Synopsys Posts Financial Results for Third Quarter Fiscal Year 2023

Announces Sassine Ghazi to Assume President and CEO Role Effective Jan. 1, 2024

SUNNYVALE, Calif., Aug. 16, 2023 -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its third quarter of fiscal year 2023. Revenue for the third quarter of fiscal year 2023 was $1.487 billion, compared to $1.248 billion for the third quarter of fiscal year 2022. Also today, the company announced that its Board of Directors has appointed Sassine Ghazi as President and Chief Executive Officer effective on January 1, 2024.

"We achieved another record quarter as semi design starts and R&D investments continue, unabated, to capitalize on the AI-driven, 'Smart Everything' era," said Aart de Geus, chair and CEO of Synopsys. "Our relentless drive for innovation has made us a catalyst for our customers, with excellent forward momentum for Synopsys. Against this backdrop, I am thrilled with Sassine's transition into the CEO role. He's a proven leader, innovator, and trusted partner who will further inspire and grow our company. Sassine has my full support!"

"I am incredibly honored, humbled, and profoundly grateful to the board, and Aart, for placing their unwavering trust in me," said Sassine Ghazi, president and COO of Synopsys. "Aart built Synopsys from a disruptive start-up into one of the world's essential semiconductor ecosystem companies. I am so proud to have been a part of that journey for the last 25 years. I am determined to build upon our strong foundation, drive innovation, and propel Synopsys to even greater heights of success."

Synopsys CFO, Shelagh Glaser, commented on the transition and the financial results: "I look forward to partnering with Aart and Sassine on this leadership transition as we continue to deliver value for shareholders and customers. We outperformed our financial guidance for the third quarter led by record revenue in design automation, which delivered its first billion-dollar-revenue quarter. Strong operational execution drove non-GAAP operating margin expansion of roughly four points year over year to 35.3%, and non-GAAP earnings per share were up an impressive 37% versus the prior year. We are raising our full-year guidance and expect revenue growth of 14-15%, and non-GAAP earnings per share growth of 24-25% year over year."

GAAP Results
On a generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal year 2023 was $336.3 million, or $2.17 per diluted share, compared to $222.6 million, or $1.43 per diluted share, for the third quarter of fiscal year 2022.

Non-GAAP Results
On a non-GAAP basis, net income for the third quarter of fiscal year 2023 was $445.9 million, or $2.88 per diluted share, compared to non-GAAP net income of $327.4 million, or $2.10 per diluted share, for the third quarter of fiscal year 2022.

For a reconciliation of net income, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below.

Business Segments
Synopsys reports revenue and operating income in three segments: (1) Design Automation, which includes digital and custom integrated circuit (IC) design software, verification hardware and software products, manufacturing-related design products, field-programmable gate array (FPGA) design software, optical products, professional services, and other; (2) Design IP, which includes our Synopsys IP portfolio; and (3) Software Integrity, which includes solutions that test software code for security vulnerabilities and quality defects, as well as professional and managed services. Further information regarding these segments is provided at the end of this press release.

Financial Targets
Synopsys also provided its consolidated financial targets for the fourth quarter and full fiscal year 2023. These financial targets assume no further changes to export control restrictions or the current U.S. government "Entity List" restrictions. 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.

Fourth Quarter and Fiscal Year 2023 Financial Targets (1)
(in millions except per share amounts)

	Range for Three Months Ending		Range for Fiscal Year Ending
	October 31, 2023		October 31, 2023
	Low	High	Low	High
Revenue	$ 1,567	$ 1,597	$ 5,810	$ 5,840
GAAP Expenses	$ 1,184	$ 1,204	$ 4,544	$ 4,564
Non-GAAP Expenses	$ 1,005	$ 1,015	$ 3,780	$ 3,790
Non-GAAP Other Income (Expense)	$ 1	$ 3	$ 10	$ 12
Non-GAAP Tax Rate	16 %	16 %	16 %	16 %
Outstanding Shares (fully diluted)	155	157	155	157
GAAP EPS	$ 2.17	$ 2.28	$ 7.85	$ 7.96
Non-GAAP EPS	$ 3.01	$ 3.06	$ 11.04	$ 11.09
Operating Cash Flow			~ $1,650

(1) Synopsys' fourth quarter of fiscal year 2023 and fiscal year 2023 will end on October 28, 2023. For presentation purposes, we refer
to the closest calendar month end.

For a reconciliation of Synopsys' fourth quarter and fiscal year 2023 targets, including expenses, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below.

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 on Synopsys' corporate website at www.synopsys.com. A webcast replay will also be available on the corporate website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the fourth quarter and fiscal year 2023 in November 2023.

Effectiveness of Information

The targets included in this press release, the statements made during the earnings conference call, the information contained in the financial supplement and the corporate overview presentation, each of which are available on Synopsys' corporate website at www.synopsys.com (collectively, the "Earnings Materials"), represent Synopsys' expectations and beliefs as of August 16, 2023. Although these Earnings Materials will remain available on Synopsys' website through the date of the earnings call for the fourth quarter and fiscal year 2023, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys undertakes no duty and does not intend to update any forward-looking statement, whether as a result of new information or future events, or otherwise update, the targets given in this press release unless required by law.

Availability of Final Financial Statements
Synopsys will include final financial statements for the third quarter of fiscal year 2023 in its quarterly report on Form 10-Q to be filed on or before September 7, 2023.

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 an S&P 500 company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP and offers the industry's broadest portfolio of application security testing tools and services. Whether you're a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing more secure, high-quality code, Synopsys has the solutions needed to deliver innovative products. Learn more at www.synopsys.com.