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Synopsys Inc (SNPS) Reports Strong Fiscal 2023 Results with Revenue and Earnings Growth

GuruFocus Research
·3 min read

  • Synopsys Inc (NASDAQ:SNPS) announces a 15% year-over-year revenue increase for fiscal year 2023.

  • GAAP net income for fiscal year 2023 reaches $1.230 billion, a significant rise from the previous year.

  • Non-GAAP net income per diluted share up 26% year-over-year, signaling strong profitability.

  • Company's outlook remains positive with double-digit revenue growth expected in the coming year.

On November 29, 2023, Synopsys Inc (NASDAQ:SNPS) released its 8-K filing, detailing the financial results for the fourth quarter and the full fiscal year of 2023. The company reported a robust performance with a 15% increase in annual revenue, reaching $5.843 billion, up from $5.082 billion in the previous fiscal year. The fourth quarter alone saw revenues of $1.599 billion, a substantial increase from $1.284 billion in the same quarter of the previous year.

Financial Highlights and Performance

GAAP net income for the fourth quarter stood at $349.2 million, or $2.26 per diluted share, which is a significant improvement from $153.5 million, or $0.99 per diluted share, in the fourth quarter of fiscal year 2022. For the entire fiscal year 2023, GAAP net income soared to $1.230 billion, or $7.92 per diluted share, up from $984.6 million, or $6.29 per diluted share, in fiscal year 2022.

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On a non-GAAP basis, the fourth quarter net income was $490.9 million, or $3.17 per diluted share, compared to $297.7 million, or $1.91 per diluted share, in the prior year's quarter. The full-year non-GAAP net income reached $1.737 billion, or $11.19 per diluted share, marking a 26% increase from $1.393 billion, or $8.90 per diluted share, in fiscal year 2022.

Management Commentary

"Despite global macroeconomic uncertainty, 2023 was a year of record revenue and profitability for Synopsys as silicon R&D and design-starts remain robust," said Sassine Ghazi, president and COO of Synopsys. "We start 2024 with tremendous forward momentum driven by a resilient business model, technology trends chief among them AI that create a rising tide for our business, and customers who continue to prioritize investments in the chips and systems that position them for the future."

"We had strong execution and outperformed our guidance in the fourth quarter, which capped a record financial year for Synopsys," added Synopsys CFO, Shelagh Glaser. "We are confident in our outlook for continued, double-digit revenue growth in the year ahead based on our technology leadership, strong customer momentum and the resiliency of our time-based business model."

Segment Performance and Future Outlook

Synopsys operates through three segments: Design Automation, Design IP, and Software Integrity. The company has provided financial targets for the first quarter and full fiscal year 2024, which include an extra week in the first quarter. These targets are based on current expectations and do not account for further changes to export control restrictions or the U.S. government "Entity List" restrictions.

For the first quarter of fiscal year 2024, revenue is targeted between $1.630 billion and $1.660 billion, with GAAP EPS ranging from $2.40 to $2.50 and non-GAAP EPS between $3.40 and $3.45. The full fiscal year 2024 targets project revenue between $6.570 billion and $6.630 billion, with GAAP EPS expected to be between $9.07 and $9.25 and non-GAAP EPS between $13.33 and $13.41. Operating cash flow is anticipated to be approximately $1.400 billion.

The company's financial statements for fiscal year 2023 will be included in its annual report on Form 10-K to be filed on or before December 27, 2023. Synopsys remains a leading partner for companies developing electronic products and software applications, with a broad portfolio in electronic design automation (EDA), semiconductor IP, and application security testing tools and services.

Investors and analysts are encouraged to review the full financial details and reconciliations of GAAP to non-GAAP financial measures in the provided 8-K filing.

Explore the complete 8-K earnings release (here) from Synopsys Inc for further details.

This article first appeared on GuruFocus.