10-QPeriod: Q3 FY2015

SYNOPSYS INC Quarterly Report for Q3 Ended Jul 31, 2015

Filed August 24, 2015For Securities:SNPS

Summary

Synopsys, Inc. reported its third-quarter fiscal year 2015 results, demonstrating continued revenue growth. Total revenue increased by 7% to $555.8 million, driven by strong performance in time-based licenses and a notable increase in upfront license revenue, largely due to hardware sales. The company maintains its business model where over 90% of revenue is time-based, providing revenue predictability. Despite revenue growth, net income saw a decrease of 16% to $55.4 million. This was primarily attributed to a 9% rise in total costs and operating expenses, which outpaced revenue growth, largely due to increased employee-related costs from higher headcount and prior-year acquisitions. The company continues to invest in research and development and strategic acquisitions to expand its market reach, particularly in software quality and security. Financially, Synopsys maintained a healthy liquidity position, with cash, cash equivalents, and short-term investments increasing by 14% to $1.12 billion. The company also completed several acquisitions during the period for a total consideration of $120.8 million, funded by existing cash. The credit facility was amended to increase borrowing capacity and extend maturity. Overall, the report indicates a company experiencing revenue growth and strategic investment, while managing increased operating expenses.

Financial Statements
Beta
Revenue$555.80M
Cost of Revenue$129.47M
Gross Profit$426.33M
R&D Expenses$198.00M
Operating Expenses$364.85M
Operating Income$61.48M
Interest Expense$599K
Net Income$55.39M
EPS (Basic)$0.36
EPS (Diluted)$0.35
Shares Outstanding (Basic)155.53M
Shares Outstanding (Diluted)158.58M

Key Highlights

  • 1Total revenue increased by 7% to $555.8 million for the third quarter of fiscal year 2015, compared to the same period in fiscal year 2014.
  • 2Net income decreased by 16% to $55.4 million for the third quarter of fiscal year 2015, compared to the same period in fiscal year 2014, primarily due to higher operating expenses.
  • 3Time-based license revenue, representing 80% of total revenue, grew by 3% to $445.8 million.
  • 4Upfront license revenue increased by 55% to $48.9 million, driven by higher hardware product sales.
  • 5Cash, cash equivalents, and short-term investments increased by 14% to $1.12 billion as of July 31, 2015.
  • 6The company completed several acquisitions totaling $120.8 million during the nine months ended July 31, 2015, funded by existing cash.
  • 7The revolving credit facility was amended to increase its size to $500 million and extend its maturity date.

Frequently Asked Questions

Synopsys reported total revenue of $555.8 million for the third quarter of fiscal year 2015, a 7% increase compared to $521.8 million in the same period of fiscal year 2014. This growth was driven by increases in time-based license revenue and a significant rise in upfront license revenue, primarily attributed to hardware sales.

Net income for the third quarter of fiscal year 2015 was $55.4 million, a decrease of 16% from $65.7 million in the prior year's third quarter. This decline was mainly due to higher operating expenses, including increased employee-related costs from headcount growth and prior acquisitions, which outpaced revenue growth.

Acquisitions remain a key part of Synopsys' growth strategy. During the nine months ended July 31, 2015, the company completed several acquisitions totaling $120.8 million, funded by existing cash. These investments, along with R&D, are aimed at expanding market reach, particularly in software quality and security.

Synopsys maintained a strong liquidity position, with cash, cash equivalents, and short-term investments totaling $1.12 billion as of July 31, 2015, an increase of 14% from the previous fiscal year-end. The company also amended its credit agreement, increasing its revolving credit facility to $500 million and extending its maturity. Outstanding debt as of July 31, 2015, included $52.5 million under the Term Loan and $160.0 million under the Revolver.