% |
| Interest Expense | $1.90M$1.70M | +11.7% |
| Net Income | $259.12M$247.80M | +4.6% |
| EPS (Basic) | $1.67$1.62 | +3.1% |
| EPS (Diluted) | $1.64$1.58 | +3.8% |
| Shares Outstanding (Basic) | 155.05M153.32M | +1.1% |
| Shares Outstanding (Diluted) | 157.71M156.60M | +0.7% |
05—Questions
Frequently Asked Questions
What was Synopsys' revenue growth and the primary driver in fiscal year 2014?
Synopsys reported a 5% increase in total revenue, reaching $2.1 billion for fiscal year 2014. The primary driver of this growth was its time-based license revenue, which constitutes the majority of its revenue stream and benefits from a recurring revenue model.
How did the acquisition of Coverity, Inc. impact Synopsys?
The acquisition of Coverity in March 2014 expanded Synopsys' product portfolio into software quality, testing, and security tools, thereby entering a new and growing market. While this acquisition incurred short-term costs affecting net income due to purchase accounting, it is expected to enhance the company's total addressable market and contribute to future growth.
What is the significance of the company's backlog?
Synopsys' non-cancellable backlog increased by 13% to $3.5 billion as of October 31, 2014. A substantial portion of this backlog is expected to be recognized as revenue over the following three years, indicating strong future revenue visibility and commitment from customers.
How does Synopsys manage its cash and debt?
Synopsys generated strong cash flow from operations, increasing by 11% to $551.0 million in fiscal year 2014. The company had $985.8 million in cash and cash equivalents as of October 31, 2014. Its debt levels remained manageable, with $75.0 million outstanding under its term loan facility and no outstanding balance on its revolving credit facility at the end of the fiscal year. The company also continued its stock repurchase program, demonstrating a commitment to shareholder returns.
06—Continue