01—Abstract
Summary
Summary of the 10-K filed December 14, 2017. Cited figures are marked; the original filing is the authoritative source.
Synopsys, Inc. (SNPS) reported total revenues of $2.72 billiona for the fiscal year ended October 31, 2017, representing a 12% increase over the previous year.
This growth was driven by strong performance in time-based product revenues, hardware sales, and professional services, reflecting the company's sustained leadership in electronic design automation (EDA) software, intellectual property (IP), and increasingly, software integrity solutions. Despite global economic uncertainties, Synopsys demonstrated resilience, a testament to its time-based revenue model which provides revenue predictability.
The company's strategic focus on expanding its IP offerings and driving growth in the software security and quality market, as evidenced by the acquisition of Black Duck Software in December 2017, signals a commitment to broadening its market reach and technological capabilities. Synopsys also continued its capital return strategy by repurchasing its common stock, underscoring its confidence in its financial position and future prospects.
02—Key points
Key Highlights
- Revenue increased by 12% to $2.72 billion in fiscal year 2017.
- Time-based revenue, which constitutes the majority of the business, grew, contributing to revenue stability.
- The company actively engaged in stock repurchases, reflecting a commitment to shareholder value.
- Synopsys continued to invest heavily in Research and Development, with R&D expenses of $908.8 million, highlighting its focus on innovation.
- The company reported significant international revenue, with 50% of total revenue derived from sales outside the United States.
- A major event subsequent to year-end was the acquisition of Black Duck Software for approximately $547 million, strengthening its software security and management capabilities.
- The company faced ongoing patent litigation with Mentor Graphics, which resulted in a $39.0 million accrual as a loss contingency in fiscal year 2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Synopsys kept $0.05.
- Revenue$2.72B100.0%
- Cost of revenue−$654.2M24.0%
- Gross profit$2.07B76.0%
- Operating costs−$1.72B63.2%
- Operating income$347.6M12.8%
- Interest, other & tax−$211.0M7.7%
- Net income$136.6M5.0%
Where FY2017 revenue went
$2.72B- R&D: $908.8M, 33% of revenue
- Other operating costs: $814.3M, 30% of revenue
- Cost of revenue: $654.2M, 24% of revenue
- Net income: $136.6M, 5.0% of revenue
- Interest, other & tax: $211.0M, 7.7% of revenue
Kept 5.0% as net incomeNet income $136.6M · 5.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed December 14, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $2.72B$2.42B | +12.5% |
| Cost of Revenue | $654.18M$542.96M | +20.5% |
| Gross Profit | $2.07B$1.88B | +10.2% |
| R&D Expenses | $908.84M$856.71M | +6.1% |
| Operating Expenses | $1.72B$1.56B | +10.3% |
| Operating Income | $347.56M$317.39M | +9.5% |
| Interest Expense | $7.30M$3.77M | +93.7% |
| Net Income | $136.56M$266.83M | −48.8% |
| EPS (Basic) | $0.91$1.76 | −48.3% |
| EPS (Diluted) | $0.88$1.73 | −49.1% |
| Shares Outstanding (Basic) | 150.46M152.02M | −1.0% |
| Shares Outstanding (Diluted) | 154.87M154.72M | +0.1% |
05—Questions
Frequently Asked Questions
What is Synopsys' core business and market position?
Synopsys is a global leader in providing Electronic Design Automation (EDA) software, intellectual property (IP) products, and services. These solutions are used by engineers to design and test integrated circuits (chips) and develop electronic systems. The company also offers software tools and services focused on improving the security and quality of software code across various industries.
How did Synopsys perform financially in fiscal year 2017?
Synopsys reported a 12% increase in revenue, reaching $2.72 billion for the fiscal year ended October 31, 2017. This growth was driven by higher time-based revenues, hardware sales, and professional services. The company's financial performance was robust, supported by its time-based revenue model which provides a degree of predictability.
What are the key strategic initiatives or significant events mentioned in the report?
Key strategic initiatives include expanding its IP offerings and driving growth in software security and quality. A significant event highlighted is the acquisition of Black Duck Software in December 2017 for approximately $547 million, aimed at bolstering its capabilities in securing and managing open-source software. The company also continued its stock repurchase program.
Does Synopsys have significant customer concentration or legal issues?
Synopsys depends on a relatively small number of large customers, with Intel Corporation accounting for 17.9% of revenue in fiscal 2017. No other customer accounted for more than 10%. The company is involved in ongoing patent litigation with Mentor Graphics, which led to a $39.0 million accrual as a loss contingency in fiscal year 2017. Additionally, Synopsys is contesting a tax assessment in Hungary.
06—Continue