The EDA & MCAD/MCAE Almanac: Q2 2011

On August 17, 2011 Synopsys, Inc. (NASDAQ: SNPS), a successful vendor of software and IP for semiconductor design, verification and manufacturing, reported results for the third quarter of its fiscal year 2011, or nominal Q2 2011 for our purposes.

For nominal Q2 2011, Synopsys reported revenue of $386.795 million, compared to $336.929 million for year-ago Q2 2010, an increase of 14.8%. But Q2 2011 was also below by 1.78% the just prior sequential nominal Q1 2011 quarter of $393.670 million.    

Guidance 3 months ago for nominal Q2 2011 was for revenue of $378 million to $386 million.

"Synopsys delivered strong revenue, earnings per share, and cash flow in the third quarter, and we are confident that we will exit fiscal 2011 with a great deal of strength," said Aart de Geus, chairman and CEO of Synopsys.  "Design activity continues unabated, driven by demand for mobile devices, cloud infrastructure, and electronics content in many every-day products.  Synopsys is integral to the success of these end markets."

Aart de Geus

GAAP Results  

On a generally accepted accounting principles (GAAP) basis, net income for nominal Q2 2011 was $52.082 million, or $0.35 per share, up 32.43% year-over-year compared to $39.327 million, or $0.26 per share, for nominal Q2 2010.  

Just-prior nominal Q1 2011 profit was $81.114 million, or $0.53 per share, 155.9% of Q2 2011. And here again we witness one of those distortions due to a tax situation from another period, albeit a positive distortion:  Synopsys’ net income for nominal Q1 2011 included a one-time $32.8 million, or $0.21 per share, tax benefit associated with a settlement with the IRS for audits for fiscal years 2006 through 2009.

Guidance for Q2 2011 EPS provided three months ago was a range from $0.25 to $0.31.

Financial Targets

Synopsys also provided its financial targets for the next quarter (our nominal Q3 2011) and full Synopsys’ fiscal year 2011.  These targets do not include future acquisition-related costs that may be incurred in fiscal 2011.  These targets constitute forward-looking information and are based on current expectations.

Nominal Q3 2011 Targets:

  • Revenue: $386 million - $392 million
  • GAAP expenses: $329 million - $341 million
  • Other income and expense: $0 - $1 million
  • Fully diluted outstanding shares: 146 million - 150 million
  • GAAP earnings per share: $0.26 - $0.31
  • Revenue from backlog: greater than 90%

Full Synopsys Fiscal Year 2011 Targets:

  • Revenue: $1.531 billion - $1.537 billion
  • Other income and expense: $3 million - $4 million
  • Fully diluted outstanding shares: 148 million - 152 million
  • GAAP earnings per share: $1.46 - $1.51
  • Cash flow from operations: greater than $400 million

Subsequent Acquisition

On September 2, 2011 Synopsys, Inc. announced that it had completed the acquisition of nSys Design Systems Private Limited (nSys), an independent provider of verification IP (VIP). With this acquisition, Synopsys is increasing its investment in VIP technology to address the growing verification challenges designers face as they create more and more complex systems on chips (SoCs) to serve the demand for 'smart' electronics. The terms of the deal, structured as an acquisition of substantially all the assets and employees of nSys, have not been disclosed.

"Addressing the growing SoC design and verification challenge is a key focus for Synopsys," said Manoj Gandhi, senior vice president and general manager of Synopsys' Verification Group. "With leading SoC designs deploying more complex protocols, VIP is becoming a critical component of the verification environment. Having the nSys team join our current VIP R&D team will help Synopsys accelerate and drive the next level of innovation in VIP technology."

VIP provides functional models of on- and off-chip protocols that verification engineers use to test all of the interfaces on an SoC before manufacturing. It enables the engineer to verify how an interface conforms to published standards and also allows the engineer to verify the interactions among various interfaces on an SoC.

The expanded portfolio of VIP from Synopsys will cover all of the widely used interface protocols and many emerging titles. It will also offer a new protocol compliance test-suite product line. Supported verification methodologies include VMM (verification methodology manual), OVM (open verification methodology) and UVM (universal verification methodology).

"Synopsys has led the industry in SystemVerilog, performance, capacity, methodology and bug-finding technology innovations for the past 15 years," said Atul Bhatia, CEO and founder of nSys Design Systems. "My team and I look forward to joining Synopsys so we can work together to deliver a VIP solution that can address customers' ever-growing SoC verification challenges."

Synopsys self description

Synopsys, Inc. (NASDAQ: SNPS) is a world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design, verification and manufacturing. Synopsys' comprehensive, integrated portfolio of implementation, verification, IP, manufacturing and field-programmable gate array (FPGA) solutions helps address the key challenges designers and manufacturers face today, such as power and yield management, system-to-silicon verification and time-to-results. These technology-leading solutions help give Synopsys customers a competitive edge in bringing the best products to market quickly while reducing costs and schedule risk. Synopsys is headquartered in Mountain View, California, and has approximately 70 offices located throughout North America, Europe, Japan, Asia and India. Visit Synopsys online at

G5 MCAD/MCAE Vendors' Summary Financials Q2 2011

Measured in $US except where indicated, Table 3 below reveals that the combined total revenue of the G5 MCAD/MCAE Vendors was US$1642.5 million in nominal Q2 2011, up 5% from the $1564.3 million total in the just prior Q1 2011, and a robust 20.3% above the total year-over-year figure of $1323.6 million for Q2 2010.

Indeed, the G5’s US$1642.5 for nominal Q2 2011 and US$1564.3 million for nominal Q1 2011 were $210.7 and $132.5 million, respectively, both figures well above the average quarter for the 2010 year ($1431.8 million). All that each quarter of 2011 has to be is $52.5 million larger than the equivalent quarters in 2010, for the full year 2011 MCAD/MCAE revenue total to eclipse the G5’s revenue total of 2008, a feat which both 2009 and 2010 failed to accomplish.

Table 3 further reveals that every member of the MCAD/MCAE G5 experienced an excellent nominal Q2 2011 relative to the previous year’s counterpart, with each vendor (save ESI in Euros) scoring at least a double digit year-over-year (YOY) percentage increase in revenues, led by Dassault’s 25.75% increase measured in $US:

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