This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, including, but not limited to, financial targets for the first quarter and full fiscal year 2019, their comparative metrics under ASC 605, and GAAP to non-GAAP reconciliations of such targets, as well as statements related to our long-term revenue, non-GAAP EPS and non-GAAP operating margin objectives, and the expected impact of ASC 606 on our results. These statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Accordingly, we caution stockholders and prospective investors not to place undue reliance on these statements. Such risks, uncertainties and factors include, but are not limited to: uncertainty in the growth of the semiconductor and electronics industry; consolidation among our customers and our dependence on a relatively small number of large customers; uncertainty in the global economy; fluctuation of our operating results; increased variability in our revenue due to the adoption of ASC 606; our highly competitive industries and our ability to meet our customers' demand for innovative technology at lower costs; risks and compliance obligations relating to the global nature of our operations; cybersecurity threats or other security breaches; our ability to protect our proprietary technology; our ability to realize the potential financial or strategic benefits of acquisitions we complete; our ability to carry out our new product and technology initiatives; investments of more resources in research and development than anticipated; increased risks resulting from an increase in sales of our hardware products, including increased variability in upfront revenue; changes in accounting principles or standards; changes in our effective tax rate; liquidity requirements in our U.S. operations; claims that our products infringe on third-party intellectual property rights; litigation; product errors or defects; the ability to obtain licenses to third-party software and intellectual property on reasonable terms or at all; the ability to timely recruit and retain senior management and key employees; the inherent limitations on the effectiveness of our controls and compliance programs; the impairment of our investment portfolio by the deterioration of capital markets; the accuracy of certain assumptions, judgments and estimates that affect amounts reported in our financial statements; and the impact of catastrophic events. More 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, 2017 and its latest Quarterly Report on Form 10-Q. The information provided herein is as of December 5, 2018. 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) | |||||||
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| Three Months Ended |
| Twelve Months Ended | ||||
| October 31, |
| October 31, | ||||
| 2018 |
| 2017 |
| 2018 |
| 2017 |
Revenue: |
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Time-based products | $ 605,561 |
| $ 527,821 |
| $ 2,303,317 |
| $ 2,021,812 |
Upfront products | 66,555 |
| 74,894 |
| 357,698 |
| 338,204 |
Maintenance and service | 122,966 |
| 93,929 |
| 460,043 |
| 364,864 |
Total revenue | 795,082 |
| 696,644 |
| 3,121,058 |
| 2,724,880 |
Cost of revenue: |
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Products | 113,400 |
| 108,221 |
| 448,430 |
| 413,203 |
Maintenance and service | 52,760 |
| 42,254 |
| 203,434 |
| 164,872 |
Amortization of intangible assets | 24,422 |
| 16,389 |
| 84,034 |
| 76,109 |
Total cost of revenue | 190,582 |
| 166,864 |
| 735,898 |
| 654,184 |
Gross margin | 604,500 |
| 529,780 |
| 2,385,160 |
| 2,070,696 |
Operating expenses: |
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Research and development | 290,875 |
| 244,515 |
| 1,084,822 |
| 908,841 |
Sales and marketing | 167,325 |
| 154,006 |
| 622,978 |
| 549,248 |
General and administrative | 63,043 |
| 26,190 |
| 262,560 |
| 196,844 |
Amortization of intangible assets | 10,704 |
| 7,808 |
| 41,630 |
| 31,614 |
Restructuring charges | 11,028 |
| 5,548 |
| 12,945 |
| 36,586 |
Total operating expenses | 542,975 |
| 438,067 |
| 2,024,935 |
| 1,723,133 |
Operating income | 61,525 |
| 91,713 |
| 360,225 |
| 347,563 |
Other income (expense), net | (9,277) |
| 8,213 |
| 3,318 |
| 35,535 |
Income before income taxes | 52,248 |
| 99,926 |
| 363,543 |
| 383,098 |
Provision (benefit) for income taxes | (202,080) |
| 220,008 |
| (68,975) |
| 246,535 |
Net income | $ 254,328 |
| $ (120,082) |
| $ 432,518 |
| $ 136,563 |
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Net income per share: |
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Basic | $ 1.71 |
| $ (0.80) |
| $ 2.90 |
| $ 0.91 |
Diluted | $ 1.66 |
| $ (0.80) |
| $ 2.82 |
| $ 0.88 |
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Shares used in computing per share amounts: |
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Basic | 149,148 |
| 150,448 |
| 149,036 |
| 150,457 |
Diluted | 153,038 |
| 150,448 |
| 153,393 |
| 154,874 |
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(1) Synopsys' fourth quarter of fiscal year 2018 and 2017 ended on November 3, 2018 and October 28, 2017, respectively. For presentation purposes, we refer to the closest calendar month end. |