10-QPeriod: Q1 FY2014

SYNOPSYS INC Quarterly Report for Q1 Ended Jan 31, 2014

Filed February 26, 2014For Securities:SNPS

Summary

This 10-Q filing for Synopsys Inc. (SNPS) for the quarter ended January 31, 2014, reveals a company with stable revenue, a strong financial position, and strategic investments. Total revenue saw a modest 1% increase year-over-year, driven by time-based license revenue, which continues to be the primary revenue driver, accounting for approximately 84% of total revenue. While operating expenses, particularly in research and development, saw an increase due to higher headcount, the company managed to maintain profitability. The balance sheet shows a healthy liquidity position with over $893 million in cash and cash equivalents, although this represents a decrease from the previous quarter. Notably, the company announced a significant acquisition of Coverity, Inc. for approximately $375 million, signaling a strategic move to expand its product offerings and market reach, which is expected to be funded by a combination of cash and debt.

Financial Highlights

53 data points
Beta

Revenue

$478.95M

77.9% Gross Margin

Net Income

$67.70M

14.1% Net Margin

EPS (Diluted)

$0.43

Total Assets

$4.19B

Cash & Equivalents

$893.05M

Free Cash Flow

-$88.25M

Financial Statements
Beta
Revenue$478.95M
Cost of Revenue$105.85M
Gross Profit$373.10M
R&D Expenses$167.54M
Operating Expenses$312.95M
Operating Income$60.16M
Interest Expense$357K
Net Income$67.70M
EPS (Basic)$0.44
EPS (Diluted)$0.43
Shares Outstanding (Basic)154.07M
Shares Outstanding (Diluted)156.76M

Key Highlights

  • 1Total revenue increased by 1% to $479.0 million for the three months ended January 31, 2014, compared to $475.1 million in the prior year period.
  • 2Time-based license revenue, the company's core business, increased by 4% to $400.1 million, representing 84% of total revenue.
  • 3Net income for the quarter was $67.7 million, a slight decrease from $69.9 million in the prior year, attributed to increased operating expenses.
  • 4The company maintained a strong liquidity position with $893.1 million in cash and cash equivalents as of January 31, 2014.
  • 5Synopsys announced a definitive agreement to acquire Coverity, Inc. for approximately $375 million, a strategic move to expand its software quality, testing, and security tools offerings.
  • 6Operating expenses increased by 3% primarily due to higher research and development costs driven by increased headcount.
  • 7The company repurchased $54.7 million of its common stock during the quarter as part of its ongoing stock repurchase program.

Frequently Asked Questions

Synopsys reported a modest 1% increase in total revenue, reaching $479.0 million for the three months ended January 31, 2014, compared to $475.1 million in the same period last year. This growth was primarily driven by an increase in time-based license revenue.

Net income slightly decreased to $67.7 million from $69.9 million in the prior year's comparable quarter. This was mainly due to an increase in operating expenses, particularly in research and development, driven by higher headcount.

Synopsys announced its agreement to acquire Coverity, Inc. for approximately $375 million. This acquisition is a strategic move aimed at expanding Synopsys' product portfolio into software quality, testing, and security tools, thereby broadening its total addressable market.

As of January 31, 2014, Synopsys held $893.1 million in cash and cash equivalents, though this was a decrease from the prior quarter. The company believes its current cash and cash equivalents, along with cash generated from operations and available credit, will be sufficient to meet its foreseeable needs.