01—Abstract
Summary
Summary of the 10-Q filed August 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Synopsys Inc. (SNPS) reported robust financial results for the nine months ended July 31, 2024, demonstrating strong revenue growth and improved profitability.
Total revenue increased by 17% to $4.5 billiona, driven by growth across both the Design Automation and Design IP segments. The company's operating income saw a significant 23% rise to $1.0 billion, reflecting effective cost management and increased revenue. Net income attributed to Synopsys also showed a substantial increase.
The company is actively navigating significant strategic initiatives, including the pending acquisition of Ansys, Inc., valued at approximately $35 billionb, and the planned divestiture of its Software Integrity business for up to $2.1 billion. These transformative actions are expected to reshape Synopsys's business, with the Ansys merger anticipated to close in the first half of calendar year 2025 and the Software Integrity divestiture expected in the second half of 2024. Despite these major transactions and associated complexities, Synopsys maintains a strong liquidity position with $2.0 billion in cash, cash equivalents, and short-term investments as of July 31, 2024.
02—Key points
Key Highlights
- Total revenue for the nine months ended July 31, 2024, increased by 17% to $4.5 billion, compared to $3.85 billion in the prior year period.
- Operating income grew by 23% to $1.04 billion for the nine months ended July 31, 2024, up from $849.1 million in the same period last year.
- Net income attributed to Synopsys for the nine months ended July 31, 2024, was $1.15 billion, a significant increase from $880.7 million in the prior year.
- The company has entered into a definitive agreement to acquire Ansys, Inc. for approximately $35 billion, a transaction expected to close in the first half of calendar year 2025.
- Synopsys plans to divest its Software Integrity business for up to $2.1 billion, with the transaction expected to close in the second half of 2024.
- Cash, cash equivalents, and short-term investments stood at $2.0 billion as of July 31, 2024, indicating a healthy liquidity position.
- The Design IP segment showed particularly strong growth, with revenue increasing by 35% for the nine months ended July 31, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Synopsys kept $0.27.
- Revenue$1.53B100.0%
- Cost of revenue−$290.7M19.1%
- Gross profit$1.24B80.9%
- Operating costs−$874.9M57.3%
- Operating income$360.2M23.6%
- Interest, other & tax$47.8M3.1%
- Net income$408.1M26.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed August 23, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.53B$1.35B | +12.7% |
| Cost of Revenue | $290.68M$260.43M | +11.6% |
| Gross Profit | $1.24B$1.09B | +12.9% |
| R&D Expenses | $508.87M$484.47M | +5.0% |
| Operating Expenses | $874.86M$793.88M | +10.2% |
| Operating Income | $360.21M$300.08M | +20.0% |
| Net Income | $408.06M$336.25M | +21.4% |
| EPS (Basic) | $2.66$2.21 | +20.4% |
| EPS (Diluted) | $2.61$2.17 | +20.3% |
| Shares Outstanding (Basic) | 153.42M152.02M | +0.9% |
| Shares Outstanding (Diluted) | 156.13M154.95M | +0.8% |
05—Questions
Frequently Asked Questions
What is the financial performance of Synopsys for the reported period?
For the nine months ended July 31, 2024, Synopsys reported a 17% increase in total revenue to $4.5 billion, and operating income rose by 23% to $1.04 billion. Net income attributed to Synopsys increased significantly to $1.15 billion. The Design IP segment demonstrated robust growth of 35% in revenue.
What are the major strategic initiatives Synopsys is undertaking?
Synopsys is pursuing two major strategic initiatives: the acquisition of Ansys, Inc. for approximately $35 billion, expected to close in the first half of calendar year 2025, and the divestiture of its Software Integrity business for up to $2.1 billion, anticipated to close in the second half of 2024. These actions are expected to significantly reshape the company's portfolio and business.
How is Synopsys's liquidity position?
As of July 31, 2024, Synopsys maintained a strong liquidity position with $2.0 billion in cash, cash equivalents, and short-term investments. The company expects this liquidity, combined with committed debt financing for the Ansys merger, to be sufficient to meet its financial requirements.
What is the impact of the Software Integrity divestiture and Ansys acquisition on the financial statements?
The Software Integrity business results are presented as discontinued operations for all periods, and its assets and liabilities are classified as held for sale. The financial impact of the Ansys acquisition, which is still pending, will be reflected in future periods upon its closing, which is anticipated in the first half of calendar year 2025. The company has secured committed debt financing for the cash portion of the Ansys transaction.
06—Continue