Q4 FY 2021 Financial Highlights

MOUNTAIN VIEW, Calif., Dec. 1, 2021 — (PRNewswire) — Synopsys, Inc. (Nasdaq: SNPS) today reported results for its fourth quarter and fiscal year 2021. Revenue for the fourth quarter of fiscal year 2021 was $1.152 billion, compared to $1.025 billion for the fourth quarter of fiscal year 2020. Revenue for fiscal year 2021 was $4.204 billion, an increase of 14.1 percent from $3.685 billion in fiscal year 2020.

"Synopsys delivered another record fiscal year in 2021, substantially exceeding our original targets, with strength in all product groups and geographies. We are entering fiscal year 2022 with significant financial, technology and customer momentum," said Aart de Geus, chairman and co-CEO of Synopsys. "Over the past several years, we have delivered disruptive innovations that are enabling the new era of 'smart everything,' an era that brings with it many new market entrants and increased investments. As a result, we are seeing a growing number of substantially expanded customer commitments and collaborations. In addition to fiscal year 2022 expectations of strong double-digit revenue growth, continued operating margin expansion, EPS growth in the mid-teens range, and nearly $1.5 billion in operating cash flow, we are also raising our long-term financial objectives, with increased EDA and IP revenue growth expectations."

GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the fourth quarter of fiscal year 2021 was $201.4 million, or $1.28 per share, compared to $197.5 million, or $1.26 per share, for the fourth quarter of fiscal year 2020. GAAP net income for fiscal year 2021 was $757.5 million, or $4.81 per share, compared to $664.3 million, or $4.27 per share, for fiscal year 2020. 

Non-GAAP Results

On a non-GAAP basis, net income for the fourth quarter of fiscal year 2021 was $285.8 million, or $1.82 per share, compared to non-GAAP net income of $247.7 million, or $1.58 per share, for the fourth quarter of fiscal year 2020. Non-GAAP net income for fiscal year 2021 was $1.077 billion, or $6.84 per share, compared to non-GAAP net income of $864.6 million, or $5.55 per share, for fiscal year 2020.

For a reconciliation between GAAP and non-GAAP results, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below. 

Business Segments

Synopsys reports revenue and operating income in two segments: (1) Semiconductor & System Design, which includes EDA and IP products, system integration solutions and associated services, and (2) Software Integrity, which includes security and quality solutions for software development. 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 first quarter and full fiscal year 2022. These financial targets assume that there are no further changes to 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.  

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 recording of the call will be available by calling +1-866-207-1041 (+1-402-970-0847 for international callers), access code 6504511, beginning at 5:45 p.m. Pacific Time today, until 11:59 p.m. Pacific Time on December 8, 2021 . 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 first quarter of fiscal year 2022 in February 2022.  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 today's 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 press 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' corporate 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 the corporate overview presentation will remain available on Synopsys' website through the date of the first quarter of fiscal year 2022 earnings call in February 2022 , 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 first quarter of fiscal year 2022 or comment to analysts or investors on, or otherwise update, the targets given in this release.

Availability of Final Financial Statements

Synopsys will include final financial statements for fiscal year 2021 in its annual report on Form 10-K to be filed by December 29, 2021 .

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 .       

GAAP to Non-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, and (vi) 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.

Synopsys adopted a three-year normalized non-GAAP tax rate of 16% for fiscal year 2019 through 2021 in the calculation of its non-GAAP financial measures to provide better consistency across interim reporting periods by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency and not necessarily reflect our normal operations, and to align our tax rate more clearly with our expected geographic earnings mix. Synopsys re-evaluated this rate on an annual basis for any significant events that could have materially affected its projections, such as significant changes in its geographic earnings mix or significant tax law changes in major jurisdictions where it operates.

Given the uncertainty surrounding corporate tax reform, Synopsys has elected to provide a projected annual non-GAAP tax rate for fiscal year 2022 rather than a three-year normalized non-GAAP tax rate in calculating its non-GAAP financial measures. Based on an evaluation of Synopsys' historical and projected mix of U.S. and international profit before tax, taking into account the impact of non-GAAP adjustments described above, as well as other factors such as its current tax structure, existing tax positions, and expected recurring tax incentives, its projected annual non-GAAP tax rate is 18% for fiscal 2022. Synopsys intends to re-evaluate the projected fiscal 2022 annual non-GAAP tax rate on an interim basis to determine the appropriateness of adopting a multi-year normalized non-GAAP tax rate.

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 Item 2.02 of the Current Report on Form 8-K filed on December 1, 2021 for additional information about the measures Synopsys uses to evaluate its core business operations.

Reconciliation of Fourth Quarter and Fiscal Year 2021 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.