01—Abstract
Summary
Summary of the 10-K filed December 14, 2015. Cited figures are marked; the original filing is the authoritative source.
Synopsys, Inc. (SNPS) reported a solid performance for the fiscal year ending October 30, 2015, with revenue growing by 9% to $2.24 billiona.
This growth was driven by a combination of organic expansion and strategic acquisitions, particularly in the software quality and security space. The company's business model, heavily reliant on time-based revenue (approximately 90%b), provides a degree of revenue predictability, although customer spending fluctuations can impact revenue recognition timing. Financially, Synopsys demonstrated strong operating income growth of 7%.
However, net income saw a decrease of 13% year-over-year, primarily due to a significant increase in the provision for income taxes, influenced by acquisition integration and prior-year tax settlements. The company continued to invest heavily in research and development ($776.2 millionc), reflecting its commitment to innovation in the complex and rapidly evolving semiconductor design and software security markets. Synopsys also actively managed its capital through a substantial stock repurchase program, demonstrating a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Revenue increased by 9% to $2.24 billion in fiscal year 2015, driven by organic growth and acquisitions.
- Operating income grew by 7% to $266.5 million, reflecting efficient operations.
- Net income decreased by 13% to $225.9 million, largely due to a significant increase in income tax provision.
- Research and Development (R&D) expenses rose by 8% to $776.2 million, underscoring investment in innovation.
- The company maintained a strong focus on its time-based revenue model, with approximately 90% of revenue derived from this source.
- Synopsys continued its share repurchase program, repurchasing approximately $500 million worth of stock during the period.
- The company is facing ongoing patent litigation with Mentor Graphics Corporation, which resulted in a jury verdict of approximately $36 million in damages.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Synopsys kept $0.10.
- Revenue$2.24B100.0%
- Cost of revenue−$518.9M23.1%
- Gross profit$1.72B76.9%
- Operating costs−$1.46B65.0%
- Operating income$266.5M11.9%
- Interest, other & tax−$40.5M1.8%
- Net income$225.9M10.1%
Where FY2015 revenue went
$2.24B- R&D: $776.2M, 35% of revenue
- Other operating costs: $680.6M, 30% of revenue
- Cost of revenue: $518.9M, 23% of revenue
- Net income: $225.9M, 10% of revenue
- Interest, other & tax: $40.5M, 1.8% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed December 14, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $2.24B$2.06B | +9.0% |
| Cost of Revenue | $518.92M$456.88M | +13.6% |
| Gross Profit | $1.72B$1.60B | +7.7% |
| R&D Expenses | $776.23M$718.77M | +8.0% |
| Operating Expenses | $1.46B$1.35B | +7.8% |
| Operating Income | $266.47M$248.72M | +7.1% |
| Interest Expense | $2.81M$1.90M | +48.5% |
| Net Income | $225.93M$259.12M | −12.8% |
| EPS (Basic) | $1.46$1.67 | −12.6% |
| EPS (Diluted) | $1.43$1.64 | −12.8% |
| Shares Outstanding (Basic) | 154.96M155.05M | −0.1% |
| Shares Outstanding (Diluted) | 158.06M157.71M | +0.2% |
05—Questions
Frequently Asked Questions
What are Synopsys's main business segments?
Synopsys operates across the 'silicon to software' spectrum, providing Electronic Design Automation (EDA) software and intellectual property (IP) for semiconductor design. Additionally, they offer software quality and security testing solutions for software developers across various industries.
How did Synopsys perform financially in fiscal year 2015?
In fiscal year 2015, Synopsys saw a 9% increase in revenue to $2.24 billion and a 7% increase in operating income to $266.5 million. However, net income decreased by 13% to $225.9 million, mainly due to higher income tax provisions related to acquisitions and tax settlements.
What is Synopsys's strategy for growth?
Synopsys's growth strategy is focused on strengthening its leadership in EDA products, expanding its IP offerings, and driving growth in the software quality and security market, which it entered through acquisitions. The company also utilizes targeted acquisitions to augment its R&D efforts.
What are the key risks facing Synopsys?
Key risks include the dependence on the semiconductor and electronics industries, which are subject to economic cycles and increasing design complexity. Other risks involve competition, the successful integration of acquisitions, potential changes in accounting principles, and intellectual property litigation.
06—Continue