10-QPeriod: Q1 FY2011

SYNOPSYS INC Quarterly Report for Q1 Ended Jan 31, 2011

Filed March 2, 2011For Securities:SNPS

Summary

Synopsys, Inc. (SNPS) reported its first quarter results for fiscal year 2011, ending January 31, 2011. The company demonstrated solid top-line growth, with total revenue increasing by 10% year-over-year to $364.6 million. This growth was primarily driven by increased time-based license revenue and contributions from recent acquisitions. While revenue showed a healthy increase, net income saw a significant decrease of 64% to $48.2 million, largely due to a one-time tax benefit of $91.6 million recorded in the prior year's first quarter related to an IRS settlement. The company maintained a strong balance sheet with total assets of $3.21 billion and total stockholders' equity of $2.16 billion. Cash and cash equivalents and short-term investments stood at $867.1 million, providing ample liquidity. Operating activities used $39.6 million in cash, a slight improvement from the prior year, while investing activities used $18.6 million and financing activities used $13.2 million. The company continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

51 data points
Beta

Revenue

$364.64M

76.9% Gross Margin

Net Income

$48.23M

13.2% Net Margin

EPS (Diluted)

$0.31

Total Assets

$3.21B

Cash & Equivalents

$700.61M

Free Cash Flow

-$49.85M

Financial Statements
Beta
Revenue$364.64M
Cost of Revenue$84.31M
Gross Profit$280.34M
R&D Expenses$120.74M
Operating Expenses$233.68M
Operating Income$46.66M
Net Income$48.23M
EPS (Basic)$0.32
EPS (Diluted)$0.31
Shares Outstanding (Basic)149.02M
Shares Outstanding (Diluted)153.64M

Key Highlights

  • 1Total revenue grew 10% year-over-year to $364.6 million, driven by time-based licenses and acquisitions.
  • 2Net income decreased significantly by 64% to $48.2 million, primarily due to a large tax benefit in the prior year's comparable quarter.
  • 3The company maintained a strong liquidity position with $867.1 million in cash, cash equivalents, and short-term investments.
  • 4Operating expenses increased by 12%, largely attributed to higher employee-related costs resulting from recent acquisitions.
  • 5Synopsys continued to be a profitable company, with a gross margin of 76.9%.
  • 6The company actively managed its capital structure, repurchasing $65.0 million in stock during the quarter.
  • 7While revenue increased, operating income saw a decline of 15.3% year-over-year, indicating pressure on profitability from increased costs.

Frequently Asked Questions

Synopsys reported total revenue of $364.6 million for the three months ended January 31, 2011, an increase of 10% compared to $330.2 million in the same period of fiscal 2010. This growth was driven by an increase in time-based license revenue and contributions from acquisitions.

Net income for the quarter was $48.2 million, a decrease of 64% from $132.8 million in the prior year's first quarter. This substantial decrease was primarily due to a significant one-time tax benefit of $91.6 million recognized in the first quarter of fiscal 2010 related to an IRS settlement. Excluding this one-time item, net income performance would show a different trend.

Synopsys maintained a strong financial position. As of January 31, 2011, the company had $867.1 million in cash, cash equivalents, and short-term investments. Total assets were $3.21 billion, and total stockholders' equity was $2.16 billion, indicating a healthy balance sheet and sufficient liquidity to meet its obligations.

Recent acquisitions have contributed to revenue growth, particularly in time-based license revenue and professional services. However, these acquisitions also led to an increase in operating expenses, primarily due to higher employee-related costs from increased headcount, which impacted profitability.