Results Summary1
Record quarterly revenue of $1.526 billion, up approximately 13% year over year.
Quarterly GAAP earnings per diluted share of $2.73; non-GAAP earnings per diluted share of $3.43, up approximately 27% year over year and exceeding guidance.
Expecting record full-year revenue with growth of approximately 15% driven by continued, strong execution and business momentum.
SUNNYVALE, Calif., Aug. 21, 2024 /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its third quarter of fiscal year 2024. Revenue for the third quarter of fiscal year 2024 was $1.526 billion, compared to $1.354 billion for the third quarter of fiscal year 2023.
"Our strong third quarter results and expectations for a record year continue to demonstrate the resiliency of Synopsys' business," said Sassine Ghazi, president and CEO of Synopsys. "The complexity and pace of technology innovation is accelerating as silicon and systems companies race to capitalize on AI in this era of pervasive intelligence. Synopsys is mission-critical to technology innovation and our customer set is expanding as more companies in more industries define and optimize system performance at the silicon level."
"Synopsys delivered an excellent third quarter, setting a new quarterly revenue record and achieving non-GAAP EPS above our guidance range," said Shelagh Glaser, CFO of Synopsys. "The strong momentum across the business is a result of our leadership products and relentless execution. For the full year, we expect to achieve revenue growth of approximately 15% and non-GAAP EPS growth of approximately 24% while expanding non-GAAP operating margin by two points."
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1 Synopsys' Software Integrity business has been presented as a discontinued operation in the consolidated financial statements for all periods presented herein and all financial results and targets are presented herein on a continuing operations basis unless otherwise noted.
Continuing Operations On May 5, 2024, Synopsys entered into an agreement to sell its Software Integrity business. Unless otherwise noted, Synopsys' Software Integrity business has been presented as a discontinued operation in the consolidated financial statements for all periods presented herein and all financial results and targets are presented herein on a continuing operations basis.
GAAP Results On a U.S. generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal year 2024 was $425.9 million, or $2.73 per diluted share, compared to $335.7 million, or $2.17 per diluted share, for the third quarter of fiscal year 2023.
Non-GAAP ResultsOn a non-GAAP basis, net income for the third quarter of fiscal year 2024 was $535.5 million, or $3.43 per diluted share, compared to non-GAAP net income of $419.0 million, or $2.70 per diluted share, for the third quarter of fiscal year 2023.
For a reconciliation of net income, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below.
Business Segments Synopsys reports revenue and operating income in two segments: (1) Design Automation, which includes our advanced silicon design, verification products and services, system integration products and services, digital, custom and field programmable gate array IC design software, verification software and hardware products, manufacturing software products and other and (2) Design IP, which includes our Synopsys IP portfolio.
Financial Targets Synopsys also provided its consolidated financial targets for continuing operations for the fourth quarter and full fiscal year 2024. The fiscal year targets include the impact of an extra week in fiscal year 2024, which was included in the first quarter of fiscal year 2024. These financial targets assume no further changes to export control restrictions or the current U.S. government "Entity List" restrictions. These targets constitute forward-looking statements and are based on current expectations. For a discussion of factors that could cause actual results to differ materially from these targets, see "Forward-Looking Statements" below.
Fourth Quarter and Full Fiscal Year 2024 Financial Targets (1)(2)
(in millions except per share amounts)
Range for Three Months Ending
Range for Fiscal Year Ending
October 31, 2024
October 31, 2024
Low
High
Low
High
Revenue
$ 1,614
$ 1,644
$ 6,105
$ 6,135
GAAP Expenses
$ 1,210
$ 1,230
$ 4,577
$ 4,597
Non-GAAP Expenses
$ 1,027
$ 1,037
$ 3,760
$ 3,770
Non-GAAP Interest and Other Income (Expense), net
$ 8
$ 10
$ 41
$ 43
Non-GAAP Tax Rate
15 %
15 %
15 %
15 %
Outstanding Shares (fully diluted)
155
157
155
157
GAAP EPS
$ 2.25
$ 2.39
$ 9.71
$ 9.85
Non-GAAP EPS
$ 3.27
$ 3.32
$ 13.07
$ 13.12
Operating Cash Flow
~ $1,300
Free Cash Flow(3)
~ $1,100
Capital Expenditures
~ $200
(1) Synopsys' fourth quarter of fiscal year 2024 and its fiscal year 2024 will end on November 2, 2024. For presentation purposes, we refer to the closest calendar month end. The first quarter of fiscal year 2024 included one extra week.
(2) Presented on a continuing operations basis.
(3) Free cash flow is calculated as cash provided from operating activities less capital expenditures and capitalization of software development costs.
For a reconciliation of Synopsys' fourth quarter and fiscal year 2024 targets, including expenses, earnings per diluted share and other measures on a GAAP and non-GAAP basis and a discussion of the financial targets that we are not able to reconcile without unreasonable efforts, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below.
Earnings Call Open to InvestorsSynopsys will hold a conference call for financial analysts and investors today at 2:00 p.m. Pacific Time. A live webcast of the call will be available on Synopsys' corporate website at investor.synopsys.com. Synopsys uses its website as a tool to disclose important information about Synopsys and comply with its disclosure obligations under Regulation Fair Disclosure. A webcast replay will also be available on the corporate website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the fourth quarter and fiscal year 2024 in December 2024.
Effectiveness of InformationThe targets included in this press release, the statements made during the earnings conference call, the information contained in the financial supplement and the corporate overview presentation, each of which are available on Synopsys' corporate website at www.synopsys.com (collectively, the "Earnings Materials"), represent Synopsys' expectations and beliefs as of August 21, 2024. Although these Earnings Materials will remain available on Synopsys' website through the date of the earnings call for the fourth quarter and fiscal year 2024, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys undertakes no duty and does not intend to update any forward-looking statement, whether as a result of new information or future events, or otherwise update, the targets given in this press release unless required by law.
Availability of Final Financial StatementsSynopsys will include final financial statements for the third quarter of fiscal year 2024 in its quarterly report on Form 10-Q to be filed on or before September 12, 2024.
About SynopsysCatalyzing the era of pervasive intelligence, Synopsys, Inc. (NASDAQ:SNPS) delivers trusted and comprehensive silicon to systems design solutions, from electronic design automation to silicon IP and system verification and validation. We partner closely with semiconductor and systems customers across a wide range of industries to maximize their R&D capability and productivity, powering innovation today that ignites the ingenuity of tomorrow. Learn more at www.synopsys.com.
Reconciliation of Third Quarter Fiscal Year 2024 ResultsThe following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP net income, earnings per diluted share, and tax rate for the periods indicated below.
GAAP to Non-GAAP Reconciliation of Third Quarter Fiscal Year 2024 Results(1)
(unaudited and in thousands, except per share amounts)
Three Months Ended
Nine Months Ended
July 31,
July 31,
2024
2023
2024
2023
GAAP net income from continuing operations attributed to Synopsys
$ 425,868
$ 335,708
$ 1,162,429
$ 880,994
Adjustments:
Amortization of acquired intangible assets
17,436
11,951
49,962
35,591
Stock-based compensation
164,029
131,092
491,516
383,444
Acquisition/divestiture related items
53,022
4,840
110,210
9,815
Restructuring charges
—
21,879
—
54,439
Gain on sale of strategic investments
—
—
(55,077)
—
Tax settlement
—
(23,752)
—
(23,752)
Tax adjustments
(124,903)
(62,685)
(231,164)
(168,717)
Non-GAAP net income from continuing operations attributed to Synopsys
$ 535,452
$ 419,033
$ 1,527,876
$ 1,171,814
Three Months Ended
Nine Months Ended
July 31,
July 31,
2024
2023
2024
2023
GAAP net income from continuing operations per diluted share attributed to Synopsys
$ 2.73
$ 2.17
$ 7.46
$ 5.68
Adjustments:
Amortization of acquired intangible assets
0.11
0.08
0.32
0.23
Stock-based compensation
1.05
0.85
3.15
2.47
Acquisition/divestiture related items
0.34
0.03
0.71
0.06
Restructuring charges
—
0.14
—
0.35
Gain on sale of strategic investments
—
—
(0.35)
—
Tax settlement
—
(0.15)
—
(0.15)
Tax adjustments
(0.80)
(0.42)
(1.49)
(1.09)
Non-GAAP net income from continuing operations per diluted share attributed to Synopsys
$ 3.43
$ 2.70
$ 9.80
$ 7.55
Shares used in computing net income per diluted share amounts:
156,131
154,947
155,863
155,119
(1) Synopsys' third quarter of fiscal year 2024 and 2023 ended on August 3, 2024 and July 29, 2023, respectively. For presentation purposes, we refer to the closest calendar month end. The first quarter of fiscal year 2024 included one extra week.
GAAP to Non-GAAP Tax Rate Reconciliation (1)(2)
(unaudited)
Three Months Ended
Nine Months Ended
July 31, 2024
July 31, 2024
GAAP effective tax rate
(7.8) %
3.2 %
Income tax effect of above non-GAAP adjustments
22.8 %
11.8 %
Non-GAAP effective tax rate
15.0 %
15.0 %
(1) Synopsys' third quarter of fiscal year 2024 ended on August 3, 2024. For presentation purposes, we refer to the closest calendar month end. The first quarter of fiscal year 2024 included one extra week.
(2) Presented on a continuing operations basis.
Reconciliation of 2024 TargetsThe following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP targets for the periods indicated below.
GAAP to Non-GAAP Reconciliation of Fourth Quarter Fiscal Year 2024 Targets (1)(2)
(in thousands, except per share amounts)
Range for Three Months Ending
October 31, 2024
Low
High
Target GAAP expenses
$ 1,210,000
$ 1,230,000
Adjustments:
Amortization of acquired intangible assets
(15,000)
(18,000)
Stock-based compensation
(168,000)
(175,000)
Target non-GAAP expenses
$ 1,027,000
$ 1,037,000
Range for Three Months Ending
October 31, 2024
Low
High
Target GAAP earnings per diluted share attributed to Synopsys
$ 2.25
$ 2.39
Adjustments:
Amortization of acquired intangible assets
0.12
0.10
Stock-based compensation
1.12
1.08
Acquisition/divestiture related items (3)
0.11
0.08
Tax adjustments
