) declined 4.1% on Wednesday in after-hours trade. Not only did
the company miss the Zacks Consensus Estimate for revenue but
also provided a tepid first quarter outlook.
Synopsys reported fiscal fourth-quarter 2013 adjusted earnings
per share (including stock-based compensation and excluding all
one time items) of 50 cents, which were ahead of the Zacks
Consensus Estimate of 35 cents. Earnings increased 29.8% on a
Total revenue for the quarter stood at $504.9 million, up 11.2%
on a year-over-year basis but missed the Zacks Consensus Estimate
of $507.0 million. More than 90% of the fourth-quarter revenues
came from the backlog. A single customer accounted for slightly
more than 11% of the revenues in the third quarter.
License revenues (including time-based and upfront) were $449.4
million, up 13.5% from the year-ago quarter. Maintenance and
service revenues decreased 4.9% from the year-ago quarter to
Gross profit was $385.8 million, up 9.7% from the year-ago
quarter. Gross margin declined 102 basis points from the year-ago
quarter to 76.4% as the company was unable to control its cost of
Operating expenses for the quarter increased 7.2% on a
year-over-year basis to $334.7 million primarily due to
acquisitions and employee costs. Operating expenses as a
percentage of revenues expanded 243 basis points (bps) from the
year-ago quarter to 66.3%.
Synopsys' operating income for the quarter was up 29.2% on a
year-over-year basis to $51.0 million, primarily due to higher
operational efficiencies. Operating margin expanded 141 bps to
10.1% during the same period.
The company reported net income of $56.9 million or 36 cents per
share compared with $29.0 million or 19 cents per share in the
year-ago quarter. Adjusted net income (including stock-based
compensation and excluding all one-time items) in the same
quarter was $77.9 million or 50 cents per share compared with
$58.6 million or 38 cents per share in the year-ago quarter.
Synopsys ended the quarter with cash and cash equivalents of
$1.02 billion compared with $892.4 million at the end of the
previous quarter. Accounts receivable were $256.0 million, down
from $278.9 million in the year-ago quarter.
For the first quarter of fiscal 2014, the company expects
revenues in the range of $475.0 million-$485.0 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 51 cents-53 cents, higher than the Zacks
Consensus estimate of 41 cents per share
For the full year 2014, the company expects revenues in the range
of $2.06 billion-$2.085 billion, while non-GAAP earnings per
share are projected within $2.55-$2.60. The company expects to
generate $425.0-$450.0 million cash from operations in fiscal
Synopsys delivered mixed fiscal fourth-quarter 2013 results, with
earnings beating the Zacks Consensus Estimate and revenues
missing the same. However, revenues improved on a year-over-year
The company provided a tepid first-quarter 2014 revenue guidance
which is lower than the Zacks Consensus Estimates of $504.0
million. 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 Synopsys will likely drive its forthcoming results.
The company has a good cash reserve that is necessary for funding
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).
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