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Synopsys Posts Financial Results for Second Quarter Fiscal Year 2018MOUNTAIN VIEW, Calif. -- May 23, 2018 -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its second quarter of fiscal year 2018. Revenue came in at $776.8 million, compared to $680.1 million for the second quarter of fiscal 2017, an increase of approximately 14.2 percent. "Synopsys is hitting on all cylinders. We had an excellent fiscal second quarter, with strength across all geographies and product groups, and are raising our revenue and non-GAAP earnings per share guidance for the year. We also continued to return capital to shareholders through our previously announced accelerated share repurchase, as well as an open market purchase this quarter," said Aart de Geus, chairman and co-CEO. "With the clear drive towards growing artificial intelligence applications and the resulting need for increased data capacity, semiconductor and systems companies are making substantial investments. In addition, software developers across many industries are highly sensitized to security challenges. Synopsys is thus ideally positioned to partner with our customers, with a second-to-none portfolio of EDA, IP and software security solutions." GAAP Results On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal 2018 was $102.5 million, or $0.67 per share, compared to $53.3 million, or $0.34 per share, for the second quarter of fiscal 2017. Non-GAAP Results On a non-GAAP basis, net income for the second quarter of fiscal 2018 was $165.0 million, or $1.08 per share, compared to non-GAAP net income of $135.8 million, or $0.88 per share, for the second quarter of fiscal 2017. A reconciliation between GAAP and non-GAAP results is provided later in this press release. Financial Targets Synopsys also provided its financial targets for the third quarter and full fiscal year 2018, which do not include any impact of future acquisition-related activities or costs. 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. Third Quarter of Fiscal Year 2018 Targets:
Full Fiscal Year 2018 Targets:
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 core business operations and what Synopsys uses to evaluate its business 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) restructuring charges, (v) the effects of certain settlements, final judgments and loss contingencies related to legal proceedings, (vi) the impact of a one-time transition tax resulting from U.S. tax reform (referred to as the "income tax related to transition tax"), (vii) the impact of a reduction in value of deferred tax assets caused by a reduction of the U.S. corporate tax rate (referred to as the "income tax related to tax rate change"), and (viii) the income tax effect of non-GAAP pre-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. In fiscal 2016, Synopsys began utilizing a normalized annual non-GAAP tax rate in the calculation of its non-GAAP measures that is based on our projected annual tax rate through fiscal 2018. In projecting this rate, we evaluated our historical and projected mix of U.S. and international profit before tax, excluding the impact of stock-based compensation, the amortization of purchased intangibles and other non-GAAP adjustments described above. We also considered other factors including our current tax structure, our existing tax positions, and expected recurring tax incentives, such as the U.S. federal research and development tax credit. On an annual basis we re-evaluate this rate for significant events that may materially affect our projections and, as a result of U.S. tax reform in December 2017, which lowered the U.S. statutory rate from 35% to 21%, we adjusted our normalized annual non-GAAP tax rate from 19% to 13% for fiscal 2018. We will re-evaluate this rate again for fiscal 2019, but we expect that our normalized annual non-GAAP tax rate will exceed 13%, but be below 19%, for fiscal 2019. 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, as well as in Item 2.02 of the Current Report on Form 8-K filed on May 23, 2018 for additional information about the measures Synopsys uses to evaluate its core business operations. Reconciliation of Second Quarter Fiscal Year 2018 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. 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.
(1) Synopsys' third quarter and fiscal year end on August 4, 2018 and November 3, 2018, respectively. For presentation purposes, we refer to the closest calendar month end. The first quarter of fiscal 2018 included an extra week. 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 448713, beginning at 4:00 p.m. Pacific Time today, until 11:59 p.m. Pacific Time, on May 30, 2018. 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 third fiscal quarter in August 2018. 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 third quarter fiscal year 2018 earnings call in August 2018, 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 third quarter of fiscal year 2018 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 second quarter of fiscal year 2018 in its quarterly report on Form 10-Q to be filed by June 14, 2018. 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 growing its leadership in software security and quality solutions. Whether you're a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing applications that require the highest security and quality, Synopsys has the solutions needed to deliver innovative, high-quality, secure products. Learn more at www.synopsys.com.
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