Synopsys beats by $0.12, beats on revenue

[Daniel Nenni]

EDA continues to be a hot market. SNPS started the year at $60 and is now over $85. My Wall Street friends want to know if it is time sell..... Not in my opinion. Now that the system companies are doing their own chips and EDA companies are climbing up the systems design flow I still see significant upside for EDA. Synopsys also continues to invest in IP (Sidense acquisition) which is a key enabler. I am also encouraged by Siemens continued investment in EDA so it is back to a three horse race which is for the greater good.

It is interesting to note the business model changes EDA has made over the last year or two. The Mentor sales organization has transformed to a high touch - customer driven model, Cadence is flooding customers with AEs and technical support, and Synopsys has made significant organization changes to improve efficiency and focus. EDA continues to evolve........ absolutely.

MOUNTAIN VIEW, Calif., Nov. 29, 2017 /PRNewswire/ --
Q4 2017 Financial Highlights

• Revenue: $696.6 million
• GAAP loss per share: $0.80
• Non-GAAP earnings per share: $0.69

FY 2017 Financial Highlights

• Revenue: $2.725 billion
• GAAP earnings per share: $0.88
• Non-GAAP earnings per share: $3.42
• Cash flow from operations: $634.6 million
• Cash and cash equivalents: $1.05 billion

Synopsys, Inc. (SNPS) today reported results for its fourth quarter and fiscal year 2017.
For the fourth quarter of fiscal 2017, Synopsys reported revenue of $696.6 million, compared to $633.7 million for the fourth quarter of fiscal 2016. Revenue for fiscal year 2017 was $2.725 billion, an increase of 12.5 percent from $2.423 billion in fiscal year 2016.

"Synopsys reported another excellent fiscal year, with double-digit revenue and non-GAAP earnings growth. We saw revenue strength across the board, augmented by upside from hardware and IP, and an approximate $150 million increase in non-cancellable backlog," said Aart de Geus, chairman and co-CEO of Synopsys. "Our EDA and IP products are essential for customers building chips to bring about the Digital Intelligence age. In addition, we are making great progress in scaling our software security platform both organically and through the recently announced planned acquisition of Black Duck Software. Overall, we continued to drive long-term shareholder value by balancing our investment priorities while executing $400 million in share repurchases during fiscal year 2017."

https://www.prnewswire.com/news-releases/synopsys-posts-financial-results-for-fourth-quarter-and-fiscal-year-2017-300563810.html

 

[Daniel Nenni]

The transcript is worth reading, In fact, Aart is always a good read:

Let me expand on these three elements of our value proposition. First, the age of Smart Everything or Digital Intelligence is here. Following the decades driven by Computation and then Mobility, Digital Intelligence is the third major wave of electronics impact.

Week by week we can see its reach growing, be it through the Internet of Things, automotive, virtual reality, medical devices or industrial. The need to manipulate massive amounts of data, apply AI through machine learning, while guaranteeing security is unstoppable. All of this is made possible an insatiable hunger for next-generation advanced chips and complex software developed by our customers.

Second, Synopsys is uniquely positioned at the very intersection of silicon hardware and software. Our design and verification tools are essential for the next-generation of advanced chips and systems. Our growing silicon-proven IP offering reduces risk and speeds time-to-market. In addition, our Software Integrity portfolio prevents code flaws from becoming security disasters.

And third, we have maintained strong financial solidity while broadening our company TAM precisely for the opportunity at hand. Our recurring revenue model lets us consistently invest in advanced product development and support. We’ve managed our strong balance sheet and cash flow to enable both consistent stock buybacks and TAM-broadening acquisitions. And we’re driving shareholder value through long-term, high single-digit non-GAAP earnings growth.

Synopsys' (SNPS) CEO Aart de Geus on Q4 2017 Results - Earnings Call Transcript | Seeking Alpha

 

[Bernard Murphy]

The Black Duck software acquisition is even more interesting. They paid $550M for this which isn't chump change. Looks like SNPS continues to press ahead in the SW direction, especially around security. Smart move.