Synopsys Inc. ( SNPS ) reported
earnings per share (EPS) of 59 cents in the second quarter of 2013,
well ahead of the Zacks Consensus Estimate of 45 cents.
Revenues in the second quarter stood at $499.3 million, up 15.4%
from $432.6 million in the year-ago period. The company witnessed
good business volume, across all its business segments. More than
90% of the total second-quarter revenue came from the backlog that
the company had at the beginning of the second quarter. A single
customer accounted for slightly more than 10% of the revenues in
the second quarter.
License revenues (including time-based and
upfront) were $438.3 million, up 13.7% from $385.9 million in the
year-ago quarter. Upfront revenues were 4.9% of the total revenue
and well within the company's targeted limit of less than
Maintenance and service revenues were $60.9
million, up 30.4% from $46.7 million in the prior-year quarter.
Gross profit was $391.5 million (78.4% of the total revenue), up
17.9% from $332.0 million (76.8% of revenues) in the year-ago
quarter. Gross margin declined as the company was unable to control
its cost of sales.
Total operating income for the quarter was $79.5 million, up
363.9% from $17.1million in the year-ago quarter. Sales &
Marketing (S&M), General & Administrative (G&A)
expenses declined compared to the year-ago quarter. Operating
margin for the quarter was 15.9% versus 4.0% in the year-ago
GAAP net income in the reported quarter was $68.7 million or 44
cents per share, up from $20.9 million or 14 cents per share in the
year-ago quarter. Excluding special items like amortization,
acquisition-related costs, facility restructuring charge, facility
restructuring charges, non-GAAP net income in the quarter was 59
cents per share, lower than the 43 cents reported in the year-ago
As of Apr 30, 2013, cash and cash equivalents were $681.0
million compared with $500.4 million at the end of the previous
quarter. Accounts receivable were $251.7 million, down from $270.2
million in the year-ago quarter.
For the third quarter of fiscal 2013, the company expects
revenues in the range of $475-$485 million. The company expects
GAAP expenses in the range of $411-$428 million. While GAAP
earnings per share are expected in the range of 28 cents - 34
cents, Non-GAAP earnings per share are expected in the range of 53
cents - 55 cents.
For the full year 2013, the company expects revenues in the
range of $1.955 - $1.975 billion, while GAAP earnings per share are
expected in the range of $1.48 - $1.56 and non-GAAP earnings per
share are projected within $2.37-$2.42.
Synopsys delivered modest second-quarter 2013 results, with a
substantial jump in revenues and EPS substantially exceeding the
Zacks Consensus Estimate. The company also delivered substantial
growth in the gross and operating margins.
Some of the unique intellectual properties provided by Synopsys
with the help of its financial strength, technology leadership and
global support will likely drive the innovation process. Synopsys
is optimistic about enhancing the innovation process based on the
increasing popularity of the automation and IP industries.
The company still has a good cash reserve that is necessary for
funding further acquisitions. Moreover, Synopsys is coming up with
new products to attract a greater number of customers and its tie
up with Advanced Micro Devices Inc. ( AMD ) encourages
However, stiff competition from Adobe Systems (
ADBE ) and
Advent Software ( ADVS ), 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).ADOBE SYSTEMS (ADBE): Free Stock Analysis
ReportADVENT SOFTWARE (ADVS): Free Stock Analysis
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