10-QPeriod: Q2 FY2008

SYNOPSYS INC Quarterly Report for Q2 Ended Apr 30, 2008

Filed June 10, 2008For Securities:SNPS

Summary

Synopsys, Inc. reported its quarterly results for the period ending April 30, 2008. The company demonstrated solid revenue growth, with total revenue increasing by 11% year-over-year to $324.6 million, largely driven by a 14% increase in time-based license revenue. This segment, which represents the majority of their software license revenue, reflects a strategic shift towards recurring revenue models. While overall net income saw a slight decrease compared to the prior year, this was attributed to a non-recurring gain in the previous period and timing of expenses. The company continues to manage its financial resources actively, including a significant stock repurchase program where $170.1 million was spent in the six-month period. Synopsys also recently completed the acquisition of Synplicity, Inc. for $223.3 million in cash, expanding its product portfolio in FPGA and IC design. The company maintains a strong liquidity position with substantial cash and short-term investments, and has an undrawn credit facility, indicating financial flexibility.

Key Highlights

  • 1Total revenue increased 11% to $324.6 million for the three months ended April 30, 2008, compared to $292.9 million in the prior year.
  • 2Time-based license revenue, a key recurring revenue stream, grew 14% to $278.2 million, constituting 86% of total revenue.
  • 3Net income for the quarter was $39.4 million, a slight decrease from $41.3 million in the prior year, mainly due to a non-recurring gain in the prior year period.
  • 4The company repurchased approximately 3.8 million shares of common stock for $87.2 million during the quarter.
  • 5Synopsys completed the acquisition of Synplicity, Inc. for $223.3 million in cash on May 15, 2008, shortly after the reporting period.
  • 6Total cash, cash equivalents, and short-term investments stood at $817.5 million as of April 30, 2008.
  • 7The company reported a favorable change in Irish tax law and a state tax audit settlement, contributing to a lower effective tax rate of 21% for the quarter.

Frequently Asked Questions

Synopsys reported a strong increase in total revenue, up 11% to $324.6 million for the three months ended April 30, 2008, compared to $292.9 million in the same period last year. This growth was primarily driven by a 14% increase in time-based license revenue.

The shift towards time-based license revenue (TSLs) indicates a strategic move to a more recurring revenue model. This model reduces dependence on upfront license fees and provides more predictable revenue streams over time, generally over a three-year term. This aligns with industry trends and customer demand for flexible payment structures.

Net income for the quarter was $39.4 million, a slight decrease from $41.3 million in the prior year. This was primarily attributed to a non-recurring gain from a litigation settlement and sale of land recognized in the second quarter of fiscal 2007, as well as the timing of certain expenses in the current fiscal year.

Synopsys actively managed its capital through stock repurchases, spending $170.1 million in the six months ended April 30, 2008. Notably, the company completed a significant acquisition of Synplicity, Inc. for $223.3 million in cash on May 15, 2008, expanding its capabilities in FPGA and IC design solutions.