Synopsys Posts Financial Results for Fourth Quarter and Fiscal

Synopsys Posts Financial Results for Fourth Quarter and Fiscal Year 2021

Forward-Looking Statements

This press release contains forward-looking statements including, but not limited to, statements regarding Synopsys' short-term and long-term financial targets, expectations and objectives; business outlook, opportunities and strategies; customer demand and market expansion; strategies related to our products and technology; our planned product releases and capabilities; industry growth rates; software trends; planned acquisitions and buybacks; our expected tax rate; the expected impact of U.S. and foreign government action on our financial results; and the continued impact and duration of the COVID-19 pandemic. These statements involve risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in our forward-looking statements. Such risks, uncertainties and factors include, but are not limited to: risks from the continued impact of the COVID-19 pandemic on the global economy and on our business, operations and financial condition; uncertainty in the growth of the semiconductor and electronics industries; macroeconomic conditions and uncertainty in the global economy; consolidation among our customers and our dependence on a relatively small number of large customers; risks and compliance obligations relating to the global nature of our operations as well as actions by the U.S. or foreign governments, such as measures in response to the COVID-19 pandemic or the imposition of additional tariffs or export restrictions; fluctuation of our operating results; and more. Additional information on potential risks, uncertainties and other factors that could affect Synopsys' results is included in filings it makes with the Securities and Exchange Commission from time to time, including in the sections entitled "Risk Factors" in its Annual Report on Form 10-K for the fiscal year ended October 31, 2020 and in its latest Quarterly Report on Form 10-Q. The information provided herein is as of December 1, 2021. Synopsys undertakes no duty, and does not intend to update any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law.

SYNOPSYS, INC.
Unaudited Consolidated Statements of Operations⁽¹⁾
(in thousands, except per share amounts)


	Three Months Ended		Twelve Months Ended
	October 31,		October 31,
	2021	2020	2021	2020
Revenue:
Time-based products	$ 688,116	$ 606,598	$ 2,633,763	$ 2,365,199
Upfront products	274,265	244,155	861,063	735,572
Maintenance and service	190,038	174,686	709,367	584,510
Total revenue	1,152,419	1,025,439	4,204,193	3,685,281
Cost of revenue:
Products	152,437	142,838	542,114	487,307
Maintenance and service	68,992	69,991	271,202	254,931
Amortization of intangible assets	13,297	11,720	48,461	52,452
Total cost of revenue	234,726	224,549	861,777	794,690
Gross margin	917,693	800,890	3,342,416	2,890,591
Operating expenses:
Research and development	413,864	339,566	1,504,823	1,279,022
Sales and marketing	197,681	176,499	712,491	632,010
General and administrative	88,960	79,796	322,988	284,530
Amortization of intangible assets	8,646	9,284	33,919	38,829
Restructuring charges	18,254	(387)	33,405	36,059
Total operating expenses	727,405	604,758	2,607,626	2,270,450
Operating income	190,288	196,132	734,790	620,141
Other income (expense), net	8,790	(4,095)	70,724	18,018
Income before income taxes	199,078	192,037	805,514	638,159
Provision (benefit) for income taxes	(2,059)	(4,989)	49,155	(25,288)
Net income	201,137	197,026	756,359	663,447
Net income (loss) attributed to non-controlling interest	(310)	(429)	(1,157)	(900)
Net income attributed to Synopsys	$ 201,447	$ 197,455	$ 757,516	$ 664,347

Net income per share:
Basic	$ 1.32	$ 1.30	$ 4.96	$ 4.40
Diluted	$ 1.28	$ 1.26	$ 4.81	$ 4.27

Shares used in computing per share amounts:
Basic	152,932	152,349	152,698	151,135
Diluted	157,243	156,825	157,340	155,706

(1) Synopsys' fourth quarter of fiscal year 2021 and 2020 ended on October 30, 2021 and October 31, 2020, respectively. For presentation purposes, we refer to the closest calendar month end.

SYNOPSYS, INC.
Unaudited Consolidated Balance Sheets ⁽¹⁾
(in thousands, except par value amounts)

	October 31, 2021	October 31, 2020
ASSETS:
Current assets:
Cash and cash equivalents	$ 1,432,840	$ 1,235,653
Short-term investments	147,949	-
Total cash, cash equivalents & short-term investments	$ 1,580,789	$ 1,235,653
Accounts receivable, net	568,501	780,709
Inventories, net	229,023	192,333
Income taxes receivable and prepaid taxes	32,411	32,355
Prepaid and other current assets	397,617	308,167
Total current assets	2,808,341	2,549,217
Property and equipment, net	472,398	483,818
Operating lease right-of-use assets, net	493,251	465,818
Goodwill	3,575,785	3,365,114
Intangible assets, net	279,132	254,322
Deferred income taxes	612,655	497,546
Other long-term assets	510,698	414,227
Total assets	$ 8,752,260	$ 8,030,062

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued liabilities	$ 694,748	$ 623,664
Operating lease liabilities, current	79,678	73,173
Accrued income taxes	46,443	27,738
Deferred revenue	1,517,623	1,388,263
Short-term debt	74,992	27,084
Total current liabilities	2,413,484	2,139,922
Operating lease liabilities, non-current	487,003	462,411
Long-term accrued income taxes	27,893	25,178
Long-term deferred revenue	136,303	104,850
Long-term debt	25,094	100,823
Other long-term liabilities	363,540	284,511
Total liabilities	3,453,317	3,117,695
Stockholders' equity:
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding	-	-
Common stock, $0.01 par value: 400,000 shares authorized; 153,062 and
152,618 shares outstanding, respectively	1,531	1,528
Capital in excess of par value	1,576,363	1,653,166
Retained earnings	4,549,713	3,795,397
Treasury stock, at cost: 4,198 and 4,643 shares, respectively	(782,866)	(488,613)
Accumulated other comprehensive income (loss)	(49,604)	(54,074)
Total Synopsys stockholders' equity	5,295,137	4,907,404
Non-controlling interest	3,806	4,963
Total stockholders' equity	5,298,943	4,912,367
Total liabilities and stockholders' equity	$ 8,752,260	$ 8,030,062

(1) Synopsys' fiscal year 2021 and 2020 ended on October 30, 2021 and October 31, 2020, respectively. For presentation purposes, we refer to the closest calendar month end.

SYNOPSYS, INC.
Unaudited Consolidated Statements of Cash Flows ⁽¹⁾
(in thousands)

	Twelve Months Ended
	October 31,
	2021	2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income attributed to Synopsys	$ 757,516	$ 664,347
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization and depreciation	203,676	209,986
Reduction of operating lease right-of-use assets	86,645	82,895
Amortization of capitalized costs to obtain revenue contracts	64,698	61,185
Stock-based compensation	345,272	248,584
Allowance for doubtful accounts	18,515	20,875
Deferred income taxes	(128,583)	(111,526)
Other non-cash	14,702	3,425
Net changes in operating assets and liabilities, net of
acquired assets and liabilities:
Accounts receivable	201,706	(236,806)
Inventories	(48,046)	(55,024)
Prepaid and other current assets	(102,174)	(11,298)
Other long-term assets	(153,037)	(83,367)
Accounts payable and accrued liabilities	125,133	113,773
Operating lease liabilities	(82,581)	(78,578)
Income taxes	28,855	14,120
Deferred revenue	160,325	148,722
Net cash provided by operating activities	1,492,622	991,313

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of short-term investments	12,850	-
Purchases of short-term investments	(161,732)	-
Proceeds from sales of long-term investments	-	2,151
Purchases of long-term investments	(7,591)	(2,762)
Purchases of property and equipment	(93,764)	(154,717)
Cash paid for acquisitions, net of cash acquired	(296,017)	(201,045)
Capitalization of software development costs	(1,976)	(4,045)
Other	(800)	-
Net cash used in investing activities	(549,030)	(360,418)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facilities	-	276,489
Repayment of debt	(28,061)	(288,879)
Issuances of common stock	210,719	197,403
Payments for taxes related to net share settlement of equity awards	(138,950)	(82,225)
Purchase of equity forward contract	(35,000)	-
Purchases of treasury stock	(753,081)	(242,078)
Other	(4,375)	(1,316)
Net cash used in financing activities	(748,748)	(140,606)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	2,369	17,154
Net change in cash, cash equivalents and restricted cash	197,213	507,443
Cash, cash equivalents and restricted cash, beginning of year	1,237,970	730,527
Cash, cash equivalents and restricted cash, end of period	$ 1,435,183	$ 1,237,970


(1) Synopsys' fiscal year 2021 and 2020 ended on October 30, 2021 and October 31, 2020, respectively. For presentation purposes, we refer to the closest calendar month end.

SYNOPSYS, INC.
Business Segment Reporting ⁽¹⁾
(in millions)

	Three Months	Three Months	Twelve Months	Twelve Months
	Ended	Ended	Ended	Ended
	October 31, 2021 ⁽³⁾	October 31, 2020 ⁽³⁾	October 31, 2021 ⁽³⁾	October 31, 2020 ⁽³⁾
Revenue by segment
- Semiconductor & System Design	$ 1,042.4	$ 934.6	$ 3,810.4	$ 3,327.2
% of Total	90.5%	91.1%	90.6%	90.3%
- Software Integrity	$ 110.0	$ 90.8	$ 393.8	$ 358.1
% of Total	9.5%	8.9%	9.4%	9.7%
Total segment revenue	$ 1,152.4	$ 1,025.4	$ 4,204.2	$ 3,685.3

Adjusted operating income by segment
- Semiconductor & System Design	$ 326.6	$ 293.5	$ 1,243.1	$ 990.8
- Software Integrity	$ 13.3	$ 6.2	$ 38.3	$ 40.8
Total adjusted segment operating income	$ 339.9	$ 299.7	$ 1,281.4	$ 1,031.6

Adjusted operating margin by segment
- Semiconductor & System Design	31.3%	31.4%	32.6%	29.8%
- Software Integrity	12.1%	6.8%	9.7%	11.4%
Total adjusted segment operating margin	29.5%	29.2%	30.5%	28.0%

Total Adjusted Segment Operating Income Reconciliation ⁽¹⁾⁽²⁾
(in millions)

	Three Months	Three Months	Twelve Months	Twelve Months
	Ended	Ended	Ended	Ended
	October 31, 2021 ⁽³⁾	October 31, 2020 ⁽³⁾	October 31, 2021 ⁽³⁾	October 31, 2020 ⁽³⁾
GAAP total operating income – as reported	$ 190.3	$ 196.1	$ 734.8	$ 620.1
Other expenses managed at consolidated level
-Amortization of intangible assets	21.9	21.0	82.4	91.3
-Stock compensation	96.7	78.4	345.3	248.6
-Non-qualified deferred compensation plan	8.9	1.3	71.6	21.5
-Acquisition-related costs	3.8	3.3	15.4	14.1
-Restructuring	18.3	(0.4)	33.4	36.1
-Legal matters	-	-	(1.5)	-
Total adjusted segment operating income	$ 339.9	$ 299.7	$ 1,281.4	$ 1,031.6

(1) Synopsys manages the business on a long-term, annual basis, and considers quarterly fluctuations of revenue and profitability as normal elements of our business. Amounts may not foot due to rounding.
(2) These segment results are consistent with the information required by ASC 280, Segment Reporting . They are presented to reflect the information that is considered by Synopsys' chief operating decision makers (CODMs) to evaluate the operating performance of its segments. The CODMs do not allocate certain operating expenses managed at a consolidated level to our reportable segments, and as a result, the reported operating income and operating margin do not include these unallocated expenses as shown in the table above. Amounts may not foot due to rounding.
(3) Synopsys' fourth quarter of fiscal year 2021 and 2020 ended on October 30, 2021 and October 31, 2020, respectively. For presentation purposes, we refer to the closest calendar month end.

INVESTOR CONTACT :

Lisa L. Ewbank
Synopsys, Inc.
650-584-1901
Synopsys-ir@synopsys.com

EDITORIAL CONTACT :

Simone Souza
Synopsys, Inc.
650-584-6454
simone@synopsys.com

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SOURCE Synopsys, Inc.

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Company Name: Synopsys, Inc.
Web: http://www.synopsys.com
Financial data for Synopsys, Inc.

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