Synopsys(SNPS) - 2024 Q4 - Annual Results

Financial Performance - Record quarterly revenue of $1.636 billion, up approximately 11% year over year, exceeding the mid-point of guidance[4] - Quarterly non-GAAP EPS of $3.40, up approximately 13% year over year, exceeding guidance; full-year 2024 non-GAAP EPS growth of approximately 25%[5] - Full-year 2024 revenue reached $6.127 billion, an increase of approximately 15% from $5.318 billion in fiscal year 2023[6] - GAAP net income for Q4 2024 was $279.3 million, or $1.79 per diluted share, compared to $346.1 million, or $2.23 per diluted share, for Q4 2023[10] - Non-GAAP net income for Q4 2024 was $529.9 million, or $3.40 per diluted share, compared to $464.1 million, or $3.00 per diluted share, for Q4 2023[11] - For the fiscal year 2024, GAAP net income per diluted share was $9.25, compared to $7.91 in fiscal year 2023, with non-GAAP net income per diluted share rising to $13.20 from $10.54[27] - Net income for the twelve months ended 2024 was $2,235,810, compared to $1,218,125 for the same period in 2023, representing an increase of 83.4%[42] Future Outlook - Synopsys expects to deliver double-digit revenue growth in 2025, despite macro uncertainties[8] - Financial targets for Q1 2025 include revenue range of $1.435 billion to $1.465 billion and full fiscal year 2025 revenue range of $6.745 billion to $6.805 billion[16] - The company targets GAAP earnings per diluted share for Q1 2025 in the range of $1.81 to $1.95, with non-GAAP earnings per diluted share targeted between $2.77 and $2.82[31] - For the full fiscal year 2025, the company anticipates GAAP earnings per diluted share to be between $10.42 and $10.63, with non-GAAP earnings per diluted share expected to range from $14.88 to $14.96[33] Acquisitions and Divestitures - The acquisition of Ansys is expected to close in the first half of 2025, pending regulatory approvals[8] - The company completed the sale of its Software Integrity business on September 30, 2024, presenting it as a discontinued operation[7] - The company is in the process of acquiring ANSYS, Inc., which is expected to impact future financial results positively[34] Tax and Expenses - Non-GAAP tax rate for fiscal year 2025 is expected to be 16%[16] - The effective GAAP tax rate for the twelve months ended October 31, 2024, was 6.6%, while the non-GAAP effective tax rate was 15.0%[28] - Target GAAP expenses for Q1 2025 are projected to be between $1,142,000 and $1,162,000, while non-GAAP expenses are expected to be between $945,000 and $955,000[31] Revenue Breakdown - Total revenue for the three months ended October 31, 2024, was $1,635,986,000, an increase of 11.5% compared to $1,467,383,000 for the same period in 2023[37] - Revenue from the Design Automation segment for the three months ended October 31, 2024, was $1,118.2 million, up from $953.7 million in 2023, reflecting a growth of 17.3%[46] - The Design IP segment generated revenue of $517.8 million for the three months ended October 31, 2024, slightly up from $513.7 million in 2023, indicating a growth of 0.8%[46] - Total products revenue for the twelve months ended October 31, 2024, reached $5,026,521,000, up 13.9% from $4,416,381,000 in the previous year[37] Cash Flow and Assets - Cash and cash equivalents rose to $3,896,532,000 as of October 31, 2024, compared to $1,433,966,000 in the previous year, showcasing improved cash flow management[40] - Total current assets increased to $6,469,666,000 as of October 31, 2024, from $3,430,624,000 a year earlier, indicating robust liquidity[40] - Total assets increased to $13,073,561,000 as of October 31, 2024, from $10,333,131,000 in the previous year, indicating growth in the company's asset base[40] - The company ended the period with cash, cash equivalents, and restricted cash of $3,898,729, significantly up from $1,441,187 at the end of 2023[42] Operational Performance - Research and development expenses for the three months ended October 31, 2024, were $554,818,000, an increase of 18.9% from $465,815,000 in the prior year[37] - Gross margin for the three months ended October 31, 2024, was $1,260,963,000, compared to $1,181,202,000 for the same period in 2023, reflecting a strong operational performance[37] - Total adjusted segment operating income for the twelve months ended October 31, 2024, was $2,362.1 million, compared to $1,928.0 million in 2023, an increase of 22.5%[48] - The adjusted operating margin for the Design Automation segment improved to 38.7% for the twelve months ended October 31, 2024, compared to 37.5% in 2023[46] Risks and Challenges - The anticipated impact of macroeconomic conditions and geopolitical uncertainties on financial results was highlighted as a risk factor[35] - Stock-based compensation for the fiscal year 2024 was $4.21 per diluted share, up from $3.30 in the previous year[27] Non-GAAP Measures - Stock-based compensation expenses are excluded from non-GAAP financial measures as they do not require cash settlement and may not reflect actual value realized[56] - Acquisition-related expenses, including compensation, professional fees, and integration costs, are excluded from core operations for consistent comparison across periods[56] - Restructuring charges, including severance and facility closures, are not considered part of core operations and are excluded from profitability assessments[58] - Gains and losses from the sale of strategic investments in privately held companies are excluded as they do not reflect core business results[59] - Changes in the fair value of non-qualified deferred compensation plans are excluded from core profitability assessments[59] - The company adopts a non-GAAP tax rate of 16% for fiscal year 2025 to provide consistency across reporting periods[60]