Synopsys(US:SNPS)2022-08-18 16:00Financial Performance - Revenues for the third quarter of fiscal 2022 were $1,247.8 million, an increase of $190.6 million or approximately 18% compared to the same period in fiscal 2021, driven by growth across all product groups and geographies [142]. - Total cost of revenue and operating expenses increased to $1,013.8 million, up $158.6 million or 19%, primarily due to a $112.4 million rise in employee-related costs from headcount increases through organic growth and acquisitions [144]. - Operating income rose to $233.9 million, an increase of $32.0 million or 16%, as revenue growth outpaced the growth of costs and expenses [144]. - Total revenue for the three months ended July 31, 2022, was $1,247.8 million, an increase of $190.7 million or 18% compared to the same period in 2021 [147]. - Semiconductor & System Design Segment revenue for the nine months ended July 31, 2022, was $3,458.5 million, reflecting a $690.5 million increase or 25% year-over-year [147]. - Time-Based Products revenue for the three months ended July 31, 2022, was $754.3 million, up $88.7 million or 13% from the previous year, accounting for 60% of total revenue [151]. - Upfront Products revenue for the nine months ended July 31, 2022, was $973.5 million, a significant increase of $386.7 million or 66% compared to the same period in 2021 [152]. - Maintenance and Service revenue for the three months ended July 31, 2022, totaled $224.9 million, an increase of $36.6 million or 19% year-over-year [154]. Expenses - Total cost of revenue for the three months ended July 31, 2022, was $271.2 million, representing a $66.1 million increase or 32% compared to the same period in 2021 [156]. - Research and Development expenses for the three months ended July 31, 2022, were $444.8 million, an increase of $73.7 million or 20% year-over-year [162]. - Sales and Marketing expenses for the three months ended July 31, 2022, were $199.2 million, reflecting a $27.8 million increase or 16% compared to the same period in 2021 [165]. - General and administrative expenses for the three months ended July 31, 2022 increased by $7.7 million (9%) to $91.5 million compared to $83.8 million in the same period of 2021 [168]. - For the nine months ended July 31, 2022, general and administrative expenses rose by $12.4 million (5%) to $246.4 million from $234.0 million in the prior year [169]. Segment Performance - The Semiconductor & System Design segment includes advanced silicon design, verification products, and semiconductor IP portfolio, serving primarily semiconductor and electronics industries [135]. - The Software Integrity segment provides a broad portfolio of products and services to manage software risks across the application lifecycle, including security and quality testing products [136]. - Adjusted operating income for the Semiconductor & System Design Segment increased by $52.1 million (16%) to $380.8 million for the three months ended July 31, 2022 [177]. - Adjusted operating income for the Software Integrity Segment rose by $2.6 million (30%) to $11.3 million for the three months ended July 31, 2022 [179]. Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended July 31, 2022 was $1,345.4 million, an increase of $223.3 million compared to $1,122.1 million in the same period of 2021 [187]. - Cash used in investing activities increased to $531.3 million for the nine months ended July 31, 2022, up by $145.4 million from $385.9 million in the prior year [187]. - Cash used in financing activities rose to $825.2 million for the nine months ended July 31, 2022, an increase of $235.8 million compared to $589.4 million in the same period of 2021 [187]. - As of July 31, 2022, the company held $1,531.2 million in cash, cash equivalents, and short-term investments [182]. - The company expects existing cash and liquidity sources to be sufficient to meet cash requirements and capital return programs over the next 12 months [184]. - As of July 31, 2022, $242.7 million remained available for future stock repurchases under the Program [196]. Market and Economic Conditions - The company has not observed material changes in customer design activity or significant requests for payment delays due to COVID-19 [132]. - The ongoing conflict between Russia and Ukraine has led to the suspension of business operations in Russia, which has not materially impacted the company's financial condition [139]. - The company is actively monitoring the effects of the COVID-19 pandemic, global semiconductor shortage, and increasing inflation on its business operations [133]. - The company's exposure to market risk has not changed materially since October 31, 2021, with ongoing assessments related to interest rates and foreign currency rates [200]. Growth Strategy - The company has consistently grown revenue since 2005, with revenue recognition for software licenses typically occurring over an arrangement period of approximately three years [129]. - The growth strategy focuses on maintaining leadership in EDA products, expanding IP offerings, and driving growth in the software security and quality market [130]. - Contracted but unsatisfied performance obligations as of July 31, 2022, were $7.1 billion, indicating strong future revenue potential [148]. Stock Repurchase Program - The company has a stock repurchase program authorized for up to $1.0 billion, with $200.0 million repurchased under an accelerated stock repurchase agreement in May 2022 [194]. - The IR Act imposes a 1% excise tax on stock repurchases made after December 31, 2022, but the company does not expect a material impact on its consolidated financial statements [197].