01—Abstract
Summary
Summary of the 10-Q filed May 24, 2024. Cited figures are marked; the original filing is the authoritative source.
Synopsys, Inc. (SNPS) reported strong financial results for the quarter ending April 30, 2024, with total revenue increasing by 15% year-over-year to $1.45 billiona.
This growth was driven by broad-based performance across both its Design Automation and Design IP segments. Net income attributed to Synopsys was $292.1 millionb, up from $272.9 million in the prior year's quarter, with diluted EPS reaching $1.88. The company also provided an update on its significant pending acquisition of Ansys, Inc., expected to close in the first half of calendar year 2025, which is valued at approximately $35 billion and is subject to regulatory approvals.
Additionally, Synopsys announced the divestiture of its Software Integrity business for up to $2.1 billionc, which is classified as discontinued operations and expected to close in the second half of 2024. Looking ahead, Synopsys has secured significant debt financing for the Ansys acquisition and is navigating a dynamic macroeconomic environment.
The company's time-based revenue model provides a degree of stability, but it continues to monitor global economic and geopolitical factors. The company's balance sheet remains robust, with substantial cash and investments, and it continues to invest in research and development to maintain its leadership position in the semiconductor design and software security markets.
02—Key points
Key Highlights
- Total revenue increased 15% year-over-year to $1.45 billion for the third quarter of fiscal year 2024.
- Net income attributed to Synopsys rose to $292.1 million, resulting in diluted EPS of $1.88.
- The company announced a pending acquisition of Ansys, Inc. for approximately $35 billion, with an expected close in the first half of calendar year 2025.
- Synopsys entered into an agreement to sell its Software Integrity business for up to $2.1 billion, with the divestiture expected to close in the second half of 2024.
- The Software Integrity business has been classified as discontinued operations.
- The company generated $388.8 million in cash flow from operating activities for the six months ended April 30, 2024, though this was lower than the prior year due to increased tax payments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Synopsys kept $0.20.
- Revenue$1.45B100.0%
- Cost of revenue−$300.4M20.6%
- Gross profit$1.15B79.4%
- Operating costs−$822.2M56.5%
- Operating income$332.1M22.8%
- Interest, other & tax−$40.0M2.7%
- Net income$292.1M20.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed May 24, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.45B$1.26B | +15.2% |
| Cost of Revenue | $300.40M$248.24M | +21.0% |
| Gross Profit | $1.15B$1.01B | +13.8% |
| R&D Expenses | $493.14M$460.46M | +7.1% |
| Operating Expenses | $822.24M$722.13M | +13.9% |
| Operating Income | $332.07M$292.38M | +13.6% |
| Net Income | $292.11M$272.91M | +7.0% |
| EPS (Basic) | $1.91$1.79 | +6.7% |
| EPS (Diluted) | $1.88$1.76 | +6.8% |
| Shares Outstanding (Basic) | 152.97M152.19M | +0.5% |
| Shares Outstanding (Diluted) | 155.77M154.73M | +0.7% |
05—Questions
Frequently Asked Questions
What are the key financial performance indicators for Synopsys in this quarter?
For the quarter ended April 30, 2024, Synopsys reported total revenue of $1.45 billion, a 15% increase year-over-year. Net income attributed to Synopsys was $292.1 million, and diluted earnings per share were $1.88. For the six months ended April 30, 2024, revenue grew 19% to $2.97 billion, and operating income increased by 25% to $684.7 million.
What are the significant strategic transactions Synopsys is undertaking?
Synopsys has two major strategic initiatives. First, it is acquiring Ansys, Inc. for approximately $35 billion, a cash-and-stock transaction expected to close in the first half of calendar year 2025, subject to regulatory approvals. Second, Synopsys has agreed to sell its Software Integrity business for up to $2.1 billion, with the transaction expected to close in the second half of 2024. The Software Integrity business has been classified as discontinued operations.
How is Synopsys managing its liquidity and capital resources, especially in light of the Ansys acquisition?
As of April 30, 2024, Synopsys had $1.7 billion in cash, cash equivalents, and short-term investments. The company has secured committed debt financing of $16.0 billion for the Ansys acquisition. Synopsys anticipates that the acquisition will result in a material increase in debt and liquidity needs. They intend to fund the cash portion of the acquisition consideration through a combination of cash and debt.
What is the financial impact of the Software Integrity business divestiture?
The Software Integrity business has been classified as discontinued operations, with its financial results excluded from continuing operations for all periods presented. The divestiture is expected to bring in up to $2.1 billion in cash. For the three months ended April 30, 2024, the Software Integrity business reported a net loss of $7.0 million.
06—Continue