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What changed in Synopsys's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Synopsys's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+438 added−431 removedSource: 10-K (2025-12-22) vs 10-K (2024-12-19)

Top changes in Synopsys's 2025 10-K

438 paragraphs added · 431 removed · 305 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

71 edited+37 added−22 removed31 unchanged
Biggest changeInformation about our Executive Officers The executive officers of Synopsys and their ages as of December 18, 2024 were as follows: Name Age Position Sassine Ghazi 54 President and Chief Executive Officer Aart J. de Geus 70 Executive Chair of the Board of Directors Shelagh Glaser 60 Chief Financial Officer Richard Mahoney 62 Chief Revenue Officer John F.
Biggest changeRegions and business teams also customize development programs for their specific demographics. 13 Table of Contents Information about our Executive Officers The executive officers of Synopsys and their ages as of December 19, 2025 were as follows: Name Age Position Sassine Ghazi 55 President and Chief Executive Officer Aart J. de Geus 71 Executive Chair of the Board of Directors Shelagh Glaser 61 Chief Financial Officer Mike Ellow 62 Chief Revenue Officer Janet Lee 62 General Counsel and Corporate Secretary Sassine Ghazi has served as our Chief Executive Officer since January 2024, became our President in November 2021 and joined our Board of Directors in August 2023.
Manufacturing Our manufacturing solutions include Synopsys technology computer-aided design (TCAD), mask synthesis and manufacturing analytics. Synopsys TCAD enables computer-aided simulations to develop and optimize semiconductor process technologies. We also offer Proteus TM Mask Synthesis tools, CATS ® mask data preparation software, Yield Explorer Odyssey, Yield-Manager ® yield management solutions and QuantumATK TM atomic-scale modeling software.
Manufacturing Our manufacturing solutions include Synopsys technology computer-aided design (TCAD), mask synthesis and manufacturing analytics. Synopsys TCAD enables computer-aided simulations to develop and optimize semiconductor process technologies. We also offer Proteus TM mask synthesis tools, CATS ® mask data preparation software, Yield Explorer Odyssey, Yield-Manager ® yield management solutions and QuantumATK ® atomic-scale modeling software.
The individual products and solutions included in the Verification Family include the following: • VC SpyGlass TM family of static verification technologies including lint, CDC (clock domain crossing), RDC (reset domain crossing), Constraint Checking, Synopsys TestMAX Advisor , and low-power analysis and verification; • VCS ® functional verification solution, our comprehensive RTL and gate-level simulation technology, including Fine-Grained Parallelism; • Verdi ® , our next generation platform that provides AI-based SoC debug solution with an integrated development environment and advanced verification management capabilities system; 5 Table of Contents • VC Formal TM , which leverages ML-based techniques to verify complex SoC designs, find deep corner-case design bugs, and enables formal signoff for control and datapath blocks; • ZeBu ® emulation systems, which use high-performance hardware to emulate SoC designs so that designers can accelerate hardware, software and power verification of large complex SoCs and perform earlier verification and optimization of the SoC together with software; • HAPS ® FPGA-based prototyping systems, which are integrated and scalable hardware-software solutions for early software development, hardware verification and system validation of IP blocks to processor subsystems to complete SoCs, including the use of at-speed interfaces, for better performance, higher quality and faster time to market; • Virtualizer TM virtual prototyping solution, which addresses the increasing development challenges associated with software-rich semiconductor and electronic products by accelerating both the development and deployment of virtual prototypes; • Platform Architect TM solution, which provides for early analysis and optimization of multi-core SoC architectures for performance and power; and • Other principal individual verification solutions, including the PrimeSim solution and the PrimeWave design environment.
The individual products and solutions included in the Verification Family include the following: • VC SpyGlass TM family of static verification technologies including lint, CDC (clock domain crossing), RDC (reset domain crossing), Constraint Checking, Synopsys TestMAX Advisor , and low-power analysis and verification; • VCS ® functional verification solution, our comprehensive RTL and gate-level simulation technology, including Fine-Grained Parallelism; • Verdi ® , our next generation platform that provides AI-based SoC debug solution with an integrated development environment and advanced verification management capabilities system; • VC Formal TM , which leverages ML-based techniques to verify complex SoC designs, find deep corner-case design bugs, and enables formal signoff for control and datapath blocks; • ZeBu ® emulation systems, which use high-performance hardware to emulate SoC designs so that designers can accelerate hardware, software and power verification of large complex SoCs and perform earlier verification and optimization of the SoC together with software; • HAPS ® FPGA-based prototyping systems, which are integrated and scalable hardware-software solutions for early software development, hardware verification and system validation of IP blocks to processor subsystems to complete SoCs, including the use of at-speed interfaces, for better performance, higher quality and faster time to market; • Virtualizer TM virtual prototyping solution, which addresses the increasing development challenges associated with software-rich semiconductor and electronic products by accelerating both the development and deployment of virtual prototypes; • Platform Architect TM solution, which provides for early analysis and optimization of multi-core SoC architectures for performance and power; and • Other principal individual verification solutions, including the PrimeSim solution and the PrimeWave design environment.
Standards in the electronic design industry can be established by formal accredited organizations, industry consortia, intercompany licensing , de facto usage, or through open-source licensing. Our products support multiple Application Programming Interfaces (APIs) including numerous commonly used frameworks and data and file formats.
Standards in the electronic design and simulation industry can be established by formal accredited organizations, industry consortia, intercompany licensing, de facto usage, or through open-source licensing. Our products support multiple Application Programming Interfaces (APIs) including numerous commonly used frameworks and data and file formats.
Customer Service and Technical Support A high level of customer service and support is critical to the adoption and successful use of our products. We provide technical support for our products through application engineering teams. Post-contract customer support includes providing frequent updates to maintain the utilization of the software due to rapid changes in technology.
Customer Service and Technical Support A high level of customer service, support and training is critical to the adoption and successful use of our products. We provide technical support for our products through application engineering teams. Post-contract customer support includes providing frequent updates to maintain the utilization of the software due to rapid changes in technology.
Our IP products offer proven, high-quality pre-configured circuits that are ready to use in a chip design, saving customers time and enabling them to direct resources to features that differentiate their products. Our global service and support engineers provide expert technical support and design assistance to our customers.
Our silicon IP products offer proven, high-quality pre-configured circuits that are ready to use in a chip design, saving customers time and enabling them to direct resources to features that differentiate their products. Our global service and support engineers provide expert technical support and design assistance to our customers.
Products and Services Design Automation Segment Our Design Automation segment includes the EDA and Other revenue groups. EDA Designing ICs involves many complex steps, including, among others architecture definition, register transfer level (RTL) design, functional/RTL verification, logic design or synthesis, gate-level verification, floorplanning, place and route, and physical verification.
Products and Services Design Automation Segment Our Design Automation segment includes the EDA, Ansys and Other revenue groups. EDA Designing ICs involves many complex steps, including, among others architecture definition, register transfer level (RTL) design, functional/RTL verification, logic design or synthesis, gate-level verification, floorplanning, place and route, and physical verification.
We are a global leader in supplying the mission-critical EDA software that engineers use to design and test integrated circuits (ICs), also known as chips or silicon, and we are pioneering artificial intelligence (AI) driven chip design across the full-stack EDA suite to improve efficiency and accelerate the design, verification testing and manufacturing of advanced digital and analog chips.
We are a global leader in supplying the mission-critical EDA solutions that engineers use to design and test integrated circuits (ICs), also known as chips or silicon, and we are pioneering artificial intelligence (AI) driven chip design across the full-stack EDA suite to improve efficiency and accelerate the design, verification testing and manufacturing of advanced digital and analog chips.
Proprietary Rights We primarily rely upon a combination of copyright, patent, trademark, and trade secret laws and license and non-disclosure agreements to establish and protect our proprietary rights. We have a diversified portfolio of more than 3,400 United States and foreign patents issued, and we will continue to pursue additional patents in the future.
Proprietary Rights We primarily rely upon a combination of copyright, patent, trademark, and trade secret laws and license and non-disclosure agreements to establish and protect our proprietary rights. We have a diversified portfolio of more than 3,800 United States and foreign patents issued, and we will continue to pursue additional patents in the future.
Our wide range of products help at different steps in the overall design process, from the design of individual ICs to the design of larger systems. Our products increase designer productivity and efficiency by automating tasks, keeping track of large amounts of data, adding intelligence to the design process, facilitating reuse of past designs and reducing errors.
Our wide range of products help at different steps in the overall design process, from the design of individual ICs to the design and simulation of larger systems. Our EDA products increase designer productivity and efficiency by automating tasks, keeping track of large amounts of data, adding intelligence to the design process, facilitating reuse of past designs and reducing errors.
Chip and systems designers must determine how best to design, locate and connect the building blocks of chips, and to verify that the resulting design behaves as intended and can be manufactured efficiently and cost-effectively. This is a complex, multi-step process that is expensive and time-consuming.
Chip and systems designers must determine how best to design, locate and connect the building blocks of intelligent systems, and to verify that the resulting design behaves as intended and can be manufactured efficiently and cost-effectively. This is a complex, multi-step process that is expensive and time-consuming.
The majority of licenses to our EDA products are network licenses that allow a number of individual users to access the software on a defined network, including, in some cases, regional or global networks. License fees depend on the type of license, product mix, and number of copies of each product licensed.
The majority of licenses to our EDA products and Ansys semiconductor products are network licenses that allow a number of individual users to access the software on a defined network, including, in some cases, regional or global networks. License fees depend on the type of license, product mix, and number of copies of each product licensed.
Our Role—As the Silicon to Systems Design Solutions Partner Synopsys' silicon to systems design solutions are designed to help our customers — chip and system engineers and software developers — speed up time to market, achieve the highest quality of results, mitigate risk, and maximize profitability.
Our Role—As the Silicon to Systems Engineering Solutions Partner Synopsys' silicon to systems engineering solutions are designed to help our customers — chip and system engineers and software developers — speed up time to market, achieve the highest quality of results, mitigate risk, and maximize profitability.
Our IP Accelerated initiative augments our established, broad portfolio of silicon-proven Synopsys IP with SoC architecture design support, customized IP subsystems, signal/power integrity analysis and IP hardening to accelerate the product development cycle.
Our IP Accelerated initiative augments our established, broad portfolio of silicon-proven Synopsys IP with SoC architecture design support, customized IP subsystems, signal/power integrity analysis and IP hardening to accelerate our customer’s product development cycle.
The most complex chips today contain more than a billion transistors. Transistors are the basic building blocks for ICs, each of which may have features that are less than 1/1,000th the diameter of a human hair. These devices are manufactured using masks to direct beams of light onto a wafer of silicon.
The most complex chips today contain more 3 Table of Contents than a billion transistors. Transistors are the basic building blocks for ICs, each of which may have features that are less than 1/1,000th the diameter of a human hair. These devices are manufactured using masks to direct beams of light onto a wafer of silicon.
By providing consistent compile, runtime and debug environments across the flow of verification tasks and by enabling seamless transitions across functions, the platform helps our customers accelerate chip verification, bring up software earlier, and get to market sooner with advanced SoCs.
By providing consistent compile, runtime and debug environments across the flow of verification tasks and by enabling seamless transitions across functions, the 5 Table of Contents platform helps our customers accelerate chip verification, bring up software earlier, and get to market sooner with advanced SoCs.
Environmental, Social and Governance Matters At Synopsys, we recognize that as we drive innovation and business success in the era of pervasive intelligence, we are simultaneously responsible for the sustainability of our operations, products, and ecosystem, which may impact our long-term value as a company.
Responsible Business Matters At Synopsys, we recognize that as we drive innovation and business success in the era of pervasive intelligence, we are simultaneously responsible for the sustainability of our operations, products and ecosystem, which may impact our long-term value as a company.
We also offer a broad and comprehensive portfolio of semiconductor IP solutions, which are pre-designed circuits that engineers use as components of larger chip designs to reduce integration risk and speed time to market. Our high quality, silicon-proven semiconductor IP includes logic libraries, embedded memories, analog IP, wired and wireless interface IP, security IP, embedded processors and subsystems.
We also offer a broad and comprehensive portfolio of semiconductor IP solutions, which are pre-designed circuits that engineers use as components of larger chip designs to reduce development risk and speed time to market. Our high quality, silicon-proven semiconductor IP includes logic libraries, embedded memories, wired interface IP, memory interface IP, security IP, and embedded processors.
Synopsys.ai offers industry leading AI-driven workflow optimization and data analytics solutions along with breakthrough generative AI capabilities, allowing engineers to accelerate and automate chip design and improve efficiency throughout the entire EDA flow.
Synopsys.ai offers industry leading AI-driven workflow optimization and data analytics solutions along with Synopsys.ai Copilot generative AI assistive and creatives capabilities, allowing engineers to accelerate and automate chip design and improve efficiency throughout the entire EDA flow.
To accelerate IP integration and silicon bring-up, our IP Accelerated initiative provides architecture design expertise, hardening, and signal and power integrity analysis. These products and services are part of our Design IP segment. Corporate Information Our headquarters are located at 675 Almanor Avenue, Sunnyvale, California 94085, and our headquarters’ telephone number is (650) 584-5000. Our website is https://www.synopsys.com/.
To accelerate IP integration and silicon bring-up, our IP Accelerated initiative provides architecture design expertise, customized IP subsystems, hardening, and signal and power integrity analysis. These products and services are part of our Design IP segment. Corporate Information Our headquarters are located at 675 Almanor Avenue, Sunnyvale, California 94085, and our headquarters’ telephone number is (650) 584-5000.
Our broad Synopsys IP portfolio includes: • High-quality solutions for widely used interfaces such as UCIe, USB, PCI Express, DDR, Ethernet, MIPI and HDMI; • Logic libraries and embedded memories, including memory compilers, non-volatile memory, and standard cells with integrated test and repair; • Processor solutions, including configurable ARC ® processors, Neural Network processors, Digital Signal Processor cores, and software and application-specific instruction-set processor tools for embedded applications; • Security IP solutions, including cryptographic cores and software, security subsystems, platform security and secured interface IP; • An industry-leading IP offering for the automotive market, optimized for strict functional safety, reliability and cybersecurity standards such as ISO 26262 and ISO 21434; and • SoC infrastructure IP, datapath and building block IP, mathematical and floating-point components, Arm ® AMBA ® interconnect fabric and peripherals, and verification IP.
Our broad Synopsys IP portfolio includes: • Pre-verified and silicon-proven IP solutions for widely used and emerging interfaces such as UCIe, UALink, HBM, CXL, USB, PCI Express, DDR/LPDDR, Ethernet, Ultra Ethernet, MIPI and HDMI; • Logic libraries and embedded memories, including memory compilers, non-volatile memory, and standard cells with integrated test and repair; • Processor solutions, including configurable ARC ® processors, Neural Network processors, Digital Signal Processor cores, and software and application-specific instruction-set processor tools for embedded applications; • Security IP solutions, including cryptographic cores and software, security subsystems, platform security and secured interface IP; • Industry-leading IP offerings for the automotive market, optimized for strict functional safety, reliability and cybersecurity standards such as ISO 26262 and ISO 21434; and • SoC infrastructure IP, datapath and building block IP, mathematical and floating-point components, Arm ® AMBA ® interconnect fabric and peripherals, and verification IP.
The platform gives designers the flexibility to integrate internally developed tools as well as those from third parties. With innovative technologies, a common foundation, and flexibility, our Digital Design Family helps reduce design times, decrease uncertainties in design steps, and minimize the risks inherent in advanced, complex IC design.
The platform gives designers the flexibility to integrate internally developed tools as well as those from third parties. With innovative technologies, a common foundation, and flexibility, our Digital Design Family helps reduce design times, decrease uncertainties in design steps, and minimize the risks inherent in advanced, complex IC design. The platform supports advanced nodes with collaborations on next-generation process technologies.
We focus on several human capital measures and objectives, including recruitment and retention; inclusion and belonging; total rewards; employee health, safety, and wellbeing; employee engagement; and talent development and succession planning. Risks related to our human capital are described in Part I, Item 1A, Risk Factors of this Annual Report.
We focus on several human capital measures and objectives, including recruitment and retention; opportunity and community; total rewards; employee health, safety, and well-being; employee engagement; and talent development and succession planning. Risks related to our human capital are described in Part I, Item 1A, Risk Factors of this Annual Report.
Our solutions comprehensively address the design process, featuring a large number of EDA products that generally fall into the following categories: • Digital and custom IC design tools are used for designing and verifying complex chips, and for designing the advanced processes and models required to manufacture those chips; • Field programmable gate array (FPGA) design, which accelerate time-to-shipping hardware with deep debug visibility, incremental design, broad language support, and optimal performance and area for FPGA-based products. • Verification, which includes technology to verify that an IC design behaves as intended; • Manufacturing, which includes products that both enable early manufacturing process development and convert IC design layouts into the masks used to manufacture the chips; and • AI-driven EDA solutions, which include AI and machine learning capabilities to boost productivity and improve efficiency throughout the EDA flow. 4 Table of Contents Digital and Custom IC Design Our Digital Design Family provides customers with a comprehensive digital design implementation solution that includes industry-leading products and redefines conventional design tool boundaries to deliver a more integrated flow than ever before, with better quality and time to results.
Our solutions comprehensively address the design process, featuring a large number of EDA products that generally fall into the following categories: 4 Table of Contents • Digital and custom IC design tools are used for designing and verifying complex chips, and for designing the advanced processes and models required to manufacture those chips; • Field programmable gate array (FPGA) design, which accelerate time-to-shipping hardware with deep debug visibility, incremental design, broad language support, and optimal performance and area for FPGA-based products. • Verification, which includes technology to verify that an IC design behaves as intended; • Manufacturing, which includes products that both enable early manufacturing process development and convert IC design layouts into the masks used to manufacture the chips; and • AI-driven EDA solutions, which include AI and machine learning capabilities to boost productivity and improve efficiency throughout the EDA flow.
Ms. Glaser has served as a director and member of the Audit Committee at PubMatic, Inc. since June 2022. Ms. Glaser holds a B.A. in Economics from the University of Michigan and an M.B.A. in Finance from Carnegie Mellon University. Richard Mahoney has served as our Chief Revenue Officer since November 2022. Mr.
Ms. Glaser has served as a director and member of the Audit Committee at PubMatic, Inc. since June 2022. Ms. Glaser holds a B.A. in Economics from the University of Michigan and an M.B.A. in Finance from Carnegie Mellon University. Mike Ellow has served as our Chief Revenue Officer since November 2025. Prior to joining Synopsys, Mr.
Ghazi was a design engineer at Intel Corporation. Mr. Ghazi received his bachelor’s degree in Business Administration from Lebanese American University; a B.S.E.E from the Georgia Institute of Technology in 1993; and an M.S.E.E. from the University of Tennessee in 1995.
Ghazi received his bachelor’s degree in Business Administration from Lebanese American University; a B.S.E.E from the Georgia Institute of Technology in 1993; and an M.S.E.E. from the University of Tennessee in 1995.
Our offices are further described under Part I, Item 2, Properties of this Annual Report . Information relating to domestic and foreign operations, including revenue and long-lived assets by geographic area, is contained in Part II, Item 8, Financial Statements and Supplementary Data of this Annual Report.
Information relating to domestic and foreign operations, including revenue and long-lived assets by geographic area, is contained in Part II, Item 8, Financial Statements and Supplementary Data of this Annual Report.
We offer a broad portfolio of IP that has been optimized to address specific application requirements for the mobile, automotive, digital home, Internet of things and AI/data center markets, enabling designers to quickly develop SoCs in these areas .
This broad portfolio of IP has been optimized to address specific application requirements for the AI/data center, automotive, edge AI, digital home, Internet of things and mobile markets, enabling designers to quickly develop SoCs or multi-die designs in these areas .
Human Capital Resources Synopsys’ mission is to empower technology innovators everywhere, and we believe our people are the key to our success. Our People and Places Team, led by our Chief People Officer, focuses on building a workplace where our talent around the globe can enthusiastically be their authentic selves and bring their best to the workplace.
Human Capital Resources Synopsys’ mission is to empower innovators to drive human advancement, and we believe our people are the key to our success. Our People and Places team, led by our Chief People Officer, focuses on building a vibrant workplace culture where talent around the globe can learn, grow, and bring their best selves to work.
Design IP Products As more functionality converges into a single chip or even a multi-die system, the number of third-party IP blocks incorporated into designs is rapidly increasing. We provide the broadest, most comprehensive portfolio of high-quality, silicon-proven IP solutions for SoCs.
Design IP Solutions As functionality expands within a single chip or across a multi-die design, the number of third-party IP design blocks incorporated into these designs are rapidly increasing. We provide the broadest, most comprehensive portfolio of high-quality, silicon-proven IP solutions for SoCs.
Risks related to our foreign operations are described in Part I, Item 1A, Risk Factors of this Annual Report. 8 Table of Contents Revenue Attributable to Product Groups Revenue from our products and services is categorized into three groups: • EDA, which includes digital and custom IC design software, verification hardware and software products, manufacturing-related design products, FPGA design software, AI driven EDA solutions, and professional services; • Design IP, which includes our interface, foundation, security, and embedded processor IP, IP subsystems, and IP implementation services; and • Other, which includes university programs, optical products, mechatronic simulation, and the impact of gains and losses from foreign currency hedges.
Risks related to our foreign operations are described in Part I, Item 1A, Risk Factors of this Annual Report. 9 Table of Contents Revenue Attributable to Product Groups Revenue from our products and services is categorized into four groups: • EDA, which includes digital and custom IC design software, verification hardware and software products, manufacturing-related design products, FPGA design software, AI driven EDA solutions and professional services; • Design IP, which includes our interface, foundation, security, and embedded processor IP, IP subsystems, and IP implementation services; • Ansys, which includes SoC and IC analysis and simulation solutions, solutions used to virtually test and optimize designs across various physics domains, such as structural analysis, thermal analysis, and CFD; and • Other, which includes university programs, mechatronic simulation and the impact of gains and losses from foreign currency hedges.
We attribute the strong retention of our talented workforce to several factors, including exciting and challenging assignments; growth opportunities; strong leadership and management; a culture of integrity and caring; our commitment to inclusion; competitive and equitable compensation and benefits; our leading products and technology; and the strength of our customer relationships.
We attribute the strong retention of our talented workforce to several factors, including exciting and challenging assignments; growth opportunities; strong leadership and management; a culture grounded in our core values of Agility, Courage, Excellence, and Trust; competitive and equitable compensation and benefits; our leading products and technology; and the strength of our customer relationships.
In certain cases, we also provide our customers with limited indemnification with respect to claims that their use of our software products infringes on patents, copyrights, trademarks or trade secrets.
We also provide our customers with limited indemnification with respect to claims that their use of our software products infringes on patents, copyrights, trademarks or trade secrets. We have not experienced material warranty or indemnity claims to date.
The Synopsys.ai suite of solutions include: • DSO.ai TM – Design Space Optimization for best quality of results and productivity with scaling of exploration design workflows; • VSO.ai TM – Verification Space Optimization for optimal functional verification coverage and faster turnaround time; • TSO.ai TM – Test Space Optimization for reduced pattern count, turnaround time and higher coverage; • ASO.ai TM – Analog Space Optimization for analog design and layout optimization and migration; • Design.da – Design data analytics for actionable insights to unlock untapped power, performance, and area; • Silicon.da – Silicon data analytics for root-cause analysis and part-level traceability of failures to improve key production and silicon operational metrics; and • Fab.da – Manufacturing data analytics for improved process control, time to market and higher yield.
The Synopsys.ai suite of solutions include: • DSO.ai TM – Design Space Optimization for best quality of results and productivity with scaling of exploration design workflows; • 3DSO.ai TM – AI-driven system analysis solution for 2.5D and 3D multi-die designs that maximizes system performance and quality of results at a rapid pace; 6 Table of Contents • VSO.ai TM – Verification Space Optimization for optimal functional verification coverage and faster turnaround time; • TSO.ai TM – Test Space Optimization for reduced pattern count, turnaround time and higher coverage; • ASO.ai TM – Analog Space Optimization for analog design and layout optimization and migration; • Design.da – Design data analytics for actionable insights to unlock untapped power, performance, and area; and • Silicon.da – Silicon data analytics for root-cause analysis and part-level traceability of failures to improve key production and silicon operational metrics.
We provide software and hardware used to validate the electronic systems that incorporate chips and the software that runs on them, including cloud-based digital design flow to boost chip-design development productivity. We also provide technical services and support to help our customers develop advanced chips and electronic systems. These products and services are part of our Design Automation segment.
We provide software and hardware used to validate the electronic systems that incorporate chips and the software that runs on them, including cloud-based digital and analog design flow to boost chip-design development productivity. We also provide technical services and support to help our customers develop advanced chips and electronic systems. Synopsys is also the global leader in engineering S&A software.
We have not experienced material warranty or indemnity claims to date. 7 Table of Contents Support for Industry Standards We actively create and support standards that help our EDA and IP customers increase productivity, facilitate efficient design flows, improve interoperability of tools from different vendors and ensure connectivity, functionality and interoperability of IP building blocks.
Support for Industry Standards We actively create and support standards that help our EDA, S&A and IP customers increase productivity, facilitate efficient design flows, improve interoperability of tools from different vendors and ensure connectivity, functionality and interoperability of IP building blocks.
Key design products are available as part of the Digital Design Family and include Fusion Compiler TM RTL to GDSII design implementation, Design Compiler ® NXT logic synthesis, IC Compiler TM II physical design, Synopsys TestMAX TM test and diagnosis, PrimeTime ® static timing analysis, PrimePower power analysis, PrimeLib library characterization, StarRC TM parasitic extraction, IC Validator TM physical verification and 3DIC Compiler, the industry’s first next-generation chip packaging solution, aimed at enabling customers to combine or stack multiple dice on a single chip.
Key design products are available as part of the Digital Design Family and include Fusion Compiler TM RTL to GDSII design implementation, Design Compiler ® NXT logic synthesis, IC Compiler TM II physical design, Synopsys TestMAX TM test and diagnosis, PrimeTime ® static timing analysis, PrimePower TM power analysis, PrimeLib library characterization, StarRC TM parasitic extraction, IC Validator TM physical verification and 3DIC Compiler, the industry’s only unified exploration-to-signoff platform for multi-die/package co-design and co-optimization, aimed at enabling customers to integrate multiple dies in a single package.
While many of our solutions have been used in cloud-based environments for years, such as in a customer’s own server and/or cloud environment, in fiscal 2022 we launched a Synopsys Cloud offering that provides customers additional options for accessing our EDA products in their own cloud environments and in the industry’s first EDA Software-as-a-Service solution developed in partnership with Microsoft Azure.
Our Synopsys Cloud offering provides customers additional options for accessing our EDA products in their own cloud environments and in the industry’s first EDA Software-as-a-Service solution developed in partnership with Microsoft Azure.
Ghazi joined Synopsys in March 1998 as an applications engineer and held a series of sales positions with increasing responsibility, culminating in leadership of worldwide strategic accounts. Prior to his appointment as Chief Operating Officer, Mr. Ghazi was the general manager for all digital and custom products, the largest business group in Synopsys. Prior to joining Synopsys, Mr.
Prior to his appointment as Chief Executive Officer, he served as Chief Operating Officer from August 2020 to January 2024. Mr. Ghazi joined Synopsys in March 1998 as an applications engineer and held a series of sales positions with increasing responsibility, culminating in leadership of worldwide strategic accounts. Prior to his appointment as Chief Operating Officer, Mr.
Within our Design IP segment, Synopsys competes against numerous other IP providers, including Cadence Design Systems, Inc., and our customers' internally developed IP. We generally compete on the basis of product quality, reliability, features, availability of titles for new manufacturing processes, ease of integration with customer designs, compatibility with design tools, license terms, price and payment terms, and customer support.
We generally compete on the basis of product quality, reliability, features, availability of titles for new manufacturing processes, ease of integration with customer designs, compatibility with design tools, license 10 Table of Contents terms, price and payment terms, and customer support.
No single factor drives an EDA customer’s buying decision, and we compete on all fronts to capture a higher portion of our customers’ budgets. Our competitors include EDA vendors that offer varying ranges of products and services, such as Cadence Design Systems, Inc. and Siemens EDA.
No single factor drives an EDA customer’s buying decision, and we compete on all fronts to capture a higher portion of our customers’ budgets.
We believe this creates value for us, our stockholders and our customers. As of our fiscal 2024 year-end, Synopsys had approximately 20,000 employees. Approximately 20% of these employees are in the United States and 80% are in other locations around the world. Approximately 87% of our employees are engineers, and over half of those employees hold Masters or PhD degrees.
We believe these efforts create value for our stockholders, customers and employees. As of fiscal 2025 year-end, Synopsys had approximately 28,000 employees, with about 23% in the United States and 77% in other locations worldwide. Approximately 75% of our employees are engineers, and over half hold Master's or PhD degrees.
We partner closely with semiconductor and systems customers across a wide range of industries to maximize their engineering and research and development capacity. We are catalyzing the era of pervasive intelligence, powering innovation today that ignites the ingenuity of tomorrow.
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.
Designers have turned to new manufacturing techniques to solve these problems, such as multiple-patterning lithography, FinFET 3D transistors 3 Table of Contents and Gate-All-Around Field-Effect transistor structures, which in turn have introduced new challenges to design and production.
Designers have turned to new manufacturing techniques to solve these problems, such as multiple-patterning lithography, FinFET 3D transistors and Gate-All-Around Field-Effect transistor structures, which in turn have introduced new challenges to design and production. The rise of silicon-powered intelligent devices and AI has increased demand for chips and systems with greater functionality and performance, reduced size and lower power consumption.
In our Design Automation and Design IP segments, post-contract customer support for our EDA and IP products also includes access to the SolvNet ® Plus portal, where customers can explore our complete design knowledge database, access self-help and receive support. Updated regularly, the SolvNet Plus portal includes technical documentation, design tips and answers to user questions.
Post-contract customer support includes access to a customer portal, where customers can explore our complete design knowledge database, access self-help and receive support. Updated regularly, these portals include technical documentation, design tips and answers to user questions. Customers can also engage, for additional charges, with our worldwide network of applications consultants for additional support needs.
Total Rewards Our Total Rewards program offers meaningful global benefits and compensation for the time, energy, commitment, skills, and expertise employees bring to the company every day. Our practices are intended to deliver fair and equitable compensation for employees based on their contribution and performance.
Total Rewards Our Total Rewards program provides meaningful global benefits, compensation, and recognition for the time, energy, commitment, skills, and expertise employees bring to Synopsys every day.
We also compete with other EDA vendors, including new entrants to the marketplace, that offer products focused on one or more discrete phases of the IC design process, as well as with customers’ internally developed design tools and capabilities.
We compete with a variety of different EDA vendors, including publicly traded companies offering varying ranges of products and services as well as other EDA vendors that offer products focused on one or more discrete phases of the IC design process. Additionally, some of our customers internally develop design tools and capabilities that compete with our products.
We typically distribute our software products and documentation to customers electronically. We maintain sales and support centers throughout the United States. Outside the United States, we maintain sales, support or service offices in Canada, multiple countries in Europe, Israel and throughout Asia, including Japan, China, Korea, India and Taiwan.
Outside the United States, we maintain sales, support or service offices in Canada, multiple countries in Europe, Israel and throughout Asia, including Japan, China, Korea, India and Taiwan. Our offices are further described under Part I, Item 2, Properties of this Annual Report.
In other words, innovation in chip and systems design often hinges on providing products “better,” “sooner,” and “cheaper” than competitors. The design of these chips and systems is extremely complex and necessitates state-of-the-art solutions. Over the past several years, market verticals including AI, 5G, automotive and cloud computing infrastructure have contributed to the ongoing demand for our products and services.
The design of these chips and systems is extremely complex and demands engineering solutions with a deeper integration of electronics and physics, enhanced by AI. Over the past several years, market verticals including AI, 5G, automotive and cloud computing infrastructure have contributed to the ongoing demand for our products and services.
Product Sales and Licensing Agreements We typically license our software to customers under non-exclusive license agreements that restrict use of our software to specified purposes within specified geographical areas.
Our Other product group also includes revenue from Synopsys’ Optical Solutions Group through October 17, 2025, the date it was divested to Keysight Technologies, Inc. Product Sales and Licensing Agreements We typically license our software to customers under non-exclusive license agreements that restrict use of our software to specified purposes within specified geographical areas.
Other Our Other product group includes revenue from sales of products to university programs as well as our optical products, mechatronic simulation, and the impact of gains and losses from foreign currency hedges. 6 Table of Contents Design IP Segment Our Design IP segment includes our Design IP products, which service companies primarily in the semiconductor and electronics industries.
Other Our Other product group includes revenue from sales of products to university programs as well as our mechatronic simulation, and the impact of gains and losses from foreign currency hedges. Our Other product group also includes revenue from Synopsys’ Optical Solutions Group through the fourth quarter of fiscal year 2025.
Fees under these licenses are typically charged on a per design basis plus, in some cases, royalties. See Note 2.
Fees under these licenses are typically charged on a per design basis plus, in some cases, royalties. See Note 2. Significant Accounting Policies and Bases of Presentation of the Notes to Consolidated Financial Statements in this Annual Report for further information.
Runkel holds a Bachelor of Arts and a Juris Doctorate from the University of California, Los Angeles. There are no family relationships among any Synopsys executive officers or directors. 13 Table of Contents
Lee holds a Bachelor of Arts from the University of Michigan, a Master of Arts from Harvard University and a Juris Doctorate from Stanford Law School. There are no family relationships among any Synopsys executive officers or directors, or any arrangement or understanding pursuant to which any person was selected as an officer. 14 Table of Contents
Our compensation and benefits programs are tailored to the various geographies in which we operate and, for eligible employees, may include: • Market-competitive salary and cash bonus opportunity; 11 Table of Contents • Employee Stock Purchase Plan; • Equity compensation; • Robust medical, dental, vision, and wellness benefits; • Comprehensive leave plans; • Life insurance options; • Retirement plans and associated benefits; • Financial planning tools and employee assistance plans; • Student loan repayment assistance; • Cancer-specific prevention, early detection, treatment, and support programs; and • Parental resources and adoption benefits.
For eligible employees, benefits may include: • Market-competitive salary and cash bonus opportunities; • Equity compensation; • Robust medical, dental, vision, and wellness benefits; • Employee Assistance Program (EAP); • Comprehensive leave plans; • Life insurance options; • Retirement plans; • Financial planning tools; • Student loan repayment assistance; • Well-being and family support; and • Parental and elder care resources.
For a full discussion of our software product offerings, see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report . We typically license Synopsys IP products under nonexclusive license agreements that provide usage rights for a specific number of designs.
Our professional services team typically provides design consulting services to our customers under consulting agreements with statements of work specific to each project. For a full discussion of our product and service offerings, see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report.
Workshops cover our EDA products and methodologies used in our design and verification flows, as well as specialized modules addressing systems design, logic design, physical design, simulation and testing. We offer regularly scheduled public and private courses in a variety of locations worldwide, as well as online training (live or on-demand) through our Virtual Classrooms.
In addition, we offer training workshops designed to increase customer design proficiency and productivity with our products. Workshops cover our EDA products and methodologies used in our design and verification flows, as well as specialized modules addressing systems design, logic design, physical design, simulation and testing.
For example, Synopsys is driving energy savings in the semiconductor ecosystem through solutions that optimize energy efficiency in the design and use of chips and systems, along with solutions that reduce energy use, water use, and waste in semiconductor manufacturing. 10 Table of Contents We maintain a robust governance structure for our ESG efforts, gauging and acting on our highest priority ESG impacts, business risks, and opportunities, as we believe this creates positive impact for our stockholders as well as our customers, employees, partners, and local communities.
We maintain a robust governance structure for our Responsible Business program, gauging and acting on our highest priority responsible business impacts, business risks, and opportunities, as we believe this creates positive impact for our stockholders as well as our customers, employees, partners, and local communities.
Our management training is designed to increase capability in the areas of communication, engagement, coaching, inclusion and belonging, hiring, and key business skills. This is based on our belief that our employees should work for and with great managers and leaders. The training aims to promote an ethical and supportive work environment that is free from bias and harassment.
As employees advance in their careers, our training framework is intended to develop new technical skills and core competencies. Our management training focuses on communication, engagement, coaching, hiring, and key business skills. This is based on our belief that employees should work for and with great managers and leaders.
Talent Development and Succession Planning We offer several programs to support the career advancement of our employees. Through our digital learning platform, we seek to foster and support a “curious learning” culture where employees can access training, external articles, videos, and blogs.
Talent Development and Succession Planning We offer programs to support career advancement, including a digital learning platform that fosters a “curious learning” culture with access to training, articles, videos, and blogs. We also host in-person and on-demand learning sessions designed to build capabilities and adaptability required for the future.
As we grow, we aspire to maintain our results-oriented culture by balancing productivity with smart investments in our employees’ development, while also supporting individual wellbeing. These are two key drivers of the overall employee experience. We also believe ongoing performance feedback encourages greater engagement in our business and improved individual performance.
To promote employee engagement and recognition, we invest in programs such as the annual Engineering and Innovation Conference and Pitch Fest innovation contest. As we grow, we aspire to maintain our results-oriented 12 Table of Contents culture by balancing productivity with smart investments in our employees’ development, while also supporting individual well-being.
Item 1. Business Company and Segment Overview Synopsys, Inc. (Synopsys, we, our or us) delivers trusted and comprehensive silicon to systems design solutions, from electronic design automation (EDA), including system verification and validation solutions, to silicon intellectual property (IP).
Item 1. Business Company and Segment Overview Synopsys, Inc. (Synopsys, we, our or us) is the leader in engineering solutions from silicon to systems, enabling customers to rapidly innovate AI-powered products. We deliver trusted and comprehensive solutions spanning silicon design, silicon intellectual property (IP), simulation and analysis (S&A) as well as design services.
Product Warranties We generally warrant our products to be free from defects in media and to substantially conform to material specifications for a period of 90 days for our software products and for up to six months for our hardware products.
We offer 8 Table of Contents regularly scheduled public and private courses in a variety of locations worldwide, as well as online training (live or on-demand) through our Virtual Classrooms. Product Warranties We generally warrant our products to be free from defects in media and to substantially conform to material specifications for a limited period of time.
Recruitment and Retention In fiscal 2024, despite hiring new employees, our total employee headcount decreased by approximately 1% due to the divestiture of our Software Integrity business. As of our fiscal 2024 year-end, our voluntary turnover rate was 6.4%.
Recruitment and Retention 11 Table of Contents In fiscal 2025, our total employee headcount grew by approximately 40% primarily as a result of the Ansys Merger. As of our fiscal 2025 year-end, our voluntary turnover rate was 5.7%.
Health, Safety and Wellbeing Our commitment to health, safety, and wellness was underscored this year by the support and resources we offered to help employees continue to thrive in a hybrid work environment, and achieve balance between their work and personal lives.
Health, Safety, and Well-being Our commitment to health, safety, and wellness is underscored by resources that help employees thrive in a hybrid work environment and balance work and personal life. Our Synopsys Wellbeing campaign encourages leaders and managers to model healthy behaviors and create opportunities for team wellness activities.
Through our annual SHAPE Synopsys surveys, we obtain employee insight into our values, manager effectiveness, ability to innovate, perceptions on inclusion and belonging, and other critical factors. We also use pulse surveys to create space for important conversations about who we are, where we are going, and how we can connect with each other and our work.
Through our annual SHAPE Synopsys survey, we gather employee insights on values, manager effectiveness, innovation, belonging, and other critical factors. We also use pulse surveys to provide space for conversations about identity, direction, and connection. In October 2025, approximately 95% of our employees participated in the SHAPE survey.
The rise of silicon-powered intelligent devices and AI has increased demand for chips and systems with greater functionality and performance, reduced size, and lower power consumption. Our customers, who design silicon and software-defined systems, are facing intense pressure to deliver innovative offerings in shorter timeframes and at lower prices.
Our customers, who design silicon and software-defined systems, are facing intense pressure to deliver innovative offerings in shorter timeframes and at lower prices. In other words, innovation in chip and systems design often hinges on providing products “better,” “sooner,” and “cheaper” than competitors.
In fiscal 2024, Synopsys received nearly 60 awards for workplace and culture, including certification as a Great Place to Work in 14 countries and recognition from Newsweek, Forbes, Fortune, US News and World Report, Comparably, and more. These results demonstrate Synopsys' stability and resiliency, and the fact that we have a global workforce that is highly engaged.
We received an engagement score of 81, which was calculated by averaging favorable responses to job satisfaction questions. In fiscal 2025, Synopsys received more than 90 workplace and culture awards, including Great Place to Work certification in 14 countries and recognition from Newsweek, Forbes, Fortune, U.S. News & World Report, Comparably, and The Wall Street Journal.
Our Environmental, Social and Governance (ESG) strategy provides a focus and structure for how we manage our own operational impact and help others in our ecosystem to do the same.
Our Responsible Business program at Synopsys provides a focus and structure for how we address both our own operational impact on the world and our ability to influence others around us.
Significant Accounting Policies and Bases of Presentation of the Notes to Consolidated Financial Statements in this Annual Report for further information. 9 Table of Contents Our hardware products, which principally consist of our emulation and prototyping systems, are either sold or leased to our customers.
Our hardware products, which principally consist of our emulation and prototyping systems, are either sold or leased to our customers. Our S&A software solutions are offered as subscription solutions and also as perpetual licenses.
Our Stronger Through Wellbeing campaign encourages our leaders and managers to model the importance of health and wellbeing and create opportunities to engage in wellness-related activities as a team. We also offer a variety of programs and resources at no cost to employees and their family members to support their mental, emotional, and financial wellbeing.
We also offer a variety of programs and resources at no cost to employees and their families to support their mental, emotional, and financial well-being. Employee Engagement We maintain a comprehensive employee feedback program to understand the employee experience and make improvements in areas such as customer interaction and knowledge sharing.
In our Design IP segment, we support a wide range of industry standards within our IP product family to ensure usability and interconnectivity. Sales and Distribution Our Design Automation and Design IP segment customers are primarily semiconductor and electronics systems companies. We market our products and services primarily through direct sales in the United States and our principal foreign markets.
We market our products and services through direct sales in the United States and our principal foreign markets. In addition, we distribute certain of our products, including our S&A software solutions, through a global network of independent channel partners. We typically distribute our software products and documentation to customers electronically. We maintain sales and support centers throughout the United States.
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The platform supports multiple technology nodes, including advanced nodes at 12nm, 10nm, 8/7nm, 6 nm, 5/4nm, 3nm and 2 nm, with technology collaborations on next-generation process technologies.
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Our Ansys ® solutions portfolio is widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial equipment, materials and chemicals, consumer products, healthcare and construction.
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Customers can also engage, for additional charges, with our worldwide network of applications consultants for additional support needs. In addition, we offer training workshops designed to increase customer design proficiency and productivity with our products.
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These products enable customers to analyze designs on-premises and/or via the cloud, providing a common platform for fast, efficient and cost-conscious product development, from design concept to final-stage testing, validation and deployment. S&A products and services are part of our Design Automation segment.
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Revenue attributable to each of our three product groups is shown below as a percentage of our total revenue for those fiscal years. Aggregate revenue derived from one of our customers and its subsidiaries through multiple agreements accounted for 12.6%, 13.5% and 12.8% of our total revenue in fiscal 2024, 2023 and 2022, respectively.
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Our website is https://www.synopsys.com/. We have 189 offices worldwide.
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Risks related to disruptions in our supply chain affecting our business are described in Part I, Item 1A, Risk Factors of this Annual Report. Our professional services team typically provides design consulting services to our customers under consulting agreements with statements of work specific to each project.
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With ANSYS, Inc, (Ansys) now part of Synopsys, we can maximize the capabilities of product R&D teams broadly enabling them to rapidly innovate AI-powered products.
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This includes open communication, sparking creative ideas, listening, collaborating, working on new challenges, and developing solutions that drive innovation for our customers. Through our ecosystem of learning and growth opportunities, collaboration and innovation tools, creative work environments, and robust total rewards, we help our employees thrive and do great work.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeMany factors have in the past and may in the future cause our backlog, revenue or earnings to fluctuate, including, among other things: • Changes in demand for our products and services—especially products, such as hardware, generating upfront revenue—due to fluctuations in demand for our customers’ products and due to constraints in our customers’ budgets for research and development as well as EDA and IP products and services; • Changes in demand for our products due to customers reducing their expenditures, which may be a result of customer cost-cutting measures or insolvency or bankruptcy, sustained global inflationary pressures and elevated interest rates or other reasons; • Product competition in the EDA, IP or semiconductor industries, which can change rapidly due to industry or customer consolidation and technological innovation; • Our ability to innovate and introduce new products and services or effectively integrate products and technologies that we acquire; • Failures or delays in completing sales due to our lengthy sales cycle, which often includes a substantial customer evaluation and approval process because of the complexity of our products and services; • Our ability to implement effective cost control measures; 19 Table of Contents • Our dependence on a relatively small number of large customers, and on such customers continuing to renew licenses and purchase additional products from us, for a large portion of our revenue; • Changes to the amount, composition and valuation of, and any impairments to or write-offs of, our assets or strategic investments; • Changes in the mix of our products sold, as increased sales of our products with lower gross margins, such as our hardware products, may reduce our overall margins; • Expenses related to our acquisition and integration of businesses and technologies, including our expenses related to the Ansys Merger; • Changes in tax rules, as well as changes to our effective tax rate, including the tax effects of infrequent or unusual transactions and tax audit settlements; • Delays, increased costs or quality issues resulting from our reliance on third parties to manufacture our hardware products, which includes a sole supplier for certain hardware components; • Natural variability in the timing of IP drawdowns, which can be difficult to predict; • General economic and political conditions that affect the semiconductor and electronics industries, such as disruptions to international trade relationships, including tariffs, changes in Export Regulations, or other trade barriers affecting our or our suppliers’ products; and • Changes in accounting standards, which may impact the way we recognize our revenue and costs and impact our earnings.
Biggest changeMany factors have in the past and may in the future cause our backlog, revenue or earnings to fluctuate, including, among other things: • Changes in demand for our products and services—especially products, such as hardware and IP, generating upfront revenue—due to fluctuations in demand for our customers’ products and due to constraints in our customers’ budgets for research and development as well as EDA, IP and S&A products and services; • Product competition in the EDA, IP, semiconductor or S&A-targeted industries; • Our ability to innovate and introduce new products and services or effectively reallocate resources across our businesses to target the highest growth opportunities and meet customer demand; • Failures or delays in completing sales due to our lengthy sales cycle, which often includes a substantial customer evaluation and approval process because of the complexity of our products and services; • Our ability to implement effective cost control measures and business transformation initiatives, including those related to our workforce; • Our dependence on a relatively small number of large customers for a large portion of our revenue, and the impact of timing requirements and the value of contract renewals; • Such key customers continuing to renew licenses and purchase additional products from us; • Changes to the amount, composition and valuation of, and any impairments to or write-offs of, our assets or strategic investments; • Changes in the mix of our products sold, as increased sales of our products with lower gross margins, such as our hardware products, may reduce our overall margins; • Natural variability in the timing of IP drawdowns, which can be difficult to predict; and • Expenses related to our acquisition and integration of businesses and technologies, including those related to the Ansys Merger.
Our income and non-income tax filings are subject to review or audit by the Internal Revenue Service and state, local and foreign taxing authorities. We exercise significant judgment in determining our worldwide provision for income taxes and, in the ordinary course of our business, there may be transactions and calculations where the ultimate tax determination is uncertain.
Our income and non-income tax filings are subject to review and audit by the Internal Revenue Service and state, local and foreign taxing authorities. We exercise significant judgment in determining our worldwide provision for income taxes and, in the ordinary course of our business, there may be transactions and calculations where the ultimate tax determination is uncertain.
Any acquisitions and strategic investments we may undertake, including the Ansys Merger, are difficult, time-consuming, and pose a number of risks, including, but not limited to: • Potential negative impact on our net income resulting from acquisition or investment-related costs or on our earnings per share; • Failure of acquired products to achieve projected sales; • Problems in integrating the acquired products with our products; 20 Table of Contents • Difficulties entering into new markets in which we are inexperienced or our competitors have stronger positions; • Potential downward pressure on operating margins due to lower operating margins of acquired businesses, increased headcount costs, and other expenses associated with adding and supporting new products; • Difficulties in retaining and integrating key employees; • Substantial reductions of our cash resources and/or the incurrence of debt, which may be at higher than anticipated interest rates; • Failure to realize expected synergies or cost savings; • Difficulties in integrating or expanding sales, marketing and distribution functions and administrative systems, including IT and human resources systems; • Dilution of our current stockholders through the issuance of common stock as a part of transaction consideration; • Difficulties in negotiating, governing and realizing value from strategic investments; • Assumption of unknown liabilities, including tax, litigation, cybersecurity and commercial-related risks, and the related expenses and diversion of resources; • Incurrence of costs and use of additional resources to remedy issues identified prior to or after an acquisition; • Disruption of ongoing business operations, including diversion of management’s attention and uncertainty for employees and customers, particularly during the post-acquisition integration process; • Potential negative impacts on our relationships with customers, distributors and business partners; • Exposure to new operational risks, regulations and business customs to the extent acquired businesses are located in regions where we are not currently conducting business; • The need to implement controls, processes and policies appropriate for a public company at acquired companies that may have previously lacked such controls, processes and policies in areas such as cybersecurity, IT, privacy and more; and • Requirements imposed by government regulators in connection with their review of an acquisition, including required divestitures or restrictions on the conduct of our business or the acquired business.
Any acquisitions and strategic investments we may undertake, including the Ansys Merger, are difficult, time-consuming, and pose a number of risks, including, but not limited to: • Potential negative impact on our net income resulting from acquisition or investment-related costs or on our earnings per share; • Failure of acquired products to achieve projected sales or problems in integrating the acquired products with our products or in creating new joint solutions; • Difficulties entering into new markets in which we are inexperienced or our competitors have stronger positions; • Potential downward pressure on operating margins due to lower operating margins of acquired businesses, increased headcount costs, and other expenses associated with adding and supporting new products; • Difficulties in retaining and integrating key employees; • Substantial reductions of our cash resources and/or the incurrence of debt, which may be at higher than anticipated interest rates; • Failure to realize expected synergies or cost savings, including within the anticipated time frames; • Difficulties in integrating or expanding sales, marketing and distribution functions and administrative systems, including IT and human resources systems; • Dilution of our current stockholders through the issuance of common stock as a part of transaction consideration; • Difficulties in negotiating, governing and realizing value from strategic investments; • Assumption of unknown liabilities, including tax, litigation, cybersecurity and commercial-related risks, and the related expenses and diversion of resources; • Incurrence of costs and use of additional resources to remedy issues identified prior to or after an acquisition; • Disruption of ongoing business operations, including diversion of management’s attention and uncertainty for employees and customers, particularly during the post-acquisition integration process; 20 Table of Contents • Potential negative impacts on our relationships with customers, distributors, business partners and channel partners; • Exposure to new operational risks, regulations and business customs to the extent acquired businesses are located in regions where we are not currently conducting business; • The need to implement controls, processes and policies appropriate for a public company at acquired companies that may have previously lacked such controls, processes and policies in areas such as cybersecurity, IT, privacy and more; and • Requirements imposed by government regulators in connection with their review of an acquisition, including required divestitures or restrictions on the conduct of our business or the acquired business.
For example and as described above, the ongoing geopolitical and economic uncertainty between the U.S. and China, the unknown impact of current and future U.S. and Chinese trade regulations, and other geopolitical risks with respect to China and Taiwan may cause disruptions in the markets and industries we serve and our supply chain, decreased demand from customers for products using our solutions or other disruptions, which could, directly or indirectly, materially harm our business, operating results and financial condition.
For example and as described above, the ongoing geopolitical and economic uncertainty between the U.S. and China, the unknown impact of current and future U.S. and Chinese trade regulations, including tariffs, and other geopolitical risks with respect to China and Taiwan may cause disruptions in the markets and industries we serve and our supply chain, decreased demand from customers for products using our solutions or other disruptions, which could, directly or indirectly, materially harm our business, operating results and financial condition.
The timing of revenue recognition is affected by factors including: • Cancellations or changes in levels of orders or the mix between upfront products revenue and time-based products revenue; • Delay of one or more orders for a particular period, particularly orders generating upfront products revenue, such as hardware; • Delay in the completion of professional services projects that require significant modification or customization and are accounted for using the percentage of completion method; • Delay in the completion and delivery of IP products in development as to which customers have paid for early access; • Customer contract amendments or renewals that provide discounts or defer revenue to later periods; and • The levels of our hardware and IP revenues, which are generally recognized upfront and are primarily dependent upon our ability to provide the latest technology and meet customer requirements.
The timing of revenue recognition is affected by factors including: • Cancellations or changes in levels of orders or the mix between upfront products revenue and time-based products revenue; • Delay of one or more orders for a particular period, particularly orders generating upfront products revenue, such as hardware; 19 Table of Contents • Delay in the completion of professional services projects that require significant modification or customization and are accounted for using the percentage of completion method; • Delay in the completion and delivery of IP products in development as to which customers have paid for early access; • Customer contract amendments or renewals that provide discounts or defer revenue to later periods; and • The levels of our hardware and IP revenues, which are generally recognized upfront and are primarily dependent upon our ability to provide the latest technology and meet customer requirements.
We expect to make additional acquisitions and strategic investments in the future, but we may not find suitable acquisition or investment targets, or we may not be able to consummate desired acquisitions or investments due to, among other things, financial constraints, unfavorable credit markets, commercially unacceptable terms, failure to obtain regulatory approvals, competitive bid dynamics or other risks, which could harm our operating results.
We expect to make additional acquisitions and strategic investments in the future, but we may not find suitable acquisition or investment targets, or we may not be able to consummate desired acquisitions or investments due to, among other things, financial constraints, unfavorable credit markets, commercially unacceptable terms, failure to obtain regulatory approvals, competitive bid dynamics, outbound investment restrictions or other risks, which could harm our operating results.
Specifically, we believe the following competitive factors affect our success: • Our ability to anticipate and lead critical development cycles and technological shifts, innovate rapidly and efficiently, improve our existing software and hardware products, and successfully develop or acquire such new products; • Our ability to offer products that provide both a high level of integration into a comprehensive platform and a high level of individual product performance; • Our ability to enhance the value of our offerings through more favorable terms; • Our ability to manage an efficient supply chain to ensure hardware product availability; • Our ability to compete on the basis of payment terms; and • Our ability to provide engineering and design consulting for our products.
Specifically, we believe the following competitive factors affect our success: • Our ability to anticipate and lead critical development cycles and technological shifts, innovate rapidly and efficiently, improve our existing software and hardware products, and successfully develop or acquire such new products; • Our ability to offer products that provide both a high level of integration into a comprehensive platform and a high level of individual product performance; • Our ability to enhance the value of our offerings through more favorable terms; • Our ability to manage an efficient supply chain to ensure hardware product availability; 16 Table of Contents • Our ability to compete on the basis of payment terms; and • Our ability to provide engineering and design consulting for our products.
A catastrophic event or other extreme weather event that results in the destruction or disruption of our data centers or our critical business or IT systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected. 30 Table of Contents Item 1B. Unresolved Staff Comments None.
A catastrophic event or other extreme weather event that results in the destruction or disruption of our data centers or our critical business or IT systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected. 28 Table of Contents Item 1B. Unresolved Staff Comments None.
A number of business combinations and strategic partnerships among our customers in the semiconductor and electronics industries have occurred over the last several years, and more could occur in the future. Consolidation among our customers could lead to fewer customers or the loss of customers, increased customer bargaining power or reduced customer spending on products and services.
A number of business combinations and strategic partnerships among our customers in the semiconductor, electronics and S&A-targeted industries have occurred over the last several years, and more could occur in the future. Consolidation among our customers could lead to fewer customers or the loss of customers, increased customer bargaining power or reduced customer spending on products and services.
A significant trade disruption, export restriction, or the establishment or increase of any trade barrier in any area where we do business could reduce customer demand and cause customers to search for substitute products and services, make our products and services more expensive or unavailable for customers, increase the cost of our products and services, have a negative impact on customer confidence and spending, make our products less competitive, or otherwise have an adverse impact on our backlog, future revenue and profits and our customers’ and suppliers’ business, operating results and financial 18 Table of Contents condition.
A significant trade disruption, export restriction, or the establishment or increase of any trade barrier in any area where we do business could reduce customer demand and cause customers to search for substitute products and services, make our products and services more expensive or unavailable for customers, increase the cost of our products and services, have a negative impact on customer confidence and spending, make our products less competitive, or otherwise have an adverse impact on our backlog, future revenue and profits and our customers’ and suppliers’ business, operating results and financial condition.
These initiatives and goals could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and ensuring the accuracy, adequacy, or completeness of the disclosure of our ESG initiatives can be costly, difficult and time consuming.
These initiatives and goals could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and ensuring the accuracy, adequacy, or completeness of the disclosure of our responsible initiatives can be costly, difficult and time consuming.
For example, developing and acting on evolving ESG reporting standards, including the SEC’s climate-related reporting requirements, California’s climate-related disclosure laws, and the European Union's Corporate Sustainability Reporting Directive as well as customer requirements may be costly, difficult and time consuming.
For example, developing and acting on evolving sustainability reporting standards, including California's climate-related disclosure laws and the European Union's Corporate Sustainability Reporting Directive, as well as customer requirements, may be costly, difficult and time consuming.
For further discussion on our ongoing audits, see Note 18. Income Taxes of the Notes to Consolidated Financial Statements in this Annual Report under the heading "Non-U.S. Examinations." Our business is subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks.
For further discussion on our ongoing audits, see Note 17. Income Taxes of the Notes to Condensed Consolidated Financial Statements in this Annual Report under the heading "Non-U.S. Examinations." Our business is subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks.
We maintain a variety of information security policies, procedures, and controls to protect our business and proprietary information, prevent data loss and other security breaches and incidents, keep our IT systems operational and reduce the impact of a security breach or 21 Table of Contents incident, but these security measures cannot provide and have not provided absolute security.
We maintain a variety of information security policies, procedures, and controls to protect our business and proprietary information, prevent data loss and other security breaches and incidents, keep our IT systems operational and reduce the impact of a security breach or incident, but these security measures cannot provide and have not provided absolute security.
Any of the foregoing could cause adverse effects on our business, operating results and financial condition, and could cause our stock price to decline. The growth of our business depends primarily on the semiconductor and electronics industries.
Any of the foregoing could cause adverse affects on our business, operating results and financial condition, and could cause our stock price to decline. The growth of our business depends primarily on the semiconductor and electronics industries.
If we fail to develop and timely offer products with AI features, if such products fail to meet our customers’ demands, if these products fail to operate as expected, or if our competitors incorporate AI into their products more quickly or more successfully than we do, we may experience brand or reputational harm and lose our competitive position, our products may become obsolete, and our business, operating results or financial condition could be adversely affected.
If we fail to develop and timely offer products with AI features, if such products fail to meet our customers’ demands, if these products fail to operate as expected, or if our competitors incorporate AI into their products more quickly or more successfully than we do, we may experience brand or 22 Table of Contents reputational harm and lose our competitive position, our products may become obsolete, and our business, operating results or financial condition could be adversely affected.
Any actual or anticipated changes, or adverse conditions in the debt capital markets, could: 28 Table of Contents • adversely affect the trading price of, or market for, our debt securities; • increase interest expense under our credit facilities; • increase the cost of, and adversely affect our ability to refinance, our existing debt; and • adversely affect our ability to raise additional debt.
Any actual or anticipated changes, or adverse conditions in the debt capital markets, could adversely affect the trading price of, or market for, our debt securities; increase interest expense under our credit facilities; increase the cost of, and adversely affect our ability to refinance, our existing debt; and adversely affect our ability to raise additional debt.
Many employees continue to work remotely based on a hybrid work model, which magnifies the importance of maintaining the integrity of our remote access security measures. We also periodically acquire new businesses with less mature security programs, and it takes time to align their security practices to meet our information security policies, procedures and controls.
Many employees continue to work remotely based on a hybrid work model, which magnifies the importance of maintaining the integrity of our remote access security measures. We also periodically acquire new businesses with less mature security programs, and it takes significant time, effort and expense to align security practices to meet our information security policies, procedures and controls.
Difficulties in any of our new product development efforts or our efforts to enter adjacent markets, including as a result of delays or disruptions, or export control restrictions, could adversely affect our business, operating results and financial condition.
Difficulties in any of our new product development efforts or our efforts to enter adjacent markets, including as a result of delays or disruptions, or export control or other trade and investment restrictions, could adversely affect our business, operating results and financial condition.
Following the Ansys Merger, the substantial indebtedness incurred in connection with the Ansys Merger could have adverse effects on our business, operating results and financial condition, including, among other things: • increasing our vulnerability to changing economic, regulatory and industry conditions; • limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry; • placing us at a competitive disadvantage compared to our competitors with less indebtedness; • increasing our interest expense and potentially requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of cash to fund our business needs; • limiting our ability to return equity through our stock repurchase program or pay dividends to our stockholders; and • limiting our ability to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures or other purposes.
Our substantial indebtedness could have adverse effects on our business, operating results and financial condition, including, among other things: 25 Table of Contents • increasing our vulnerability to changing economic, regulatory and industry conditions; • limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry; • placing us at a competitive disadvantage compared to our competitors with less indebtedness; • increasing our interest expense and potentially requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of cash to fund our business needs; • limiting our ability to return equity through our stock repurchase program or pay dividends to our stockholders; and • limiting our ability to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures or other purposes.
We could also face scrutiny from certain stakeholders for the scope or nature of such initiatives or goals, or for any revisions to these goals.
We could also face scrutiny from certain stakeholders, regulators or authorities for the scope or nature of such initiatives or goals, or for any revisions to these goals.
Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness following the Ansys Merger will depend on, among other factors, our financial position and performance as well as prevailing market conditions and other factors beyond our control.
Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness will depend on, among other factors, our financial position and performance as well as prevailing market conditions and other factors beyond our control.
Further, statements about our ESG initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change.
Further, statements about our responsible business initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change.
Further information regarding certain of these matters is contained in Part I, Item 3, Legal Proceedings of this Annual Report. General Risks Catastrophic events and the effects of climate change, pandemics or other unexpected events may disrupt our business and harm our operating results.
Further information regarding certain of these matters is contained in Part II, Item 1, Legal Proceedings of this Annual Report. General Risks Catastrophic events and the effects of climate change, pandemics or other unexpected events may disrupt our business and harm our operating results.
In addition, current and future changes to the U.S. and foreign regulatory approval processes and requirements related to acquisitions, including the Ansys Merger, may cause approvals to take longer than anticipated, not be forthcoming or contain burdensome conditions, which may prevent our planned transactions or jeopardize, delay or reduce the anticipated benefits of such transactions, and impede the execution of our business strategy.
In addition, current and future changes to the U.S. and foreign regulatory approval processes and requirements related to acquisitions or divestitures may cause approvals to take longer than anticipated, not be forthcoming or contain burdensome conditions, which may prevent our planned transactions or jeopardize, delay or reduce the anticipated benefits of such transactions and impede the integration of such acquisitions and execution of our business strategy.
Despite these measures, there is no guarantee that a compromise of our third-party vendors will not occur and in turn result in a compromise of our own IT systems or data.
Despite these measures, there is no guarantee that a compromise of our third-party 21 Table of Contents vendors will not occur and in turn result in a compromise of our own IT systems or data.
Due to the global nature of our business, our operating results may be negatively impacted by catastrophic events and the effects of climate change, pandemics, such as the COVID-19 pandemic, or other unexpected events throughout the world. We rely on a global network of infrastructure applications, enterprise applications and technology systems for our development, marketing, operational, support and sales activities.
Due to the global nature of our business, our operating results may be negatively impacted by catastrophic events and the effects of climate change, pandemics or other unexpected events throughout the world. We rely on a global network of infrastructure applications, enterprise applications and technology systems for our development, marketing, operational, support and sales activities.
Our employees are often recruited aggressively by our competitors and our customers worldwide. Any failure to recruit and/or retain senior management and key employees could harm our business, operating results and 23 Table of Contents financial condition. Additionally, efforts to recruit such employees could be costly and negatively impact our operating expenses.
Our employees are often recruited aggressively by our competitors and our customers worldwide. Any failure to recruit and/or retain senior management and key employees could harm our business, operating results and financial condition. Additionally, efforts to recruit and/or retain such employees could be costly and negatively impact our operating expenses.
In addition, any allegations of manufacturability issues resulting from use of our IP 24 Table of Contents products could, even if untrue, adversely affect our reputation and our customers’ willingness to license IP products from us.
In addition, any allegations of manufacturability issues resulting from use of our IP products could, even if untrue, adversely affect our reputation and our customers’ willingness to license IP products from us.
Our combined business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures and meet other liquidity needs.
We may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures and meet other liquidity needs.
A deterioration of conditions in worldwide credit markets could limit our ability to obtain external financing to fund our operations, capital expenditures or pending acquisitions, such as the Ansys Merger. In addition, difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults.
A deterioration of conditions in worldwide credit markets could limit our ability to obtain external financing to fund our operations, capital expenditures or pending acquisitions. In addition, difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults.
Additionally, despite our measures to prevent piracy, other parties may attempt to illegally copy or use our products, which could result in lost revenue if their efforts are successful. Some foreign countries do not currently provide effective legal protection for intellectual property and our ability to prevent the unauthorized use of our products in those countries is therefore limited.
Additionally, despite our measures to prevent piracy, other parties may illegally copy or use our products, which could result in lost revenue. Some foreign countries do not currently provide effective legal protection for intellectual property and our ability to prevent the unauthorized use of our products in those countries is therefore limited.
For additional detail on developments in tax laws and regulations applicable to us, see Note 18. Income Taxes of the Notes to Consolidated Financial Statements in this Annual Report under the heading "Legislative Developments." We have a wide range of statutory tax rates in the multiple jurisdictions in which we operate.
For additional detail on developments in tax laws and regulations applicable to us, see Note 17. Income Taxes of the Notes to Condensed Consolidated Financial Statements in this Annual Report under the heading "Legislative Developments." 26 Table of Contents We have a wide range of statutory tax rates in the multiple jurisdictions in which we operate.
Export Administration Regulations or other U.S. or non-U.S. export requirements (collectively, the Export Regulations) could subject us to substantial civil and criminal penalties, including fines and the possible loss of the ability to engage in exporting and other international transactions.
Export Regulations or other U.S. or non-U.S. export, sanctions, or similar trade requirements (collectively, the Trade Restrictions) could subject us to substantial civil and criminal penalties, including fines and the possible loss of the ability to engage in exporting and other international transactions.
We may not be able to realize the potential financial or strategic benefits of the transactions we complete, or find suitable target businesses and technology to acquire. Acquisitions and strategic investments are an important part of our growth strategy.
We may not realize the potential financial or strategic benefits of the transactions we complete, including the Ansys Merger, or find suitable target businesses and technology to acquire. Acquisitions and strategic investments are an important part of our growth strategy.
For example, we have in the past experienced significant changes to our executive leadership team due to planned succession and other departures.
For example, we have experienced significant changes to our executive leadership team due to planned succession and other departures.
In addition to tariffs and other trade barriers, our global operations are subject to numerous U.S. and foreign laws and regulations such as those related to anti-corruption, tax, corporate governance, imports and exports, financial and other disclosures, privacy and labor relations. These laws and regulations are complex and may have differing or conflicting legal standards, making compliance difficult and costly.
Our global operations are subject to numerous U.S. and foreign laws and regulations such as those related to anti-corruption, tax, corporate governance, imports and exports, government contracts, economic sanctions, financial and other disclosures, privacy and labor relations. These laws and regulations are complex and may have differing or conflicting legal standards, making compliance difficult and costly.
Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate repayment obligations under all of our outstanding debt, which could have a material adverse effect on our business, operating results or financial condition.
Our ability to comply with these provisions may be affected by events beyond our control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate repayment obligations under all of our outstanding debt, which could have a material adverse effect on our business, operating results or financial condition.
There is inherent risk, based on the complex relationships between certain Asian countries such as China, where we derive a growing percentage of our revenue, and the United States, that political, diplomatic or military events could result in trade disruptions, including tariffs, trade embargoes, export restrictions and other trade barriers.
There is inherent risk, based on the complex relationships between certain Asian countries such as China and the United States, that political, diplomatic or military events could result in trade disruptions, including tariffs, trade embargoes, export restrictions and other trade barriers.
We may also communicate certain initiatives and goals regarding environmental matters, diversity, responsible sourcing, social investments and other ESG matters in our public disclosures.
We may also communicate certain initiatives and goals regarding environmental matters, human capital matters, responsible sourcing, social investments and other responsible business matters in our public disclosures.
Due to the nature of our business and technology, governmental agencies from time to time review certain transactions for compliance with applicable Export Regulations. For example, we have received administrative subpoenas from the U.S. Bureau of Industry and Security (the BIS) requesting production of information and documentation relating to transactions with certain Chinese entities.
Due to the nature of our business and technology, governmental agencies from time to time review certain transactions for compliance with applicable Trade Restrictions. For example, we have received administrative subpoenas from BIS requesting production of information and documentation relating to transactions with certain Chinese entities.
Future changes to the Export Regulations, including changes in the enforcement and scope of such regulations, may create delays in the introduction of our products or services in international markets or could prevent our customers with international operations from deploying our products or services globally.
Future changes to the Trade Restrictions, including changes in the enforcement and scope of such regulations, or the implementation of new or expanded license requirements, may create delays in the introduction of our products or services in international markets or could prevent our customers with international operations from deploying our products or services globally.
These efforts may not be successful due to a variety of factors, including, but not limited to, our ability to: • Attract a new customer base, including in industries in which we have less experience; • Successfully develop new sales and marketing strategies to meet customer requirements; • Accurately predict, prepare for and promptly respond to technological developments in new fields; • Compete with new and existing competitors, many of which may have more financial resources, industry experience, brand recognition, relevant intellectual property rights or established customer relationships than we do; • Balance our investment in adjacent markets with investment in our existing products and services; and • Attract and retain employees with expertise in new fields.
These efforts may not be successful due to a variety of factors, including, but not limited to, our ability to: • Attract a new customer base, including in industries in which we have less experience; • Successfully develop new sales and marketing strategies to meet customer requirements; • Accurately predict, prepare for and promptly respond to technological developments in new fields; • Compete with new and existing competitors; • Balance our investment in adjacent markets with investment in our existing products and services; and • Attract and retain employees with expertise in new fields.
If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our ESG goals on a timely basis, or at all, our business, financial performance and growth could be adversely affected. We may be subject to litigation proceedings that could harm our business.
If our data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to these goals on a timely basis, or at all, our business, financial performance and growth could be adversely affected.
Our international operations and sales subject us to a number of increased risks, including, among others: • Economic slowdowns, recessions or uncertainty in financial markets, including, among other things, the impact of sustained global inflationary pressures and elevated interest rates; • Uncertain economic, legal and political conditions in China, Europe, the Middle East and other regions where we do business, including, for example, changes in China-Taiwan relations, regional or global military conflicts, and related sanctions and financial penalties imposed on participants in such conflicts; • Government trade restrictions, including tariffs, export controls or other trade barriers, and changes to existing trade arrangements, including the unknown impact of current and future U.S. and Chinese trade regulations; • Ineffective or weaker legal protection of intellectual property rights; • Difficulties in adapting to cultural differences in the conduct of business, which may include business practices in which we are prohibited from engaging by the Foreign Corrupt Practices Act or other anti-corruption laws; and • Financial risks such as longer payment cycles, changes in currency exchange rates and difficulty in collecting accounts receivable.
Our international operations and sales subject us to a number of increased risks, including, among others: • Economic slowdowns, recessions or uncertainty in financial markets; • Uncertain economic, legal and political conditions in China, Europe, the Middle East and other regions where we do business; • Government trade restrictions, including tariffs, export controls, economic sanctions or other trade barriers, and changes to existing trade arrangements; • Ineffective or weaker legal protection of intellectual property rights; • Difficulties in adapting to cultural differences in the conduct of business, which may include business practices in which we are prohibited from engaging by the Foreign Corrupt Practices Act or other anti-corruption laws; and • Financial risks such as longer payment cycles, changes in currency exchange rates and difficulty in collecting accounts receivable.
We are subject to export controls, laws and regulations that restrict selling, shipping or transmitting certain of our products and services and transferring certain of our technology outside the United States. These requirements also restrict domestic release of software and technology to certain foreign nationals.
We are subject to export controls, laws and regulations that restrict selling, shipping or transmitting certain of our products and services and transferring certain of our technology outside the United States.
We derive roughly half of our revenue from sales outside the United States, and we expect our orders and revenue to continue to depend on sales to customers outside the U.S. We have also continually expanded our non-U.S. operations.
Business Operations Risks The global nature of our operations exposes us to increased risks and compliance obligations. We derive roughly half of our revenue from sales outside the United States, and we expect our orders and revenue to continue to depend on sales to customers outside the U.S. We have also continually expanded our non-U.S. operations.
If we are unable to anticipate technological changes in our industry by introducing new or enhanced products in a timely and cost-effective manner, or if we fail to introduce products that meet market demand, we may lose our competitive position, our products may become obsolete, and our business, operating results or financial condition could be adversely affected.
If we are unable to anticipate technological changes in our industry by introducing new or enhanced products in a timely and cost-effective manner, or if we fail to introduce products that meet market demand, we may lose our competitive position, our products may become obsolete, and our business, operating results or financial condition could be adversely affected. 23 Table of Contents Additionally, we have in the past and may in the future invest in efforts to expand into adjacent markets.
Legal fees related to such litigation will increase our operating expenses and may reduce our net income. We may not be successful in our AI initiatives, which could adversely affect our business, operating results or financial condition. We have incorporated, and are continuing to develop and deploy, AI into our products and the operations of our business.
We may not be successful in our AI initiatives, which could adversely affect our business, operating results or financial condition. We have incorporated, and are continuing to develop and deploy, AI into our products and the operations of our business.
We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including, among others, the SEC, the Nasdaq Stock Market, the Financial Accounting Standards Board, states and the international governing bodies such as the European Union. These rules and regulations continue to evolve in scope and complexity making compliance difficult and uncertain.
We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including, among others, the SEC, the Nasdaq Stock Market, the Financial Accounting Standards Board, other federal agencies, states and the international governing bodies such as the European Union.
Under our customer agreements and other license agreements, we agree in many cases to indemnify our customers if our products are alleged to infringe on a third party’s intellectual property rights.
We are from time to time subject to claims alleging our infringement of third-party intellectual property rights, including patent rights. Under our customer agreements and other license agreements, we agree in many cases to indemnify our customers if our products are alleged to infringe on a third party’s intellectual property rights.
Changing rules, regulations as well as customer, employee and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying 29 Table of Contents with or meeting such regulations and expectations.
These rules and regulations continue to evolve in scope and complexity making compliance difficult and uncertain. Changing rules and regulations as well as customer, employee and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
Such covenants may, subject to certain significant exceptions, restrict our ability and the ability of certain of our subsidiaries after the Ansys Merger to, among other things, engage in mergers, consolidations and acquisitions, grant liens and incur debt at subsidiaries. In addition, such agreements also contain financial covenants that will require us to maintain certain financial ratios.
Such covenants, subject to certain significant exceptions, restrict our ability and the ability of certain of our subsidiaries to, among other things, engage in mergers, consolidations and acquisitions, grant liens, enter into certain sale and leaseback transactions and incur debt at subsidiaries. In addition, the term loan also contains financial covenants that will require us to maintain certain financial ratios.
Current and potential customers who are concerned or affected by such tariffs or restrictions may respond by developing their own products or replacing our solutions, which would have an adverse effect on our business.
Current and potential customers who are concerned or affected by such tariffs or restrictions may respond by developing their own products or replacing our solutions, including seeking alternatives from foreign competitors or open-source solutions not subject to these restrictions, which would have an adverse effect on our business.
The techniques used to obtain unauthorized access to networks or to sabotage systems of companies such as ours change frequently, increasingly leverage technologies such as AI, and generally are not recognized until launched against a target.
During this time, we may also experience increased incidences of cyberattacks or other security breaches. The techniques used to obtain unauthorized access to networks or to sabotage systems of companies such as ours change frequently, increasingly leverage technologies such as AI, and generally are not recognized until launched against a target.
The inclusion of third-party intellectual property in our products can also subject us and our customers to infringement claims. We may not be able to sufficiently limit our potential liability contractually.
The inclusion of third-party intellectual property in our products can also subject us and our customers to infringement claims. We may not be able to sufficiently limit our potential liability contractually. Regardless of outcome, infringement claims may require us to use significant resources and may divert management’s attention from the operation of our business.
The growth in sales of our hardware products subjects us to risks, including, but not limited to: • Increased dependence on a sole supplier for certain hardware components, which may reduce our control over product quality and pricing and may lead to delays in production and delivery of our hardware products, should our supplier fail to deliver sufficient quantities of acceptable components in a timely fashion; • Increasingly variable revenue and less predictable revenue forecasts, due to fluctuations in hardware revenue, which is recognized upfront upon shipment, as opposed to most sales of software products for which revenue is recognized over time; • Potential reductions in overall margins, as the gross margin for our hardware products, is typically lower than those of our software products; • Longer sales cycles, which create risks of insufficient, excess or obsolete inventory and variations in inventory valuation, which can adversely affect our business, operating results and financial condition; • Decreases or delays in customer purchases in favor of next-generation releases or competitive products, which may lead to excess or obsolete inventory or require us to discount our older hardware products; • Longer warranty periods than those of our software products, which may require us to replace hardware components under warranty, thus increasing our costs; and • Potential impacts on our supply chain, including the effects of sustained global inflationary pressures and elevated interest rates, or global semiconductor shortages.
The growth in sales of our hardware products subjects us to risks, including, but not limited to: • Delays in production and delivery of our hardware products, including due to, among other things, difficulty scaling production capacity and yield to meet customer demand, or a dependence on a sole supplier for certain hardware products, which may reduce our control over product availability, quality and pricing; • Increasingly variable revenue and less predictable revenue forecasts, due to fluctuations in hardware revenue, which is recognized upfront upon shipment, as opposed to most sales of software products for which revenue is recognized over time; 24 Table of Contents • Potential reductions in overall margins, as the gross margin for our hardware products, is typically lower than those of our software products and may be subject to certain trade regulation, including tariffs; • Longer sales cycles, which create risks of insufficient, excess or obsolete inventory and variations in inventory valuation, which can adversely affect our business, operating results and financial condition; • Decreases or delays in customer purchases in favor of next-generation releases or competitive products, which may lead to excess or obsolete inventory or require us to discount our older hardware products; • Longer warranty periods than those of our software products, which may require us to replace hardware components under warranty, thus increasing our costs; and • Potential impacts on our supply chain, including the factors creating an uncertain macroeconomic environment as discussed above.
Our trade secrets may also be stolen, otherwise become known, or be independently developed by competitors. 22 Table of Contents From time to time, we may need to commence litigation or other legal proceedings in order to assert claims of infringement of our intellectual property, defend our products from piracy, protect our trade secrets or know-how, or determine the enforceability, scope and validity of the propriety rights of others.
From time to time, we may need to commence litigation or other legal proceedings in order to assert claims of infringement of our intellectual property, defend our products from piracy, protect our trade secrets or know-how, or determine the enforceability, scope and validity of the propriety rights of others. Intellectual property litigation is lengthy, expensive and uncertain.
We may be subject to legal claims or regulatory matters involving stockholder, consumer, employment, customer, supplier, competition and other issues on a global basis. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur.
We or our directors or officers are subject to litigation proceedings, which are expensive, could divert management attention and harm our business. We are subject to legal claims or regulatory matters involving stockholder, consumer, employment, customer, supplier, competition and other issues on a global basis. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur.
Additionally, due to our business model, the negative impact of these events or disruptions may not be immediately realized. 15 Table of Contents Further economic uncertainty could also adversely affect the banking and financial services industry and result in bank failures or credit downgrades of the banks we rely on for foreign currency forward contracts, credit and banking transactions, and deposit services, or cause them to default on their obligations.
Further economic uncertainty could also adversely affect the banking and financial services industry and result in bank failures or credit downgrades of the banks we rely on for foreign currency forward contracts, credit and banking transactions, and deposit services, or cause them to default on their obligations.
In some cases, such changes could prevent the export or import of our products. 17 Table of Contents Consolidation among our customers and within the industries in which we operate, as well as our dependence on a relatively small number of large customers, may negatively impact our operating results.
Consolidation among our customers and within the industries in which we operate, as well as our dependence on a relatively small number of large customers, may negatively impact our operating results.
For example, China has implemented national policies favoring Chinese companies and has formed government-backed investment funds as it seeks to build independent EDA capabilities and compete internationally in the semiconductor industry.
The industries in which we operate are highly competitive, with new competitors entering these markets both domestically and internationally. For example, China has implemented national policies favoring Chinese companies and has formed government-backed investment funds as it seeks to build independent EDA capabilities and compete internationally in the semiconductor industry.
If we do not obtain or maintain appropriate patent, copyright or trade secret protection for any reason, or cannot fully defend our intellectual property rights in certain jurisdictions, our business and operating results would be harmed. In addition, intellectual property litigation is lengthy, expensive and uncertain.
Legal fees related to such litigation will increase our operating expenses and may reduce our net income. If we do not obtain or maintain appropriate patent, copyright or trade secret protection for any reason, or cannot fully defend our intellectual property rights in certain jurisdictions, our business and operating results would be harmed.
For example, the United States government has implemented controls on advanced computing ICs, computer commodities that contain such ICs, and certain semiconductor manufacturing items, as well as controls on transactions involving items for supercomputer and semiconductor manufacturing end-users. These controls expand the scope of foreign-produced items subject to license requirements for certain entities on the U.S. government's Entity List.
For example, the United States government has implemented controls on advanced computing ICs, computer commodities that contain such ICs, and certain semiconductor manufacturing items, as well as controls on transactions involving items for supercomputer and semiconductor manufacturing end-users.
In addition, we and our competitors may acquire businesses and technologies to complement and expand our respective product offerings. Consolidated competitors could have considerable financial resources and channel influence as well as broad geographic reach, which may enable them to be more competitive in, among other things, product differentiation, breadth of technology portfolio, pricing, marketing, services or support.
Consolidated competitors could have considerable financial resources and channel influence as well as broad geographic reach, which may enable them to be more competitive in, among other 17 Table of Contents things, product differentiation, breadth of technology portfolio, pricing, marketing, services or support. Such consolidations or acquisitions could negatively impact our business, operating results and financial condition.
The covenants contained in the agreements governing our indebtedness following the Ansys Merger may impose restrictions on us and certain of our subsidiaries that may affect our ability to operate our businesses.
The covenants contained in the agreements governing our indebtedness may impose restrictions on us and certain of our subsidiaries that may affect our ability to operate our businesses. The agreements that govern our indebtedness contain various affirmative and negative covenants. The indenture governing the Senior Notes also contains various affirmative and negative covenants.
Failure to realize the benefits expected from the Ansys Merger could adversely affect our business, operating results and financial condition. The anticipated benefits we expect from the Ansys Merger are based on projections and assumptions about our combined business with Ansys, which may not materialize as expected or which may prove to be inaccurate.
Furthermore, the anticipated benefits we expect from the Ansys Merger are based on projections and assumptions about our combined business with Ansys, which may not materialize as expected or which may prove to be inaccurate. In the case of the Ansys Merger, the foregoing risks may be magnified due to the scale of the merger.
While AI technology may drive future growth in our business, worldwide markets for AI-enabled products may not develop in the manner or time periods we anticipate, or at all. If domestic or global economies worsen, overall spending on the development of AI-related products may decrease, which would adversely impact demand for our products in these markets.
If domestic or global economies worsen, overall spending on the development of AI-related products may decrease, which would adversely impact demand for our products in these markets.
Furthermore, the semiconductor and electronics industries have become increasingly complex and interconnected ecosystems. Many of our customers outsource the manufacturing of their semiconductor designs to foundries. Our customers also frequently incorporate third-party IP, whether provided by us or other vendors, into their designs to improve the efficiency of their design process.
Many of our customers outsource the manufacturing of their semiconductor designs to foundries. Our customers also frequently incorporate third-party IP, whether provided by us or other vendors, into their designs to improve the efficiency of their design process. We work closely with major foundries to ensure that our EDA, IP and manufacturing solutions are compatible with their manufacturing processes.
We operate in highly competitive industries, and if we do not continue to meet our customers’ demand for innovative technology at lower costs, our products may not be competitive or may become obsolete. In our Design Automation segment, we compete against EDA vendors that offer a variety of products and services, such as Cadence Design Systems, Inc. and Siemens EDA.
We operate in highly competitive industries, and if we do not continue to meet our customers’ demand for innovative technology at lower costs, our products may not be competitive or may become obsolete.
Uncertainty in the macroeconomic environment, including the effects of, among other things, sustained global inflationary pressures and elevated interest rates, potential economic slowdowns or recessions, supply chain disruptions, geopolitical pressures, fluctuations in foreign exchange rates and associated global economic conditions, have resulted in volatility in credit, equity and foreign currency markets.
The current macroeconomic environment demonstrates the effects of, among other things, changes in U.S. and global trade policy, including the tariffs enacted in 2025 by the U.S. and other governments, sustained global inflationary pressures and elevated interest rates, potential economic slowdowns or recessions, supply chain disruptions, geopolitical pressures and fluctuations in foreign exchange rates.
In addition, if our customers or distributors build elevated inventory levels, we could experience a decrease in demand for our products. If any of these events or disruptions were to occur, the demand for our products and services could be adversely affected along with our business, operating results and financial condition.
If any of these events or disruptions were to occur, the demand for our products and services could be adversely affected along with our business, operating results and financial condition. Additionally, due to our business model, the negative impact of these events or disruptions may not be immediately realized.
Semiconductor device functionality requirements continually increase while feature widths decrease, which substantially increases the complexity, cost and risk of chip design and manufacturing. At the same time, our customers and potential customers continue to demand a lower total cost of design, which can lead to the consolidation of their purchases from one vendor.
At the same time, our customers and potential customers continue to demand a lower total cost of design, which can lead to the consolidation of their purchases from one vendor or displacement of their purchases by internal development.
If we do not manage the foregoing risks, the transactions that we complete or are unable to complete, including the Ansys Merger and the Optical Solutions Divestiture (as defined below), may have an adverse effect on our business, operating results and financial condition.
It could also disrupt existing business relationships, make it harder to develop new business relationships, or otherwise negatively impact the way that we operate our business. If we do not manage the foregoing risks, the transactions that we complete or are unable to complete may have an adverse effect on our business, operating results and financial condition.
We have completed a significant number of acquisitions in recent years and are currently anticipating the closing of the Ansys Merger in the first half of calendar year 2025.
We have completed a significant number of acquisitions in recent years, including the Ansys Merger, which was completed in July 2025.
Our financial results are also affected by fluctuations in foreign currency exchange rates. A weakening U.S. dollar relative to other currencies increases expenses of our foreign subsidiaries when they are translated into U.S. dollars in our consolidated statements of income.
A weakening U.S. dollar relative to other currencies increases expenses of our foreign subsidiaries when they are translated into U.S. dollars in our consolidated statements of income. Likewise, a strengthening U.S. dollar relative to other currencies, including the renminbi or Yen, reduces revenue of our foreign subsidiaries upon translation and consolidation.
Our historical results should not be viewed as indicative of our future performance due to these periodic fluctuations.
Our operating results may fluctuate in the future, which may adversely affect our stock price. Our operating results are subject to quarterly and annual fluctuations, which may adversely affect our stock price. Our historical results should not be viewed as indicative of our future performance due to these periodic fluctuations.
Longer-term reduced demand for these or other products could result in reduced demand for design solutions and significant decreases in our average selling prices and product sales over time. Future economic downturns could also adversely affect our business, operating results and financial condition.
Longer-term reduced demand for these or other products could result in reduced demand for design solutions and significant decreases in our average selling prices and product sales over time. In addition, if our customers or distributors build elevated inventory levels, we could experience a decrease in demand for our products.
We also compete with other EDA vendors, including new entrants to the marketplace, that offer products focused on one or more discrete phases of the IC design process. Moreover, some of our customers internally develop design tools and capabilities that compete with our products.
In our Design Automation segment, we compete against a variety of different EDA vendors, including publicly traded companies that offer a variety of products and services as well as other EDA vendors, including new entrants to the market, that offer products focused on one or more discrete phases of the IC design process.
If growth in the semiconductor and electronics industries slows or stalls, including, among other things, due to sustained global inflationary pressures and elevated interest rates, a continued or worsening global supply chain disruption, geopolitical pressures or economic slowdowns or recessions then demand for our products and services could decrease and our business, operating results and financial condition could be adversely affected.
If growth in the semiconductor and electronics industries or certain sectors within these industries slows or stalls, including, among other things, due to the factors creating an uncertain macroeconomic environment as discussed above, then demand for our products and services could 15 Table of Contents decrease and our business, operating results and financial condition could be adversely affected.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs part of this process, appropriate personnel will collaborate with subject matter specialists, as necessary, to gather insights for identifying and assessing material cybersecurity threat risks, their severity, and potential mitigations. As part of the above approach and processes, we regularly engage with assessors, consultants, auditors, and other third-parties to help identify areas for continued focus, improvement and/or compliance.
Biggest changeOur process for identifying and assessing material risks from cybersecurity threats operates alongside our broader overall risk assessment process. As part of this process, appropriate personnel will collaborate with subject matter specialists, as necessary, to gather insights for identifying and assessing material cybersecurity threat risks, their severity, and potential mitigations.
The CGN Committee of our Board, a majority of whom are individuals with a strong background in cybersecurity and related matters, meets with members of senior management to review our information technology and data security policies and practices, and to assess current and potential threats, cybersecurity incidents and related risks.
The CGN Committee, a majority of whom are individuals with a strong background in cybersecurity and related matters, meets with members of senior management to review our information technology and data security policies and practices, and to assess current and potential threats, cybersecurity incidents and related risks.
Our approach includes, among other things: • Security and privacy reviews designed to identify risks from new features, software, suppliers and vendors; • A vulnerability management program designed to identify software vulnerabilities; • A variety of tools designed to monitor our networks, systems, and data for suspicious activity; • An internal red team program that simulates cyber threats, enhancing our ability to fix vulnerabilities before they are exploited by threat actors; • A threat intelligence program designed to model and research our adversaries; • Products and services to structure, test, and assess the rigor of our software security practices; • A variety of privacy, cybersecurity, and incident response trainings and simulations, including regular controlled penetration testing and cyber incident exercises to test the robustness of our data security protections and incident response readiness; • For suppliers and service providers, pre-engagement risk-based diligence, contractual security and notification provisions, and ongoing monitoring as appropriate; and • Maintaining cyber liability insurance that covers certain liabilities related to data breaches and related incidents.
Our approach includes, among other things: • Security and privacy reviews designed to identify risks from new features, software, suppliers, and vendors; • A vulnerability management program designed to identify software vulnerabilities; • A variety of tools designed to monitor our networks, systems, and data for suspicious activity; • An internal red team program that simulates cyber threats, enhancing our ability to fix vulnerabilities before they are exploited by threat actors; • A threat intelligence program designed to model and research our adversaries; • Products and services to structure, test, and assess the rigor of our software security practices; • A variety of privacy, cybersecurity, and incident response trainings and simulations, including mandatory yearly training for all employees, additional training for all Information Technology and Information Security personnel, and regular controlled penetration testing and cyber incident exercises to test the robustness of our data security protections and incident response readiness; • For suppliers and service providers, pre-engagement risk-based diligence, contractual security and notification provisions, and ongoing monitoring as appropriate; and • Maintaining cyber liability insurance that covers certain liabilities related to data breaches and related incidents.
In our risk factors, we describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, 31 Table of Contents including our business strategy, results of operations or financial condition.
In our risk factors, we describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition. See our risk factor disclosures in Part I, Item 1A of this Annual Report.
See our risk factor disclosures in Part I, Item 1A of this Annual Report. Cybersecurity Governance Information technology and data security, particularly cybersecurity, is a top area of focus for our Board of Directors (the Board), which considers these areas as essential for the success of our company and the broader technology industry in which we operate.
Cybersecurity Governance Information technology and data security, particularly cybersecurity, is a top area of focus for our Board of Directors (the Board), which considers these areas as essential for the success of our company and the broader technology industry in which we operate. Our Board is actively involved in overseeing cybersecurity risk management.
Our Board is actively involved in overseeing cybersecurity risk management. At least once a year, senior management, including our Chief Information Security Officer (CISO), presents to the Board on Synopsys' cybersecurity performance and risk profile.
At least once a year, senior management, including our Chief Information Security Officer (CISO), presents to the Board on Synopsys' cybersecurity performance and risk profile. Further, senior management and our CISO present semiannually to our Corporate Governance and Nominating Committee (CGN Committee) on Synopsys' cybersecurity risk oversight activities and cybersecurity preparedness efforts.
Synopsys’ cybersecurity program is designed to leverage multiple industry-recognized frameworks including the National Institute of Standards and Technology Cyber Security Framework (NIST CSF) and the ISO/IEC 27001 Information Security Management Framework, and are assessed regularly by our internal audit department.
Synopsys’ cybersecurity policies and procedures are intended to align with multiple industry-recognized frameworks, including the National Institute of Standards and Technology Cyber Security Framework (NIST CSF) and the ISO/International Electrotechnical Commission (IEC) 27001 Information Security Management Framework. In addition, some Synopsys products are ISO27001 and/or SOC2 Type 2 certified. Our internal audit department regularly assesses our conformity with these frameworks.
We track our NIST CSF implementation through periodic third-party maturity assessments that provide the basis for establishing performance goals for the coming period. Our process for identifying and assessing material risks from cybersecurity threats operates alongside our broader overall risk assessment process.
We track our NIST CSF implementation through regular third-party maturity assessments, which provide the basis for establishing performance goals for the coming period. We also closely monitor the ever-changing landscape of related laws and regulations and regularly update our policies and processes to promote continued compliance.
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Since 2015, we have not experienced any material cybersecurity incidents and the expenses we have incurred from cybersecurity incidents were immaterial. This includes penalties and settlements, of which there were none.
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As part of the above approach and processes, we regularly engage with assessors, consultants, auditors, and other third-parties to help identify areas for continued focus, improvement and/or compliance. Since 2015, Synopsys is not aware of any material information security breaches and has not made any associated penalties/settlements, and the expenses we have incurred from cybersecurity incidents were immaterial.
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Further, senior management and our CISO present semiannually to our Corporate Governance and Nominating Committee (CGN Committee) on Synopsys' cybersecurity risk oversight activities and cybersecurity preparedness efforts.
Added
This 29 Table of Contents includes penalties and settlements, of which there were none. During the same time period, while some of our suppliers have experienced security breaches, none of these breaches have had a material impact on Synopsys.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe currently lease approximately 3.3 million square feet of space in 29 countries other than the United States, and own buildings in Wuhan, China and Hsinchu, Taiwan as well as office space in Xiamen, China and Yongin-si, South Korea . These offices are likewise used primarily for sales and support, service, and research and development activities for our business segments.
Biggest changeWe currently lease approximately 4 million square feet of space in 35 countries other than the United States, and own buildings in Wuhan, China and Hsinchu, Taiwan as well as office space in Xiamen, China, Pune, India, and Yongin-si, South Korea .
We believe that our existing facilities, including both owned and leased properties, are in good condition and suitable for our current needs and that suitable additional or substitute space will be available on commercially reasonable terms as needed to accommodate any expansion of our operations. 32 Table of Contents
We believe that our existing facilities, including both owned and leased properties, are in good condition and suitable for our current needs and that suitable additional or substitute space will be available on commercially reasonable terms as needed to accommodate any expansion of our operations.
Item 2. Properties Our principal o ffices are currently located in Sunnyvale, California. We currently lease approximately 1.1 million square feet of space in 24 offices throughout the United States, of which we sublet 340,000 square feet to third parties. We own a 118,000 square foot building in California, which we lease to a third party.
Item 2. Properties Our principal o ffices are currently located in Sunnyvale, California. We currently lease approximately 1.7 million square feet of space in 45 offices throughout the United States, of which we sublet 340,000 square feet to third parties. We own approximately 176,000 square feet across four sites in the United States.
As our needs change, from time to time, we may relocate, expand, and/or otherwise increase or decrease the size of our operations, offices or personnel.
These offices are likewise used primarily for sales and support, service, and research and development activities for our business segments. 30 Table of Contents As our needs change, from time to time, we may relocate, expand, and/or otherwise increase or decrease the size of our operations, offices or personnel.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on Synopsys because of the defense costs, diversion of management resources and other factors. We regularly review the status of each significant matter and assess its potential financial exposure.
Biggest changeHowever, the ultimate outcome of any litigation is often uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial condition. Regardless of outcome, litigation can have an adverse impact on Synopsys because of the defense costs, diversion of management resources and other factors.
We are not aware of any legal proceedings that would materially impact our business, operating results or financial condition.
We are not aware of any other legal proceedings that would materially impact our business, operating results, or financial condition. Item 4. Mine Safety Disclosures Not applicable. 31 Table of Contents PART II
Item 3. Legal Proceedings We are subject to routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate outcome of any litigation is often uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial condition.
Item 3. Legal Proceedings We are subject to routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. On October 31, 2025, a shareholder class action complaint was filed in the United States District Court for the Northern District of California captioned Kim v. Synopsys, Inc., et al.
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(Case No. 25-cv-09410) against us and certain of our officers (the Kim Action). The complaint brings claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and alleges that certain material misstatements or omissions related to the performance of our Design IP segment were made in violation of federal securities laws.
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In addition, on November 25, 2025, a shareholder class action complaint was filed in the United States District Court for the Northern District of California captioned New England Teamsters Pension Fund v. Synopsys, Inc., et al . (Case No. 25-cv-10201) against us and certain of our directors and officers.
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The complaint raises similar allegations to the Kim Action but also brings claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 on behalf of stockholders who received our stock in exchange for their shares of common stock of Ansys, Inc. as part of our acquisition of that company.
Added
The plaintiffs in both actions are seeking unspecified monetary damages and an award of costs and expenses, including reasonable attorneys’ fees and expert fees. We believe these claims are without merit, and we intend to defend the matters vigorously.
Added
As we are unable to determine at this time whether any loss ultimately will occur or to estimate the range of such loss, no amount of loss has been accrued by us in our financial statements as of and for the fiscal year-ended October 31, 2025 We regularly review the status of each significant matter and assess its potential financial exposure.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe table below sets forth information regarding our repurchases of our common stock during the three months ended November 2, 2024: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Maximum dollar value of shares that may yet be purchased under the programs Month #1 August 4, 2024 through September 7, 2024 — $ — — $ 194,276,393 Month #2 September 8, 2024 through October 5, 2024 — $ — — $ 194,276,393 Month #3 October 6, 2024 through November 2, 2024 — $ — — $ 194,276,393 Total — — $ 194,276,393
Biggest changeThe table below sets forth information regarding our repurchases of our common stock during the three months ended October 31, 2025: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Maximum dollar value of shares that may yet be purchased under the programs Month #1 August 1, 2025 through August 31, 2025 — $ — — $ 194,276,393 Month #2 September 1, 2025 through September 30, 2025 — $ — — $ 194,276,393 Month #3 October 1, 2025 through October 31, 2025 — $ — — $ 194,276,393 Total — — $ 194,276,393
Dividends We have not paid cash dividends on our common stock. Stock Repurchase Program In fiscal 2022, our Board of Directors approved a stock repurchase program (the Program) with authorization to purchase up to $1.5 billion of our common stock. As of October 31, 2024, $194.3 million remained available for future repurchases under the Program.
Dividends We have not paid cash dividends on our common stock. Stock Repurchase Program In fiscal 2022, our Board of Directors approved a stock repurchase program (the Program) with authorization to purchase up to $1.5 billion of our common stock. As of October 31, 2025, $194.3 million remained available for future repurchases under the Program.
However, in connection with the pending Ansys Merger, we have suspended the Program until we reduce our expected debt levels.
However, in connection with the Ansys Merger, we have suspended the Program until we reduce our expected debt levels.
Fiscal year ending November 2. 34 Table of Contents The information presented above in the stock performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, except to the extent that we subsequently specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or Exchange Act.
Fiscal year ending October 31. 32 Table of Contents The information presented above in the stock performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, except to the extent that we subsequently specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or Exchange Act.
The graph assumes that $100 was invested in Synopsys common stock on November 1, 2019 (the last trading day before the beginning of our fifth preceding fiscal year) and in each of the indexes on October 31, 2019 (the closest month end) and that all dividends were reinvested. No cash dividends were declared on our common stock during such time.
The graph assumes that $100 was invested in Synopsys common stock on October 30, 2020 (the last trading day before the beginning of our fifth preceding fiscal year) and in each of the indexes on October 31, 2020 (the closest month end) and that all dividends were reinvested. No cash dividends were declared on our common stock during such time.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Select Market under the symbol “SNPS.” As of December 16, 2024, we had 198 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Select Market under the symbol “SNPS.” As of December 15, 2025, we had 331 stockholders of record.
The comparisons in the table are not intended to forecast or be indicative of possible future performance of our common stock. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* *$100 invested on November 1, 2019 in stock or October 31, 2019 in index, including reinvestment of dividends.
The comparisons in the table are not intended to forecast or be indicative of possible future performance of our common stock. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* *$100 invested on October 30, 2020 in stock or October 31, 2020 index, including reinvestment of dividends. Indexes calculated on a month-end basis.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDesign Automation Segment Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Adjusted operating income $ 1,631.9 $ 1,413.9 $ 1,176.1 $ 218.0 15 % $ 237.8 20 % Adjusted operating margin 39 % 37 % 36 % 2 % 5 % 1 % 3 % The increase in adjusted operating income for fiscal 2024 compared to fiscal 2023 and for fiscal 2023 compared to fiscal 2022 was primarily due to an increase in revenue from arrangements booked in prior periods.
Biggest changeDesign Automation Segment Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Adjusted operating income $ 2,213.5 $ 1,631.9 $ 1,413.9 $ 581.6 36 % $ 218.0 15 % Adjusted operating margin 42 % 39 % 37 % 3 % 8 % 2 % 5 % The increase in adjusted operating income for fiscal 2025 compared to fiscal 2024 and for fiscal 2024 compared to fiscal 2023 was primarily due to an increase in revenue from arrangements booked in prior periods. 47 Table of Contents Design IP Segment Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Adjusted operating income $ 419.3 $ 730.2 $ 514.1 $ (310.9) (43) % $ 216.1 42 % Adjusted operating margin 24 % 38 % 33 % (14) % (37) % 5 % 15 % The decrease in adjusted operating income for fiscal 2025 compared to fiscal 2024 was primarily due to lower revenue from the impact of China export control restrictions, including the Q3 2025 BIS Restrictions, weaker than expected demand from a major foundry customer, and certain roadmap and resource decisions that did not yield their intended results, as well as an increase in employee-related costs due to headcount increases.
Business Combinations We allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date with the exception of contract assets and contract liabilities (deferred revenue) which are recognized and measured on the acquisition date in accordance with our "Revenue Recognition" policy in Note 2.
Business Combinations We allocate the purchase price of acquired companies to the tangible assets acquired, liabilities assumed and intangible assets acquired based upon their estimated fair values on the acquisition date with the exception of contract assets and contract liabilities (deferred revenue) which are recognized and measured on the acquisition date in accordance with our "Revenue Recognition" policy in Note 2.
Cash provided by our operations is dependent primarily upon the payment terms of our license agreements. We generally receive cash from upfront arrangements much sooner than from time-based products revenue, in which the license fee is typically paid either quarterly or annually over the term of the license.
Cash provided by operations is dependent primarily upon the payment terms of our license agreements. We generally receive cash from upfront arrangements much sooner than from time-based products revenue, in which the license fee is typically paid either quarterly or annually over the term of the license.
The increase in cost of revenue for fiscal 2024 compared to fiscal 2023 was primarily due to increases of $62.7 million in amortization of acquired technology-related intangible assets, which included an impairment charge of $53.5 million due to a decline in estimated fair value resulting from the reductions in the expected future cash flows associated with certain core/developed technology intangible assets as further discussed in Note 7.
The increase in cost of revenue for fiscal 2024 compared to fiscal 2023 was primarily due to increases of $62.7 million in amortization of acquired technology-related intangible assets, which included an impairment charge of $53.5 million due to a decline in estimated fair value resulting from the reductions in the expected future cash flows associated with certain core/developed technology intangible assets as further discussed in Note 6.
In connection with the pending Ansys Merger, we have suspended our stock repurchase program until we reduce our expected debt levels. The IR Act was enacted in the United States on August 16, 2022. The IR Act imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022.
In connection with the Ansys Merger, we have suspended our stock repurchase program until we reduce our expected debt levels. The IR Act was enacted in the United States on August 16, 2022. The IR Act imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022.
Change in Fair Value of Deferred Compensation The income or loss arising from the change in the fair value of our non-qualified deferred compensation plan obligation is recorded in cost of sales and each functional operating expense, with the offsetting change in the fair value of the related assets recorded in interest and other income (expense), net.
Change in Fair Value of Deferred Compensation The income or loss arising from the change in the fair value of our non-qualified deferred compensation plan obligation is recorded in cost of sales and each functional operating expense, with the offsetting change in the fair value of the related assets recorded in other income (expense), net.
As of October 31, 2024, we were in compliance with the financial covenant. In July 2018, we entered into a 12-year 220.0 million Renminbi (approximately $33.0 million) credit agreement with a lender in China to support our facilities expansion. Borrowings bear interest at a floating rate based on the 5-year Loan Prime Rate plus 0.74%.
As of October 31, 2025, we were in compliance with the financial covenant. In July 2018, we entered into a 12-year 220.0 million Renminbi (approximately $33.0 million) credit agreement with a lender in China to support our facilities expansion. Borrowings bear interest at a floating rate based on the 5-year Loan Prime Rate plus 0.74%.
Summary of Significant Accounting Polices and Basis of Presentation of the Notes to Consolidated Financial Statements in this Annual Report for a discussion on our revenue recognition policy . The revenue we recognize in a particular period generally results from selling efforts in prior periods rather than the current period.
Summary of Significant Accounting Policies and Basis of Presentation of the Notes to Consolidated Financial Statements in this Annual Report for a discussion on our revenue recognition policy . The revenue we recognize in a particular period generally results from selling efforts in prior periods rather than the current period.
Stock Repurchase Program In fiscal 2022, our Board of Directors approved a stock repurchase program (the Program) with authorization to purchase up to $1.5 billion of our common stock. As of October 31, 2024 , $194.3 million remained available for future stock repurchases under the Program.
Stock Repurchase Program In fiscal 2022, our Board of Directors approved a stock repurchase program (the Program) with authorization to purchase up to $1.5 billion of our common stock. As of October 31, 2025 , $194.3 million remained available for future stock repurchases under the Program.
In addition to the interest on any outstanding loans, Synopsys will also be required to pay a facility fee on the entire portion of the revolving credit facility ranging from 0.080% to 0.175% based on the credit ratings of Synopsys on the daily amount of the revolving commitment. 50 Table of Contents The Revolving Credit Agreement contains a financial covenant requiring us to maintain a maximum consolidated leverage ratio, as well as other non-financial covenants.
In addition to the interest on any outstanding loans, Synopsys is also required to pay a facility fee on the entire portion of the revolving credit facility ranging from 0.080% to 0.175% based on the credit ratings of Synopsys on the daily amount of the revolving commitment. 50 Table of Contents The Revolving Credit Agreement contains a financial covenant requiring us to maintain a maximum consolidated leverage ratio, as well as other non-financial covenants.
We have changed our fiscal year end from the Saturday nearest to October 31 and consisting of 52 or 53 fiscal weeks to a fiscal year end of October 31 each year. The fiscal year change becomes effective with our fiscal year 2025, which began on November 3, 2024.
Fiscal Year End We have changed our fiscal year end from the Saturday nearest to October 31 and consisting of 52 or 53 fiscal weeks to a fiscal year end of October 31 each year. The fiscal year change became effective with our fiscal 2025, which began on November 3, 2024.
There is no impact on our net income from the fair value changes in our deferred compensation plan obligation and related assets. 45 Table of Contents Amortization of Acquired Intangible Assets Amortization of acquired intangible assets included in operating expenses consists of the amortization of trademarks, trade names, and customer relationships intangible assets related to acquisitions.
There is no impact on our net income from the fair value changes in our deferred compensation plan obligation and related assets. Amortization of Acquired Intangible Assets Amortization of acquired intangible assets, included in operating expenses, consists of the amortization of trademarks, trade names and customer relationships intangible assets related to acquisitions.
The second performance obligation is to provide maintenance on the hardware and its embedded software, which includes rights to technical support, hardware repairs and software updates that are all provided over the same term 41 Table of Contents and have the same time-based pattern of transfer to the customer.
The second performance obligation is to provide maintenance on the hardware and its embedded software, which includes rights to technical support, hardware repairs and software updates that are all provided over the same term and have the same time-based pattern of transfer to the customer.
We do not believe the amount of unsatisfied performance obligations is indicative of future sales or revenue, or that such obligations at the end of any given period correlates with actual sales performance of a particular geography or 42 Table of Contents particular products and services.
We do not believe the amount of unsatisfied performance obligations is indicative of future sales or revenue, or that such obligations at the end of any given period correlates with actual sales performance of a particular geography or particular products and services.
Accounting for business combinations requires management to make significant estimates and assumptions including our estimates for intangible assets. Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies and are inherently uncertain.
Accounting for business combinations requires management to make significant estimates and assumptions for the valuation of goodwill and intangible assets. Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies and are inherently uncertain.
The majority of the remaining backlog is expected to be recognized in the following three years . The backlog was approximately $8.1 billion as of October 31, 2023, which included $1.4 billion in non-cancellable FSA commitments from customers. The amount and composition of unsatisfied performance obligations will fluctuate period to period.
The majority of the remaining backlog is expected to be recognized in the following three years . The backlog was approximately $8.1 billion as of October 31, 2024, which included $1.2 billion in non-cancellable FSA commitments from customers. The amount and composition of unsatisfied performance obligations will fluctuate period to period.
We have elected to exclude future sales-based royalty payments from the remaining performance obligations. Approximately 41% of the backlog as of October 31, 2024, excluding non-cancellable FSA, is expected to be recognized as revenue over the next 12 months, with the remainder recognized thereafter.
We have elected to exclude future sales-based royalty payments from the remaining performance obligations. Approximately 45% of the backlog as of October 31, 2025, excluding non-cancellable FSA, is expected to be recognized as revenue over the next 12 months, with the remainder recognized thereafter.
We will continue to monitor such developments, including potential additional trade restrictions, and other regulatory or policy changes by the U.S. and foreign governments. For more on risks related to government export and import restrictions such as the U.S. government’s Entity List and other U.S.
We will continue to monitor such developments, including potential additional Trade Restrictions, new or expanded license requirements, and other regulatory or policy changes by the U.S. and foreign governments. For more on risks related to government export and import restrictions such as the U.S. government’s Entity List and other U.S.
We have concluded that our EDA software licenses in Technology Subscription License (TSL) contracts are not distinct from our obligation to provide unspecified software updates to the licensed software throughout the license term, because those promises represent inputs to a single, combined performance obligation.
We have concluded that our EDA software licenses in Technology Subscription License (TSL) contracts and software licenses in Ansys semiconductor products are not distinct from our obligation to provide unspecified software updates to the licensed software throughout the license term, because those promises represent inputs to a single, combined performance obligation.
Upon the effective date, the Sixth Amendment amended the financial covenant to allow netting of the cash proceeds of certain debt incurred to finance the Ansys Merger as well as certain other modifications set forth therein.
The Sixth Amendment amended the financial covenant to allow netting of the cash proceeds of certain debt incurred to finance the Ansys Merger as well as certain other modifications set forth therein.
Further disaggregation of the revenues into various products and services within these two segments is summarized as follows: Design Automation Segment • EDA solutions include digital, custom and FPGA IC design software, verification software and hardware products, system integration products and services, and obligations to provide unspecified updates and support services.
Further disaggregation of the revenues into various products and services within these two segments is summarized as follows: Design Automation Segment • EDA solutions include digital, custom and FPGA IC design software, verification software and hardware products, Ansys semiconductor products, system integration products and services, and obligations to 39 Table of Contents provide unspecified updates and support services.
For a discussion of fiscal 2023 changes compared to fiscal 2022, see the discussion in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report for the fiscal year ended October 31, 2023, filed on December 12, 2023.
For a discussion of fiscal 2024 changes compared to fiscal 2023, see the discussion in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report for the fiscal year ended October 31, 2024, filed on December 19, 2024.
As revenues from IP products sales and hardware products sales are recognized upfront, customer demand and timing requirements for such IP products and hardware products could result in increased variability of our total revenues.
As revenues from sales of IP products, hardware products and S&A product licenses are recognized upfront, customer demand and timing requirements for such IP products, hardware products and S&A product licenses could result in increased variability of our total revenues.
Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) as of October 31, 2024 were approximately $8.1 billion, which includes $1.2 billion in non-cancellable FSA commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date.
Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) were approximately $11.4 billion as of October 31, 2025, which includes $2.0 billion in non-cancellable FSA commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date.
Currently, a reasonably reliable estimate of timing of payments related to uncertain tax benefits in individual years beyond fiscal 2024 cannot be made due to uncertainties in timing of the commencement and settlement of potential tax audits. 51 Table of Contents
Currently, a reasonably reliable estimate of timing of payments related to uncertain tax benefits in individual years beyond fiscal 2025 cannot be made due to uncertainties in timing of the commencement and settlement of potential tax audits.
Significant non-cash items and capital expenditures of discontinued operations related to our Software Integrity business are presented separately in Note 3. Discontinued Operations of the Notes to Consolidated Financial Statements.
Cash Flows Our consolidated statements of cash flows include cash flows related to the Software Integrity business. Significant non-cash items and capital expenditures of discontinued operations related to our Software Integrity business are presented separately in Note 3. Discontinued Operations of the Notes to Consolidated Financial Statements in this Annual Report .
Upon the completion of the Ansys Merger, the Sixth Amendment, among other things: • amends the applicable margin used to determine the interest that accrues on loans and the facility fee payable under the revolving credit facility to be based on our credit ratings; • amends the financial covenant thresholds under the financial covenant in the Revolving Credit Agreement requiring us to maintain a maximum consolidated leverage ratio; and • amends certain conditions to borrowing, other non-financial covenants and events of default.
The Sixth Amendment, among other things, also amended: (i) the applicable margin used to determine the interest that accrues on loans and the facility fee payable under the revolving credit facility to be based on our credit ratings, (ii) the financial covenant thresholds under the financial covenant in the Revolving Credit Agreement requiring us to maintain a maximum consolidated leverage ratio and (iii) certain conditions to borrowing, other non-financial covenants and events of default.
Please also see the cautionary language at the beginning of Part I of this Annual Report regarding forward-looking statements. Unless otherwise noted, this Management’s Discussion and Analysis of Financial Condition and Results of Operations relates solely to our continuing operations and does not include the operations of our Software Integrity business. See “Software Integrity Divestiture” below and Note 3.
Please also see the cautionary language at the beginning of Part I of this Annual Report regarding forward-looking statements. Unless otherwise noted, this Management’s Discussion and Analysis of Financial Condition and Results of Operations does not include the operations of our former Software Integrity business. See Note 3.
As of October 31, 2024 , we held $4.1 billion in cash, cash equivalents and short-term investments. We also held $2.2 million in restricted cash primarily associated with deposits for office leases and employee loan programs. Our cash equivalents consisted primarily of taxable money market mutual funds, time deposits and highly liquid investments with maturities of three months or less.
As of October 31, 2025 , we held $3.0 billion in cash, cash equivalents and short-term investments. We also held $5.7 million in restricted cash primarily associated with deposits for office leases and employee loan programs. Our cash equivalents consisted primarily of taxable money market mutual funds, time deposits and highly liquid investments with maturities of three months or less.
Upfront Products Revenue Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Upfront products revenue $ 1,802.2 $ 1,400.1 $ 1,221.2 $ 402.1 29 % $ 178.9 15 % Percentage of total revenue 29 % 26 % 26 % Changes in upfront products revenue are generally attributable to normal fluctuations in the extent and timing of customer requirements, which can drive the amount of upfront orders and revenue in any particular period.
Upfront Products Revenue Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Upfront products revenue $ 2,010.6 $ 1,802.2 $ 1,400.1 $ 208.4 12 % $ 402.1 29 % Percentage of total revenue 29 % 29 % 26 % Changes in upfront products revenue are generally attributable to normal fluctuations in the extent and timing of customer requirements, which can drive the amount of upfront orders and revenue in any particular period.
F or more information regarding our revenue as of October 31, 2024, including our contract balances as of such date, see Note 6. Revenue of the Notes to Consolidated Financial Statements in this Annual Report.
F or more information regarding our revenue during the year ended October 31, 2025, including our contract balances as of such date, see Note 5. Revenue of the Notes to Consolidated Financial Statements in this Annual Report.
There was no outstanding balance under the Revolving Credit Agreement as of October 31, 2024 and October 31, 2023.
There was no outstanding balance under the Revolving Credit Agreement as of October 31, 2025.
As of October 31, 2024, we had a $15.6 million outstanding balance under the agreement. See Note 11. Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Consolidated Financial Statements in this Annual Report for further discussion.
As of October 31, 2025, we had $13.1 million outstanding balance under the agreement. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Consolidated Financial Statements in this Annual Report for further discussion.
Purchase Obligations Purchase obligations represent an estimate of all open purchase orders and contractual obligations in the ordinary course of business for which we have not received the goods or services. As of October 31, 2024 , we had $650.0 million of purchase obligations, with $558.5 million payable within 12 months.
Purchase Obligations Purchase obligations represent an estimate of all open purchase orders and contractual obligations in the ordinary course of business for which we have not received the goods or services. As of October 31, 2025 , we had $1.2 billion of purchase obligations, with $832.2 million payable within 12 months.
Our short-term investments include U.S. government and municipal obligations, investment-grade available-for-sale debt and asset backed securities with an overall weighted-average credit rating of approximately AA. As of October 31, 2024, approximately $916.9 million of our cash and cash equivalents were domiciled in various foreign jurisdictions.
Our short-term investments include U.S. government and municipal obligations and investment-grade available-for-sale debt with an overall weighted-average credit rating of approximately AA. As of October 31, 2025, approximately $1.4 billion of our cash and cash equivalents were domiciled in various foreign jurisdictions.
Subject to the completion of the Ansys Merger, interest under the Revolving Credit Agreement will accrue on dollar-denominated loans at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate plus an applicable margin based on our credit ratings ranging from 0.795% to 1.200% or (ii) the ABR plus an applicable margin based on our credit ratings ranging from 0.000% to 0.200%.
Interest under the Revolving Credit Agreement accrues on dollar-denominated loans at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate (as defined in the Revolving Credit Agreement) plus an applicable margin based on our credit ratings ranging from 0.795% to 1.200% or (ii) the ABR (as defined in the Revolving Credit Agreement) plus an applicable margin based on our credit ratings ranging from 0.000% to 0.200%.
In fiscal 2024, while we saw continued strength in the artificial intelligence and high-performance computing sectors, certain industries such as industrial, automotive and consumer electronics are recovering more slowly from recent macroeconomic uncertainty.
While we have seen continued strength in the artificial intelligence and high-performance computing sectors, certain industries such as industrial, automotive and consumer electronics have recovered more slowly from recent macroeconomic uncertainty.
On February 13, 2024, we entered into a Sixth Amendment Agreement (the Sixth Amendment), which amended and restated our previous revolving credit agreement, dated as of December 14, 2022 (as amended and restated, the Revolving Credit Agreement).
On February 13, 2024, we entered into a Sixth Amendment Agreement (the Sixth Amendment), which amended and restated our previous revolving credit agreement, dated as of December 14, 2022 (as amended and restated, the Revolving Credit Agreement). Under the Sixth Amendment, certain amendments became effective on February 13, 2024 and certain additional amendments became effective on the Acquisition Date.
Total Revenue Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Design Automation $ 4,221.1 $ 3,775.3 $ 3,300.2 $ 445.8 12 % $ 475.1 14 % Design IP 1,906.3 1,542.7 1,315.5 363.6 24 % 227.2 17 % Total $ 6,127.4 $ 5,318.0 $ 4,615.7 $ 809.4 15 % $ 702.3 15 % Our revenues are subject to fluctuations, primarily due to customer requirements including the timing and value of contract renewals.
Total Revenue Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Design Automation $ 5,302.4 $ 4,221.1 $ 3,775.3 $ 1,081.3 26 % $ 445.8 12 % Design IP 1,751.8 1,906.3 1,542.7 (154.5) (8) % 363.6 24 % Total $ 7,054.2 $ 6,127.4 $ 5,318.0 $ 926.8 15 % $ 809.4 15 % Our revenues are subject to fluctuations, primarily due to customer requirements including customer demand, timing requirements and the value of contract renewals.
For more on risks related to the Ansys Merger, see Part I, Item 1A, Risk Factors , “ Risks Related to the Ansys Merger " of this Annual Report.
Business Combinations of the Notes to Consolidated Financial Statements for more information on the Ansys Merger. For more on risks related to the Ansys Merger, see Part I, Item 1A, Risk Factors , “ Risks Related to the Ansys Merger " of this Annual Report.
Cash Provided by (Used in) Investing Activities Net cash provided by investing activities was $1.2 billion for fiscal 2024 compared to net cash used in investing activities of $482.1 million for fiscal 2023.
Cash Provided by (Used in) Investing Activities Net cash used in investing activities was $15.9 billion for fiscal 2025 compared to net cash provided by investing activities of $1.2 billion for fiscal 2024.
We have consistently grown our revenue since 2005, despite periods of global economic uncertainty. We achieved these results because of our solid execution, leading technologies and strong customer relationships, and because we generally recognize our revenue for software licenses over the arrangement period, which typically approximates three years. See Note 2.
We achieved these results because of our solid execution, leading technologies and strong customer relationships, and because we generally recognize our revenue for software licenses over the arrangement period, which typically approximates two to three years. See Note 2.
The increase in research and development expenses for fiscal 2023 compared to fiscal 2022 was primarily due to higher employee-related costs of $135.1 million as a result of headcount increases as we continue to expand and enhance our product portfolio, increases of $57.2 million in the change in fair value of our executive deferred compensation plan assets, $31.0 million in facility costs, and $21.2 million in consultant and contractor costs.
The increase in research and development expenses for fiscal 2024 compared to fiscal 2023 was primarily due to higher employee-related costs of $148.2 million as a result of headcount increases as we continue to expand and enhance our product portfolio, increases of $36.5 million in the change in the fair value of our executive deferred compensation plan assets, $20.6 million in IT and facility costs, $6.7 million in depreciation expenses, and $2.4 million in consultant and contractor costs.
We have provided for foreign withholding taxes on the undistributed earnings of certain of our foreign subsidiaries to the extent such earnings are no longer considered to be indefinitely reinvested in the operations of those subsidiaries.
We have provided for foreign withholding taxes on the undistributed earnings of certain of our foreign subsidiaries to the extent such earnings are no longer considered to be indefinitely reinvested in the operations of those subsidiaries. Our debt and liquidity needs increased as a result of completing the Ansys Merger.
Year Ended October 31, 2024 2023 $ Change (dollars in millions) Cash provided by operating activities $ 1,407.0 $ 1,703.3 $ (296.3) Cash provided by (used in) investing activities $ 1,223.0 $ (482.1) $ 1,705.1 Cash used in financing activities $ (181.3) $ (1,196.9) $ 1,015.6 Cash Provided by Operating Activities We expect cash from our operating activities to fluctuate as a result of a number of factors, including the timing of our billings and collections, our operating results, and the timing and amount of tax and other liability payments.
Year Ended October 31, 2025 2024 $ Change (dollars in millions) Cash provided by operating activities $ 1,518.6 $ 1,407.0 $ 111.6 Cash provided by (used in) investing activities $ (15,881.3) $ 1,223.0 $ (17,104.3) Cash provided by (used in) financing activities $ 13,355.8 $ (181.3) $ 13,537.1 Cash Provided by Operating Activities We expect cash from our operating activities to fluctuate as a result of a number of factors, including the timing of billings and collections, operating results, and the timing and amount of tax and other liability payments.
The increase in sales and marketing expenses for fiscal 2023 compared to fiscal 2022 was primarily due to increases of $41.0 million in employee-related costs due to headcount increases and higher sales commissions, $13.2 million in the change in the fair value of our executive deferred compensation plan assets, $10.4 million in travel and marketing costs due to an increased number of in-person meetings and events, and $8.4 million in facility costs.
The increase in sales and marketing expenses for fiscal 2024 compared to fiscal 2023 was primarily due to increases of $90.9 million in employee-related costs due to headcount increases, $19.6 million in the change in the fair value of our executive deferred compensation plan assets, and $7.0 million in travel and marketing costs due to an increased number of in-person meetings and events.
General and Administrative Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) General and administrative expenses $ 568.5 $ 376.7 $ 313.6 $ 191.8 51 % $ 63.1 20 % Percentage of total revenue 9 % 7 % 7 % The increase in general and administrative expenses for fiscal 2024 compared to fiscal 2023 was primarily due to increases of $135.2 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger, $39.3 million in personnel-related costs due to headcount increases from hiring, $24.2 million in maintenance and depreciation expenses, and $5.7 million in the change in the fair value of our executive deferred compensation plan assets.
The increase in general and administrative expenses for fiscal 2024 compared to fiscal 2023 was primarily due to increases of $135.2 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger, $39.3 million in personnel-related costs due to headcount increases from hiring, $24.2 million in maintenance and depreciation expenses, and $5.7 million in the change in the fair value of our executive deferred compensation plan assets.
We expect growth across our geographies in fiscal 2025; however, we are expecting a challenging near-term growth environment, including in China, due to macroeconomic factors as well as, to a lesser degree, Entity List and other global trade restrictions.
We expect growth across our geographies in fiscal 2026; however, we are expecting a challenging near-term environment, including in China, due to macroeconomic factors and Trade Restrictions (as defined below).
EDA products and services are typically sold through TSL arrangements that grant customers the right to access and use all of the licensed products at the outset of an arrangement; software updates are generally made available throughout the entire term of the arrangement. The duration of our TSL contracts is generally three years, though it may vary for specific arrangements.
EDA products and services are typically sold through Technology Subscription License (TSL) arrangements that grant customers the right to access and use all of the licensed products at the outset of an arrangement; software updates are generally made available throughout the entire term of the arrangement.
Operating Expenses Research and Development Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Research and development expenses $ 2,082.4 $ 1,849.9 $ 1,589.8 $ 232.5 13 % $ 260.1 16 % Percentage of total revenue 34 % 35 % 34 % The increase in research and development expenses for fiscal 2024 compared to fiscal 2023 was primarily due to higher employee-related costs of $148.2 million as a result of headcount increases as we continue to expand and 44 Table of Contents enhance our product portfolio, increases of $36.5 million in the change in the fair value of our executive deferred compensation plan assets, $20.6 million in facility costs, $6.7 million in depreciation expenses, and $2.4 million in consultant and contractor costs.
These increases were partially offset by a decrease of $2.1 million in IT and facility costs. 43 Table of Contents Operating Expenses Research and Development Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Research and development expenses $ 2,479.3 $ 2,082.4 $ 1,849.9 $ 396.9 19 % $ 232.5 13 % Percentage of total revenue 35 % 34 % 35 % The increase in research and development expenses for fiscal 2025 compared to fiscal 2024 was primarily due to increases of $319.7 million in employee-related costs as a result of headcount increases from organic growth of $172.9 million as we continue to expand and enhance our product portfolio and $146.8 million from the Ansys Merger, $57.1 million in IT and facility costs, and $39.1 million in consultant and contractor costs, partially offset by a decrease of $6.6 million in the change in the fair value of our executive deferred compensation plan assets.
Impact of the Current Macroeconomic and Geopolitical Environment Uncertainty in the macroeconomic environment, including the effects of, among other things, sustained global inflationary pressures and elevated interest rates, potential economic slowdowns or recessions, supply chain disruptions, geopolitical pressures, fluctuations in foreign exchange rates, and associated global economic conditions, have resulted in volatility in credit, equity and foreign currency markets.
Impact of the Current Macroeconomic Environment The current macroeconomic environment, including the effects of, among other things, changes in U.S. and global trade policy, including the tariffs enacted in 2025 by the U.S. and other governments, sustained global inflationary pressures and elevated interest rates, potential economic slowdowns or recessions, supply chain disruptions, geopolitical pressures, and fluctuations in foreign exchange rates, have resulted in increased volatility in global markets.
Maintenance and Service Revenue Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Maintenance revenue $ 429.4 $ 358.1 $ 291.6 $ 71.3 20 % $ 66.5 23 % Professional service and other revenue 671.5 543.5 445.2 128.0 24 % 98.3 22 % Total $ 1,100.9 $ 901.6 $ 736.8 $ 199.3 22 % $ 164.8 22 % Percentage of total revenue 18 % 17 % 16 % The increase in maintenance revenue for fiscal 2024 compared to fiscal 2023 and for fiscal 2023 compared to fiscal 2022 was primarily due to an increase in the volume of arrangements that include maintenance.
Maintenance and Service Revenue Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Maintenance revenue $ 954.2 $ 429.4 $ 358.1 $ 524.8 122 % $ 71.3 20 % Professional service and other revenue 599.8 671.5 543.5 (71.7) (11) % 128.0 24 % Total $ 1,554.0 $ 1,100.9 $ 901.6 $ 453.1 41 % $ 199.3 22 % Percentage of total revenue 22 % 18 % 17 % The increase in maintenance revenue for fiscal 2025 compared to fiscal 2024 was primarily due to an increase in the volume of arrangements that include maintenance largely due to the closing of the Ansys Merger, which contributed $449.0 million in maintenance revenue in fiscal 2025.
The present value of operating cash flows from the existing technology was determined using discount rates ranging from approximately 11% to 14%. Customer relationships represent the fair value of the existing relationships with the acquired company’s customers.
The present value of operating cash flows from the existing technology and trade names was determined using discount rate of approximately 10.0%. Customer relationships represent the fair value of the existing relationships with the acquired company’s customers.
The increase in upfront products revenue for fiscal 2024 compared to fiscal 2023 and for fiscal 2023 compared to fiscal 2022 was primarily due to an increase in the sale of IP and hardware products driven by higher demand from customers.
The increase in upfront products revenue for fiscal 2025 compared to fiscal 2024 was primarily due to an increase in the sale of hardware products driven by higher demand from customers and the closing of the Ansys Merger, which contributed $198.7 million in upfront products revenue in fiscal 2025.
Revenue allocated to the IP licenses is recognized at a point in time upon the later of the delivery date or the beginning of the license period, and revenue allocated to support is recognized over the support term. Royalties are recognized as revenue in the quarter in which the applicable customer sells its products that incorporate our IP.
Revenue allocated to the IP licenses is recognized at a point in time upon the later of the delivery date or the beginning of the license period, and revenue allocated to support is recognized over the support term.
The increase in professional service and other revenue for fiscal 2024 compared to fiscal 2023 and for fiscal 2023 compared to fiscal 2022 was primarily due to the timing of IP customization projects . 43 Table of Contents Cost of Revenue Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Cost of products revenue $ 770.2 $ 697.7 $ 594.0 $ 72.5 10 % $ 103.7 17 % Cost of maintenance and service revenue 367.1 287.9 259.3 79.2 28 % 28.6 11 % Amortization of acquired intangible assets 108.0 45.3 44.7 62.7 138 % 0.6 1 % Total $ 1,245.3 $ 1,030.9 $ 898.0 $ 214.4 21 % $ 132.9 15 % Percentage of total revenue 20 % 19 % 19 % We divide cost of revenue into three categories: cost of products revenue, cost of maintenance and service revenue, and amortization of acquired intangible assets.
The decrease in professional service and other revenue for fiscal 2025 compared to fiscal 2024 and the increase for fiscal 2024 compared to fiscal 2023 were primarily due to the timing of IP customization projects. 42 Table of Contents Cost of Revenue Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Cost of products revenue $ 867.2 $ 770.2 $ 697.7 $ 97.0 13 % $ 72.5 10 % Cost of maintenance and service revenue 444.5 367.1 287.9 77.4 21 % 79.2 28 % Amortization of acquired intangible assets 311.8 108.0 45.3 203.8 189 % 62.7 138 % Total $ 1,623.5 $ 1,245.3 $ 1,030.9 $ 378.2 30 % $ 214.4 21 % Percentage of total revenue 23 % 20 % 19 % Our cost of revenue comprises of three categories: cost of products revenue, cost of maintenance and service revenue, and amortization of acquired intangible assets.
For more on risks related to the current macroeconomic and geopolitical environment, see Part I, Item 1A, Risk Factors , “ Uncertainty in the macroeconomic environment, and its potential impact on the semiconductor and electronics industries, may negatively affect our business, operating results and financial condition ” of this Annual Report.
See Part I, Item 1A, Risk Factors , “ Uncertainty in the macroeconomic environment, and its potential impact on the semiconductor and electronics industries, may negatively affect our business, operating results and financial condition ” and " Our operating results may fluctuate in the future, which may adversely affect our stock price " of this Annual Report for further discussion of the impact of global economic uncertainty on our business, operations and financial condition and potential fluctuations in our operating results, respectively.
Material Cash Requirements Our material cash requirements include the following contractual and other obligations. Leases We have operating lease arrangements for office space, data center, equipment and other corporate assets. As of October 31, 2024 , we had lease payment obligations, net of immaterial sublease income, of $631.0 million, with $93.2 million payable within 12 months.
Leases We have operating lease arrangements for office space, data center, equipment and other corporate assets. As of October 31, 2025 , we had lease payment obligations, net of immaterial sublease income, of $812.4 million, with $132.8 million payable within 12 months.
Our effective tax rate for fiscal 2023 was 6.9%, which included $60.5 million of U.S. federal research tax credit benefit, $80.0 million of FDII deduction benefit, and $40.0 million of net excess tax benefit from stock-based compensation. See Note 18.
Our effective tax rate for fiscal 2024 was 6.6%, which included $70.1 million of U.S. federal research tax credit benefit, $104.8 million of FDII deduction benefit, and $43.4 million of net excess tax benefit from stock-based compensation. See Note 17.
Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Amortization of acquired intangible assets $ 16.2 $ 9.3 $ 11.6 $ 6.9 74 % (2.3) (20) % Percentage of total revenue — % — % — % The increase in amortization of acquired intangible assets for fiscal 2024 compared to fiscal 2023 was primarily due to amortization expense related to intangible assets acquired during fiscal 2024, partially offset by certain intangible assets becoming fully amortized during fiscal 2024 .
Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Amortization of acquired intangible assets $ 192.5 $ 16.2 $ 9.3 $ 176.3 1,088 % $ 6.9 74 % Percentage of total revenue 3 % — % — % The increase in amortization of acquired intangible assets for fiscal 2025 compared to fiscal 2024 was primarily due to amortization expense related to intangible assets acquired from the Ansys Merger .
Segment Disclosure of the Notes to Consolidated Financial Statements in this Annual Report for more information about our reportable segments and revenue by geographic regions.
Results of Operations Revenue Our revenues are generated from two business segments: the Design Automation segment and the Design IP segment. See Note 19. Segment Disclosure of the Notes to Consolidated Financial Statements in this Annual Report for more information about our reportable segments and revenue by geographic regions.
Fiscal Year End Historically, our fiscal years have been 52- or 53-week periods ending on the Saturday nearest to October 31. Fiscal 2024 was a 53-week year ending on November 2, 2024, which impacted our revenue, expenses and operating results. Fiscal 2023 and 2022 were 52-week years and ended on October 28, 2023, and October 29, 2022, respectively.
Our fiscal quarters end on January 31, April 30, July 31 and October 31 of each year. Historically, our fiscal years have been 52- or 53-week periods ending on the Saturday nearest to October 31. Fiscal 2024 was a 53-week year ended on November 2, 2024. Fiscal 2023 was a 52-week year ended on October 28, 2023.
Sales and Marketing Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Sales and marketing expenses $ 859.3 $ 724.9 $ 642.7 $ 134.4 19 % $ 82.2 13 % Percentage of total revenue 14 % 14 % 14 % The increase in sales and marketing expenses for fiscal 2024 compared to fiscal 2023 was primarily due to increases of $90.9 million in employee-related costs due to headcount increases, $19.6 million in the change in the fair value of our executive deferred compensation plan assets, and $7.0 million in travel and marketing costs due to an increased number of in-person meetings and events.
Sales and Marketing Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Sales and marketing expenses $ 1,074.2 $ 859.3 $ 724.9 $ 214.9 25 % $ 134.4 19 % Percentage of total revenue 15 % 14 % 14 % The increase in sales and marketing expenses for fiscal 2025 compared to fiscal 2024 was primarily due to increases of $183.5 million in employee-related costs due to headcount increases from the Ansys Merger, which contributed $156.3 million, and organic growth, which contributed $27.2 million; $22.8 million in IT and facility costs, $13.1 million in travel and marketing costs due to an increased number of in-person meetings and events, $3.3 million in depreciation and maintenance expense, partially offset by a decrease of $10.6 million in the change in the fair value of our executive deferred compensation plan assets.
The following table sets forth some of our key consolidated financial information for each of our last three fiscal years: Year Ended October 31, 2024 2023 2022 (in millions, except per share amounts) Revenue $ 6,127.4 $ 5,318.0 $ 4,615.7 Cost of revenue $ 1,245.3 $ 1,030.9 $ 898.0 Operating expenses $ 3,526.4 $ 3,013.9 $ 2,569.0 Operating income $ 1,355.7 $ 1,273.2 $ 1,148.7 Net income from continuing operations attributed to Synopsys $ 1,441.7 $ 1,227.0 $ 970.2 Net income from discontinued operations attributed to Synopsys $ 821.7 $ 2.8 $ 14.4 Diluted net income per share attributed to Synopsys: Continuing operations $ 9.25 $ 7.91 $ 6.20 Discontinued operations $ 5.26 $ 0.01 $ 0.09 Fiscal 2024 compared to fiscal 2023 financial performance summary • Revenues were $6.1 billion, an increase of $809.4 million or 15%, primarily due to revenue growth across all products and geographies. • Total cost of revenue and operating expenses was $4.8 billion, an increase of $726.9 million or 18%, primarily due to an increase of $325.8 million in employee-related costs resulting from headcount increases through organic growth and acquisitions. • Operating income was $1.4 billion, an increase of $82.5 million or 6%. • Net income from discontinued operations was $821.7 million, an increase of $818.9 million, primarily due to the gain on Software Integrity Divestiture.
The following table sets forth some of our key consolidated financial information for each of our last three fiscal years: Year Ended October 31, 2025 2024 2023 (in millions, except per share amounts) Revenue $ 7,054.2 $ 6,127.4 $ 5,318.0 Cost of revenue $ 1,623.5 $ 1,245.3 $ 1,030.9 Operating expenses $ 4,515.7 $ 3,526.4 $ 3,013.9 Operating income $ 914.9 $ 1,355.7 $ 1,273.2 Net income from continuing operations attributed to Synopsys $ 1,336.1 $ 1,441.7 $ 1,227.0 Net income (loss) from discontinued operations attributed to Synopsys $ (3.9) $ 821.7 $ 2.8 Diluted net income (loss) per share attributed to Synopsys: Continuing operations $ 8.07 $ 9.25 $ 7.91 Discontinued operations $ (0.03) $ 5.26 $ 0.01 Fiscal 2025 compared to fiscal 2024 financial performance summary • Revenues were $7.1 billion, an increase of $926.8 million or 15%, which includes revenues from Ansys of $756.6 million.
Export Regulations), including, among other things, the inclusion of certain Chinese technology companies on the Entity List, restrictions on the export of electronic computer-aided design software specially designed for the development of ICs with Gate-All-Around Field-Effect Transistor structures, and certain other restrictions to China’s access to certain semiconductor and advanced computing technology. We currently believe U.S.
Export Regulations), including, among other things, the inclusion of certain Chinese technology companies on the Entity List, restrictions on the export of electronic computer-aided design (ECAD) software specially designed for the development of certain ICs, as well as controls on ECAD software for advanced semiconductor packaging involving multiple chips or chiplets, and certain other restrictions on China’s access to certain semiconductor and advanced computing technology.
Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include, but are not limited to: • future expected cash flows from software license sales, subscriptions, support agreements, consulting contracts and acquired developed technologies and patents; 40 Table of Contents • historical and expected customer attrition rates and anticipated growth in revenue from acquired customers; • estimated obsolescence rates used in valuing technology related intangible assets; • the expected use of the acquired assets; and • discount rates used to discount expected future cash flows to present value, which are typically derived from a weighted-average cost of capital analysis and adjusted to reflect inherent risks.
Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include, but are not limited to: • future expected cash flows, which includes estimates of software license sales, subscriptions, support agreements and consulting contracts; • projected expenses, which include cost of revenue, research and development and selling, general and administrative expenses (including estimated expenses required to generate the revenues attributable to different intangible assets); 38 Table of Contents • historical and expected customer attrition rates and anticipated growth in revenue from acquired customers; • royalty rates applied to acquired developed technology platforms and other intangible assets; • expected obsolescence rates and estimated useful lives of technology-related intangible assets; • expected use of the acquired assets; and • discount rates used to discount expected future cash flows to present value, which are typically derived from the implied rate of return on the transaction and a weighted-average cost of capital analysis with adjustments made to reflect inherent risks of the individual assets being valued; The fair value of the definite-lived intangibles was determined using variations of the income approach.
The portion of the transaction price allocated to the maintenance obligation is recognized as revenue ratably over the maintenance term. • Revenue from Professional Service contracts is recognized over time, generally using costs incurred or hours expended to measure progress. We have a history of reasonably estimating project status and the costs necessary to complete projects.
Revenue from support service is classified as maintenance and service revenue and is recognized ratably over the term of the contract, as we satisfy the support service performance obligation. • Revenue from professional service contracts is recognized over time, generally using costs incurred or hours expended to measure progress.
Time-Based Products Revenue Year Ended October 31, $ Change % Change $ Change % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (dollars in millions) Time-based products revenue $ 3,224.3 $ 3,016.3 $ 2,657.7 $ 208.0 7 % $ 358.6 13 % Percentage of total revenue 53 % 57 % 58 % The increase in time-based products revenue for fiscal 2024 compared to fiscal 2023 and for fiscal 2023 compared to fiscal 2022 was primarily attributable to an increase in TSL license revenue from arrangements booked in prior periods.
Segment Disclosure of the Notes to Consolidated Financial Statements in this Annual Report . 41 Table of Contents Time-Based Products Revenue Year Ended October 31, $ Change % Change $ Change % Change 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 (dollars in millions) Time-based products revenue $ 3,489.6 $ 3,224.3 $ 3,016.3 $ 265.3 8 % $ 208.0 7 % Percentage of total revenue 49 % 53 % 57 % The increase in time-based products revenue for fiscal 2025 compared to fiscal 2024 was primarily attributable to the closing of the Ansys Merger, which contributed $86.5 million in revenue in fiscal 2025, and an increase in TSL license revenue from arrangements booked in prior periods.
Our revenue growth from period to period is expected to vary based on the mix of our time based and upfront products. Based on our leading technologies, customer relationships, business model, diligent expense management, and acquisition strategy, we believe that we will continue to execute our strategies successfully.
Based on our leading technologies, customer relationships, business model, diligent expense management and acquisition strategy, we believe that we will continue to execute our strategies successfully. Acquisition of Ansys On July 17, 2025 (the Acquisition Date), we completed our acquisition of ANSYS, Inc.
Export Regulations will not have a material impact on our business. We anticipate additional changes to U.S. Export Regulations in the future, but we cannot forecast the scope or timing of such changes, nor the impact on our business.
Export Regulations or other U.S. or non-U.S. export, sanctions, or similar trade requirements (collectively, the Trade Restrictions) in the future, but we cannot forecast the scope or timing of such changes, nor the impact on our business.
While we are actively monitoring this conflict, at this time, it has not had a material impact on our business, operating results or financial condition to date. While our time-based model provides stability to our business, operating results and overall financial position, the broader implications of these macroeconomic or geopolitical events, particularly in the long term, remain uncertain.
While our time-based model provides stability to our business, operating results and overall financial position, the broader implications of these macroeconomic or geopolitical events, particularly in the long term, remain uncertain. Further, the negative impact of these events or disruptions may be deferred due to our business model.
See Note 11. Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Consolidated Financial Statements in this Annual Report for more information on the Bridge Commitment and the Term Loan Agreement.
We funded the Cash Consideration in the Ansys Merger from the issuance of the Senior Notes and the borrowings under the Term Loan Agreement. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Consolidated Financial Statements in this Annual Report for further discussion.
These unallocated expenses consist primarily of amortization of acquired intangible assets, stock-based compensation expense, changes in the fair value of deferred compensation plan, restructuring charges, and acquisition/divestiture related items. See Note 20. Segment Disclosure of the Notes to Consolidated Financial Statements in this Annual Report for more information.
Segment Operating Results We do not allocate certain operating expenses managed at a consolidated level to our reportable segments. These unallocated expenses consist primarily of amortization of acquired intangible assets, stock-based compensation expense, changes in the fair value of deferred compensation plan, restructuring charges, and acquisition/divestiture related items. See Note 19.
The following is a summary of our restructuring liabilities: Fiscal Year Balance at Beginning of Period Costs Incurred Cash Payments Balance at End of Period (dollars in millions) 2024 $ 8.2 $ — $ (3.6) $ 4.6 2023 $ — $ 53.1 $ (44.9) $ 8.2 2022 $ 12.9 $ 11.2 $ (24.1) $ — See Note 21.
The following is a summary of our restructuring liabilities: Fiscal Year Balance at Beginning of Period Costs Incurred Cash Payments Balance at End of Period (dollars in millions) 2025 $ 4.6 $ — $ (0.8) $ 3.8 2024 $ 8.2 $ — $ (3.6) $ 4.6 2023 $ — $ 53.1 $ (44.9) $ 8.2 In November 2025, we initiated a restructuring plan for involuntary employee terminations as part of a business reorganization (the 2026 Plan) upon approval by the Board of Directors.
See Part I, Item 1A, Risk Factors of this Annual Report for further discussion of the impact of global economic and geopolitical uncertainty on our business, operations and financial condition. 38 Table of Contents Developments in Export Control Regulations The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce published changes to U.S. export control regulations (U.S.
See Part I, Item 1A, Risk Factors of this Annual Report for further discussion of the impact of global economic and geopolitical uncertainty on our business, operations and financial condition. Impact of Global Trade Policy and the Current Geopolitical Environment We are actively monitoring changes to global trade policy, such as changes to U.S.
Term Loan Refer to "Bridge Commitment Letter, Term Loan and Revolving Credit Facilities” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report for more information. Long Term Accrued Income Taxes As of October 31, 2024 , we had $18.8 million of long-term accrued income taxes which represent uncertain tax benefits.
Debt Obligations Refer to "Bridge Commitment Letter, Term Loan, Revolving Credit Facilities and Senior Notes” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report for more information.
Upfront products revenue as a percentage of total revenue will likely fluctuate based on the timing of IP and hardware product sales. Such fluctuations will continue to be impacted by the timing of shipments and FSA drawdowns due to customer requirements.
Such fluctuations will continue to be impacted by the timing of shipments and FSA drawdowns due to customer requirements.
See Note 2. Summary of Significant Accounting Policies and Basis of Presentation of the Notes to Consolidated Financial Statements in this Annual Report for further information on our significant accounting policies.
Summary of Significant Accounting Policies and Basis of Presentation of the Notes to Consolidated Financial Statements in this Annual Report for further information on our significant accounting policies. 37 Table of Contents Revenue Recognition Our contracts with customers often include promises to transfer multiple products and services to a customer.
On February 13, 2024, we entered into a term loan facility credit agreement (the Term Loan Agreement), which provides us with the ability to borrow up to $4.3 billion at the closing of the Ansys Merger, subject to the satisfaction of customary closing conditions for similar facilities, for the purpose of financing a portion of the cash consideration to be paid in the Ansys Merger and paying related fees and expenses in connection with the Ansys Merger and the other transactions contemplated by the Merger Agreement.
Bridge Commitment Letter, Term Loan, Revolving Credit Facilities and Senior Notes 49 Table of Contents On January 15, 2024, we entered into the Bridge Commitment Letter with certain financial institutions that committed to provide, subject to the satisfaction of customary closing conditions, the bridge commitment (the Bridge Commitment) for the purpose of financing a portion of the aggregate Cash Consideration in the Ansys Merger and paying related fees and expenses in connection with the Ansys Merger and the other transactions contemplated by the Merger Agreement.
The decrease in amortization of acquired intangible assets for fiscal 2023 compared to fiscal 2022 was primarily due to certain intangible assets becoming fully amortized during fiscal 2023, partially offset by amortization expense related to intangible assets acquired during fiscal 2023 .
The increase in amortization of acquired intangible assets for fiscal 2024 compared to fiscal 2023 was primarily due to amortization expense related to intangible assets acquired during fiscal 2024, partially offset by certain intangible assets becoming fully amortized during fiscal 2024. 45 Table of Contents Restructuring Charges In the first quarter of fiscal 2023, we initiated a restructuring plan for involuntary employee terminations as part of a business reorganization (the 2023 Plan).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+3 added−2 removed8 unchanged
Biggest changeOur cash equivalents and debt by fiscal year of expected maturity and average interest rates as of October 31, 2024 are as follows: Maturing in Year Ending 2025 2026 2027 2028 2029 and thereafter Total Fair Value (in thousands) Cash & Cash equivalents $ 3,778,164 $ 3,778,164 $ 3,778,164 Approx. average interest rate 3.56 % Short-term investments $ 57,156 $ 58,484 $ 27,380 $ 4,260 $ 6,589 $ 153,869 $ 153,869 Approx. average coupon rate 3.25 % 4.17 % 4.29 % 4.43 % 5.37 % Short-term debt (variable rate): Credit Facility in China $ 15,601 $ 15,601 $ 15,601 Average interest rate LPR + .74% of such rate Foreign Currency Risk.
Biggest changeOur cash equivalents, short-term investments and debt by fiscal year of expected maturity and average interest rates as of October 31, 2025 are as follows: Maturing in Year Ending 2026 2027 2028 2029 2030 and thereafter Total Fair Value (in millions) Cash & Cash equivalents $ 2,797.2 $ — $ — $ — $ — $ 2,797.2 $ 2,797.2 Approx. average interest rate 2.89 % Short-term investments $ 27.0 $ 29.3 $ 16.6 $ — $ — $ 72.9 $ 72.9 Approx. average coupon rate 2.76 % 3.82 % 3.66 % Debt (variable rate): Credit Facility in China $ 2.6 $ 2.6 $ 2.6 $ 2.6 $ 2.6 $ 13.1 $ 13.1 Average interest rate LPR + .74% of such rate Senior Notes $ — $ 1,000.0 $ 1,000.0 $ — $ 8,000.0 $ 10,000.0 $ 10,143.0 Average interest rate 4.84 % 4.85 % 5.31 % 5.22 % Term Loan $ — $ 600.0 $ 2,850.0 $ — $ — $ 3,450.0 $ 3,450.0 Average interest rate 5.39 % 5.48 % 5.46 % Deferred payment on settlement of interest rate treasury lock $ 22.1 $ 22.1 $ 22.1 $ 22.1 $ 22.1 $ 110.6 $ 110.6 Interest rate 3.45 % Foreign Currency Risk.
Our policy also limits the amount of credit exposure to any one issue, issuer and type of instrument. Our exposure to market risk for changes in interest rates relates to our cash, cash equivalents, short-term investments, and outstanding debt. As of October 31, 2024, all of our cash, cash equivalents, and debt were at short-term variable or fixed interest rates.
Our policy also limits the amount of credit exposure to any one issue, issuer and type of instrument. Our exposure to market risk for changes in interest rates relates to our cash, cash equivalents, short-term investments, and outstanding debt. As of October 31, 2025, all of our cash, cash equivalents, and debt were at short-term variable or fixed interest rates.
We enter into hedges in the form of foreign currency forward contracts to reduce our exposure to foreign currency rate changes on non-functional currency denominated forecasted transactions and balance sheet positions including: (1) certain assets and liabilities, (2) shipments forecasted to occur within approximately one month, (3) future billings and revenue on previously shipped orders, and (4) certain future intercompany invoices denominated in foreign currencies.
We enter into hedges in the form of foreign currency forward contracts to reduce our exposure to foreign currency rate changes on non-functional currency denominated forecasted transactions and balance sheet positions including: (1) certain assets and liabilities, (2) shipments forecasted to occur within approximately one month, (3) future billings and revenue on previously shipped orders, and (4) certain future intercompany invoices 52 Table of Contents denominated in foreign currencies.
At the same time, the U.S. dollar value of our Euro-based expenses would decline, resulting in positive cash flow of approximately $16.4 million that would offset the loss and negative cash flow on the maturing forward contracts.
At the same time, the U.S. dollar value of our Euro-based expenses would decline, resulting in positive cash flow of approximately $3.4 million that would offset the loss and negative cash flow on the maturing forward contracts.
The primary objective of our investment activities is to preserve the invested principal while maximizing yields without significantly increasing risk exposure. To achieve this objective, we maintain our portfolio of investments in a mix of tax-exempt and taxable instruments that meet high credit quality standards, as specified in our investment policy.
The primary objective of our investment activities is to preserve the invested principal while maximizing yields without significantly increasing risk exposure. To achieve this objective, we maintain our portfolio of investments in a mix of tax-exempt and taxable instruments that meet high credit quality standards, as specified 51 Table of Contents in our investment policy.
For example, if the Euro were to depreciate by 10% compared to the U.S. dollar prior to the settlement of the Euro forward contracts listed in the table below as of October 31, 2024, the fair value of the contracts would decrease by approximately $16.4 million, and we would be required to pay approximately $16.4 million to the counterparty upon contract maturity.
For example, if the Euro were to depreciate by 10% compared to the U.S. dollar prior to the settlement of the Euro forward contracts listed in the table below as of October 31, 2025, the fair value of the contracts would decrease by approximately $3.4 million, and we would be required to pay approximately $3.4 million to the counterparty upon contract maturity.
Information about the gross notional values of our foreign currency contracts as of October 31, 2024 is as follows: Gross Notional Amount in U.S.
Information about the gross notional values of our foreign currency contracts as of October 31, 2025 is as follows: Gross Notional Amount in U.S.
Financial Assets and Liabilities of the Notes to Consolidated Financial Statements in this Annual Report for a description of our accounting for foreign currency contracts . 52 Table of Contents The success of our hedging activities depends upon the accuracy of our estimates of various balances and transactions denominated in non-functional currencies.
Financial Assets and Liabilities of the Notes to Consolidated Financial Statements in this Annual Report for a description of our accounting for foreign currency forward contracts . The success of our hedging activities depends upon the accuracy of our estimates of various balances and transactions denominated in non-functional currencies.
As of October 31, 2024, we had short term fixed income investment portfolio of $153.9 million. These securities, as with all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase.
As of October 31, 2025, we had short term fixed income investment portfolio of $72.9 million. These securities, as with all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase.
Our non-marketable equity securities investments totaled $15.7 million and $19.1 million as of October 31, 2024 and 2023, respectively. Our strategic investments include privately-held companies that are considered to be in the start-up or development stages and have a higher inherent risk.
Our non-marketable equity securities investments totaled $45.0 million and $15.7 million as of October 31, 2025 and 2024, respectively. Our strategic investments include privately-held companies that are considered to be in the start-up or development stages and have a higher inherent risk.
The foreign currency contracts are carried at fair value and denominated in various currencies as listed in the tables below. The duration of forward contracts usually ranges from 2 months to 29 months. See Note 2. Summary of Significant Accounting Policies and Basis of Presentation and Note 9.
The foreign currency contracts are carried at fair value and denominated in various currencies as listed in the tables below. The duration of forward contracts usually ranges from 1 month to 30 months. See Note 2. Summary of Significant Accounting Policies and Basis of Presentation and Note 8.
If we are not able to successfully hedge against the risks associated with foreign currency fluctuations, our financial condition and operating results could be adversely affected.
Our operating expenses incurred outside the United States and denominated in foreign currencies are increasing and are subject to fluctuations due to changes in foreign currency exchange rates. If we are not able to successfully hedge against the risks associated with foreign currency fluctuations, our financial condition and operating results could be adversely affected.
While par value generally approximates fair value on variable instruments, rising interest rates over time would increase both our interest income and our interest expense.
The carrying value of the term loans approximates their fair value as the underlying interest rates are tied to SOFR or ABR. While par value generally approximates fair value on variable instruments, rising interest rates over time would increase both our interest income and our interest expense.
Likewise, a strengthening of the U.S. dollar relative to other currencies, including the renminbi or Yen, reduces revenue of our foreign subsidiaries upon translation and consolidation. If the U.S. dollar continues to strengthen, this could adversely affect our financial condition and operating results.
Likewise, a strengthening of the U.S. dollar relative to other currencies, including the renminbi or Yen, reduces revenue of our foreign subsidiaries upon translation and consolidation. Increased international sales in the future may result in greater foreign currency denominated sales, increasing our foreign currency risk.
Removed
In addition, increased international sales in the future may result in greater foreign currency denominated sales, increasing our foreign currency risk. Our operating expenses incurred outside the United States and denominated in foreign currencies are increasing and are subject to fluctuations due to changes in foreign currency exchange rates.
Added
As of October 31, 2025, we had $10.0 billion in principal amount of fixed rate senior notes outstanding with the fair value of $10.1 billion. As of October 31, 2025, we also had $3.5 billion of outstanding term loans, which are subject to floating interest rates.
Removed
Dollars Average Contract Rate (in thousands) Forward Contract Values: Indian rupee $ 589,799 86.973 Japanese yen 469,566 151.041 Euro 164,701 1.100 Canadian dollar 157,536 1.369 Chinese renminbi 122,191 7.013 Korean won 68,720 1,342.594 Taiwanese dollar 64,599 32.042 Israel shekel 34,919 3.704 British pound sterling 10,055 1.257 Singapore dollar 2,557 1.328 Swiss franc 1,698 0.883 $ 1,686,341 Equity Price Risk.
Added
However, it would not impact the interest expense on our fixed rate senior notes outstanding.
Added
Dollars Average Contract Rate (in thousands) Forward Contract Values: Indian rupee $ 637,068 88.896 Japanese yen 375,436 147.960 Chinese renminbi 187,276 7.056 Canadian dollar 151,455 1.382 Taiwanese dollar 103,539 30.481 Euro 34,241 1.116 Korean won 9,959 1,430.200 British pound sterling 4,484 1.322 Israel shekel 2,923 3.248 Singapore dollar 1,685 1.291 $ 1,508,066 Equity Price Risk.

Other SNPS 10-K year-over-year comparisons