SYNOPSYS INC Quarterly Report for Q1 Ended Jan 31, 2017

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.

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.

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