About Synopsys, Inc.

To sum up, Synopsys is a leading provider of electronic design automation (EDA) software and services. Its products are used by designers of integrated circuits (ICs) to develop, simulate, and test the physical design of ICs before production, and then to test finished products for bugs and security vulnerabilities. The company also provides intellectual property (IP) products, or pre-designed circuits used as part of larger chips. Customers come from a variety of markets, but particularly the semiconductor and electronics manufacturing industries, with Intel its top customer. The company generates about half its sales outside the US.

Operations

Synopsys makes money from four groups: Core EDA, which includes digital, custom, and field-programmable gate array (FPGA) IC design tools, as well as verification products (its Verification Continuum platform); IP, Systems and Software Integrity, which includes the Designware IP portfolio, system-level products, and security and quality testing tools (SecureAssist and Coverity); Manufacturing Solutions, products that aid in developing IC designs; and Professional Services and Other, which covers customer service and technical support.

Core EDA is Synopsys' core source of revenue, accounting for about 60% of sales. IP, Systems and Software Integrity brings in about 30%, followed by Manufacturing Solutions and Professional Services and Other rounding out the revenue.

Revenues are also broken down among time-based (paid over the life of the contract), upfront, and maintenance and services. Almost 75% of revenues come from time-based products while more than 10% are from upfront products, with maintenance and services accounting for about 15%.

Geographic Reach

The company, based in Mountain View, California, has more than 30 offices in the US. Its international headquarters is in Dublin, Ireland, and it has offices in about 30 countries, with major operations in Armenia, India, China, and Taiwan.

The US represents Synopsys' largest market, accounting for 50% of revenue; the Asia/Pacific region generates about 30% of revenue, followed by Europe and Japan, each at about 10%.

Sales and Marketing

Synopsys markets its products primarily to semiconductor and electronics systems companies through direct sales efforts in the US and in select international markets. Intel accounts for nearly 20% of revenue while other customers have included Samsung, TSMC, Toshiba, ARM, Renesas, Imagination Technologies, and LSI Corporation.

Financial Performance

Synopsys has seen a steady increase in revenue over the past five years. Sales in 2017 jumped 12% from the previous year, primarily attributed to higher TSL revenues, hardware sales, and IP consulting projects.

The company's technology subscription license (TSL) products grew 6% in 2017 to more than $2 billion (adding about $110 million in revenue) while hardware sales jumped 36% -- a $90 million increase from 2016. Maintenance and service revenues saw a 38% spike and a $100 million-plus increase.

Sales rose in all geographic markets, led by the US, which accounted for 50% of the revenue growth for the year. Asia Pacific saw the largest growth with an 18% increase in revenue.

Profits dropped significantly to about $137 million, almost half of 2016. A 13% increase in total cost of revenue and operating expenses (increased headcount, including those from acquisitions) contributed to the decrease in profits.

Operations generated $635 million in cash compared to $587 million in 2016. Higher cash collections accounted for most of the cash flow increase.

Strategy

Like most suppliers to the semiconductor industry, Synopsys has had to deal with the industry's consolidation. Synopsys has managed its way through the merger and acquisition trends and, in some cases, expanded its business. The trend toward integration of multiple chips and software into chip products plays to Synopsys' strengths in providing design and test products and services. The company looks for opportunities to grow in areas such as digital intelligence, machine learning, the Internet of Things, 5G mobile networks, virtual and assisted reality, and massive cloud-based computing. The automotive market is a particular area of interest for Synopsys, where it sees opportunities in technologies for self-driving cars.

Mergers and Acquisitions

Kilopass Technology and Sidense Corporate are both providers of IP products used in automotive, mobile, industrial, and Internet of Things (IoT) applications; Synopsis acquired these companies in January 2018 and October 2017, respectively, to enhance and broaden its offerings in the IP solution market.

In 2017 Synopsys acquired Black Duck Software, which helps companies work with open source software. Black Duck becomes part of Synopsys's Software Integrity Group. Also in 2017, Synopsys completed its acquisition of certain assets of Forcheck, a privately held software company based in the Netherlands that provides a static analysis tool for detecting coding defects and anomalies in FORTRAN applications. QuantumWise, another 2017 acquisition, provides simulation tools for materials modeling and will allow the company to create higher-quality early Process Design Kits (PDKs) for Design-Technology Co-Optimization (DTCO).

The acquisition of Cigital and Codiscope came in 2016. Cigital and Codiscope add complementary products, services, and their workforces to Synopsys's portfolio. In the same year, Synopsys acquired Gold Standard Simulations Ltd., a provider of CAD and EDA simulation products for design technology, Synopsys built on its TCAD strategy to reduce development time and cost.

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Synopsys, Inc.

690 E Middlefield Rd
Mountain View, CA 94043-4033
Phone: 1 (650) 584-5000
Fax: 1 (650) 584-4396

Stats

  • Employer Type: Public
  • Stock Symbol: SNPS
  • Stock Exchange: NASDAQ
  • Chairman and Co-CEO: Aart J. de Geus
  • Chairman and Co-CEO: Aart J. de Geus
  • CFO: Trac Pham
  • 2017 Employees: 11,686

Major Office Locations

  • Mountain View, CA

Other Locations

  • Chandler, AZ
  • El Segundo, CA
  • Milpitas, CA
  • Pasadena, CA
  • San Diego, CA
  • San Francisco, CA
  • San Jose, CA
  • Sunnyvale, CA
  • Monument, CO
  • Schaumburg, IL
  • Marlborough, MA
  • Westborough, MA
  • Durham, NC
  • Parsippany, NJ
  • Ossining, NY
  • Hillsboro, OR
  • Allentown, PA
  • Austin, TX
  • Plano, TX
  • Williston, VT
  • Kirkland, WA
  • Seattle, WA
  • Calgary, Canada
  • Mississauga, Canada
  • Nepean, Canada
  • Shanghai, China
  • Shenzhen, China
  • Frankfurt Am Main, Germany
  • Hsinchu City, Taiwan
  • Taipei City, Taiwan
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