) reported fiscal first-quarter 2014 adjusted earnings per share
(including stock-based compensation and excluding all one-time
items) on a proportionate tax basis of 51 cents, ahead of the
Zacks Consensus Estimate of 31 cents. Earnings decreased 14.9% on
a year-over-year basis.
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On a GAAP basis, earnings per share came in at 43 cents compared
with 45 cents in the year-ago period.
Total revenue for the quarter stood at $478.9 million, up a
marginal 0.8% on a year-over-year basis but missing the Zacks
Consensus Estimate of $488.0 million. Revenues came within
management's guided range of $475.0 million-$485.0 million. Year
over year revenues were positively impacted by higher adoption of
License revenues (including time-based and upfront) were $434.1
million, up 4.2% from the year-ago quarter. Maintenance and
service revenues decreased 23.2% from the year-ago quarter to
More than 90% of the first-quarter revenues came from backlog. A
single customer accounted for slightly more than 11% of the
revenues in the first-quarter.
GAAP gross profit was $373.1 million, up 2.5% from the year-ago
quarter. Gross margin increased 127 basis points from the
year-ago quarter to 77.9% due to lower cost of sales.
GAAP operating expenses in the quarter increased 3.3% on a
year-over-year basis to $312.9 million primarily due to higher
selling & marketing and research and development expenses,
which increased 3.9% and 6.4%, respectively from the year-ago
quarter. Operating expenses as a percentage of revenues expanded
155 basis points (bps) from the year-ago quarter to 65.3%.
Synopsys' GAAP operating income for the quarter was down 1.4% on
a year-over-year basis to $60.2 million, primarily due to higher
operating expenses as a percentage of revenue. Operating margin
declined 27 bps to 12.6% during the same period.
The company reported GAAP net income of $67.7 million or 43 cents
per share compared with $69.9 million or 45 cents per share in
the year-ago quarter.
Adjusted net income (including stock-based compensation and
excluding all one-time items) on a proportionate tax basis in the
same quarter was $79.4 million or 51 cents per share compared
with $91.9 million or 60 cents per share in the year-ago quarter.
Cash Flow & Balance Sheet
Synopsys ended the quarter with cash and cash equivalents of
$893.1 million compared with $1.02 billion at the end of the
previous quarter. Accounts receivable were $246.8.0 million, down
from $256.0 million in the year-ago quarter. Long-term debt in
the quarter was $67.5 million. Net cash used in operating
activities during the quarter was $73.9 million.
For the second-quarter of fiscal 2014, the company expects
revenues in the range of $505.0 million-$515.0 million. The Zacks
Consensus Estimate is pegged at $513.0 million. The company
expects non-GAAP expenses in the range of $377.0 million-$387.0
million. Management expects non-GAAP earnings per share in the
range of 60 cents-62 cents, higher than the Zacks Consensus
Estimate of 42 cents per share.
For the full year 2014, the company expects revenues in the range
of $2.03 billion-$2.065 billion, while non-GAAP earnings per
share are projected within $2.55-$2.60. The Zacks Consensus
Estimate for revenues and earnings is pegged at $2.076 billion
and $1.69 per share, respectively. The company expects to
generate $425.0-$450.0 million cash from operations in fiscal
Synopsys delivered mixed fiscal first-quarter 2014 results, with
earnings beating the Zacks Consensus Estimate and revenues
missing the same. However, revenues improved on a year-over-year
basis. Moreover, the company provided an encouraging
second-quarter 2014 guidance.
We believe the company's recent product launches, acquisitions
and deal wins will boost results, going ahead. Moreover, the
unique intellectual properties and global support provided by the
company will likely drive its forthcoming results. Additionally,
the company's acquisition of Coverity will expand Synopsys' reach
in the software quality, testing and security tools market.
However, competition from
) coupled with a challenging technology spending environment and
uncertainty regarding proper time to realize acquisition
synergies keep us on the sidelines.
Currently, Synopsys has a Zacks Rank #3 (Hold).