Synopsys Posts Financial Results for First Quarter Fiscal Year 2015

MOUNTAIN VIEW, Calif., Feb. 18, 2015 -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its first quarter of fiscal year 2015.

For the first quarter of fiscal year 2015, Synopsys reported revenue of $542.0 million, compared to $479.0 million for the first quarter of fiscal 2014, an increase of approximately 13.2 percent.

"Synopsys delivered strong results in the fiscal first quarter, and we are raising our revenue and non-GAAP earnings targets for the year," said Aart de Geus, chairman and co-CEO of Synopsys. "We see high demand for our new products, momentum in IP and prototyping, and we're making good progress in our higher-growth software quality and security space."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the first quarter of fiscal 2015 was $65.2 million, or $0.41 per share, compared to $67.7 million, or $0.43 per share, for the first quarter of fiscal 2014.

Non-GAAP Results

On a non-GAAP basis, net income for the first quarter of fiscal 2015 was $125.7 million, or $0.80 per share, compared to non-GAAP net income of $93.1 million, or $0.59 per share, for the first quarter of fiscal 2014. Reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Financial Targets

Synopsys also provided its financial targets for the second quarter and full fiscal year 2015. These targets do not include any impact of future acquisition-related activities or costs that may be incurred in fiscal year 2015. 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.

Second Quarter of Fiscal Year 2015 Targets:

• Revenue: $543 million - $553 million
• GAAP expenses: $470 million - $489 million
• Non-GAAP expenses: $418 million - $428 million
• Other income and expense: $0 - $2 million
• Tax rate applied in non-GAAP net income calculations: 22 - 23 percent
• Fully diluted outstanding shares: 155 million - 159 million
• GAAP earnings per share: $0.26 - $0.33
• Non-GAAP earnings per share: $0.62 - $0.64

Full Fiscal Year 2015 Targets:

• Revenue: $2.195 billion - $2.235 billion
• Other income and expense: $5 million - $9 million
• Tax rate applied in non-GAAP net income calculations: 19 - 20 percent
• Fully diluted outstanding shares: 155 million - 159 million
• GAAP earnings per share: $1.41 - $1.50
• Non-GAAP earnings per share: $2.75 - $2.80
• Cash flow from operations: approximately $450 million

GAAP Reconciliation

Synopsys continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, Synopsys presents non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Synopsys' operating results in a manner that focuses on what Synopsys believes to be its ongoing business operations and what Synopsys uses to evaluate its ongoing operations and for internal planning and forecasting purposes. Synopsys' management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Synopsys' management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes: (i) the amortization of acquired intangible assets, (ii) the impact of stock compensation, (iii) acquisition-related costs, (iv) other significant items, including restructuring charges and certain accruals for legal and tax matters, and (v) the income tax effect of non-GAAP pre-tax adjustments as well as unusual or infrequent tax adjustments; and the non-GAAP measures that exclude such information in order to assess the performance of Synopsys' business and for planning and forecasting in subsequent periods. Whenever Synopsys uses a non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed below.

Reconciliation of First Quarter Fiscal Year 2015 Results

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP net income and earnings per share for the periods indicated below.

GAAP to Non-GAAP Reconciliation of First Quarter Fiscal Year 2015 Results
(unaudited and in thousands, except per share amounts)

Reconciliation of Target Non-GAAP Operating Results

The following tables reconcile the specific items excluded from GAAP in the calculation of target non-GAAP operating results for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Second Quarter Fiscal Year 2015 Targets
(in thousands, except per share amounts)

GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2015 Targets

Earnings Call Open to Investors

Synopsys 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 at Synopsys' corporate website at www.synopsys.com. A recording of the call will be available by calling +1-800-475-6701 (+1-320-365-3844 for international callers), access code 352869, beginning at 4:00 p.m. Pacific Time today. A webcast replay will also be available on the website from approximately 4:30 p.m. Pacific Time today through the time Synopsys announces its results for the second fiscal quarter in May 2015. Synopsys will post copies of the prepared remarks of Aart de Geus, chairman and co-chief executive officer, and Trac Pham, chief financial officer, on its website following the call. In addition, Synopsys makes additional information available in a financial supplement and corporate overview presentation, also posted on the corporate website.

Effectiveness of Information

The targets included in this release, the statements made during the earnings conference call and the information contained in the financial supplement and corporate overview presentation (available in the Investor Relations section of Synopsys' website at www.synopsys.com) represent Synopsys' expectations and beliefs as of the date of this release only. Although this press release, copies of the prepared remarks of the co-chief executive officer and chief financial officer made during the call, the financial supplement, and corporate overview presentation will remain available on Synopsys' website through the date of the second quarter fiscal year 2015 earnings call in May 2015, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys does not currently intend to report on its progress during the second quarter of fiscal year 2015 or comment to analysts or investors on, or otherwise update, the targets given in this earnings release.

Availability of Final Financial Statements

Synopsys will include final financial statements for the first quarter fiscal 2015 in its quarterly report on Form 10-Q to be filed by March 12, 2015.

Financial Tables

To read financial tables, click here

About Synopsys

Synopsys, Inc. (Nasdaq:SNPS) is the Silicon to Software™ partner for innovative companies developing the electronic products and software applications we rely on every day. As the world's 15th largest software company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP, and is also a leader in software quality and security testing with its Coverity® solutions. Whether you're a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing applications that require the highest quality and security, Synopsys has the solutions needed to deliver innovative, high-quality, secure products. Learn more at www.synopsys.com.