Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025

Results Summary1 Quarterly revenue of $1.740 billion, up 14% year-over-year (YoY) Quarterly GAAP earnings per diluted share of $1.50; non-GAAP earnings per diluted share of $3.39 Results reflect the closing of Ansys acquisition on July 17, 2025 Expecting full-year 2025 revenue between $7.03 and $7.06 billion dollars as Synopsys transformation continues , /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its third quarter of fiscal year 2025. Revenue for the third quarter of fiscal year 2025 was $1.740 billion, compared to $1.526 billion for the third quarter of fiscal year 2024. Synopsys headquarters in Sunnyvale, Calif. (PRNewsfoto/Synopsys, Inc.) "Q3 was a transformational quarter. Against a challenging geo-political backdrop, we closed the Ansys acquisition – expanding our portfolio, customer base and opportunity. Now more than ever, Synopsys is the mission-critical partner technology R&D needs to design and deliver AI-powered products," said Sassine Ghazi, president and CEO of Synopsys. "While I'm proud of how our team navigated external challenges in the quarter, our IP business underperformed expectations. We are taking action to enhance our competitive advantage and drive resilient, long-term growth." "In Q3, strength in Design Automation was offset by weakness in Design IP," said Shelagh Glaser, CFO of Synopsys. "We are taking a more conservative view of Q4, while guiding another consecutive year of profitable growth." _____________________________ 1 The operating results of Ansys have been included in our condensed consolidated financial statements for the three and nine months ended July 31, 2025 from the Acquisition Date, and were not material to our financial results for either of these periods. GAAP ResultsOn a U.S. generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal year 2025 was $242.5 million, or $1.50 per diluted share, compared to $425.9 million, or $2.73 per diluted share, for the third quarter of fiscal year 2024.Non-GAAP ResultsOn a non-GAAP basis, net income for the third quarter of fiscal year 2025 was $548.9 million, or $3.39 per diluted share, compared to non-GAAP net income of $535.5 million, or $3.43 per diluted share, for the third quarter of fiscal year 2024.For a reconciliation of net income, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below.Business Segments Synopsys reports revenue and operating income in two segments: (1) Design Automation, which includes our advanced silicon design, verification products and services, simulation and analysis solutions (Ansys), system integration products and services, digital, custom and field programmable gate array IC design software, verification software and hardware products, manufacturing software products and other and (2) Design IP, which includes our interface, foundation, security, and embedded processor IP, IP subsystems, and IP implementation services.Continuing Operations On September 30, 2024, Synopsys completed the sale of its Software Integrity business. Unless otherwise noted, Synopsys' Software Integrity business has been presented as a discontinued operation in the Synopsys' consolidated financial statements for all periods presented herein and all financial results and targets are presented herein on a continuing operations basis.Financial TargetsSynopsys also provided its consolidated financial targets for the fourth quarter and full fiscal year 2025. These targets reflect a change in Synopsys' fiscal year from a 52/53-week period ending on the Saturday nearest to October 31 of each year to October 31 of each year. As a result of this change, there will be ten fewer days in the first half of fiscal year 2025 and two extra days in the second half of fiscal year 2025, which results in eight fewer days in the aggregate in Synopsys' fiscal year 2025 as compared to its fiscal year 2024. These targets also assume no further changes to export control restrictions or the current U.S. government "Entity List" restrictions. These targets constitute forward-looking statements and are based on current expectations. For a discussion of factors that could cause actual results to differ materially from these targets, see "Forward-Looking Statements" below. Fourth Quarter and Full Fiscal Year 2025 Financial Targets (in millions except per share amounts) Range for Three Months Ending Range for Fiscal Year Ending October 31, 2025 October 31, 2025 Low High Low High Revenue $ 2,230 $ 2,260 $ 7,030 $ 7,060 GAAP Expenses $ 2,115 $ 2,139 $ 6,079 $ 6,103 Non-GAAP Expenses $ 1,440 $ 1,450 $ 4,430 $ 4,440 Non-GAAP Interest and Other Income (Expense), net $ (179) $ (181) $ (92) $ (94) Non-GAAP Tax Rate 16 % 16 % 16 % 16 % Outstanding Shares (fully diluted) 187 188 165 166 GAAP EPS $ (0.27) $ (0.16) $ 5.03 $ 5.16 Non-GAAP EPS $ 2.76 $ 2.80 $ 12.76 $ 12.80 Operating Cash Flow ~$1,130 Free Cash Flow(1) ~$950 Capital Expenditures ~$180 (1) Free cash flow is calculated as cash provided from operating activities less capital expenditures. For a reconciliation of Synopsys' fourth quarter and fiscal year 2025 targets, including expenses, earnings per diluted share and other measures on a GAAP and non-GAAP basis and a discussion of the financial targets that we are not able to reconcile without unreasonable efforts, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below.Earnings Call Open to InvestorsSynopsys will hold a conference call for financial analysts and investors today at 2:00 p.m. Pacific Time. A live webcast of the call will be available on Synopsys' corporate website at investor.synopsys.com. Synopsys uses its website as a tool to disclose important information about Synopsys and comply with its disclosure obligations under Regulation Fair Disclosure. A webcast replay will also be available on the corporate website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the fourth quarter and fiscal year 2025.Effectiveness of InformationThe targets included in this press release, the statements made during the earnings conference call, the information contained in the financial supplement and the corporate overview presentation, each of which are available on Synopsys' corporate website at www.synopsys.com (collectively, the "Earnings Materials"), represent Synopsys' expectations and beliefs as of September 9, 2025. Although these Earnings Materials will remain available on Synopsys' website through the date of the earnings call for the fourth quarter and fiscal year 2025, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys undertakes no duty and does not intend to update any forward-looking statement, whether as a result of new information or future events, or otherwise update, the targets given in this press release unless required by law.Availability of Final Financial StatementsSynopsys will include final financial statements for the third quarter of fiscal year 2025 in its quarterly report on Form 10-Q to be filed on or before September 9, 2025.Reconciliation of Third Quarter Fiscal Year 2025 ResultsThe following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP net income, earnings per diluted share, and tax rate for the periods indicated below. GAAP to Non-GAAP Reconciliation of Third Quarter Fiscal Year 2025 Results(1) (unaudited and in thousands, except per share amounts) Three Months Ended Nine Months Ended July 31, July 31, 2025 2024 2025 2024 GAAP net income from continuing operations attributed to Synopsys $ 242,509 $ 425,868 $ 887,424 $ 1,162,429 Adjustments: Amortization of acquired intangible assets 74,941 17,436 99,193 49,962 Stock-based compensation 267,723 164,029 655,725 491,516 Acquisition/divestiture related items 120,012 53,022 264,355 110,210 (Gain) loss on sale of strategic investments 1,200 — 3,635 (55,077) Tax adjustments (157,477) (124,903) (315,553) (231,164) Non-GAAP net income from continuing operations attributed to Synopsys $ 548,908 $ 535,452 $ 1,594,779 $ 1,527,876 Three Months Ended Nine Months Ended July 31, July 31, 2025 2024 2025 2024 GAAP net income from continuing operations per diluted share attributed to Synopsys $ 1.50 $ 2.73 $ 5.61 $ 7.46 Adjustments: Amortization of acquired intangible assets 0.46 0.11 0.63 0.32 Stock-based compensation 1.66 1.05 4.15 3.15 Acquisition/divestiture related items 0.74 0.34 1.67 0.71 (Gain) loss on sale of strategic investments 0.01 — 0.02 (0.35) Tax adjustments (0.98) (0.80) (2.00) (1.49) Non-GAAP net income from continuing operations per diluted share attributed to Synopsys $ 3.39 $ 3.43 $ 10.08 $ 9.80 Shares used in computing net income per diluted share amounts: 161,682 156,131 158,176 155,863 (1) Synopsys' third quarter of fiscal year 2025 and 2024 ended on July 31, 2025 and August 3, 2024, respectively. For presentationpurposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter. GAAP to Non-GAAP Tax Rate Reconciliation (1) (unaudited) Three Months Ended Nine Months Ended July 31, 2025 July 31, 2025 GAAP effective tax rate (28.0) % (1.4) % Stock-based compensation 0.5 % (1.3) % Tax adjustments (2) 43.5 % 18.7 % Non-GAAP effective tax rate 16.0 % 16.0 % (1) Presented on a continuing operations basis. (2) The tax adjustments are primarily due to the capital loss on the sale of Synopsys' ownership in OpenLight Photonics, Inc., the tax benefit from the release of valuation allowance on California research credits due to the Ansys Merger, the differences in the tax rate effect of certain deductions, such as the deduction for foreign- derived intangible income and credits, and the impact of discrete uncertain tax positions. Reconciliation of 2025 TargetsThe following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP targets for the periods indicated below. GAAP to Non-GAAP Reconciliation of Fourth Quarter Fiscal Year 2025 Targets (in thousands, except per share amounts) Range for Three Months Ending October 31, 2025 Low High Target GAAP expenses $ 2,115,000 $ 2,139,000 Adjustments: Amortization of acquired intangible assets (398,000) (405,000) Stock-based compensation (277,000) (284,000) Target non-GAAP expenses $ 1,440,000 $ 1,450,000 Range for Three Months Ending October 31, 2025 Low High Target GAAP earnings (losses) per diluted share attributed to Synopsys $ (0.27) $ (0.16) Adjustments: Amortization of acquired intangible assets 2.16 2.12 Stock-based compensation 1.51 1.48 Tax adjustments (0.64) (0.64) Target non-GAAP earnings per diluted share attributed to Synopsys $ 2.76 $ 2.80 Shares used in non-GAAP calculation (midpoint of target range) 187,500 187,500 GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2025 Targets (in thousands, except per share amounts) Range for Fiscal Year Ending October 31, 2025 Low High Target GAAP expenses $ 6,078,598 $ 6,102,598 Adjustments: Amortization of acquired intangible assets (497,193) (504,193) Stock-based compensation (932,725) (939,725) Acquisition/divestiture related items (1) (218,680) (218,680) Target non-GAAP expenses $ 4,430,000 $ 4,440,000 Range for Fiscal Year Ending October 31, 2025 Low High Target GAAP earnings per diluted share attributed to Synopsys $ 5.03 $ 5.16 Adjustments: Amortization of acquired intangible assets 3.05 3.00 Stock-based compensation 5.68 5.64 Acquisition/divestiture related items (1) 1.60 1.60 Loss on sale of strategic investments 0.02 0.02 Tax adjustments (2.62) (2.62) Target non-GAAP earnings per diluted share attributed to Synopsys $ 12.76 $ 12.80 Shares used in non-GAAP calculation (midpoint of target range) 165,500 165,500 (1) Adjustments reflect actual expenses incurred by Synopsys as of July 31, 2025 or certain contractually obligated financing fees and related amortization expenses, and do not fully reflect all potential adjustments for future periods for the reasons set forth in "GAAP to Non-GAAP Reconciliation" below. Forward-Looking StatementsThis press release and the investor conference call contain forward-looking statements, including, but not limited to, statements concerning our short-term and long-term financial targets, expectations and objectives; our businesses, business segments, strategies, initiatives and opportunities, including, among other things, our plan to reallocate resources in our Design IP segment to higher growth opportunities; harness AI efficiencies, and undertake actions that will impact our workforce; industry growth and technological trends; our market outlook; the macroeconomic environment and global economic conditions; the impact of current and future U.S. and foreign trade regulations, government actions and regulatory changes, such as export control restrictions and tariffs, including the anticipated impact of China export control restrictions; the Ansys Merger and its expected impact; planned dispositions and their expected impact, including the pending sales to Keysight Technologies, Inc. of our Optical Solutions Group and the Ansys PowerArtist RTL business and their potential impact on our ability to realize the benefits of the Ansys Merger; our key customers, customer concentration, customer demand and market expansion; product development and our planned product releases and capabilities; the expected realization of our contracted but unsatisfied or partially unsatisfied performance obligations (backlog); planned stock repurchases; our expected tax rate; and the impact and result of pending legal, regulatory, administrative and tax proceedings. These statements involve risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in such forward-looking statements. Such risks, uncertainties and factors include, but are not limited to: macroeconomic conditions and geopolitical uncertainty in the global economy; uncertainty in the growth of the semiconductor and electronics industries; the highly competitive industry we operate in; actions by the U.S. or foreign governments, such as the imposition of additional export restrictions or tariffs; consolidation among our customers and our dependence on a relatively small number of large customers; risks and compliance obligations relating to the global nature of our operations; failure to realize the benefits expected from the Ansys Merger or unexpected difficulties or expenditures arising therefrom; and more. Additional information on potential risks, uncertainties and other factors that could affect Synopsys' results is included in filings we make with the SEC from time to time, including in the sections entitled "Risk Factors" in our latest Annual Report on Form 10-K and in our latest Quarterly Report on Form 10-Q. The financial information contained in this press release should be read in conjunction with the consolidated financial statements and notes thereto included in Synopsys' most recent reports on Forms 10-K and 10-Q, each as may be amended from time to time. Synopsys' financial results for its third quarter of fiscal year 2025 are not necessarily indicative of Synopsys' operating results for any future periods. The information provided herein is as of September 9, 2025. Synopsys undertakes no duty to, and does not intend to, update any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law. SYNOPSYS, INC. Unaudited Condensed Consolidated Statements of Income (1) (in thousands, except per share amounts) Three Months Ended Nine Months Ended July 31, July 31, 2025 2024 2025 2024 Revenue: Time-based products $ 892,364 $ 803,147 $ 2,548,928 $ 2,389,924 Upfront products 516,404 442,528 1,395,204 1,281,283 Total products revenue 1,408,768 1,245,675 3,944,132 3,671,207 Maintenance and service 330,969 280,074 855,186 820,243 Total revenue 1,739,737 1,525,749 4,799,318 4,491,450 Cost of revenue: Products 230,895 179,536 615,953 553,753 Maintenance and service 103,301 96,630 290,309 275,348 Amortization of acquired intangible assets 46,368 14,510 62,624 41,165 Total cost of revenue 380,564 290,676 968,886 870,266 Gross margin 1,359,173 1,235,073 3,830,432 3,621,184 Operating expenses: Research and development 625,301 508,872 1,732,496 1,527,542 Sales and marketing 259,480 211,491 683,700 640,117 General and administrative 280,550 150,437 584,133 396,464 Amortization of acquired intangible assets 28,573 4,062 36,569 12,152 Total operating expenses 1,193,904 874,862 3,036,898 2,576,275 Operating income 165,269 360,211 793,534 1,044,909 Interest expense (146,502) (11,742) (251,977) (20,547) Other income (expense), net 170,543 43,526 335,061 166,617 Income before income taxes 189,310 391,995 876,618 1,190,979 Provision (benefit) for income taxes (52,967) (30,712) (12,080) 37,634 Net income from continuing operations 242,277 422,707 888,698 1,153,345 Income (loss) from discontinued operations, net of income taxes — (17,813) (3,900) (13,155) Net income 242,277 404,894 884,798 1,140,190 Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest (232) (3,161) 1,274 (9,084) Net income attributed to Synopsys $ 242,509 $ 408,055 $ 883,524 $ 1,149,274 Net income (loss) attributed to Synopsys Continuing operations $ 242,509 $ 425,868 $ 887,424 $ 1,162,429 Discontinued operations — (17,813) (3,900) (13,155) Net income $ 242,509 $ 408,055 $ 883,524 $ 1,149,274 Net income (loss) per share attributed to Synopsys - basic: Continuing operations $ 1.51 $ 2.78 $ 5.67 $ 7.60 Discontinued operations — (0.12) (0.03) (0.08) Basic net income per share $ 1.51 $ 2.66 $ 5.64 $ 7.52 Net income (loss) per share attributed to Synopsys - diluted: Continuing operations $ 1.50 $ 2.73 $ 5.61 $ 7.46 Discontinued operations — (0.12) (0.02) (0.09) Diluted net income per share $ 1.50 $ 2.61 $ 5.59 $ 7.37 Shares used in computing per share amounts: Basic 160,174 153,417 156,536 152,885 Diluted 161,682 156,131 158,176 155,863 (1) Synopsys' third quarter of fiscal year 2025 and 2024 ended on July 31, 2025 and August 3, 2024, respectively. For presentation purposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter. SYNOPSYS, INC. Unaudited Condensed Consolidated Balance Sheets (1) (in thousands, except par value amounts) July 31, 2025 October 31, 2024 ASSETS: Current assets: Cash and cash equivalents $ 2,526,475 $ 3,896,532 Short-term investments 67,235 153,869 Total cash, cash equivalents and short-term investments 2,593,710 4,050,401 Accounts receivable, net 1,392,373 934,470 Inventories 382,056 361,849 Prepaid and other current assets 1,153,172 1,122,946 Current assets held for sale 74,317 — Total current assets 5,595,628 6,469,666 Property and equipment, net 699,688 563,006 Operating lease right-of-use assets, net 693,368 565,917 Goodwill 26,945,723 3,448,850 Intangible assets, net 13,079,912 195,164 Deferred income taxes 97,061 1,247,258 Other long-term assets 1,118,876 583,700 Total assets $ 48,230,256 $ 13,073,561 LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and accrued liabilities $ 1,283,204 $ 1,163,592 Operating lease liabilities 127,452 94,791 Deferred revenue 1,991,429 1,391,737 Short-term debt 22,117 — Current liabilities held for sale 20,005 — Total current liabilities 3,444,207 2,650,120 Long-term operating lease liabilities 672,729 574,065 Long-term deferred revenue 383,405 340,831 Long-term debt 14,318,016 15,601 Other long-term liabilities 1,797,713 469,738 Total liabilities 20,616,070 4,050,355 Redeemable non-controlling interest — 30,000 Stockholders' equity: Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding — — Common stock, $0.01 par value: 400,000 shares authorized; 185,460 and 154,112 shares outstanding, respectively 1,855 1,541 Capital in excess of par value 18,549,871 1,211,206 Retained earnings 9,866,791 8,984,105 Treasury stock, at cost: 1,756 and 3,148 shares, respectively (572,091) (1,025,770) Accumulated other comprehensive income (loss) (231,895) (180,380) Total Synopsys stockholders' equity 27,614,531 8,990,702 Non-controlling interest (345) 2,504 Total stockholders' equity 27,614,186 8,993,206 Total liabilities, redeemable non-controlling interest and stockholders' equity $ 48,230,256 $ 13,073,561 (1) Synopsys' third quarter of fiscal year 2025 ended on July 31, 2025 and its fiscal year 2024 ended on November 2, 2024, respectively. For presentation purposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter. SYNOPSYS, INC. Unaudited Condensed Consolidated Statements of Cash Flows (1) (in thousands) Nine Months Ended July 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 884,798 $ 1,140,190 Adjustments to reconcile net income to net cash provided by operating activities: Amortization and depreciation 211,307 180,149 Reduction of operating lease right-of-use assets 80,789 72,196 Amortization of capitalized costs to obtain revenue contracts 38,920 57,071 Stock-based compensation 655,909 540,026 Allowance for credit losses 23,559 14,696 (Gain) loss on sale of strategic investments 3,635 (55,077) Gain on sale of building (51,385) — Loss on divestitures, net of transaction costs 8,299 — Amortization of bridge financing costs 41,996 18,435 Amortization of debt issuance costs 6,790 — Deferred income taxes (326,610) (276,840) Other (737) (3,730) Net changes in operating assets and liabilities, net of effects from acquisitions and dispositions: Accounts receivable (27,989) 59,159 Inventories (34,068) (71,303) Prepaid and other current assets 120,348 (350,652) Other long-term assets (427,793) (137,159) Accounts payable and accrued liabilities 31,384 17,532 Operating lease liabilities (78,360) (72,254) Income taxes (140,347) (241,952) Deferred revenue (19,932) (46,276) Unrealized loss on settlement of interest rate treasury lock (121,643) — Net cash provided by operating activities 878,870 844,211 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of short-term investments 53,630 98,265 Proceeds from sales of short-term investments 148,809 200 Purchases of short-term investments (47,558) (97,181) Proceeds from sales of strategic investments 3,470 55,696 Purchases of strategic investments (4,086) (1,240) Purchases of property and equipment, net (134,908) (118,772) Proceeds from sale of building 74,279 — Acquisitions, net of cash acquired (16,681,257) (156,947) Proceeds from business divestiture, net of cash divested 142,546 — Other (611) — Net cash used in investing activities (16,445,686) (219,979) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt, net of issuance costs 14,329,340 — Repayment of debt (2,579) (2,607) Payment of bridge financing and term loan costs — (72,265) Issuances of common stock 138,101 143,148 Payments for taxes related to net share settlement of equity awards (242,791) (278,571) Redemption of redeemable non-controlling interest (30,000) — Other (463) (1,096) Net cash provided by (used in) financing activities 14,191,608 (211,391) Effect of exchange rate changes on cash, cash equivalents and restricted cash 8,649 5,458 Net change in cash, cash equivalents and restricted cash (1,366,559) 418,299 Cash, cash equivalents and restricted cash, beginning of year, including cash from discontinued operations 3,898,729 1,441,187 Cash, cash equivalents and restricted cash, end of period, including cash from discontinued operations 2,532,170 1,859,486 Less: Cash, cash equivalents and restricted cash from discontinued operations — 17,441 Cash, cash equivalents and restricted cash from continuing operations $ 2,532,170 $ 1,842,045 (1) Synopsys' third quarter of fiscal year 2025 and 2024 ended on July 31, 2025 and August 3, 2024, respectively. For presentation purposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter. Synopsys provides segment information, namely revenue, adjusted segment operating income and adjusted segment operating margin, in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting. Synopsys' chief operating decision maker ("CODM") is our Chief Executive Officer. In evaluating our business segments, the CODM considers the income and expenses that the CODM believes are directly related to those segments. The CODM does not allocate certain operating expenses managed at a consolidated level to our business segments and, as a result, the reported operating income and operating margin do not include these unallocated expenses as shown in the table below. These unallocated expenses are presented in the table below to provide a reconciliation of the total adjusted operating income from segments to our consolidated operating income from continuing operations: SYNOPSYS, INC. Business Segment Reporting (1)(2) (in millions) Three Months Ended July 31, 2025 Three Months Ended July 31, 2024 Nine Months Ended July 31, 2025 Nine Months Ended July 31, 2024 Revenue by segment - Design Automation $ 1,312.1 $ 1,062.6 $ 3,454.6 $ 3,103.0 % of Total 75.4 % 69.6 % 72.0 % 69.1 % - Design IP $ 427.6 $ 463.1 $ 1,344.7 $ 1,388.5 % of Total 24.6 % 30.4 % 28.0 % 30.9 % Adjusted operating income by segment - Design Automation $ 583.8 $ 440.9 $ 1,447.2 $ 1,218.6 - Design IP $ 86.0 $ 169.7 $ 363.1 $ 540.2 Adjusted operating margin by segment - Design Automation 44.5 % 41.5 % 41.9 % 39.3 % - Design IP 20.1 % 36.7 % 27.0 % 38.9 % Total Adjusted Segment Operating Income Reconciliation (1)(2) (in millions) Three Months Ended July 31, 2025 Three Months Ended July 31, 2024 Nine Months Ended July 31, 2025 Nine Months Ended July 31, 2024 GAAP total operating income – as reported $ 165.3 $ 360.2 $ 793.5 $ 1,044.9 Other expenses managed at consolidated level -Amortization of acquired intangible assets (3) 74.9 18.6 99.2 53.3 -Stock-based compensation (3) 267.7 164.4 655.9 492.6 -Non-qualified deferred compensation plan 43.4 25.8 42.9 76.3 -Acquisition/divestiture related items (4) 118.4 41.7 218.7 91.8 Total adjusted segment operating income $ 669.8 $ 610.6 $ 1,810.3 $ 1,758.8 (1) Synopsys manages the business on a long-term, annual basis, and considers quarterly fluctuations of revenue and profitability as normal elements of our business. Amounts may not foot due to rounding. (2) Synopsys' third quarter of fiscal year 2025 and 2024 ended on July 31, 2025 and August 3, 2024, respectively. For presentation purposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter. (3) The adjustment includes non-GAAP expenses attributable to non-controlling interest and redeemable non-controlling interest. (4) The adjustment excludes the amortization of bridge financing costs entered into in connection with the Ansys Merger that was recorded in interest expense, and certain divestiture related items that were recorded in other income (expense), net in our unaudited condensed consolidated statements of income. GAAP to Non-GAAP ReconciliationSynopsys continues to provide all information required in accordance with GAAP but acknowledges evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, Synopsys presents non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Synopsys' operating results in a manner that focuses on what Synopsys believes to be its core business operations and what Synopsys uses to evaluate its business operations and for internal budgeting and resource allocation purposes. This press release includes non-GAAP earnings per diluted share, non-GAAP net income and non-GAAP tax rate for the periods presented. It also includes future estimates for non-GAAP expenses, non-GAAP interest and other income (expense), non-GAAP tax rate, non-GAAP earnings per diluted share and free cash flow. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.When possible, Synopsys provides a reconciliation of non-GAAP financial measures to their most closely applicable GAAP financial measures. Synopsys is unable to provide a full reconciliation of certain fourth quarter and full fiscal year 2025 non-GAAP financial targets to the corresponding GAAP financial measures on a forward-looking basis because Synopsys believes that it would not be possible for it to have the required information necessary to quantitatively reconcile such measures with sufficient precision without unreasonable efforts due to, among other things, the potential variability and limited predictability of the excluded adjustment items necessary for a full reconciliation such as certain acquisition/divestiture related items, restructuring charges, tax deduction variability, changes in the fair value of non-qualified deferred compensation plan, and gains (losses) on the sale of strategic investments. For the same reasons, Synopsys is unable to address the probable significance of the unavailable information. Synopsys' management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, as superior to, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, the corresponding GAAP financial measures. Synopsys' management believes presentation of non-GAAP financial measures, when shown in conjunction with the corresponding GAAP financial measures, provides useful information to investors allowing them to view financial and business trends relating to our financial condition and results of operations through the eyes of management. Synopsys' management evaluates and makes decisions about our business operations using both GAAP financial measures and non-GAAP financial measures to help facilitate internal comparisons to Synopsys' historical operating results and forecasted targets, planning and forecasting in subsequent periods and comparisons to competitors' operating results.The following are descriptions of the adjustments made to reconcile non-GAAP financial measures (other than free cash flow, which is defined in the footnote to the Financial Targets table above) to the most directly comparable GAAP financial measures:(i) Amortization of acquired intangible assets. We incur expenses from amortization of acquired intangible assets, which may include impairment charges from write-downs of acquired intangible assets. Acquired intangible assets include, among other things, core/developed technology, customer relationships, contract rights, trademarks and trade names, and other intangibles related to acquisitions. We amortize the intangible assets over their estimated useful lives. We do not enter into acquisitions on a predictable cycle. The amount of an acquisition's purchase price allocated to intangible assets and their estimated useful lives can vary significantly and are unique to each acquisition. From time to time, we incur impairment charges due to write-downs of acquired intangible assets. We believe that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets, including impairment charges, provides investors and others with a consistent basis for comparison across accounting periods. We also exclude this item because such expenses are non-cash in nature and we believe the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding our core operational performance and liquidity, and ability to invest in research and development and fund future acquisitions and capital expenditures.(ii) Stock-based compensation. Stock-based compensation expenses consist primarily of expenses related to restricted stock units, stock options, employee stock purchase rights and other stock awards, including such expenses associated with acquisitions. We exclude stock-based compensation expense from our non-GAAP financial measures primarily because it is not an expense that typically requires or will require cash settlement by us. Further, the expense for the fair value of the stock-based instruments we utilize may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards and, therefore, is not used by management to assess the core profitability of our business operations.(iii) Acquisition/divestiture related items. In connection with certain of our business combinations and/or divestitures, we incur significant expenses that we would not have otherwise incurred as part of our business operations. These expenses include, among other things, compensation expenses, professional fees and other direct expenses, concurrent restructuring activities and divestiture activities, including employee severance and other exit costs, bridge financing costs, costs related to integration activities, debt forgiveness, changes to the fair value of contingent consideration related to the acquired company, and amortization of the fair value difference of below-market value assets arising from arrangements entered into or acquired in conjunction with an acquisition. We also recognize the gains and losses from the mark-up of equity or cost method investments to fair value upon obtaining control through acquisition. We exclude these items because they are related to acquisitions and divestitures and have no direct correlation to the core operation of our business. Further, because we do not acquire or divest businesses on a predictable cycle and the terms of each transaction can vary significantly and are unique to each transaction, we believe it is useful to exclude such expenses when looking for a consistent basis for comparison across accounting periods.(iv) Restructuring charges. We initiate restructuring activities to align our costs to our operating plans and business strategies based on then-current economic conditions, and such activities have a specific and defined term. Restructuring costs generally include severance and other termination benefits related to voluntary retirement programs, involuntary headcount reductions and facilities closures. Such restructuring costs include elimination of operational redundancy, permanent reductions in workforce and facilities closures and, therefore, are not considered by us to be a part of the core operation of our business and are not used by management when assessing the core profitability and performance of our business operations.(v) Gains (losses) on the sale of strategic investments. We exclude gains and losses on the sale of equity investments in privately held companies because we do not believe they are reflective of our core business and operating results.(vi) Deferred compensation. We exclude changes in the fair value of our non-qualified deferred compensation plan because we do not use these to assess the core profitability of our business operations.(vii) Income tax effect of non-GAAP pre-tax adjustments. Excluding the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes assists investors in understanding the tax provision associated with those adjustments and the effect on net income. We utilize an annual non-GAAP tax rate in calculating non-GAAP financial measures to provide better consistency across interim reporting periods by eliminating the effects of certain non-recurring and other period-specific items, which can vary in size and frequency and do not necessarily reflect our normal operations, and to more closely align our tax rate with our expected geographic earnings mix. This annual non-GAAP tax rate is based on an evaluation of our historical and projected mix of U.S. and international profit before tax, taking into account the impact of non-GAAP adjustments, U.S. tax law changes, as well as other factors such as our current tax structure, existing tax positions and expected recurring tax incentives. Based on these considerations, we have elected to adopt a non-GAAP tax rate of 16% for fiscal year 2025.About SynopsysSynopsys, Inc. (Nasdaq: SNPS) is the leader in engineering solutions from silicon to systems, enabling customers to rapidly innovate AI-powered products. We deliver industry-leading silicon design, IP, simulation and analysis solutions, and design services. We partner closely with our customers across a wide range of industries to maximize their R&D capability and productivity, powering innovation today that ignites the ingenuity of tomorrow. Learn more at www.synopsys.com. © 2025 Synopsys, Inc. All rights reserved. Synopsys, the Synopsys logo and other Synopsys trademarks are available at https://www.synopsys.com/company/legal/trademarks-brands.html. Other company or product names may be trademarks of their respective owners. INVESTOR CONTACT:Tushar JainSynopsys, Inc.650-584-4289[email protected]EDITORIAL CONTACT:Cara WalkerSynopsys, Inc.650-584-5000[email protected]SOURCE Synopsys, Inc. WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025

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