Synopsys Inc. (NASDAQ:SNPS)

Over the six-year period examined, significant changes are observed in the composition and net value of property, plant, and equipment. The largest component, computer and other equipment, demonstrates a consistent upward trend, increasing from US$788.105 million to US$1.150804 million. Buildings, conversely, show a decline in value, particularly from 2023 onwards, decreasing from US$135.255 million to US$100.016 million. Furniture and fixtures exhibit moderate growth, rising from US$72.702 million to US$101.183 million. Land values initially increased but then decreased, falling from US$21.598 million to US$13.888 million. Leasehold improvements have generally increased, with a notable rise from US$241.062 million to US$295.917 million.

Gross Property and Equipment

The gross value of property and equipment generally increased over the period, rising from US$1.253348 million to US$1.661808 million. However, a slight decrease is noted between 2022 and 2023, followed by a recovery in 2024 and further growth in 2025. This suggests potential asset disposals or reclassifications in 2023.

Accumulated Depreciation

Accumulated depreciation consistently increased throughout the period, from US$769.530 million to US$965.115 million. The rate of increase appears to be relatively stable, reflecting the ongoing depreciation of the asset base.

Net Property and Equipment

The net value of property and equipment demonstrates a positive trend overall, increasing from US$483.818 million to US$696.693 million. This growth is primarily driven by the increases in computer and other equipment, furniture and fixtures, and leasehold improvements, offsetting the decline in building values. A significant increase is observed between 2022 and 2023, and this trend continues into 2024 and 2025.

The shift in asset composition, with a growing proportion allocated to computer and other equipment and leasehold improvements, suggests a potential strategic focus on technology and leased assets rather than owned buildings. The decline in land and building values warrants further investigation to understand the underlying reasons, such as potential impairments or disposals. The consistent increase in net property and equipment indicates ongoing investment in the asset base, contributing to the overall growth of the company’s long-term assets.

The analysis reveals trends in the age and useful life estimations of property, plant, and equipment over a six-year period. The average age ratio exhibits a generally increasing pattern from 2020 to 2022, followed by a decline through 2025. Simultaneously, estimations of total useful life and elapsed time since purchase fluctuate, impacting the calculated remaining useful life.

Average Age Ratio

The average age ratio increased from 62.39% in 2020 to 65.23% in 2022, indicating a growing proportion of the asset base consisting of older equipment. However, this trend reversed in subsequent years, decreasing to 63.06% in 2024 and further to 58.57% in 2025. This decline suggests either the acquisition of newer assets or revisions in age estimations.

Useful Life and Age Estimations

Estimated total useful life initially increased from 10 years in 2020 to 12 years in 2022, potentially reflecting changes in asset composition or depreciation policies. It then decreased to 9 years in 2024 before returning to 10 years in 2025. The estimated age, representing the time elapsed since purchase, consistently increased from 6 years in 2020 to 8 years in 2022, then stabilized at 6-7 years from 2023-2025.

Remaining Useful Life

Despite fluctuations in total useful life estimations, the estimated remaining useful life remained relatively stable at 4 years between 2020 and 2024. A slight increase to 4 years is observed in 2025, coinciding with the decrease in the average age ratio. This suggests a potential lengthening of the productive lifespan of the asset base as older assets are replaced or re-evaluated.

The interplay between these metrics suggests a dynamic asset management strategy. The initial increase in the average age ratio, coupled with increasing useful life estimations, could indicate a period of extending the use of existing assets. The subsequent decline in the average age ratio and stabilization of remaining useful life suggest a more recent focus on asset renewal or improved maintenance practices.

The reported values reveal trends in property, plant, and equipment, specifically concerning accumulated depreciation, gross property and equipment, land holdings, and the average age ratio over a six-year period. Accumulated depreciation consistently increased from 2020 to 2023, reaching 944,068 thousand US dollars before decreasing slightly in 2024 and increasing again in 2025. Gross property and equipment also exhibited an overall upward trend, growing from 1,253,348 thousand US dollars in 2020 to 1,661,808 thousand US dollars in 2025, with a notable increase between 2022 and 2023. Land values initially increased but then decreased significantly in 2024 and 2025.

Accumulated Depreciation

Accumulated depreciation demonstrated a consistent increase year-over-year until 2023, indicating ongoing utilization and aging of the asset base. The slight dip in 2024 could be attributed to asset disposals or changes in depreciation methods, followed by a further increase in 2025. This pattern suggests continued investment in, and subsequent depreciation of, property, plant, and equipment.

Gross Property and Equipment

The growth in gross property and equipment suggests ongoing capital expenditures and asset acquisitions. The substantial increase between 2022 and 2023 is particularly noteworthy, potentially reflecting a significant investment period. The slight decrease in 2024, followed by a substantial increase in 2025, indicates fluctuating investment patterns.

Land

Land values experienced an initial increase before a substantial decline in 2024 and 2025. This decrease could be due to land sales, revaluation of land holdings, or adjustments related to land development projects. The magnitude of the decrease warrants further investigation.

Average Age Ratio

The average age ratio generally increased from 62.39% in 2020 to 65.23% in 2022, indicating an aging asset base. It then decreased to 63.80% in 2023 and continued to decline to 58.57% in 2025. This decrease in the average age ratio, despite increasing accumulated depreciation and gross property and equipment, suggests that newer assets are being added at a rate that offsets the aging of existing assets. The decline in the ratio from 2023 to 2025 is the most pronounced, potentially indicating a period of significant asset renewal or expansion.

Overall, the trends suggest a dynamic asset base with ongoing investment, depreciation, and potential restructuring of land holdings. The decreasing average age ratio in recent years is a positive indicator, suggesting the company is actively managing the age of its assets.

Over the observed period, property and equipment, gross, exhibited a generally increasing trend, with fluctuations noted in later years. Beginning at US$1,253,348 thousand in 2020, the value rose to US$1,501,329 thousand in 2023 before decreasing slightly to US$1,492,987 thousand in 2024 and then increasing significantly to US$1,661,808 thousand in 2025. Land values initially increased, peaking at US$21,598 thousand in 2022, then decreased substantially to US$13,888 thousand by 2025. Depreciation expenses also demonstrated an overall upward trend, moving from US$119,100 thousand in both 2020 and 2021 to US$171,900 thousand in 2025. The estimated total useful life of the assets has varied over the period, showing no clear consistent trend.

Gross Property and Equipment

The gross value of property and equipment increased by approximately 24.4% between 2020 and 2023, suggesting significant investment in fixed assets during this timeframe. The subsequent decrease in 2024 was modest, followed by a more substantial increase in 2025, potentially indicating further acquisitions or major capital improvements.

Land Value

The decline in land value from 2022 to 2025 is notable, decreasing by approximately 35.7%. This could be due to revaluation, sales of land holdings, or adjustments related to impairment. Further investigation would be required to determine the specific reasons for this decrease.

Depreciation Expense

The increase in depreciation expense from US$119,100 thousand to US$171,900 thousand over the six-year period aligns with the growth in gross property and equipment. The increase suggests a larger base of depreciable assets. The fluctuation in depreciation expense may also be influenced by changes in the estimated useful lives of assets.

Estimated Useful Life

The estimated total useful life of the assets has fluctuated between 9 and 12 years. A decrease from 12 years in 2022 to 9 years in 2024 suggests a potential shortening of the expected lifespan of assets, possibly due to technological obsolescence or changes in usage patterns. The return to 10 years in 2025 may indicate a revised assessment of asset longevity or the introduction of new assets with longer expected lives. These changes in estimated useful life directly impact the annual depreciation expense.

Analysis reveals a consistent increase in accumulated depreciation over the period from 2020 to 2023, followed by a decrease in 2024 and a subsequent increase in 2025. Depreciation expense demonstrates a generally increasing trend, with notable fluctuations observed in later years. The reported time elapsed since purchase exhibits a decreasing trend, suggesting recent asset acquisitions.

Accumulated Depreciation

Accumulated depreciation increased from US$769,530 thousand in 2020 to US$944,068 thousand in 2023, representing a cumulative increase of approximately 22.8%. A decrease to US$929,981 thousand was noted in 2024, followed by a further increase to US$965,115 thousand in 2025. This suggests potential asset disposals or changes in depreciation methods in 2024, offset by subsequent additions or continued depreciation in 2025.

Depreciation Expense

Depreciation expense remained constant at US$119,100 thousand in both 2020 and 2021. A decrease to US$107,700 thousand occurred in 2022, before rising significantly to US$145,100 thousand in 2023. This upward trend continued in 2024, reaching US$162,900 thousand, and further increased to US$171,900 thousand in 2025. The increases in depreciation expense from 2022 onwards likely correlate with new asset purchases or a shift towards accelerated depreciation schedules.

Time Elapsed Since Purchase

The reported time elapsed since purchase decreased from 8 years in 2022 to 7 years in 2023, and then to 6 years in both 2024 and 2025. This consistent decline indicates a pattern of recent asset acquisitions, potentially replacing older assets or expanding operational capacity. The decreasing age suggests a relatively modern asset base.

The combination of increasing depreciation expense and decreasing time elapsed since purchase suggests ongoing investment in property, plant, and equipment. The fluctuation in accumulated depreciation warrants further investigation to determine the underlying causes, such as asset disposals or changes in accounting policies.

Property and equipment, net of accumulated depreciation, generally increased over the five-year period from 2020 to 2024, with a significant increase in 2023 and 2024. However, land decreased over the same period. Depreciation expense fluctuated, increasing notably in 2023 and 2024. The estimated remaining life of property and equipment remained consistent at four years, with a single instance of three years in 2024.

Property and Equipment, Net

The net value of property and equipment decreased from 2020 to 2021, then increased through 2024. The most substantial increase occurred between 2023 and 2024, rising from US$557,261 thousand to US$696,693 thousand. This suggests significant capital expenditures or acquisitions during those periods, potentially outweighing accumulated depreciation.

Land

The value of land decreased steadily from 2020 to 2025. While the initial decreases were modest, the decline accelerated, falling from US$19,965 thousand in 2020 to US$13,888 thousand in 2025. This decrease could be due to land sales, revaluation, or write-downs.

Depreciation Expense

Depreciation expense remained relatively stable at US$119,100 thousand in 2020 and 2021. It then decreased in 2022 to US$107,700 thousand before increasing significantly in 2023 and 2024, reaching US$145,100 thousand and US$162,900 thousand respectively. The increase in depreciation expense correlates with the increases in property and equipment, net, indicating that new assets are being put into service and depreciated.

Estimated Remaining Life

The estimated remaining life of property and equipment was consistently four years from 2020 to 2023. A decrease to three years is observed in 2024. This reduction in estimated life could indicate a change in the company’s assessment of the useful life of its assets, potentially due to technological obsolescence or increased wear and tear. The return to four years in 2025 is notable and warrants further investigation to understand the reason for the fluctuation.

The combination of increasing property and equipment, net, and rising depreciation expense suggests ongoing investment in fixed assets. The decreasing land value and the fluctuation in estimated remaining life require further scrutiny to understand the underlying drivers and potential implications for future financial performance.