Stock Analysis on Net
Stock Analysis on Net

Synopsys Inc. (NASDAQ:SNPS)

Common-Size Income Statement 

Synopsys Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Oct 31, 2024 Oct 31, 2023 Oct 31, 2022 Oct 31, 2021 Oct 31, 2020 Oct 31, 2019
Time-based products 52.62 57.91 58.91 62.65 64.18 65.40
Upfront products 29.41 24.46 24.14 20.48 19.96 18.44
Products revenue 82.03% 82.38% 83.06% 83.13% 84.14% 83.84%
Maintenance and service 17.97 17.62 16.94 16.87 15.86 16.16
Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Products -12.57 -13.07 -12.87 -12.89 -13.22 -13.66
Maintenance and service -5.99 -6.57 -6.75 -6.45 -6.92 -6.97
Amortization of intangible assets -1.76 -1.28 -1.32 -1.15 -1.42 -1.77
Cost of revenue -20.32% -20.92% -20.93% -20.50% -21.56% -22.40%
Gross margin 79.68% 79.08% 79.07% 79.50% 78.44% 77.60%
Research and development -33.98 -33.32 -33.07 -35.79 -34.71 -33.83
Sales and marketing -14.02 -15.22 -15.35 -16.95 -17.15 -18.83
General and administrative -9.28 -7.02 -6.96 -7.68 -7.72 -6.82
Amortization of acquired intangible assets -0.27 -0.48 -0.59 -0.81 -1.05 -1.23
Restructuring charges 0.00 -1.32 -0.24 -0.79 -0.98 -1.40
Operating expenses -57.55% -57.36% -56.20% -62.02% -61.61% -62.12%
Operating income 22.13% 21.72% 22.87% 17.48% 16.83% 15.48%
Interest income 1.09 0.63 0.17 0.06 0.10 0.20
Interest expense -0.57 -0.02 -0.03 -0.08 -0.14 -0.35
Gains (losses) on assets related to deferred compensation plan 1.39 0.35 -1.35 1.70 0.58 0.83
Gain on sale of strategic investments 0.90 0.00 0.00 0.00 0.00 0.00
Foreign currency exchange gains (losses) 0.10 -0.03 0.09 0.13 0.15 0.11
Other, net -0.33 -0.38 0.21 -0.12 -0.20 -0.04
Other income (expense), net 2.58% 0.56% -0.92% 1.68% 0.49% 0.75%
Income before income taxes 24.71% 22.28% 21.95% 19.16% 17.32% 16.23%
(Provision) benefit for income taxes -1.63 -1.43 -2.70 -1.17 0.69 -0.39
Net income from continuing operations 23.08% 20.85% 19.25% 17.99% 18.00% 15.84%
Income from discontinued operations, net of income taxes 13.41 0.00 0.00 0.00 0.00 0.00
Net income 36.49% 20.85% 19.25% 17.99% 18.00% 15.84%
Net loss attributed to non-controlling interest and redeemable non-controlling interest 0.45 0.20 0.12 0.03 0.02 0.00
Net income attributed to Synopsys 36.94% 21.05% 19.38% 18.02% 18.03% 15.84%

Based on: 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31).

Over the analyzed periods, the composition of revenue by product type reveals notable shifts. The share of revenue from time-based products steadily declined from 65.4% in 2019 to 52.62% in 2024, while upfront products increased their contribution from 18.44% to 29.41% over the same period. Overall, product revenue remained relatively stable around 82-84% of total revenue, with a slight downward trend towards 82.03% in 2024. Maintenance and service revenue as a percentage of total revenue exhibited a gradual increase, rising from 16.16% in 2019 to 17.97% in 2024.

Cost-related metrics indicate an improvement in cost efficiencies. The cost of revenue as a percentage of total revenue decreased from 22.4% in 2019 to 20.32% in 2024, aiding the enhancement of gross margin. Correspondingly, gross margin increased from 77.6% to 79.68% over the same interval, signaling improved profitability at the gross level.

Operating expenses showed a downward trend relative to revenue until 2022, with a low of 56.2%, before slightly increasing to around 57.55% by 2024. Within operating expenses, research and development remained a significant and fairly stable expense category, fluctuating around the 33-35% range. Sales and marketing expenses gradually declined from 18.83% in 2019 to 14.02% in 2024, indicating greater operational efficiency or possibly adjusted strategic priorities. General and administrative expenses fluctuated and increased notably to 9.28% in 2024, potentially reflecting restructuring or increased overhead costs. Amortization of acquired intangible assets consistently decreased from 1.23% to 0.27%, suggesting the winding down of amortizable assets over time.

Operating income saw a steady increase from 15.48% in 2019 to a peak of 22.87% in 2022, then stabilized around 22% through 2024, reflecting effective cost control and revenue management practices. There was a rise in interest income from 0.2% to 1.09%, while interest expense generally decreased until 2023 before rising sharply to 0.57% in 2024, which may be indicative of changes in financing costs or debt levels.

Other income and expenses demonstrated volatility, with gains and losses related to deferred compensation plans showing mixed outcomes. The gain on sale of strategic investments appeared only in 2024 at 0.9%, contributing positively to non-operating income. Foreign currency exchange impact was minimal overall, fluctuating around zero. Net other income (expense) showed improvement over time, notably achieving 2.58% in 2024, which helped boost pre-tax income.

Income before income taxes increased steadily from 16.23% in 2019 to 24.71% in 2024. Tax provision fluctuated, presenting both benefits and provisions, but generally remained a small percentage of revenue. Net income from continuing operations increased from 15.84% to 23.08%, showing improved profitability after tax.

In 2024, the company reported income from discontinued operations amounting to 13.41% of revenue, significantly impacting overall net income, which nearly doubled from 21.05% in 2023 to 36.94% in 2024. This contributed to a substantial increase in net income attributable to the company in that year.

In summary, the company's financial profile indicates positive trends in revenue composition with increasing upfront product revenues, improved gross margins, and controlled operating expenses leading to enhanced operating income. The period also saw fluctuations in other income components and an extraordinary impact of discontinued operations in the final reported year, resulting in a marked increase in net income. Changes in interest expenses and administrative costs warrant further analysis to understand their drivers. Overall, the data suggests growing operational efficiency and profitability over the timeframe analyzed.