10-QPeriod: Q1 FY2017

SYNOPSYS INC Quarterly Report for Q1 Ended Jan 31, 2017

Filed February 17, 2017For Securities:SNPS

Summary

Synopsys Inc. (SNPS) reported solid financial results for the quarter ending January 31, 2017, demonstrating year-over-year revenue growth of 15% to $652.8 million. This growth was primarily driven by an increase in hardware sales, time-based license revenues, and IP consulting projects, with acquisitions contributing to a lesser extent. Despite increased operating expenses primarily due to higher headcount (including from acquisitions) and increased product and consulting costs, operating income saw a significant rise of 36% to $96.9 million. The company maintained a strong liquidity position with cash, cash equivalents, and short-term investments totaling $966.4 million, though this represented a decrease from the prior quarter due to significant cash outflows for acquisitions and stock repurchases. The company's business model, with approximately 90% of revenue recurring via time-based licenses and maintenance, continues to provide a stable revenue base.

Financial Highlights

55 data points
Beta

Revenue

$652.79M

76.1% Gross Margin

Net Income

$86.59M

13.3% Net Margin

EPS (Diluted)

$0.56

Total Assets

$5.26B

Cash & Equivalents

$827.71M

Free Cash Flow

$28.70M

Financial Statements
Beta
Revenue$652.79M
Cost of Revenue$155.75M
Gross Profit$497.04M
R&D Expenses$212.65M
Operating Expenses$400.17M
Operating Income$96.87M
Interest Expense$1.31M
Net Income$86.59M
EPS (Basic)$0.57
EPS (Diluted)$0.56
Shares Outstanding (Basic)150.78M
Shares Outstanding (Diluted)154.43M

Key Highlights

  • 1Total revenue increased by 15% year-over-year to $652.8 million.
  • 2Operating income grew significantly by 36% to $96.9 million.
  • 3The company completed acquisitions totaling $188.1 million during the quarter, adding $132.9 million in goodwill and $64.9 million in identifiable intangible assets.
  • 4Cash, cash equivalents, and short-term investments stood at $966.4 million, down from $1.117 billion at the end of the previous fiscal year, primarily due to cash used in investing and financing activities.
  • 5The company initiated a restructuring plan, recording $12.1 million in charges during the quarter, with a total expected cost of $15-16 million.
  • 6Synopsys amended and restated its credit agreement, increasing its revolving credit facility to $650 million and adding a $150 million term loan facility.
  • 7Diluted earnings per share increased to $0.56 from $0.39 in the prior year period.

Frequently Asked Questions

Synopsys reported a 15% year-over-year increase in total revenue to $652.8 million for the quarter ended January 31, 2017. This growth was primarily driven by increases in hardware sales, time-based license revenues, and IP consulting projects. Acquisitions also contributed to a lesser extent.

Profitability improved significantly. Operating income increased by 36% to $96.9 million. Net income rose to $86.6 million, or $0.56 per diluted share, from $60.0 million, or $0.39 per diluted share, in the same period last year.

As of January 31, 2017, Synopsys held $966.4 million in cash, cash equivalents, and short-term investments. This balance decreased from the prior quarter due to significant cash outflows for acquisitions and stock repurchases, partially offset by proceeds from its term loan facility and operating activities. The company believes its liquidity sources will satisfy its business requirements for at least the next 12 months.

Yes, Synopsys completed acquisitions with an aggregate purchase consideration of $188.1 million, net of cash acquired. These acquisitions resulted in approximately $132.9 million of goodwill and $64.9 million of acquired identifiable intangible assets.