01—Abstract
Summary
Summary of the 10-Q filed May 28, 2025. Cited figures are marked; the original filing is the authoritative source.
Synopsys Inc. (SNPS) reported solid financial results for the second quarter and first six months of fiscal year 2025, demonstrating resilience in its core businesses.
Revenue grew by 10% year-over-year in the quarter to $1.6 billiona, driven by broad-based growth across products and geographies. The company's Design Automation segment showed strength, while the Design IP segment experienced a slight sequential improvement. Operating income increased by 13% in the quarter, reflecting effective cost management, though it decreased year-over-year for the six-month period due to increased expenses related to the Ansys acquisition and other professional fees.
A significant event during the period was the issuance of $10 billionb in senior notes to fund a portion of the Ansys acquisition. The company continues to advance towards the closing of the Ansys Merger, anticipated in the first half of calendar year 2025, subject to regulatory approvals. Management expressed confidence in the company's liquidity and ability to meet its financial obligations, supported by substantial cash reserves and committed financing.
02—Key points
Key Highlights
- Total revenue increased by 10% year-over-year to $1.604 billion for the three months ended April 30, 2025.
- Operating income grew by 13% year-over-year to $376.4 million for the three months ended April 30, 2025.
- The company issued $10 billion in Senior Notes to fund a portion of the Ansys Merger acquisition.
- The pending acquisition of Ansys remains on track, with an anticipated closing in the first half of calendar year 2025, subject to regulatory approvals.
- Synopsys ended the quarter with a strong cash position of $14.119 billion in cash and cash equivalents.
- Revenue from upfront products increased significantly by 29% year-over-year for the three months ended April 30, 2025, indicating strong demand for IP and hardware products.
- Research and Development expenses increased by 12% for the quarter, reflecting continued investment in product enhancement and innovation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Synopsys kept $0.22.
- Revenue$1.60B100.0%
- Cost of revenue−$318.3M19.8%
- Gross profit$1.29B80.2%
- Operating costs−$909.5M56.7%
- Operating income$376.4M23.5%
- Interest, other & tax−$31.1M1.9%
- Net income$345.3M21.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed May 28, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $1.60B$1.45B | +10.3% |
| Cost of Revenue | $318.35M$300.40M | +6.0% |
| Gross Profit | $1.29B$1.15B | +11.4% |
| R&D Expenses | $553.98M$493.14M | +12.3% |
| Operating Expenses | $909.49M$822.24M | +10.6% |
| Operating Income | $376.43M$332.07M | +13.4% |
| Net Income | $345.33M$292.11M | +18.2% |
| EPS (Basic) | $2.23$1.91 | +16.8% |
| EPS (Diluted) | $2.21$1.88 | +17.6% |
| Shares Outstanding (Basic) | 154.93M152.97M | +1.3% |
| Shares Outstanding (Diluted) | 156.09M155.77M | +0.2% |
05—Questions
Frequently Asked Questions
What is the current status of the Ansys merger?
Synopsys entered into an Agreement and Plan of Merger to acquire Ansys in January 2024. The transaction is valued at approximately $35.0 billion and is anticipated to close in the first half of calendar year 2025, subject to customary closing conditions, including regulatory approvals.
How did Synopsys fund the Ansys acquisition?
Synopsys funded a portion of the Ansys acquisition through the issuance of $10 billion in Senior Notes in March 2025. These proceeds, along with existing cash, committed debt financing, and potential proceeds from divestitures, are intended to cover the cash consideration, transaction fees, and repayment of Ansys' outstanding indebtedness.
What is Synopsys's current financial health and liquidity position?
Synopsys maintains a strong liquidity position, ending the quarter with $14.119 billion in cash and cash equivalents. The company expects its existing cash, cash equivalents, short-term investments, and committed debt financing to be sufficient to meet its financial obligations and cash requirements for the next twelve months and beyond, despite the significant debt expected from the Ansys Merger.
How has the revenue mix between time-based and upfront products changed?
Revenue from upfront products saw a significant increase of 29% year-over-year for the three months ended April 30, 2025, driven by higher demand for IP and hardware products. While time-based product revenue also grew, its percentage of total revenue slightly decreased. This shift towards upfront products can lead to increased volatility in quarterly results.
06—Continue