01—Abstract
Summary
Summary of the 10-K filed December 20, 2019. Cited figures are marked; the original filing is the authoritative source.
Synopsys, Inc. (SNPS) reported strong revenue growth of 8% for fiscal year 2019, reaching $3.4 billiona, driven by its Semiconductor & System Design segment.
The company's strategic restructuring and adoption of ASC 606 revenue recognition standards contributed to a significant increase in operating income. Synopsys continues to lead in Electronic Design Automation (EDA) software and semiconductor intellectual property (IP), while also expanding its Software Integrity segment focused on code security and quality. Despite ongoing global economic uncertainties and competitive pressures, Synopsys demonstrated resilience.
The company's robust financial performance was supported by consistent revenue growth and effective expense management. Investors can find confidence in Synopsys' market leadership, its diversified product portfolio spanning silicon to software, and its strategic investments in innovation and expansion.
The company's commitment to returning value to shareholders is evident through its active stock repurchase program. Overall, the filing indicates a financially sound company with a strong market position and a clear strategy for continued growth.
02—Key points
Key Highlights
- Synopsys reported an 8% increase in revenue, reaching $3.4 billion for fiscal year 2019.
- The Semiconductor & System Design segment remains the primary revenue driver, while the Software Integrity segment showed substantial growth (19%).
- Operating income saw a significant increase of 44% year-over-year, indicating improved profitability.
- The company adopted new revenue recognition standards (ASC 606), which impacted revenue reporting but did not affect cash generated.
- Synopsys continued to invest heavily in Research and Development, a key factor in maintaining its technology leadership.
- A substantial stock repurchase program of $500 million was in place, with $400 million remaining availability at the end of the fiscal year.
- The company maintained effective internal controls and reported an unqualified opinion from its independent registered public accounting firm.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Synopsys kept $0.16.
- Revenue$3.36B100.0%
- Cost of revenue−$752.9M22.4%
- Gross profit$2.61B77.6%
- Operating costs−$2.09B62.1%
- Operating income$520.2M15.5%
- Interest, other & tax$12.1M0.4%
- Net income$532.4M15.8%
Where FY2019 revenue went
$3.36B- R&D: $1.14B, 34% of revenue
- Other operating costs: $950.6M, 28% of revenue
- Cost of revenue: $752.9M, 22% of revenue
- Operating income: $520.2M, 15% of revenue
Kept 15% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed December 20, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $3.36B$3.12B | +7.7% |
| Cost of Revenue | $752.95M$735.90M | +2.3% |
| Gross Profit | $2.61B$2.39B | +9.3% |
| R&D Expenses | $1.14B$1.08B | +4.8% |
| Operating Expenses | $2.09B$2.02B | +3.1% |
| Operating Income | $520.23M$360.23M | +44.4% |
| Interest Expense | $11.66M$15.61M | −25.3% |
| Net Income | $532.37M$432.52M | +23.1% |
| EPS (Basic) | $3.55$2.90 | +22.4% |
| EPS (Diluted) | $3.45$2.82 | +22.3% |
| Shares Outstanding (Basic) | 149.87M149.04M | +0.6% |
| Shares Outstanding (Diluted) | 154.19M153.39M | +0.5% |
05—Questions
Frequently Asked Questions
What are Synopsys' main business segments?
Synopsys operates in two main segments: Semiconductor & System Design, which includes Electronic Design Automation (EDA) software, semiconductor intellectual property (IP), and system integration solutions; and Software Integrity, which offers tools and services to improve software code security, quality, and compliance.
How did Synopsys perform financially in fiscal year 2019?
In fiscal year 2019, Synopsys generated $3.4 billion in revenue, an 8% increase from the previous year. Operating income grew significantly by 44%, demonstrating improved profitability. The company also managed its expenses effectively while continuing to invest in R&D.
What is the significance of the adoption of ASC 606?
The adoption of ASC 606, a new revenue recognition standard, impacted how Synopsys recognizes revenue from contracts with customers. While it led to changes in reporting for certain contracts, the company stated it did not affect the cash generated from its business and aimed to provide better disclosures on revenue and cash flows.
Does Synopsys have significant customer concentration?
Yes, Synopsys stated that Intel Corporation and its subsidiaries accounted for 12.8% of its total revenue in fiscal year 2019. No other customer accounted for more than 10% of its revenue during the reported periods.
06—Continue