Synopsys' acquisition of Ansys is still pending, awaiting regulatory approvals and satisfaction of customary closing conditions. The transaction is expected to close in the first half of calendar year 2025.

To obtain governmental approval and successfully close the Ansys Merger, Synopsys signed a definitive agreement to sell its Optical Solutions Group to Keysight Technologies, Inc.

Synopsys is incorporating AI into its products and business operations. However, the company acknowledges that the Al landscape is rapidly evolving and that failure to develop and timely offer successful AI-enabled products could adversely affect its business.

Synopsys has suspended its stock repurchase program to reduce expected debt levels related to the Ansys Merger. $194.3 million remained available for future repurchases under the program as of January 31, 2025.

Synopsys derives roughly half of its revenue from sales outside the United States, and it expects its orders and revenue to continue to depend on sales to customers outside the U.S. This strategy requires Synopsys to recruit and retain qualified technical and managerial employees, manage multiple remote locations performing complex software development projects, and ensure intellectual property protection outside of the U.S.

The company is actively monitoring geopolitical pressures and the uncertain macroeconomic environment, including the effects of 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.

The Ansys Merger is subject to governmental approvals that may impose conditions and is dependent on obtaining financing, which could be limited by debt covenants. Failure to complete the Ansys Merger or realize its benefits could adversely affect Synopsys.

Synopsys derives roughly half of its revenue from sales outside the United States, and it expects its orders and revenue to continue to depend on sales to customers outside the U.S. This strategy requires Synopsys to recruit and retain qualified technical and managerial employees, manage multiple remote locations performing complex software development projects, and ensure intellectual property protection outside of the U.S.

Synopsys stores sensitive data, including intellectual property and customer information, and its operations depend on IT systems. Security breaches could compromise this information and disrupt operations, harming the business and reputation.

Synopsys competes against established EDA vendors and a growing number of silicon IP providers. The company acknowledges that the industries in which it operates are highly competitive, with new competitors entering the markets both domestically and internationally.

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 demand for Synopsys' products and services is dynamic and depends on customer requirements. Technology in these industries evolves rapidly and is characterized by frequent product introductions and improvements as well as changes in industry standards and customer requirements.

Cost of revenue decreased from $279.2M to $270.0M YoY. This was primarily due to decreases of $5.2 million in hardware-related costs including inventory provisions, $4.6 million in amortization of acquired technology-related intangible assets, $3.0 million in facility costs, and $2.4 million in costs to fulfill IP consulting arrangements

Sales and marketing expenses decreased from $218.8M to $209.2M YoY. This was primarily due to a decrease of $9.4 million in the change in the fair value of our executive deferred compensation plan assets.

General and administrative expenses increased from $131.3M to $167.1M YoY. This was primarily due to an increase of $34.4 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger.

Research and development expenses increased from $525.5M to $553.2M YoY. This was primarily due to increases of $19.4 million in employee-related costs as a result of headcount increases as we continue to expand and enhance our product portfolio, $10.3 million in consultant and contractor costs, and $7.4 million in facility costs

Synopsys is 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.

Synopsys' growth strategy is based on maintaining and building on its leadership in its Design Automation products, expanding and proliferating its Design IP offerings and continuing to expand its product portfolio and its total addressable market.

Synopsys has suspended its stock repurchase program to reduce expected debt levels related to the Ansys Merger. $194.3 million remained available for future repurchases under the program as of January 31, 2025.

Research and development expenses increased from $525.5M to $553.2M YoY. This was primarily due to increases of $19.4 million in employee-related costs as a result of headcount increases as we continue to expand and enhance our product portfolio, $10.3 million in consultant and contractor costs, and $7.4 million in facility costs

To obtain governmental approval and successfully close the Ansys Merger, Synopsys signed a definitive agreement to sell its Optical Solutions Group to Keysight Technologies, Inc.

The 10-Q filing does not contain any specific information regarding environmental commitments, social responsibility initiatives, or governance practices. There is no discussion of sustainability risks or opportunities.

The Company is 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.

The Company may also communicate certain initiatives and goals regarding environmental matters, human capital matters, responsible sourcing, social investments and other ESG matters in its public disclosures. 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.

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.

Synopsys is actively monitoring geopolitical pressures around the world, including, among others, changes in China-Taiwan relations, the conflicts in Ukraine and the Middle East and other regional or global military conflicts.

The Bureau of Industry and Security of the U.S. Department of Commerce has published changes to U.S. export control regulations (the 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 ICs with Gate-All-Around Field-Effect Transistor structures, as well as controls on ECAD software for advanced semiconductor packaging involving multiple chips or chiplets, and certain other restrictions to China's access to certain semiconductor and advanced computing technology.