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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                      TO
COMMISSION FILE NUMBER: 000-19807
synopsyslogoa20.jpg
SYNOPSYS, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-1546236
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification Number)
675 ALMANOR AVE
SUNNYVALE, CA 94085
(Address of principal executive offices, including zip code)
(650) 584-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock
(par value of $0.01 per share)
SNPSNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý  Accelerated Filer ☐
Non-accelerated filer 
¨  
  Smaller reporting company ☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ý
As of August 21, 2024, there were 153,613,744 shares of the registrant’s common stock outstanding.


SYNOPSYS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED JULY 31, 2024
TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
SYNOPSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except par value amounts)
July 31,
2024		 October 31,
2023
ASSETS
Current assets:
Cash and cash equivalents$1,839,815 $1,433,966 
Short-term investments154,431 151,639 
      Total cash, cash equivalents and short-term investments1,994,246 1,585,605 
Accounts receivable, net805,198 856,660 
Inventories386,009 325,590 
Prepaid and other current assets914,598 548,115 
Current assets held for sale
1,027,702 114,654 
Total current assets5,127,753 3,430,624 
Property and equipment, net571,408 549,837 
Operating lease right-of-use assets, net556,593 559,923 
Goodwill3,444,349 3,346,065 
Intangible assets, net266,092 239,577 
Deferred income taxes1,102,716 853,526 
Other long-term assets579,773 444,820 
Long-term assets held for sale
— 908,759 
Total assets$11,648,684 $10,333,131 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities$756,983 $1,059,914 
Operating lease liabilities89,869 79,832 
Deferred revenue1,356,804 1,559,461 
Current liabilities held for sale
331,294 286,244 
Total current liabilities2,534,950 2,985,451 
Long-term operating lease liabilities568,407 579,686 
Long-term deferred revenue319,080 150,827 
Long-term debt15,599 18,078 
Other long-term liabilities465,233 381,531 
Long-term liabilities held for sale
— 33,257 
Total liabilities3,903,269 4,148,830 
Redeemable non-controlling interest31,043 31,043 
Stockholders’ equity:
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding
— — 
Common stock, $0.01 par value: 400,000 shares authorized; 153,613 and 152,053 shares outstanding, respectively
1,536 1,521 
Capital in excess of par value1,192,363 1,276,152 
Retained earnings7,884,044 6,741,699 
Treasury stock, at cost: 3,648 and 5,207 shares, respectively
(1,188,435)(1,675,650)
Accumulated other comprehensive income (loss)(180,112)(196,414)
Total Synopsys stockholders’ equity7,709,396 6,147,308 
Non-controlling interest4,976 5,950 
Total stockholders’ equity7,714,372 6,153,258 
Total liabilities, redeemable non-controlling interest and stockholders’ equity$11,648,684 $10,333,131 
1


See the accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
2

SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
 Three Months Ended 
 July 31,		Nine Months Ended 
 July 31,
 2024202320242023
Revenue:
Time-based products$803,147 $827,396 $2,389,924 $2,235,531 
Upfront products442,528 292,653 1,281,283 958,631 
Total products revenue1,245,675 1,120,049 3,671,207 3,194,162 
Maintenance and service280,074 234,341 820,243 656,469 
Total revenue1,525,749 1,354,390 4,491,450 3,850,631 
Cost of revenue:
Products179,536 174,460 553,753 500,146 
Maintenance and service96,630 74,978 275,348 211,833 
Amortization of acquired intangible assets
14,510 10,994 41,165 32,683 
Total cost of revenue290,676 260,432 870,266 744,662 
Gross margin1,235,073 1,093,958 3,621,184 3,105,969 
Operating expenses:
Research and development508,872 484,470 1,527,542 1,384,120 
Sales and marketing211,491 185,769 640,117 537,981 
General and administrative150,437 99,750 396,464 274,406 
Amortization of acquired intangible assets
4,062 2,014 12,152 5,949 
Restructuring charges— 21,879 — 54,439 
Total operating expenses874,862 793,882 2,576,275 2,256,895 
Operating income360,211 300,076 1,044,909 849,074 
Interest and other income (expense), net
31,784 25,484 146,070 52,631 
Income before income taxes391,995 325,560 1,190,979 901,705 
Provision (benefit) for income taxes(30,712)(6,951)37,634 29,779 
Net income from continuing operations
422,707 332,511 1,153,345 871,926 
Income (loss) from discontinued operations, net of income taxes
(17,813)544 (13,155)(296)
Net income
404,894 333,055 1,140,190 871,630 
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest
(3,161)(3,197)(9,084)(9,068)
Net income attributed to Synopsys$408,055 $336,252 $1,149,274 $880,698 
Net income (loss) attributed to Synopsys:
Continuing operations
$425,868 $335,708 $1,162,429 $880,994 
Discontinued operations
(17,813)544 (13,155)(296)
Net income
$408,055 $336,252 $1,149,274 $880,698 
Net income (loss) per share attributed to Synopsys - basic:
Continuing operations
$2.78 $2.21 $7.60 $5.79 
Discontinued operations
$(0.12)$— $(0.08)$— 
Basic net income per share
$2.66 $2.21 $7.52 $5.79 
Net income (loss) per share attributed to Synopsys - diluted:
3

Continuing operations
$2.73 $2.17 $7.46 $5.68 
Discontinued operations
$(0.12)$— $(0.09)$— 
Diluted net income per share
$2.61 $2.17 $7.37 $5.68 
Shares used in computing per share amounts:
Basic153,417 152,023 152,885 152,204 
Diluted156,131 154,947 155,863 155,119 
See the accompanying Notes to Condensed Consolidated Financial Statements (unaudited).

4

SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in thousands)
 Three Months Ended 
 July 31,		Nine Months Ended 
 July 31,
 2024202320242023
Net income$404,894 $333,055 $1,140,190 $871,630 
Other comprehensive income (loss):
Change in foreign currency translation adjustment4,913 (12,232)4,526 19,297 
Change in unrealized gains (losses) on available-for-sale securities, net of tax of $0 for periods presented
885 (212)1,764 1,326 
Cash flow hedges:
Deferred gains (losses), net of tax $(1,989) and $(1,970) for the three and nine months ended July 31, 2024, respectively, and of $(2,147) and $(14,995) for each of the same periods in fiscal 2023, respectively.
4,181 5,907 7,656 43,489 
Reclassification adjustment on deferred (gains) losses included in net income, net of tax of $348 and $(2,083) for the three and nine months ended July 31, 2024, respectively, and of $(2,111) and $(8,707) for each of the same periods in fiscal 2023, respectively.
(2,078)5,250 2,356 22,881 
Other comprehensive income (loss), net of tax effects7,901 (1,287)16,302 86,993 
Comprehensive income412,795 331,768 1,156,492 958,623 
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest(3,161)(3,197)(9,084)(9,068)
Comprehensive income attributed to Synopsys$415,956 $334,965 $1,165,576 $967,691 
See the accompanying Notes to Condensed Consolidated Financial Statements (unaudited).

5

SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands)
 Capital in
Excess of
Par
Value		Retained
Earnings		Treasury
Stock		Accumulated
Other
Comprehensive
Income (Loss)		Total 
Synopsys
Stockholders’
Equity		Non-controlling
Interest		Stockholders’
Equity
Common Stock
 SharesAmount
Balance at April 30, 2024
153,204 $1,532 $1,182,829 $7,478,366 $(1,321,554)$(188,013)$7,153,160 $4,638 $7,157,798 
Net income408,055 408,055 (783)407,272 
Other comprehensive income (loss), net of tax effects7,901 7,901 7,901 
Common stock issued, net of shares withheld for employee taxes409 4 (170,884)133,119 (37,761)(37,761)
Stock-based compensation180,418 180,418 1,121 181,539 
Adjustments to redeemable non-controlling interest(2,377)(2,377)(2,377)
Balance at July 31, 2024
153,613 $1,536 $1,192,363 $7,884,044 $(1,188,435)$(180,112)$7,709,396 $4,976 $7,714,372 
Balance at October 31, 2023
152,053 $1,521 $1,276,152 $6,741,699 $(1,675,650)$(196,414)$6,147,308 $5,950 $6,153,258 
Net income1,149,274 1,149,274 (2,154)1,147,120 
Other comprehensive income (loss), net of tax effects16,302 16,302 16,302 
Purchases of treasury stock(74)(1)1 (45,000)(45,000)(45,000)
Equity forward contract, net45,000 45,000 45,000 
Common stock issued, net of shares withheld for employee taxes1,634 16 (666,689)532,215 (134,458)(134,458)
Stock-based compensation536,401 536,401 3,625 540,026 
Adjustments to redeemable non-controlling interest(6,929)(6,929)(6,929)
Recognition of non-controlling interest upon issuance of subsidiary stock1,498 1,498 (2,445)(947)
Balance at July 31, 2024
153,613 $1,536 $1,192,363 $7,884,044 $(1,188,435)$(180,112)$7,709,396 $4,976 $7,714,372 
Capital in
Excess of
Par
Value		Retained
Earnings		Treasury
Stock		Accumulated
Other
Comprehensive
Income (Loss)		Total 
Synopsys
Stockholders’
Equity		Non-controlling
Interest		Stockholders’
Equity
Common Stock
 SharesAmount
Balance at April 30, 2023
152,251 $1,523 $1,330,072 $6,075,009 $(1,428,748)$(145,997)$5,831,859 $5,086 $5,836,945 
Net income336,252 336,252 (557)335,695 
Other comprehensive income (loss), net of tax effects(1,287)(1,287)(1,287)
Purchases of treasury stock(751)(8)8 (300,000)(300,000)(300,000)
Common stock issued, net of shares withheld for employee taxes625 6 (215,666)(18,796)185,859 (48,597)(48,597)
Stock-based compensation142,968 142,968 1,496 144,464 
Adjustments for redeemable non-controlling interest(2,640)(2,640)(2,640)
Recognition of non-controlling interest upon issuance of subsidiary stock— (576)(576)
Balance at July 31, 2023
152,125 $1,521 $1,257,382 $6,389,825 $(1,542,889)$(147,284)$5,958,555 $5,449 $5,964,004 
Balance at October 31, 2022
152,375 $1,524 $1,487,126 $5,534,307 $(1,272,955)$(234,277)$5,515,725 $4,801 $5,520,526 
Net income880,698 880,698 (1,217)879,481 
Other comprehensive income (loss), net of tax effects86,993 86,993 86,993 
Purchases of treasury stock(2,382)(24)24 (860,724)(860,724)(860,724)
Equity forward contract, net(45,000)(45,000)(45,000)
Common stock issued, net of shares withheld for employee taxes2,132 21 (603,944)(19,108)590,790 (32,241)(32,241)
Stock-based compensation418,047 418,047 3,902 421,949 
Adjustment for redeemable non-controlling interest(6,072)(6,072)(6,072)
Recognition of non-controlling interest upon issuance of subsidiary stock1,129 1,129 (2,037)(908)
Balance at July 31, 2023
152,125 $1,521 $1,257,382 $6,389,825 $(1,542,889)$(147,284)$5,958,555 $5,449 $5,964,004 
See the accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
6

SYNOPSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 Nine Months Ended 
 July 31,
 20242023
Cash flows from operating activities:
Net income$1,140,190 $871,630 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation180,149 180,033 
Reduction of operating lease right-of-use assets72,196 72,647 
Amortization of capitalized costs to obtain revenue contracts57,071 61,677 
Stock-based compensation540,026 421,949 
Allowance for credit losses14,696 11,937 
Gain on sale of strategic investments
(55,077)— 
Amortization of bridge financing costs
18,435 — 
Deferred income taxes(276,840)(166,061)
Other non-cash(3,730)8,649 
Net changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable59,159 112,511 
Inventories(71,303)(77,919)
Prepaid and other current assets(350,652)8,373 
Other long-term assets(137,159)(116,487)
Accounts payable and accrued liabilities17,532 48,574 
Operating lease liabilities(72,254)(52,914)
Income taxes(241,952)123,924 
Deferred revenue(46,276)(131,310)
Net cash provided by operating activities
844,211 1,377,213 
Cash flows from investing activities:
Proceeds from maturities and sales of short-term investments
98,465 104,139 
Purchases of short-term investments(97,181)(102,457)
Proceeds from sales of strategic investments
55,696 7,248 
Purchases of strategic investments
(1,240)(435)
Purchases of property and equipment(118,772)(136,520)
Acquisitions, net of cash acquired(156,947)(51,324)
Capitalization of software development costs— (2,204)
Net cash used in investing activities(219,979)(181,553)
Cash flows from financing activities:
Repayment of debt(2,607)(2,603)
Payment of bridge financing and term loan costs
(72,265)— 
Issuances of common stock143,148 164,841 
Payments for taxes related to net share settlement of equity awards(278,571)(198,969)
Purchase of equity forward contract— (45,000)
Purchases of treasury stock— (860,724)
Other(1,096)(122)
Net cash used in financing activities(211,391)(942,577)
Effect of exchange rate changes on cash, cash equivalents and restricted cash5,458 14,997 
Net change in cash, cash equivalents and restricted cash 418,299 268,080 
Cash, cash equivalents and restricted cash, beginning of year, including cash from discontinued operations
1,441,187 1,419,864 
Cash, cash equivalents and restricted cash, end of period, including cash from discontinued operations
1,859,486 1,687,944 
Less: Cash, cash equivalents and restricted cash from discontinued operations
17,441 4,835 
Cash, cash equivalents and restricted cash from continuing operations
$1,842,045 $1,683,109 
See the accompanying Notes to Condensed Consolidated Financial Statements (unaudited).
7

SYNOPSYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Description of Business
Synopsys, Inc. (Synopsys, we, our or us) delivers trusted and comprehensive silicon to systems design solutions, from electronic design automation (EDA), including system verification and validation solutions, to silicon intellectual property (IP). We partner closely with semiconductor and systems customers across a wide range of industries to maximize their research and development capability and productivity. We are catalyzing the era of pervasive intelligence to power innovation today that ignites the ingenuity of tomorrow.
We are a global leader in supplying the EDA software that engineers use to design and test integrated circuits (ICs), also known as chips or silicon, and we are 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. We provide software and hardware used to validate the electronic systems that incorporate chips and the software that runs on them, including cloud-based digital design flow to boost chip-design development productivity. We also provide technical services and support to help our customers develop advanced chips and electronic systems. These products and services are part of our Design Automation segment.
We also offer a broad and comprehensive portfolio of semiconductor IP solutions, which are pre-designed circuits that engineers use as components of larger chip designs to reduce integration risk and speed time to market. Our high quality, silicon-proven semiconductor IP includes logic libraries, embedded memories, analog IP, wired and wireless interface IP, security IP, embedded processors and subsystems. To accelerate IP integration and silicon bring-up, our IP accelerated initiative provides architecture design expertise, hardening, and signal and power integrity analysis. These products and services are part of our Design IP segment.
Note 2. Summary of Significant Accounting Policies and Basis of Presentation
We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The condensed consolidated financial statements are unaudited but, in management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary for a fair presentation of our quarterly results. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023 as filed with the SEC on December 12, 2023 (our Annual Report).
Use of Estimates. To prepare financial statements in conformity with U.S. GAAP, management must make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates and could have a material impact on our operating results and financial position.
Principles of Consolidation. The condensed consolidated financial statements include our accounts and the accounts of our wholly and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Fiscal Year and Fiscal Quarter End. Our fiscal year ends on the Saturday nearest to October 31 and consists of 52 weeks, with the exception that approximately every five years, we have a 53-week year. When a 53-week year occurs, we include the additional week in the first quarter to realign fiscal quarters with calendar quarters. Fiscal 2024 is a 53-week year ending on November 2, 2024, which impacts our revenue, expenses and operating results. Fiscal 2023 was a 52-week year and ended on October 28, 2023.
Our results of operations for the first nine months of fiscal 2024 and 2023 included 40 weeks and 39 weeks, respectively, and ended on August 3, 2024 and July 29, 2023, respectively. For presentation purposes, the condensed consolidated financial statements and accompanying notes refer to the closest calendar month end.
8

Software Integrity Divestiture. During the second quarter of fiscal 2024, we determined that our Software Integrity business met the criteria to be classified as a discontinued operation, and, as a result, Software Integrity’s historical financial results are reflected in our consolidated financial statements as discontinued operations, and assets and liabilities were retrospectively reclassified as assets and liabilities held for sale. We did not allocate any general corporate overhead to discontinued operations. See Note 3. Discontinued Operations of the Notes to Condensed Consolidated Financial Statements.
Significant Accounting Policies. There have been no material changes to our significant accounting policies included in our Annual Report.
Recently Issued Accounting Pronouncements
In June 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which applies to all equity securities measured at fair value that are subject to contractual sale restrictions. This change prohibits entities from taking into account contractual restrictions on the sale of equity securities when estimating fair value and introduces required disclosures for such transactions. The ASU will become effective for us beginning on November 1, 2024 and will be applied prospectively. Early adoption is permitted. Any future impact from the adoption of this ASU will depend on the facts and circumstances of future transactions.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for our annual report beginning in the fiscal year 2025, and interim period reports beginning in the first quarter of the fiscal year 2026 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. The ASU will become effective for us beginning on November 1, 2025 and will be applied on a prospective basis, with a retrospective option. Early adoption is permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements and related disclosures.
Note 3. Discontinued Operations
On May 5, 2024, we entered into an Equity Purchase Agreement (the Purchase Agreement) by and between Synopsys and Sapphire Software Buyer, Inc. (Buyer), an entity controlled by funds affiliated with Clearlake Capital Group, L.P. and Francisco Partners (together, the Sponsors), pursuant to which we will sell our Software Integrity business. Pursuant to the Purchase Agreement, and subject to the satisfaction or waiver of customary closing conditions specified therein, we will sell our Software Integrity business to the Buyer (the Software Integrity Divestiture) for a purchase price of up to $2.1 billion in cash, comprised of: (i) $1.5 billion, payable at closing; (ii) $125 million, payable in equal installments over five fiscal quarters beginning on the first business day after the 75th day of our first full fiscal quarter following the closing, subject to acceleration at our option prior to the closing of our pending acquisition of ANSYS, Inc. (Ansys); and (iii) up to $475 million, payable upon the Sponsors achieving a specified rate of return in the event of one or more potential liquidity transactions.
The Software Integrity Divestiture, which was unanimously approved by our Board of Directors, is currently expected to close in the second half of 2024, subject to customary closing conditions including the receipt of required regulatory approvals.
9

Management believes that the Software Integrity Divestiture has met the criteria to be disclosed as discontinued operations as it represents a significant strategic shift that has a major effect on our operations and financial results. The results of the Software Integrity business are presented as discontinued operations in the condensed consolidated statements of income and, as such, have been excluded from both continuing operations and segment results for all periods presented. Further, we reclassified the assets and liabilities of the Software Integrity business as assets and liabilities held for sale in the condensed consolidated statements of balance sheets for all periods presented. The condensed consolidated statements of cash flows are presented on a consolidated basis for both continuing operations and discontinued operations. We did not allocate any general corporate overhead to the Software Integrity business. Unless otherwise noted, reference within these Notes to Condensed Consolidated Financial Statements relates to continuing operations.
The financial results of the Software Integrity business are presented as income (loss) from discontinued operations, net of income taxes on our condensed consolidated statements of income. The following table presents the major components of financial results of our Software Integrity business for the periods presented:
Three Months Ended 
 July 31,		Nine Months Ended 
 July 31,
2024202320242023
(in thousands)
Revenue
$127,917 $132,898 $392,579 $392,860 
Cost of revenue
40,279 47,050 136,010 145,188 
Operating expenses
91,854 90,450 262,745 258,008 
Interest and other income (expense), net
605 324 1,601 722 
Income (loss) from discontinued operations before income taxes
(3,611)(4,278)(4,575)(9,614)
Income tax provisions (benefits)
14,202 (4,822)8,580 (9,318)
Income (loss) from discontinued operations, net of income taxes
$(17,813)$544 $(13,155)$(296)
As of July 31, 2024, the assets and liabilities of our Software Integrity business are classified as current in our condensed consolidated balance sheets, as it is probable that the sale will occur within one year. The following table represents the aggregated carrying amounts of classes of assets and liabilities that are classified as discontinued operations on the condensed consolidated balance sheets for the periods presented:
July 31, 2024
(in thousands)
Assets:
Cash and cash equivalents$17,441 
Accounts receivable, net
78,930 
Prepaid and other assets
48,550 
Property and equipment, net6,373 
Operating lease right-of use assets, net6,646 
Goodwill724,294 
Intangible assets, net119,141 
Deferred income taxes26,327 
Total current assets held for sale
$1,027,702 
Liabilities:
Accounts payable and accrued liabilities
$91,874 
Operating lease liabilities
5,626 
Deferred revenue
233,794 
Total current liabilities held for sale
$331,294 

10

October 31, 2023
(in thousands)
Assets:
Cash and cash equivalents
$4,947 
Accounts receivable, net
90,307 
Prepaid and other current assets
19,400 
Total current assets held for sale
$114,654 
Property and equipment, net
$7,424 
Operating lease right-of use assets, net
8,906 
Goodwill
724,271 
Intangible assets, net
134,617 
Deferred income taxes
7,388 
Other long-term assets
26,153 
Total long-term assets held for sale
$908,759 
Liabilities:
Accounts payable and accrued liabilities
$63,847 
Operating lease liabilities
5,858 
Deferred revenue
216,539 
Total current liabilities held for sale
$286,244 
Long-term operating lease liabilities
$4,349 
Long-term deferred revenue
24,301 
Other long-term liabilities
4,607 
Total long-term liabilities held for sale
$33,257 
The following table presents significant non-cash items and capital expenditures of discontinued operations for the periods presented:
Nine Months Ended July 31,
20242023
(in thousands)
Amortization and depreciation
$16,317 $37,495 
Reduction of operating lease right-of-use assets
$2,162 $3,481 
Amortization of capitalized costs to obtain revenue contracts
$20,808 $21,398 
Stock-based compensation
$47,476 $37,495 
Deferred income taxes
$18,939 $7,388 
Purchases of property and equipment
$972 $2,351 
Note 4. Pending Acquisition of Ansys
On January 15, 2024, we entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire all of the outstanding shares of Ansys, a provider of broad engineering simulation and analysis software and services, in a cash-and-stock transaction (the Ansys Merger) that values Ansys at approximately $35.0 billion, based on the closing price of Synopsys common stock on December 21, 2023.
Under the terms of the Merger Agreement, at the effective time of the Ansys Merger (the Effective Time), each share of Ansys common stock issued and outstanding immediately prior to the Effective Time (with certain exceptions set forth in the Merger Agreement) will be converted into the right to receive 0.3450 (the Exchange Ratio) of a share of Synopsys common stock and $197.00 in cash, without interest. The Merger Agreement also provides for Synopsys’ assumption of certain outstanding Ansys options and other unvested Ansys equity awards held by continuing Ansys
11

employees. If the stock consideration to be issued by Synopsys in connection with the Ansys Merger exceeds 19.9999% of the shares of Synopsys common stock issued and outstanding immediately prior to the Effective Time, the Exchange Ratio will be reduced to the minimum extent necessary to ensure that the aggregate number of shares of Synopsys common stock to be issued in connection with the Ansys Merger does not exceed such threshold, and the cash consideration will be correspondingly increased to offset such adjustment.
The Ansys Merger was approved by the holders of a majority of the outstanding shares of Ansys common stock on May 22, 2024 and is anticipated to close in the first half of calendar year 2025. The Ansys Merger is subject to the satisfaction or waiver of customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, the clearance of the Ansys Merger under certain other antitrust and foreign investment regimes, and the continued effectiveness of the registration statement on Form S-4 (File No. 333-277912) filed by us on March 14, 2024 and declared effective by the SEC on April 17, 2024. We and Ansys each have termination rights under the Merger Agreement. A fee of $1.5 billion may be payable by us to Ansys, or a fee of $950.0 million may be payable by Ansys to us, upon termination of the Merger Agreement under specified circumstances, each as more fully described in the Merger Agreement.
In connection with the execution of the Merger Agreement, we entered into a commitment letter on January 15, 2024 (the Bridge Commitment Letter) with certain financial institutions that committed to provide, subject to the satisfaction of customary closing conditions, a senior unsecured bridge facility (the Bridge Commitment). The Bridge Commitment currently provides for an aggregate principal amount of up to $11.7 billion. On February 13, 2024, we entered into a term loan facility credit agreement (the Term Loan Agreement), which provides us with the ability to borrow up to $4.3 billion at the closing of the Ansys Merger, subject to the satisfaction of customary closing conditions for similar facilities, for the purpose of financing a portion of the cash consideration to be paid in the Ansys Merger and paying related fees and expenses in connection with the Ansys Merger and the other transactions contemplated by the Merger Agreement. See Note 11. Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements for more information on the Bridge Commitment and the Term Loan Agreement.
Note 5. Business Combinations
During the nine months ended July 31, 2024, we completed three acquisitions for aggregate purchase consideration of $159.3 million, net of cash acquired. The purchase consideration was allocated as follows: $78.9 million to identifiable intangible assets, $97.5 million to goodwill, and $17.1 million to net tangible liabilities. The total purchase consideration is preliminary, and as additional information becomes available, we may further revise it during the remainder of the measurement period, which will not exceed 12 months from the closing of the acquisition. The goodwill recognized from these acquisitions, of which $62.7 million was attributable to the Design Automation reporting unit and $34.8 million was attributable to the Design IP reporting unit, was not deductible for income tax purposes.
We have included the financial results of these acquisitions in our condensed consolidated financial statements from the date of each acquisition. These results were not material to our condensed consolidated financial statements.
Transaction costs were $53.0 million and $110.2 million during the three and nine months ended July 31, 2024, respectively. Transaction costs were $4.8 million and $9.8 million during the three and nine months ended July 31, 2023, respectively. These costs mainly consisted of professional fees and administrative costs for closed and pending acquisitions and were expensed as incurred in our condensed consolidated statements of income.
Note 6. Revenue
Disaggregated Revenue
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The following table shows the percentage of revenue by product groups:
Three Months Ended 
 July 31,		Nine Months Ended 
 July 31,
2024202320242023
EDA66.9 %71.8 %66.8 %71.3 %
Design IP30.4 %25.9 %30.9 %26.7 %
Other2.7 %2.3 %2.3 %2.0 %
Total100.0 %100.0 %100.0 %100.0 %
Contract Balances
The contract assets indicated below are presented as prepaid and other current assets in the condensed consolidated balance sheets. The contract assets are transferred to receivables when the rights to invoice and receive payment become unconditional. Unbilled receivables are presented as accounts receivable, net, in the condensed consolidated balance sheets.
Contract balances are as follows:
As of
July 31, 2024October 31, 2023
 (in thousands)
Contract assets, net$693,874 $375,904 
Unbilled receivables$33,603 $60,016 
Deferred revenue$1,675,884 $1,710,288 
During the three and nine months ended July 31, 2024, we recognized revenue of $216.8 million and $1.3 billion, respectively, that was included in the deferred revenue balance as of October 31, 2023, including previously unfulfilled contracts that have expired and are no longer subject to an implied promise to provide future services.
Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) were approximately $7.9 billion as of July 31, 2024, which includes $1.2 billion in non-cancellable Flexible Spending Account (FSA) commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date. We have elected to exclude future sales-based royalty payments from the remaining performance obligations. Approximately 40% of the backlog as of July 31, 2024, excluding non-cancellable FSA, is expected to be recognized as revenue over the next 12 months, with the remainder recognized thereafter. The majority of the remaining backlog is expected to be recognized in the following three years.
During the three and nine months ended July 31, 2024, we recognized $21.1 million and $73.9 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods. During the three and nine months ended July 31, 2023, we recognized $24.2 million and $75.8 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods.
Costs of Obtaining a Contract with Customer
Capitalized commission costs, net of accumulated amortization, as of July 31, 2024 were $70.5 million and are included in other long-term assets in our condensed consolidated balance sheets. Amortization of these assets was $12.6 million and $36.3 million during the three and nine months ended July 31, 2024, respectively, and are included in sales and marketing expense in our condensed consolidated statements of income. Amortization of these assets was $14.0 million and $40.3 million during the three and nine months ended July 31, 2023, respectively, and are included in sales and marketing expense in our condensed consolidated statements of income.
Note 7. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill during the nine months ended July 31, 2024 are as follows:
13

 (in thousands)
Balance at October 31, 2023
$3,346,065 
Additions97,521 
Adjustments173 
Effect of foreign currency translation590 
Balance at July 31, 2024
$3,444,349 
Intangible Assets
Intangible assets as of July 31, 2024 consist of the following:
Gross Carrying AmountAccumulated
Amortization		Net Amount
 (in thousands)
Core/developed technology$904,381 $711,119 $193,262 
Customer relationships314,154 242,955 71,199 
Contract rights intangible176,343 174,724 1,619 
Trademarks and trade names12,925 12,913 12 
Total$1,407,803 $1,141,711 $266,092 
Intangible assets as of October 31, 2023 consist of the following:
Gross Carrying AmountAccumulated
Amortization		Net Amount
 (in thousands)
Core/developed technology$842,448 $672,480 $169,968 
Customer relationships296,883 231,557 65,326 
Contract rights intangible175,747 171,487 4,260 
Trademarks and trade names12,925 12,902 23 
Capitalized software development costs50,795 50,795 — 
Total$1,378,798 $1,139,221 $239,577 
Amortization expense related to intangible assets consists of the following:
 Three Months Ended 
 July 31,		Nine Months Ended 
 July 31,
 2024202320242023
 (in thousands)
Core/developed technology$13,447 $10,436 $38,373 $31,427 
Customer relationships4,058 2,011 11,467 5,945 
Contract rights intangible1,063 558 3,465 1,257 
Trademarks and trade names4 3 12 3 
Capitalized software development costs(1)
— 557 — 1,626 
Total$18,572 $13,565 $53,317 $40,258 
(1) Amortization of capitalized software development costs is included in cost of products revenue in the condensed consolidated statements of income.
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The following table presents the estimated future amortization of acquired intangible assets as of July 31, 2024:
Fiscal year(in thousands)
Remainder of fiscal 2024$17,344 
202562,103 
202651,778 
202746,831 
202832,099 
2029 and thereafter55,937 
Total$266,092 
Note 8. Balance Sheet Components
As of
July 31, 2024October 31, 2023
(in thousands)
Other long-term assets:
Deferred compensation plan assets$373,306 $297,180 
Capitalized commission, net70,532 67,240 
Other135,935 80,400 
Total$579,773 $444,820 
Accounts payable and accrued liabilities:
Payroll and related benefits$530,948 $531,848 
Accrued income taxes3,172 226,762 
Other accrued liabilities144,316 146,696 
Accounts payable78,547 154,608 
Total$756,983 $1,059,914 
Other long-term liabilities:
Deferred compensation plan liabilities$373,306 $297,180 
Other91,927 84,351 
Total$465,233 $381,531 

Note 9. Financial Assets and Liabilities
Cash Equivalents and Short-term Investments
15

As of July 31, 2024, the balances of our cash equivalents and short-term investments are as follows:
Amortized CostGross
Unrealized
Gains		Gross
Unrealized
Losses Less Than 12 Continuous Months		Gross
Unrealized
Losses 12 Continuous Months or Longer
Estimated
Fair Value(1)
 (in thousands)
Cash equivalents:
Money market funds$44,537 $— $— $— $44,537 
U.S. Treasury, agency & T-bills7,445 1 — — 7,446 
Total:$51,982 $1 $— $— $51,983 
Short-term investments:
U.S. Treasury, agency & T-bills$18,250 $61 $— $(9)$18,302 
Corporate debt securities104,267 528 (13)(24)104,758 
Asset-backed securities31,237 164 (2)(28)31,371 
Total:$153,754 $753 $(15)$(61)$154,431 
(1)See Note 10. Fair Value Measurements for further discussion on fair values.
The contractual maturities of our available-for-sale debt securities as of July 31, 2024 are as follows:
Amortized CostFair Value
(in thousands)
less than 1 year$61,373 $61,426 
1-5 years87,412 88,022 
5-10 years3,066 3,084 
>10 years1,903 1,899 
Total$153,754 $154,431 
As of October 31, 2023, the balances of our cash equivalents and short-term investments are as follows:
Amortized CostGross
Unrealized
Gains		Gross
Unrealized
Losses Less Than 12 Continuous Months		Gross
Unrealized
Losses 12 Continuous Months or Longer
Estimated
Fair Value(1)
 (in thousands)
Cash equivalents:
Money market funds$10,129 $— $— $— $10,129 
U.S. Treasury, agency & T-bills2,994 — — — 2,994 
Total:$13,123 $— $— $— $13,123 
Short-term investments:
U.S. Treasury, agency & T-bills$15,752 $— $(61)$