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Synopsys (SNPS) Tops Q2 Earnings & Revenues, Guides Well
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Synopsys Inc. (SNPS - Free Report) reported second-quarter fiscal 2017 earnings per share (excluding all one-time items but including stock-based compensation expenses) of 75 cents, which were 10.3% higher than the year-ago quarter’s adjusted earnings of 68 cents. The Zacks Consensus Estimate is pegged at 56 cents.
On a Non-GAAP basis, the company’s earnings per share came in at 88 cents compared with 81 cents reported in the year-ago quarter.
On a GAAP basis, the company’s earnings per share came in at 34 cents compared with 45 cents reported in the year-ago quarter.
Quarter Details
Total revenue increased approximately 12.4% year over year to $680.1 million and exceeded the previously guided range of $665–$680 million. Reported revenues also surpassed the Zacks Consensus Estimate of $665 million. On a year-over-year basis, revenues were positively impacted by higher adoption of Synopsys’ products and strength in hardware products.
About 90% of the revenues came from backlog for the beginning of the quarter and the remaining 10% was contributed by one customer.
Segment wise, License revenues (including time-based and upfront) were $584.5 million, up nearly 7.8% from the year-ago quarter. Maintenance and service revenues increased 52.4% year over year to $95.5 million.
Adjusted gross profit (excluding all one-time items but including stock-based compensation expenses) was $537.7 million, up approximately 8% from the year-ago period. However, as a percentage of revenues, it contracted 320 basis points (bps) from the year-ago quarter to 79.1%.
Adjusted operating expenses increased 7.2% on a year-over-year basis to $403.9 million, primarily due to higher employee compensation expenses, research and development expenses and sales and marketing. As a percentage of revenues, the same decreased 290 bps from the year-ago quarter to 59.4%.
Synopsys’ adjusted operating income (excluding all one-time items but including stock-based compensation expenses) was up 10.3% on a year-over-year basis and came in at $133.7 million. However, operating margin decreased 30 bps on a year-over-year basis to 19.7%.
The company’s adjusted net income (excluding all one-time items but including stock-based compensation expenses) for the quarter came in at $115.9 million, marking a year-over-year increase of 12.7%.
On a non-GAAP basis, Synopsys reported earnings of 135.8 million compared with 125.6 million reported in the year-ago quarter.
On a GAAP basis, net income was $53.3 million compared with $69.4 million in second-quarter fiscal 2016.
Balance Sheet & Cash Flow
Synopsys exited the quarter with cash, cash equivalents and short-term investments of $1.131 billion million compared with $966.3 million at the end of the previous quarter. Accounts receivables were $373.8 million compared with $331.9 million in the last quarter. During the quarter, cash flow from operational activities was $123 million. The company repurchased $100 million worth of its common stock during the quarter. The company has a remaining $235 million for its current authorization.
Guidance
Synopsys provided guidance for the third quarter and raised its fiscal 2017 outlook. The company now expects fiscal 2017 revenues to come in the range of $2.650–$2.670 billion (previous guidance $2.58–$2.61 billion). The Zacks Consensus Estimate for revenues is pegged at $2.608 billion.
Non-GAAP earnings per share are now projected between $3.24 and $3.29 (previously $3.21 and $3.26). GAAP earnings are projected between $1.84 per share and $1.97 per share. The company now projects cash from operations to be approximately $580 million to $600 million ($500 million to $520 million).
For the third quarter, the company expects revenues in the range of $685–$700 million (mid-point $692.5 million). The Zacks Consensus Estimate for revenues is pegged at $640 million. The company expects non-GAAP expenses within $517–$527 million. Management expects non-GAAP earnings per share in the range of 91–94 cents, while GAAP earnings are projected between 51 cents and 59 cents.
Our Take
Synopsys posted impressive second-quarter fiscal 2017 results. Revenues as well as earnings improved year over year, mainly due to strength in hardware products. Moreover, the company’s third-quarter and fiscal 2017 guidance was also encouraging.
Shares of the company have returned 50.6% in the last one year, outperforming the Zacks Computer-Software industry’s gain of just 32.3%.
Synopsys is a vendor of electronic design automation (EDA) software to the semiconductor and electronics industries. We believe the company’s recent product launches, acquisitions and deal wins will boost results, going ahead. Moreover, unique intellectual properties and global support provided by the company is likely to drive its forthcoming results. Additionally, the acquisition of Cigital and Codiscope will enable Synopsys to offer a comprehensive software security signoff solution to its customers.
However, competition from Cadence Design Systems Inc. (CDNS - Free Report) and Mentor Graphics Corp., a challenging technology spending environment and uncertainty regarding the exact time of realizing acquisition synergies keep us on the sidelines.
DXC and Alphabet have a long-term expected EPS growth rate of 8% and 16.7%, respectively.
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Synopsys (SNPS) Tops Q2 Earnings & Revenues, Guides Well
Synopsys Inc. (SNPS - Free Report) reported second-quarter fiscal 2017 earnings per share (excluding all one-time items but including stock-based compensation expenses) of 75 cents, which were 10.3% higher than the year-ago quarter’s adjusted earnings of 68 cents. The Zacks Consensus Estimate is pegged at 56 cents.
On a Non-GAAP basis, the company’s earnings per share came in at 88 cents compared with 81 cents reported in the year-ago quarter.
On a GAAP basis, the company’s earnings per share came in at 34 cents compared with 45 cents reported in the year-ago quarter.
Quarter Details
Total revenue increased approximately 12.4% year over year to $680.1 million and exceeded the previously guided range of $665–$680 million. Reported revenues also surpassed the Zacks Consensus Estimate of $665 million. On a year-over-year basis, revenues were positively impacted by higher adoption of Synopsys’ products and strength in hardware products.
About 90% of the revenues came from backlog for the beginning of the quarter and the remaining 10% was contributed by one customer.
Segment wise, License revenues (including time-based and upfront) were $584.5 million, up nearly 7.8% from the year-ago quarter. Maintenance and service revenues increased 52.4% year over year to $95.5 million.
Adjusted gross profit (excluding all one-time items but including stock-based compensation expenses) was $537.7 million, up approximately 8% from the year-ago period. However, as a percentage of revenues, it contracted 320 basis points (bps) from the year-ago quarter to 79.1%.
Adjusted operating expenses increased 7.2% on a year-over-year basis to $403.9 million, primarily due to higher employee compensation expenses, research and development expenses and sales and marketing. As a percentage of revenues, the same decreased 290 bps from the year-ago quarter to 59.4%.
Synopsys’ adjusted operating income (excluding all one-time items but including stock-based compensation expenses) was up 10.3% on a year-over-year basis and came in at $133.7 million. However, operating margin decreased 30 bps on a year-over-year basis to 19.7%.
The company’s adjusted net income (excluding all one-time items but including stock-based compensation expenses) for the quarter came in at $115.9 million, marking a year-over-year increase of 12.7%.
On a non-GAAP basis, Synopsys reported earnings of 135.8 million compared with 125.6 million reported in the year-ago quarter.
On a GAAP basis, net income was $53.3 million compared with $69.4 million in second-quarter fiscal 2016.
Balance Sheet & Cash Flow
Synopsys exited the quarter with cash, cash equivalents and short-term investments of $1.131 billion million compared with $966.3 million at the end of the previous quarter. Accounts receivables were $373.8 million compared with $331.9 million in the last quarter. During the quarter, cash flow from operational activities was $123 million. The company repurchased $100 million worth of its common stock during the quarter. The company has a remaining $235 million for its current authorization.
Guidance
Synopsys provided guidance for the third quarter and raised its fiscal 2017 outlook. The company now expects fiscal 2017 revenues to come in the range of $2.650–$2.670 billion (previous guidance $2.58–$2.61 billion). The Zacks Consensus Estimate for revenues is pegged at $2.608 billion.
Non-GAAP earnings per share are now projected between $3.24 and $3.29 (previously $3.21 and $3.26). GAAP earnings are projected between $1.84 per share and $1.97 per share. The company now projects cash from operations to be approximately $580 million to $600 million ($500 million to $520 million).
For the third quarter, the company expects revenues in the range of $685–$700 million (mid-point $692.5 million). The Zacks Consensus Estimate for revenues is pegged at $640 million. The company expects non-GAAP expenses within $517–$527 million. Management expects non-GAAP earnings per share in the range of 91–94 cents, while GAAP earnings are projected between 51 cents and 59 cents.
Our Take
Synopsys posted impressive second-quarter fiscal 2017 results. Revenues as well as earnings improved year over year, mainly due to strength in hardware products. Moreover, the company’s third-quarter and fiscal 2017 guidance was also encouraging.
Shares of the company have returned 50.6% in the last one year, outperforming the Zacks Computer-Software industry’s gain of just 32.3%.
Synopsys is a vendor of electronic design automation (EDA) software to the semiconductor and electronics industries. We believe the company’s recent product launches, acquisitions and deal wins will boost results, going ahead. Moreover, unique intellectual properties and global support provided by the company is likely to drive its forthcoming results. Additionally, the acquisition of Cigital and Codiscope will enable Synopsys to offer a comprehensive software security signoff solution to its customers.
However, competition from Cadence Design Systems Inc. (CDNS - Free Report) and Mentor Graphics Corp., a challenging technology spending environment and uncertainty regarding the exact time of realizing acquisition synergies keep us on the sidelines.
Currently, Synopsys has a Zacks Rank #3 (Hold). Few better-ranked stocks in the technology sector are DXC Technology Company. (DXC - Free Report) and Alphabet Inc. (GOOGL - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXC and Alphabet have a long-term expected EPS growth rate of 8% and 16.7%, respectively.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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