) reported earnings per share (EPS) of 43 cents in the third
quarter of 2012, in line with the Zacks Consensus Estimate.
Revenue in the third quarter stood at $443.7 million, up 14.7%
from $386.8 million in the year-ago period. The company witnessed
strong business growth and customers are interested to witness new
design aggressively even amidst the prevailing uncertain
The average length of renewable customer license commitments was
roughly 2.5 years in the quarter.
(including time-based and upfront) were $388.2 million, up 13.8%
from $341.2 million in the year-ago quarter. Upfront revenue was
5.7% of the total revenue and was well within the company's
targeted range of less than 10.0%.
Maintenance and service revenues
were $55.5 million, up 21.7% from $45.6 million in the prior-year
Gross profit in the third quarter was $344.0 million (77.5% of
the total revenue), up 13.9% from $302.1 million (78.1% of
revenues) in the year-ago quarter. Gross margin declined by 60
basis points, as the growth in cost of production slightly exceeded
the growth in revenue.
Total operating expense in the quarter was $280.6 million, up
15.1% from $243.9 million in the year-ago quarter. Research &
Development (R&D), Sales & Marketing (S&M), General
& Administrative (G&A) expenses also increased considerably
in the quarter. Operating margin for the quarter was 14.3% versus
15.0% in the year-ago quarter.
GAAP net income in the reported quarter was $75.7 million or 50
cents per share, up from $52.1 million or 35 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 43
cents per share compared with 47 cents in the year-ago quarter.
Synopsys has a decent cash position. As of July 31, 2012, cash
and cash equivalents were $963.8 million compared with $796.6
million at the end of the previous quarter.
For the fourth quarter of 2012, the company expects revenue to
be in the range of $440 million - $448 million. GAAP expenses are
expected to be in the range of $387.0 million - $403.0 million,
whereas non-GAAP expenses are expected to be in the range of $345.0
million - $355.0 million.
GAAP earnings per share are projected in the 22 cents to 28
cents range, while non-GAAP earnings per share are forecasted in
the range of 46 cents - 48 cents.
For fiscal 2012, revenue is expected to be in the range of
$1.742 billion - $1.750 billion, while other income and expense are
expected in the range of $1 - $3 million. GAAP earnings per share
are expected around $1.25 - $1.31, while non-GAAP earnings per
share are pegged in the range of $2.09 - $2.11.
Synopsys delivered modest third quarter 2012 results, with
revenue and operating performance remaining almost unchanged
compared to the year-ago period. The improved performance was due
to efficient cost management, which increased keeping pace with
Moreover, with the increasing importance of the automation and
IP industries; Synopsys is encouraged to enhance its process of
innovations. Synopsys' financial strength, technology leadership
and global support would drive the innovation process.
The fourth quarter and fiscal year 2012 guidance are
encouraging. Although Synopsys is gaining traction from new
products and acquisitions, we believe these will take some time to
have meaningful impact on its result. In addition, we also believe
that it will take some time for Synopsys to integrate the
chip-design software provider SpringSoft, which will ultimately
help the company to come up with innovative solutions.
The company has a short-term Zacks #2 Rank (implying a Buy
SYNOPSYS INC (SNPS): Free Stock Analysis Report
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