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, 2025 Oct 31, 2024 Oct 31, 2023 Oct 31, 2022 Oct 31, 2021 Oct 31, 2020
Time-based products 49.47 52.62 57.91 58.91 62.65 64.18
Upfront products 28.50 29.41 24.46 24.14 20.48 19.96
Products revenue 77.97% 82.03% 82.38% 83.06% 83.13% 84.14%
Maintenance and service 22.03 17.97 17.62 16.94 16.87 15.86
Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Products -12.29 -12.57 -13.07 -12.87 -12.89 -13.22
Maintenance and service -6.30 -5.99 -6.57 -6.75 -6.45 -6.92
Amortization of acquired intangible assets -4.42 -1.76 -1.28 -1.32 -1.15 -1.42
Cost of revenue -23.02% -20.32% -20.92% -20.93% -20.50% -21.56%
Gross margin 76.98% 79.68% 79.08% 79.07% 79.50% 78.44%
Research and development -35.15 -33.98 -33.32 -33.07 -35.79 -34.71
Sales and marketing -15.23 -14.02 -15.22 -15.35 -16.95 -17.15
General and administrative -10.91 -9.28 -7.02 -6.96 -7.68 -7.72
Amortization of acquired intangible assets -2.73 -0.27 -0.48 -0.59 -0.81 -1.05
Restructuring charges 0.00 0.00 -1.32 -0.24 -0.79 -0.98
Operating expenses -64.01% -57.55% -57.36% -56.20% -62.02% -61.61%
Operating income 12.97% 22.13% 21.72% 22.87% 17.48% 16.83%
Interest expense -6.33 -0.57 -0.02 -0.03 -0.08 -0.14
Interest income 3.94 1.09 0.63 0.17 0.06 0.10
Gain on divestitures 7.78 0.00 0.00 0.00 0.00 0.00
Gains (losses) on assets related to deferred compensation plan 0.93 1.39 0.35 -1.35 1.70 0.58
Gain on sale of building 0.73 0.03 0.00 0.00 0.00 0.00
Gain (loss) on sale of strategic investments -0.05 0.90 0.00 0.00 0.00 0.00
Foreign currency exchange gains (losses) 0.03 0.10 -0.03 0.09 0.13 0.15
Other, net -0.24 -0.37 -0.38 0.21 -0.12 -0.20
Other income (expense), net 13.11% 3.15% 0.58% -0.88% 1.76% 0.63%
Income before income taxes 19.75% 24.71% 22.28% 21.95% 19.16% 17.32%
(Provision) benefit for income taxes -0.79 -1.63 -1.43 -2.70 -1.17 0.69
Net income from continuing operations 18.96% 23.08% 20.85% 19.25% 17.99% 18.00%
Income (loss) from discontinued operations, net of income taxes -0.06 13.41 0.00 0.00 0.00 0.00
Net income 18.90% 36.49% 20.85% 19.25% 17.99% 18.00%
Net (income) loss attributed to non-controlling interest and redeemable non-controlling interest -0.01 0.45 0.20 0.12 0.03 0.02
Net income attributed to Synopsys 18.89% 36.94% 21.05% 19.38% 18.02% 18.03%

Based on: 10-K (reporting date: 2025-10-31), 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).

The common-size income statement reveals several noteworthy trends over the six-year period. Revenue composition has shifted, with a decreasing proportion derived from time-based products and an increasing proportion from upfront products and maintenance and service. Operating income and net income have demonstrated volatility, with a significant surge in profitability in the final year of the observed period.

Revenue Composition
Time-based products consistently represent a significant portion of revenue, but their contribution has declined from 64.18% in 2020 to 49.47% in 2025. Conversely, upfront products have increased from 19.96% to 28.50% over the same period. Maintenance and service revenue has also shown a consistent increase, rising from 15.86% to 22.03%. This suggests a strategic shift towards more recurring revenue streams.
Gross Margin
Gross margin remained relatively stable between 78.44% and 79.50% from 2020 to 2022, experienced a slight increase to 79.68% in 2023, and then decreased to 76.98% in 2025. This decrease in the final year coincides with an increase in cost of revenue as a percentage of revenue.
Operating Expenses
Operating expenses as a percentage of revenue decreased from 61.61% in 2020 to 56.20% in 2022, then increased to 64.01% in 2025. This fluctuation is largely driven by changes in research and development expenses, which remained consistently high, and a notable increase in general and administrative expenses in the later years. Restructuring charges were present in 2020, 2021, and 2022, but diminished significantly thereafter.
Profitability
Operating income as a percentage of revenue increased from 16.83% in 2020 to a peak of 22.87% in 2022, before declining to 12.97% in 2025. Net income followed a similar pattern, with a substantial increase to 36.49% in 2023, followed by a decrease to 18.90% in 2025. This volatility is influenced by fluctuations in other income and expense, net, and the provision for income taxes.
Interest and Other Income
Interest expense remained minimal for the majority of the period, but increased significantly in 2025. Interest income showed a substantial increase over the period, contributing positively to other income. Gains on divestitures, sale of buildings, and strategic investments contributed to other income in later years, particularly in 2025. Foreign currency exchange gains and losses were relatively small and fluctuated over the period.
Tax Rate
The effective tax rate fluctuated considerably. A benefit was recorded in 2021, while provisions were made in other years. The tax rate was particularly high in 2025, contributing to the decline in net income.

Overall, the company experienced a dynamic period with shifts in revenue composition, fluctuating operating expenses, and significant changes in profitability, particularly in the final two years. The increase in upfront products and maintenance and service revenue suggests a potential strategic focus on recurring revenue models. The substantial increase in net income in 2023, followed by a decline in 2025, warrants further investigation to understand the underlying drivers.