Analysis of Reportable Segments
Synopsys Inc. operates in 3 segments: Design Automation; Design IP; and Software Integrity.
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- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Segment Profit Margin
Synopsys Inc., profit margin by reportable segment
| Oct 31, 2025 | Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|---|
| Design Automation | ||||||
| Design IP | ||||||
| Software Integrity |
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).
Segment profit margins demonstrate varying performance across the reporting periods. The Design Automation segment exhibits a consistent upward trend, while the Design IP segment shows initial growth followed by a significant decline in the most recent period. The Software Integrity segment displays improvement, but has incomplete information for a full trend analysis.
- Design Automation
- The Design Automation segment’s profit margin began at 33.56% in 2021 and increased steadily through 2025, reaching 41.75%. This represents a cumulative increase of 8.19 percentage points over the observed period. The growth rate appears to be accelerating, with larger increases observed in later years.
- Design IP
- The Design IP segment’s profit margin increased from 30.17% in 2021 to 34.49% in 2022, indicating positive momentum. However, this trend reversed sharply in 2025, with the profit margin declining to 23.94%. This represents a substantial decrease of 10.55 percentage points from its peak in 2022. The cause of this decline warrants further investigation.
- Software Integrity
- The Software Integrity segment’s profit margin increased from 9.73% in 2021 to 14.55% in 2022. Profit margin figures are unavailable for 2023, 2024, and 2025, preventing a comprehensive assessment of its long-term performance. The initial increase suggests potential for growth within this segment, but the lack of recent information limits conclusive observations.
Overall, the performance of the segments is divergent. While Design Automation demonstrates strong and consistent improvement, the Design IP segment experienced a notable downturn. The Software Integrity segment’s trajectory remains unclear due to incomplete reporting.
Segment Profit Margin: Design Automation
Synopsys Inc.; Design Automation; segment profit margin calculation
| Oct 31, 2025 | Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Adjusted operating income | ||||||
| Revenue | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2025 Calculation
Segment profit margin = 100 × Adjusted operating income ÷ Revenue
= 100 × ÷ =
The segment profit margin for Design Automation demonstrates a consistent upward trend over the observed period. This is supported by increases in both adjusted operating income and revenue. A detailed examination of these metrics reveals a strengthening financial performance within this segment.
- Segment Profit Margin
- The segment profit margin began at 33.56% in 2021 and increased to 41.75% in 2025. This represents a cumulative increase of 8.19 percentage points over five years, indicating improving profitability. The rate of increase appears to be accelerating, with larger gains observed between 2022-2023 (1.57 percentage points) and 2024-2025 (3.09 percentage points).
- Adjusted Operating Income
- Adjusted operating income has exhibited substantial growth, rising from US$924,605 thousand in 2021 to US$2,213,526 thousand in 2025. This represents an increase of 139.4% over the period. The growth rate has also increased, with larger absolute increases in income observed in later years.
- Revenue
- Revenue for the Design Automation segment has also increased consistently, moving from US$2,754,737 thousand in 2021 to US$5,302,340 thousand in 2025. This signifies a growth of 92.2% over the five-year period. While revenue growth is substantial, it is proportionally less than the growth in adjusted operating income, contributing to the observed increase in segment profit margin.
The combination of increasing revenue and a disproportionately larger increase in adjusted operating income suggests improved operational efficiency and pricing power within the Design Automation segment. The accelerating trend in segment profit margin warrants further investigation to understand the underlying drivers and assess the sustainability of this performance.
Segment Profit Margin: Design IP
Synopsys Inc.; Design IP; segment profit margin calculation
| Oct 31, 2025 | Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Adjusted operating income | ||||||
| Revenue | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2025 Calculation
Segment profit margin = 100 × Adjusted operating income ÷ Revenue
= 100 × ÷ =
The segment profit margin for Design IP demonstrates a clear upward trend from 2021 through 2023, followed by a significant decline in 2024 and 2025. This analysis details the observed patterns in adjusted operating income, revenue, and the resulting segment profit margin.
- Adjusted Operating Income
- Adjusted operating income for the Design IP segment increased consistently from 2021 to 2023, rising from US$318.473 million to US$532.055 million. This growth accelerated in 2023. However, a substantial decrease is observed in 2024 and 2025, with income falling to US$730.174 million and then US$419.325 million respectively. This suggests potential challenges impacting profitability in the latter years.
- Revenue
- Revenue for the Design IP segment also exhibited growth from 2021 to 2023, increasing from US$1.056 billion to US$1.543 billion. The rate of revenue growth was consistent with that of adjusted operating income. In 2024, revenue increased significantly to US$1.906 billion, but then decreased in 2025 to US$1.752 billion. The revenue decrease in 2025 is less pronounced than the decrease in adjusted operating income, indicating a potential shift in cost structure or pricing.
- Segment Profit Margin
- The segment profit margin began at 30.17% in 2021 and steadily increased to 38.30% in 2023, indicating improving operational efficiency and/or pricing power. This positive trend reversed sharply in 2024, with the margin declining to 23.94% and remaining at that level in 2025. This substantial decrease suggests that while revenue increased in 2024, it was not sufficient to offset increases in costs, or that pricing pressures emerged. The 2025 margin indicates this is not a temporary fluctuation, but a sustained change.
In summary, the Design IP segment experienced strong growth in both revenue and profitability from 2021 to 2023. However, recent performance indicates a concerning trend of declining profitability despite continued, though fluctuating, revenue. Further investigation into the cost structure and competitive landscape is warranted to understand the drivers behind this shift.
Segment Profit Margin: Software Integrity
Synopsys Inc.; Software Integrity; segment profit margin calculation
| Oct 31, 2025 | Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Adjusted operating income | ||||||
| Revenue | ||||||
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | ||||||
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).
1 2025 Calculation
Segment profit margin = 100 × Adjusted operating income ÷ Revenue
= 100 × ÷ =
The Software Integrity segment demonstrated a positive trend in financial performance between 2021 and 2023. Adjusted operating income and revenue both increased over this period, resulting in an expanding segment profit margin.
- Adjusted Operating Income
- Adjusted operating income for the Software Integrity segment increased from US$38.311 million in 2021 to US$76.324 million in 2023. No figures are available for 2020, 2024, or 2025.
- Revenue
- Revenue for the Software Integrity segment grew from US$393.784 million in 2021 to US$524.606 million in 2023. Similar to adjusted operating income, revenue figures are absent for 2020, 2024, and 2025.
- Segment Profit Margin
- The segment profit margin exhibited consistent growth, rising from 9.73% in 2021 to 10.09% in 2022, and further increasing to 14.55% in 2023. This indicates improving profitability within the Software Integrity segment. Profit margin figures are unavailable for 2020, 2024, and 2025.
The observed increase in segment profit margin suggests that the Software Integrity segment is becoming more efficient in converting revenue into profit. The growth in both adjusted operating income and revenue supports this conclusion. The lack of information for 2020, 2024, and 2025 limits a complete assessment of long-term trends.
Revenue
Synopsys Inc., revenue by reportable segment
US$ in thousands
| Oct 31, 2025 | Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|---|
| Design Automation | ||||||
| Design IP | ||||||
| Software Integrity | ||||||
| Total |
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).
Revenue performance across reportable segments demonstrates consistent growth between 2021 and 2025. The segment 'Design Automation' consistently represents the largest portion of total revenue and exhibits a strong upward trajectory. 'Design IP' also shows growth, though with a slight decrease in the most recent reported year. 'Software Integrity' experienced growth between 2021 and 2022, but subsequent figures are unavailable for comparison.
- Design Automation Revenue Trend
- Revenue from Design Automation increased from US$2,754,737 thousand in 2021 to US$5,302,340 thousand in 2025. This represents a substantial compound annual growth rate, indicating strong demand for these services. The growth appears to be accelerating, with larger absolute increases in revenue observed in later years.
- Design IP Revenue Trend
- Design IP revenue grew from US$1,055,672 thousand in 2021 to US$1,906,314 thousand in 2023, before decreasing to US$1,751,838 thousand in 2025. While the segment experienced significant growth initially, the decline in 2025 warrants further investigation to determine the underlying causes.
- Software Integrity Revenue Trend
- Software Integrity revenue increased from US$393,784 thousand in 2021 to US$524,606 thousand in 2022. However, revenue figures are not available for 2023, 2024, or 2025, making it impossible to assess the segment’s recent performance or identify any emerging trends.
- Total Revenue Trend
- Total revenue increased consistently from US$4,204,193 thousand in 2021 to US$7,054,178 thousand in 2025. This growth is primarily driven by the strong performance of the Design Automation segment, with contributions from Design IP until 2023. The absence of recent Software Integrity revenue figures impacts the complete picture of total revenue composition.
Overall, the revenue performance indicates a healthy growth trajectory, particularly within the Design Automation segment. The decrease in Design IP revenue in 2025 and the lack of recent information regarding Software Integrity represent areas requiring further scrutiny.
Adjusted operating income
Synopsys Inc., adjusted operating income by reportable segment
US$ in thousands
| Oct 31, 2025 | Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|---|
| Design Automation | ||||||
| Design IP | ||||||
| Software Integrity | ||||||
| Total |
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 adjusted operating income demonstrates significant growth across all reportable segments between 2021 and 2025. However, the growth rates vary considerably between segments, and a recent decline is observed in one segment.
- Design Automation
- The Design Automation segment exhibits a consistently strong upward trend in adjusted operating income, increasing from US$924.605 million in 2021 to US$2.213.526 million in 2025. This represents a cumulative increase of approximately 139.4% over the five-year period. The segment’s growth appears to be accelerating, with larger absolute increases observed in later years.
- Design IP
- The Design IP segment also shows growth between 2021 and 2023, rising from US$318.473 million to US$532.055 million, a growth of 66.8%. However, in 2025, adjusted operating income for this segment decreased substantially to US$419.325 million. This represents a decline of approximately 26.8% from its peak in 2023, indicating a potential shift in performance.
- Software Integrity
- The Software Integrity segment demonstrates growth from US$38.311 million in 2021 to US$76.324 million in 2023. Adjusted operating income figures are unavailable for 2024 and 2025, preventing assessment of recent trends within this segment.
- Total Adjusted Operating Income
- Total adjusted operating income increased from US$1.281.389 million in 2021 to US$2.632.851 million in 2025, representing an overall increase of approximately 105.5%. While the overall trend is positive, the rate of growth appears to be moderating in the most recent period, potentially influenced by the decline in the Design IP segment.
The substantial growth in Design Automation is a key driver of the overall positive trend. The decline in Design IP in 2025 warrants further investigation to determine the underlying causes and potential implications for future performance. The lack of recent information for Software Integrity limits the ability to assess its current contribution to overall results.