Introduction
Synopsys, Inc. (Synopsys) provides products and services used across the entire Silicon to Software spectrum to bring Smart Everything to life.
Synopsys has three reportable segments : (1) Design Automation, which includes the advanced silicon design, verification products and services, system integration products and services, digital, custom and FPGA IC design software, verification software and hardware products, manufacturing software products and other; (2) Design IP, which includes our Design IP products; and (3) Software Integrity, which includes solutions that test software code for security vulnerabilities and quality defects, as well as professional and managed services.
Synopsys’ fiscal year ends on the Saturday closest to October 31 and consists of 52 weeks, but approximately every five years, Synopsys’ fiscal year has 52 weeks.
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, Synopsys has 52 weeks, ending on October 28, 2023, October 29, 2022, and October 30, 2021 ,respectively.
Asset structure analysis
In fiscal year 2023 and fiscal year 2022, Synopsys’ total assets were $10.3 billion and $9.4 billion, respectively.
In fiscal 2023, Synopsys’ total assets increased by 9.6% year-over-year.
In fiscal year 2023 and fiscal year 2022, Synopsys’ goodwill reached $4.1 billion and $3.8 billion.
In 2023, goodwill accounted for 40% of total assets.
Liquidity and solvency analysis
In fiscal 2023, Synopsys’ current assets were $3.4 billion and total current liabilities were $3.0 billion.
The current ratio is 1.13.
This ratio is underestimated.
Among current liabilities, Synopsys’s deferred revenue amounted to $1.78 billion. This part of the liability does not need to be repaid. It only needs to provide services to customers.
After deducting deferred revenue from current liabilities, the adjusted current ratio is 2.8.
Synopsys is very liquid.
In 2023, total liabilities were $4.15 billion.
The debt ratio in 2023 was 40%. Even considering that the ratio of goodwill to total assets is too large, Synopsys’s debt ratio is not too high, and Synopsys’s solvency is relatively strong.
Profitability Analysis
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, Synopsys’ revenue was $5.8 billion, $5.1 billion, and $4.2 billion, respectively.
In fiscal year 2023, the revenue increased by 13.7% year-on-year.
In fiscal year 2022, the revenue increased by 21.4% year-on-year.
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, Synopsys’ net profits were $1.2 billion, $980 million, and $756 million, respectively.
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, the net profit margin was 20%, 19%, and 18% ,respectively.
In fiscal year 2023 and fiscal year 2022, the return on net assets was 19.5% and 17.8%, respectively.
cash flow analysis
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, Synopsys’ net cash from operating activities was $1.7 billion, $1.7 billion, and $1.5 billion, respectively.
Synopsys’ cash flow is very strong.
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, the amount of property and equipment purchased by Synopsys was $190 million, $140 million, and $90 million.
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, free cash flow was $1.51 billion, $1.56 billion, and $1.41 billion, respectively.
In fact, I think this free cash flow is inaccurate. Acquisitions also caused cash outflows.
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, acquisitions were $300 million, $420 million, and $300 million, respectively.
Then, in fiscal year 2023, fiscal year 2022, and fiscal year 2021, the adjusted free cash flow was $1.21 billion, $1.14 billion, and $1.11 billion, respectively.
In fiscal year 2023, fiscal year 2022, and fiscal year 2021, the amount of stock repurchases was $1.16 billion, $1.1 billion, and $750 million.
In effect, adjusted free cash flow can be considered the actual return to shareholders, since the cash returned to shareholders should not exceed the amount of adjusted free cash flow.
Results for the first quarter ended January 31, 2024
For the three months ended January 31, 2024, revenue was $1.65 billion and operating profit was $360 million.
For the three months ended October 31, 2023, revenue was $1.36 billion and operating profit was $256 million.
Summary
We estimate that Synopsys is worth $20 billion, although its market price is $85 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.
