01—Abstract
Summary
Summary of the 10-Q filed February 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Synopsys Inc. (SNPS) reported strong financial results for the first quarter of fiscal year 2024, with revenue increasing by 21% year-over-year to $1.65 billiona, driven by growth across all product segments and geographies.
This growth was also positively impacted by an extra week in the quarter. The company's net income attributed to Synopsys surged by 65% to $449.1 millionb, resulting in a diluted earnings per share of $2.89, a significant increase from $1.75 in the prior year's comparable quarter. This performance reflects robust demand for Synopsys' Electronic Design Automation (EDA) and Design IP solutions, as well as improvements in its Software Integrity segment.
A major development during the quarter was the announcement of Synopsys' agreement to acquire Ansys Inc. for approximately $35.0 billionc in a cash-and-stock transaction, expected to close in the first half of calendar year 2025. This transformative acquisition aims to create a leading provider of mission-critical semiconductor and system design software. The company also secured significant financing commitments for this transaction.
02—Key points
Key Highlights
- Revenue increased by 21% to $1.65 billion, driven by strong performance across all segments.
- Net income attributed to Synopsys grew by 65% to $449.1 million, with diluted EPS rising to $2.89.
- Announced a definitive agreement to acquire Ansys Inc. for approximately $35.0 billion in a cash-and-stock transaction.
- Secured committed debt financing of up to $4.3 billion for the Ansys acquisition and updated bridge financing.
- Design IP segment saw significant revenue growth of 53% year-over-year.
- Operating income increased by 41% to $359.6 million, reflecting improved profitability.
- The company is exploring strategic alternatives for its Software Integrity segment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Synopsys kept $0.30.
- Revenue$1.51B100.0%
- Cost of revenue−$279.2M18.5%
- Gross profit$1.23B81.5%
- Operating costs−$879.2M58.2%
- Operating income$352.6M23.3%
- Interest, other & tax$96.5M6.4%
- Net income$449.1M29.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed February 23, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.51B$1.36B | +11.0% |
| Cost of Revenue | $279.19M$284.35M | −1.8% |
| Gross Profit | $1.23B$1.08B | +14.4% |
| R&D Expenses | $525.53M$465.33M | +12.9% |
| Operating Expenses | $879.17M$821.05M | +7.1% |
| Operating Income | $352.63M$255.93M | +37.8% |
| Interest Expense | $1.32M$264K | +401.5% |
| Net Income | $449.11M$271.54M | +65.4% |
| EPS (Basic) | $2.95$1.78 | +65.7% |
| EPS (Diluted) | $2.89$1.75 | +65.1% |
| Shares Outstanding (Basic) | 152.31M152.40M | −0.1% |
| Shares Outstanding (Diluted) | 155.33M155.08M | +0.2% |
05—Questions
Frequently Asked Questions
What are the key financial takeaways from this quarter's report?
Synopsys reported a substantial 21% year-over-year increase in revenue to $1.65 billion and a significant 65% surge in net income to $449.1 million. Diluted earnings per share rose to $2.89 from $1.75 in the prior year. This strong performance was driven by growth across all business segments, particularly Design IP, and benefited from an extra week in the fiscal first quarter.
What is the significance of the announced Ansys acquisition?
Synopsys announced a $35 billion agreement to acquire Ansys, Inc., a leading provider of engineering simulation and analysis software. This strategic move is expected to create a dominant force in mission-critical semiconductor and system design, combining Synopsys' EDA expertise with Ansys' simulation capabilities. The transaction is anticipated to close in the first half of calendar year 2025, and Synopsys has secured significant financing for the deal.
How did Synopsys' different business segments perform?
All segments showed growth. The Design Automation segment revenue increased by 11%, while Design IP experienced a robust 53% jump in revenue. The Software Integrity segment also grew by 8%, though the company is exploring strategic alternatives for this segment. The strong performance across segments contributed to a healthy increase in overall revenue and profitability.
What is the company's outlook regarding its Software Integrity segment?
Synopsys is exploring strategic alternatives for its Software Integrity segment. This means the company is considering a range of strategic opportunities, which could include a sale, spin-off, or other strategic realignment. Management is currently evaluating these options.
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