10-QPeriod: Q2 FY2022

SYNOPSYS INC Quarterly Report for Q2 Ended Apr 30, 2022

Filed May 20, 2022For Securities:SNPS

Summary

Synopsys Inc. reported strong financial results for the second quarter of fiscal year 2022, driven by robust growth in its Semiconductor & System Design segment. Total revenue increased by approximately 25% year-over-year to $1.279 billion, with significant contributions from both time-based and upfront product revenue streams. The company demonstrated impressive operational leverage, with operating income growing by 87% to $363.7 million, indicating effective cost management alongside revenue expansion. Key financial health indicators remain positive, with a substantial increase in cash, cash equivalents, and short-term investments to $1.72 billion. The company also continued its commitment to shareholder returns through an active stock repurchase program. Management expressed confidence in the company's ability to meet future cash requirements and capital return plans, supported by strong operational performance and a solid balance sheet.

Financial Highlights

58 data points
Beta

Revenue

$1.28B

80.2% Gross Margin

Net Income

$294.78M

23.0% Net Margin

EPS (Diluted)

$1.89

Total Assets

$9.21B

Cash & Equivalents

$1.58B

Free Cash Flow

$724.34M

Financial Statements
Beta
Revenue$1.28B
Cost of Revenue$252.81M
Gross Profit$1.03B
R&D Expenses$389.96M
Operating Expenses$662.72M
Operating Income$363.70M
Interest Expense$400K
Net Income$294.78M
EPS (Basic)$1.93
EPS (Diluted)$1.89
Shares Outstanding (Basic)153.09M
Shares Outstanding (Diluted)156.17M

Key Highlights

  • 1Total revenue grew 25% year-over-year to $1.279 billion for Q2 FY2022.
  • 2Operating income saw a significant increase of 87% to $363.7 million.
  • 3Semiconductor & System Design segment revenue increased by 25%, demonstrating continued strength in core markets.
  • 4Software Integrity segment revenue also showed healthy growth of 20%.
  • 5Cash, cash equivalents, and short-term investments increased to $1.72 billion, reflecting strong cash generation.
  • 6The company repurchased $250 million of its common stock during the quarter.
  • 7Deferred revenue increased significantly to $1.96 billion, indicating strong future revenue visibility.

Frequently Asked Questions

The primary driver of Synopsys' revenue growth in Q2 FY2022 was a broad-based increase across all product groups and geographies, particularly strong performance in the Semiconductor & System Design segment. This was supported by both time-based and upfront product revenue, with notable growth in IP and hardware products.

Synopsys experienced a significant improvement in profitability. Operating income grew by 87% year-over-year to $363.7 million. This robust growth was fueled by a revenue increase that outpaced the growth in operating expenses, indicating strong operational leverage.

Synopsys maintains a strong liquidity position, with cash, cash equivalents, and short-term investments totaling $1.72 billion as of April 30, 2022. The company generates substantial cash flow from operations and believes its existing liquidity and operational cash flow will be sufficient to meet its obligations and capital return programs. They also have access to a $650 million revolving credit facility, which was undrawn at the end of the period.

Yes, Synopsys completed an acquisition of a 75% equity interest in OpenLight Photonics, Inc. for $90.0 million. This acquisition is expected to contribute to the Semiconductor & System Design reporting segment. While acquisitions are a part of their growth strategy, the company stated these were not material individually or in aggregate to the financial statements.