Synopsys, Inc. Net Income surged on 24.8% and Revenue increased on 9.7%
12/02/2020 • About Synopsys, Inc. (
$SNPS) • By InTwits
Synopsys, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Synopsys, Inc. is a growth stock: FY2020 revenue growth was 9.7%, 5 year revenue CAGR was 10.4% at FY2020 ROIC 12.7%
- Synopsys, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: $155m in FY2020, $198m in FY2019, $99m in FY2018, $70m in FY2017, $67m in FY2016
- The company has highly profitable business model: ROIC is 12.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 9.7%. Revenue growth showed acceleration in FY20Q4 - it increased 20.5% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 3.3 pp from 23.7% to 27.0% in FY2020. During the last 5 years EBITDA Margin bottomed in FY2018 at 18.2% and was growing since that time.
Gross Margin increased slightly on 0.84 pp from 77.6% to 78.4% in FY2020. During FY2016-FY2020 Gross Margin bottomed in FY2017 at 76.0% and was growing since that time. SG&A as a % of Revenue decreased slightly on 0.78 pp from 25.7% to 24.9% in FY2020.
Net Income margin increased on 2.2 pp from 15.8% to 18.0% in FY2020. During FY2016-FY2020 Net Income margin bottomed in FY2017 at 5.0% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 4.2%. Synopsys, Inc. showed small growth in CAPEX/Revenue of 1.6 pp from 2.6% in FY2017 to 4.2% in FY2020. It's average level of CAPEX/Revenue for the last three years was 4.4%.
Return on investment
The company operates at good ROIC (12.7%) and ROE (14.8%). ROIC showed almost no change in FY2020. ROE increased slightly on 0.70 pp from 14.1% to 14.8% in FY2020. ROIC grew at 0.92 pp per annum in the last 5 years. During the last 5 years ROE bottomed in FY2017 at 4.2% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.6x and Debt / EBITDA is 0.7x. Debt jumped on 382% while cash surged on 69.6%.
Synopsys, Inc. has no short term refinancing risk: cash is higher than short term debt (1,232.5%).
Valuation and dividends
The company's trades at EV/EBITDA 35.3x and P/E 53.3x.
Management team
The company's CEO Aart J De Geus has spent 8 years with the company. Trac Pham is a Synopsys, Inc.'s CFO. Trac Pham has spent 6 years at the company.
Financial and operational results
FY ended 10/31/2020
Synopsys, Inc. ($SNPS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,423 | 2,725 | 3,121 | 3,361 | 3,685 | 9.7% |
| Gross Profit | 1,880 | 2,071 | 2,385 | 2,608 | 2,891 | 10.8% |
| SG&A | 668 | 746 | 886 | 862 | 917 | 6.3% |
| EBITDA | 524 | 537 | 569 | 876 | 985 | 12.4% |
| EBIT | 317 | 348 | 360 | | | |
| Interest expence | 4 | 7 | 16 | | | |
| Tax | 63 | 247 | -69 | | | |
| Net Income | 267 | 137 | 433 | 532 | 664 | 24.8% |
| Stock Based Compensation | 98 | 108 | 140 | | | |
Balance Sheet
|
|---|
| Cash | 977 | 1,048 | 723 | 729 | 1,236 | 69.6% |
| Accounts Receivable | 439 | 451 | 554 | | | |
| Inventory | | 62 | 122 | | | |
| Short Term Debt | 205 | 10 | 344 | 18 | 100 | 469.2% |
| Long Term Debt | 0 | 134 | 126 | 120 | 563 | 369.0% |
Cash flow
|
|---|
| Capex | 67 | 70 | 99 | 198 | 155 | -21.9% |
Ratios
|
|---|
| Revenue growth | 8.0% | 12.5% | 14.5% | 7.7% | 9.7% | |
| EBITDA growth | 9.6% | 2.4% | 6.0% | 53.8% | 12.4% | |
|
|---|
| Gross Margin | 77.6% | 76.0% | 76.4% | 77.6% | 78.4% | 0.8% |
| EBITDA Margin | 21.6% | 19.7% | 18.2% | 26.1% | 26.7% | 0.7% |
| EBIT Margin | 13.1% | 12.8% | 11.5% | | |
| SG&A, % of revenue | 27.6% | 27.4% | 28.4% | 25.7% | 24.9% | -0.8% |
| SBC, % of revenue | 4.0% | 4.0% | 4.5% | | |
| Net Income Margin | 11.0% | 5.0% | 13.9% | 15.8% | 18.0% | 2.2% |
| CAPEX, % of revenue | 2.8% | 2.6% | 3.2% | 5.9% | 4.2% | -1.7% |
|
|---|
| ROIC | 9.4% | 10.1% | 9.7% | 12.6% | 12.7% | 0.1% |
| ROE | 8.4% | 4.2% | 12.8% | 14.1% | 14.8% | 0.7% |
| Net Debt/EBITDA | -1.5x | -1.7x | -0.4x | -0.7x | -0.6x | 0.1x |
| Interest expence / Average debt | 1.8% | 4.2% | 5.1% | | | |
People
|
|---|
| Insider ownership | 0.7% | 0.7% | 0.7% | | | |
| Employees | 10,669 | 11,686 | 13,245 | | | |
| Revenue/Employee, th. $ | 227 | 233 | 236 | | | |
Synopsys, Inc. ($SNPS) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 834 | 861 | 964 | 1,025 | | 1.7% | 3.0% | 13.0% | 20.5% |
| EBITDA | 177 | 217 | 305 | 287 | | -16.7% | 18.9% | 56.5% | 46.6% |
| Net Income | 104 | 110 | 253 | 197 | | -32.2% | -7.0% | 153.1% | 22.9% |
Balance Sheet
|
|---|
| Cash | 700 | 856 | 1,050 | 1,236 | | 18.2% | 35.7% | 52.9% | 69.6% |
| Short Term Debt | 277 | 194 | 96 | 100 | | -33.2% | 17.0% | 477.1% | 469.2% |
| Long Term Debt | 582 | 576 | 577 | 563 | | 357.5% | 357.0% | 360.8% | 369.0% |
Ratios
|
|---|
| Gross Margin | 76.9% | 78.6% | 80.0% | 78.1% | | 0.4% | 1.4% | 1.9% | -0.4% |
| EBITDA Margin | 21.2% | 25.1% | 31.6% | 28.0% | | -4.7% | 3.4% | 8.8% | 5.0% |
| Net Income Margin | 12.5% | 12.8% | 26.2% | 19.3% | | -6.2% | -1.4% | 14.5% | 0.4% |
Peers in Application Software
Below we provide Synopsys, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.5% | 14.7% |
|---|
| Synopsys, Inc. ($SNPS) | - | 12.5% | 14.5% | 7.7% | 9.7% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| Synopsys, Inc. ($SNPS) | 77.6% | 76.0% | 76.4% | 77.6% | 78.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -4.2% | -3.3% | 2.7% | 6.8% |
|---|
| Synopsys, Inc. ($SNPS) | 21.6% | 19.7% | 18.2% | 26.1% | 26.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 3.0% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| Synopsys, Inc. ($SNPS) | 2.8% | 2.6% | 3.2% | 5.9% | 4.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.8% | -11.8% | -10.6% | -4.5% | -2.2% |
|---|
| Synopsys, Inc. ($SNPS) | 9.4% | 10.1% | 9.7% | 12.6% | 12.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.3x |
|---|
| Synopsys, Inc. ($SNPS) | -1.5x | -1.7x | -0.4x | -0.7x | -0.6x |
