10-QPeriod: Q2 FY2013

SYNOPSYS INC Quarterly Report for Q2 Ended Apr 30, 2013

Filed May 31, 2013For Securities:SNPS

Summary

Synopsys, Inc. (SNPS) reported robust financial performance for the period ending April 30, 2013. The company demonstrated significant year-over-year growth in total revenue, driven primarily by an increase in time-based license revenue, reflecting the strength of its recurring revenue model and contributions from recent acquisitions. This revenue growth, coupled with well-managed operating expenses, led to a substantial increase in net income and diluted earnings per share compared to the prior year period. Key balance sheet changes include a reduction in total assets and liabilities, with a notable decrease in current liabilities, particularly deferred revenue and accounts payable. The company maintained a strong cash position and generated positive cash flow from operations, albeit lower than the prior year due to timing differences. Investments in property and equipment and strategic acquisitions continue to shape the company's asset base. Overall, Synopsys appears to be in a solid financial position, with continued revenue expansion and profitability.

Financial Highlights

54 data points
Beta

Revenue

$499.26M

78.4% Gross Margin

Net Income

$68.69M

13.8% Net Margin

EPS (Diluted)

$0.44

Total Assets

$4.10B

Cash & Equivalents

$681.02M

Free Cash Flow

$118.28M

Financial Statements
Beta
Revenue$499.26M
Cost of Revenue$107.73M
Gross Profit$391.52M
R&D Expenses$169.96M
Operating Expenses$312.02M
Operating Income$79.50M
Interest Expense$456K
Net Income$68.69M
EPS (Basic)$0.45
EPS (Diluted)$0.44
Shares Outstanding (Basic)153.51M
Shares Outstanding (Diluted)156.61M

Key Highlights

  • 1Total revenue increased by 15% year-over-year to $499.3 million for the three months ended April 30, 2013.
  • 2Net income saw a significant increase of 227% to $68.7 million for the three months ended April 30, 2013, compared to $21.0 million in the prior year period.
  • 3Diluted earnings per share grew to $0.44 from $0.14 in the same period last year.
  • 4The company's recurring revenue model remains strong, with time-based license revenue constituting 83% of total revenue.
  • 5Total liabilities decreased by approximately 12.7% from $1.6 billion to $1.4 billion, largely due to a reduction in current liabilities.
  • 6Cash and cash equivalents stood at $681.0 million as of April 30, 2013, indicating ample liquidity.
  • 7The company's gross margin remained strong at approximately 78.4% for the three months ended April 30, 2013.

Frequently Asked Questions

The primary driver of Synopsys' revenue growth is the increase in time-based license revenue, which has grown due to organic growth and contributions from acquired companies. This reflects the continued strength and stability of their recurring revenue business model.

The company's total assets and total liabilities have decreased. Notably, current liabilities saw a significant reduction, driven by decreases in accounts payable, accrued liabilities, and deferred revenue. Intangible assets also decreased due to amortization.

Acquisitions are an important part of Synopsys' growth strategy. The company has recently completed acquisitions (like SpringSoft, Magma, and EVE) that enhance their technology, expand their product portfolio, and increase their total addressable market, particularly in IP and system-level solutions, which are expected to drive future revenue growth.

Synopsys maintained a strong cash position of $681.0 million as of April 30, 2013, and generated positive cash flow from operating activities. They also have a $350 million revolving credit facility and a $150 million term loan facility, providing additional liquidity if needed. The company actively manages its cash and capital expenditures.