FINANCIAL SUPPLEMENT Q3 FY2021
August 18, 2021
CONTENTS
- Financial Targets
- Revenue by Product Group
III. Revenue by Geographic Region
IV. | Selected Financial and Operating Metrics |
- Reconciliations and Adjustments VI. Notice to Investors
- FISCAL YEAR 2021 SELECTED FINANCIAL TARGETS (1) (2)
USEFUL LINKS
Press Release
Webcast
Form 10-K FY2020
Form 10-Q Q2 FY2021
CONTACT
Synopsys, Inc.
Investor Relations
Phone: (650) 584-4257
Email:invest-info@synopsys.com
Q4 FY2021 | FY2021 | |
Revenue (million) | $1,138 - $1,168 | $4,190 - $4,220 |
GAAP Expenses (million) | $924 - $952 | $3,431 - $3,459 |
Non-GAAP Expenses (million) | $805 - $815 | $2,915 - $2,925 |
Other Income and Expense Net (million) | ($5) - ($3) | ($6) - ($4) |
Annual Non-GAAP Tax Rate | 16% | 16% |
Fully Diluted Outstanding Shares (million) | 156 - 159 | 156 - 159 |
GAAP Operating Margin | ~18% | |
Non-GAAP Operating Margin | ~30.5% | |
GAAP Earnings Per Share | $1.09 - $1.25 | $4.63 - $4.79 |
Non-GAAP Earnings Per Share | $1.75 - $1.80 | $6.78 - $6.83 |
Cash Flow from Operations (million) | ~$1,350 | |
Capital Expenditures (million) | ~$90 | |
Average Renewable License Duration | 2.5 - 3 years | |
- These targets were provided by Synopsys as of August 18, 2021.
- These targets assume there are no further changes to the current U.S. government "Entity List" restrictions for fiscal 2021.
RECENT ACQUISITIONS
Code Dx
- Closed June 2021.
- Terms not disclosed; not material.
- Offers customers consolidated risk reporting and prioritization across correlated software vulnerability data produced by Synopsys security solutions and more than 75 third-party and open source application security and development products.
MorethanIP
- Closed May 2021.
- Terms not disclosed; not material.
- Expands Synopsys' Ethernet controller IP portfolio with the addition of MAC and PCS for 200G/400G and 800G Ethernet, providing a complete low- latency, high-performance Ethernet IP solution for networking, AI, and cloud computing SoCs.
- Complements Synopsys' existing 112G Ethernet PHY IP solution.
The information provided herein should be reviewed in conjunction with Synopsys, Inc.'s earnings results
as disclosed in its Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2021. P a g e | 1
II. REVENUE BY PRODUCT GROUP (Unaudited)
($ millions) | Q120 | Q220 | Q320 | Q420 | FY20 | Q121 | Q221 | Q321 |
EDA | 492.6 | 511.4 | 531.8 | 580.5 | 2,116.3 | 536.2 | 587.6 | 590.3 |
% of Revenue | 59% | 59% | 55% | 57% | 57% | 55% | 57% | 56% |
IP & System Integration | 255.1 | 260.0 | 335.7 | 351.9 | 1,202.6 | 339.6 | 339.3 | 363.8 |
% of Revenue | 31% | 30% | 35% | 34% | 33% | 35% | 33% | 34% |
Software Integrity | 85.6 | 88.3 | 93.4 | 90.8 | 358.1 | 92.0 | 93.9 | 98.0 |
% of Revenue | 10% | 10% | 10% | 9% | 10% | 9% | 9% | 9% |
Other | 1.1 | 1.7 | 3.2 | 2.3 | 8.3 | 2.6 | 3.5 | 5.0 |
% of Revenue | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
Total | 834.4 | 861.3 | 964.1 | 1,025.4 | 3,685.3 | 970.3 | 1,024.3 | 1,057.1 |
Revenue from our products and services is categorized into four groups:
- EDA, which includes digital and custom integrated circuit (IC) design software, verification products, manufacturing-related products, and field-programmable gate array (FPGA) design software;
- IP & System Integration, which includes our DesignWare® IP portfolio, system-level design products, prototyping products, and general professional services;
- Software Integrity, which includes solutions that test software code for security vulnerabilities and quality defects, as well as professional and managed services; and
- Other, which includes university programs and the impact of gains and losses from foreign currency hedges.
Note: Amounts included in the table above may not foot due to rounding. Product revenue data for multi-product transactions reflect internal allocations based upon certain assumptions and management's methodology. In addition, we allocate maintenance revenue to the products to which those maintenance services relate.
III. REVENUE BY GEOGRAPHIC REGION (Unaudited)
($ millions) | Q120 | Q220 | Q320 | Q420 | FY20 | Q121 | Q221 | Q321 |
North America | 415.4 | 405.8 | 443.7 | 536.9 | 1,801.9 | 474.2 | 479.2 | 487.0 |
% of Revenue | 50% | 47% | 46% | 52% | 49% | 49% | 47% | 46% |
Europe | 94.4 | 89.3 | 94.3 | 107.3 | 385.3 | 105.2 | 106.2 | 112.9 |
% of Revenue | 11% | 10% | 10% | 10% | 10% | 11% | 10% | 11% |
Korea | 89.5 | 105.3 | 96.3 | 97.8 | 389.0 | 98.3 | 105.4 | 110.5 |
% of Revenue | 11% | 12% | 10% | 10% | 11% | 10% | 10% | 10% |
China | 67.3 | 81.1 | 160.2 | 112.2 | 420.8 | 115.8 | 125.5 | 164.2 |
% of Revenue | 8% | 9% | 17% | 11% | 11% | 12% | 12% | 16% |
Other | 167.8 | 179.8 | 169.5 | 171.1 | 688.3 | 176.9 | 208.1 | 182.6 |
% of Revenue | 20% | 21% | 18% | 17% | 19% | 18% | 20% | 17% |
Total | 834.4 | 861.3 | 964.1 | 1,025.4 | 3,685.3 | 970.3 | 1,024.3 | 1,057.1 |
Note: Amounts included in the table above may not foot due to rounding. Geographic revenue data for multi-regional,multi-product transactions reflect internal allocations and are based upon certain assumptions and management's methodology.
The information provided herein should be reviewed in conjunction with Synopsys, Inc.'s earnings results
as disclosed in its Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2021. P a g e | 2
IV. SELECTED FINANCIAL AND OPERATING METRICS
Q120 | Q220 | Q320 | Q420 | FY20 | Q121 | Q221 | Q321 | |||||||||||
Revenue License Type (millions) | (1) | |||||||||||||||||
- Time-based Products | $556.4 | $590.1 | $612.1 | $606.6 | $2,365.2 | $631.3 | $648.8 | $665.6 | ||||||||||
- Upfront Products | $150.7 | $129.8 | $210.9 | $244.2 | $735.6 | $174.4 | $209.1 | $203.3 | ||||||||||
- Maintenance and Service | (2) | $127.2 | $141.5 | $141.1 | $174.7 | $584.5 | $164.7 | $166.4 | $188.3 | |||||||||
Recurring Revenue (% of Total Revenue) | (3) | 87% | 90% | 87% | 79% | 86% | 87% | 86% | 86% | |||||||||
Avg Renewable License Duration (yrs) | (4) | ~2.5 | ~3.2 | ~2.4 | ~2.6 | ~2.7 | ~2.3 | ~2.6 | ~2.5 | |||||||||
Non-GAAP Operating Margin | (5) | 22.4% | 25.7% | 33.6% | 29.2% | 28.0% | 29.6% | 31.0% | 31.9% | |||||||||
Cash, Cash Equivalents & Short-term | $700 | $856 | $1,050 | $1,236 | $1,023 | $1,458 | $1,530 | |||||||||||
Investments (millions) | ||||||||||||||||||
- % held in U.S. | 31% | 36% | 37% | 48% | 40% | 54% | 56% | |||||||||||
Outstanding Debt | $331 | $236 | $131 | $128 | $123 | $116 | $107 | |||||||||||
Operating Cash Flow | (1),(6) | $10 | $380 | $399 | $202 | $991 | $174 | $526 | $422 | |||||||||
Capital Expenditures | (1) | $55 | $26 | $40 | $34 | $155 | $28 | $16 | $23 | |||||||||
Share Repurchases (millions) | (1)(9) | |||||||||||||||||
- Number of Shares | 0.6 | 0.8 | - | 0.2 | 1.6 | 0.8 | 0.8 | 0.5 | ||||||||||
- Gross Share Repurchases | ($100) | ($100) | - | ($42) | ($242) | ($253) | ($145) | ($140) | ||||||||||
- Remaining Repurchase Authorization | $300 | $200 | $500 | $458 | $458 | $205 | $60 | $360 | ||||||||||
DSO | 87 | 67 | 59 | 69 | 74 | 54 | 50 | |||||||||||
Employee Headcount | ~14,280 | ~14,500 | ~14,800 | ~15,040 | ~15,355 | ~15,555 | ~15,870 | |||||||||||
Revenue by Segment (millions) | (7)(8) | |||||||||||||||||
- Semiconductor & System Design | $748.8 | $773.0 | $870.7 | $934.6 | $3,327.2 | $878.3 | $930.4 | $959.1 | ||||||||||
% of Total | 90% | 90% | 90% | 91% | 90% | 91% | 91% | 91% | ||||||||||
- Software Integrity | $85.6 | $88.3 | $93.4 | $90.8 | $358.1 | $92.0 | $93.9 | $98.0 | ||||||||||
% of Total | 10% | 10% | 10% | 9% | 10% | 9% | 9% | 9% | ||||||||||
Adjusted Op Income by Segment (millions) | (7)(8) | |||||||||||||||||
- Semiconductor & System Design | $178.9 | $209.7 | $308.7 | $293.5 | $990.8 | $278.9 | $308.8 | $328.7 | ||||||||||
- Software Integrity | $8.1 | $11.7 | $14.8 | $6.2 | $40.8 | $7.9 | $8.4 | $8.7 | ||||||||||
Adjusted Operating Margin by Segment | (7)(8) | |||||||||||||||||
- Semiconductor & System Design | 23.9% | 27.1% | 35.4% | 31.4% | 29.8% | 31.8% | 33.2% | 34.3% | ||||||||||
- Software Integrity | 9.4% | 13.3% | 15.8% | 6.8% | 11.4% | 8.6% | 9.0% | 8.8% | ||||||||||
- Amounts may not foot due to rounding.
- Includes maintenance on term and perpetual licenses.
- We define recurring revenue as revenue generated from time-based products, multi-period IP contracts, and maintenance and services, for which revenue is recognized over time.
- Weighted average duration of the license arrangements closed in the period reported.
- Should be read in conjunction with our Form 8-K filed with the Securities and Exchange Commission (SEC) on August 18, 2021 and the reconciliations of the non-GAAP financial measures to their comparable GAAP measures found in this financial supplement to our Q3 fiscal 2021 report (Supplement).
- Typically tracks earnings before interest, taxes, depreciation and amortization (EBITDA) over time (less cash taxes). It is important to look at multi-year averages, as operating cash flow is inherently lumpy.
- We manage the business on a long-term, annual basis, and consider quarterly fluctuations of revenue and profitability as a normal element of our business.
- These segment results are consistent with the information required by Accounting Standards Codification (ASC) 280. 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. Such unallocated expenses consist of stock-based compensation expense, amortization of intangible assets, restructuring, litigation and acquisition-related costs. Management excludes these same expenses to arrive at non-GAAP measures used to evaluate and make decisions about Synopsys as a whole.
- Q3'21 share repurchases totaled $140.0 million. In addition, we completed the remaining $35.0 million of the Q3 ASR on August 17, 2021 - bringing the total YTD to $573.1 million.
The information provided herein should be reviewed in conjunction with Synopsys, Inc.'s earnings results
as disclosed in its Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2021. P a g e | 3
V. RECONCILIATIONS AND ADJUSTMENTS
SUPPLEMENTAL GAAP TO NON-GAAP INFORMATION (1)
(Unaudited and in thousands, except per share amounts)
Three Months Ended July 31, 2021 | ||||||
GAAP | Adjustments (2) | Non-GAAP | ||||
Cost of revenue: | ||||||
Products | $ | 127,592 | $ | (10,374) | $ | 117,218 |
Maintenance and service | 65,604 | (3,671) | 61,933 | |||
Amortization of intangible assets | 11,870 | (11,870) | - | |||
Operating expenses: | ||||||
Research and development | $ | 371,146 | $ | (49,066) | $ | 322,080 |
Sales and marketing | 171,428 | (17,567) | 153,861 | |||
General and administrative | 83,846 | (19,204) | 64,642 | |||
Amortization of intangible assets | 8,570 | (8,570) | - | |||
Restructuring charges | 15,151 | (15,151) | - | |||
Operating income | $ | 201,923 | $ | 135,473 | $ | 337,396 |
Other income (expense), net | $ | 11,414 | $ | (10,473) | $ | 941 |
Provision (benefit) for income taxes | $ | 14,945 | $ | 39,189 | $ | 54,134 |
Net income (loss) attributed to non-controlling interest | $ | (254) | $ | - | $ | (254) |
Net income attributed to Synopsys | $ | 198,646 | $ | 85,811 | $ | 284,457 |
Net income per share (Diluted) | $ | 1.27 | $ | 0.54 | $ | 1.81 |
Shares used in computing per share amounts: | ||||||
Diluted | 156,907 | 156,907 |
- Synopsys' third quarter of fiscal year 2021 ended on July 31, 2021.
- The adjustments to the various line items resulted from excluding the following from non-GAAP measures: stock compensation of $85.2 million, amortization of intangible assets of $20.4 million, restructuring charges of $15.2 million, acquisition-related costs of $5.7 million, legal matter of ($1.5) million, changes in the fair value of the non-qualified deferred compensation plan of $10.5 million, and tax effect of non-GAAP adjustments of ($39.2) million.
GAAP TO NON-GAAP OPERATING MARGIN RECONCILIATION (1)
(Unaudited)
Three Months Ended | |
July 31, 2021 | |
GAAP operating margin | 19.1% |
Amortization of intangible assets | 1.9% |
Stock compensation | 8.1% |
Acquisition-related costs | 0.5% |
Restructuring charges | 1.4% |
Legal matters | (0.1%) |
Non-qualified deferred compensation plan | 1.0% |
Non-GAAP operating margin | 31.9% |
(1) Synopsys' third quarter of fiscal year 2021 ended on July 31, 2021.
The information provided herein should be reviewed in conjunction with Synopsys, Inc.'s earnings results
as disclosed in its Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2021. P a g e | 4
NOTICE TO INVESTORS
TOTAL ADJUSTED SEGMENT OPERATING INCOME RECONCILIATION (1) (2)
(in millions)
Three Months Ended | ||
July 31, 2021 (3) | ||
GAAP total operating income - as reported | $ | 201.9 |
Other expenses managed at consolidated level | ||
-Amortization of intangible assets | 20.4 | |
-Stock compensation | 85.2 | |
-Non-qualified deferred compensation plan | 10.5 | |
-Acquisition-related costs | 5.7 | |
-Restructuring charges | 15.2 | |
-Legal matters | (1.5) | |
Total adjusted segment operating income | ||
$ | 337.4 | |
- 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.
- 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.
- Synopsys' third quarter of fiscal year 2021 and 2020 ended on July 31, 2021 and August 1, 2020, respectively. For presentation purposes, we refer to the closest calendar month end.
The information provided herein should be reviewed in conjunction with Synopsys, Inc.'s earnings results
as disclosed in its Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2021. P a g e | 5
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Synopsys Inc. published this content on 18 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2021 20:23:03 UTC.