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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, 2025
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

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 class Trading Symbol(s) Name of each exchange on which registered
Common Stock
(par value of $0.01 per share)
SNPS Nasdaq 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 September 5, 2025, there were 185,748,673 shares of the registrant’s common stock outstanding.

SYNOPSYS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED JULY 31, 2025
TABLE OF CONTENTS

    Page
PART I. Financial Information
1

Item 1. Financial Statements (Unaudited)
1

Condensed Consolidated Balance Sheets
1

Condensed Consolidated Statements of Income
3

Condensed Consolidated Statements of Comprehensive Income
5

Condensed Consolidated Statements of Stockholders’ Equity
6

Condensed Consolidated Statements of Cash Flows
7

Notes to Condensed Consolidated Financial Statements
9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
39

Item 3. Quantitative and Qualitative Disclosures About Market Risk
56

Item 4. Controls and Procedures
57

PART II. Other Information
58

Item 1. Legal Proceedings
58

Item 1A. Risk Factors
59

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
76

Item 5. Other Information
76

Item 6. Exhibits
77

Signatures
79

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SYNOPSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except par value amounts)

July 31,
2025  October 31,
2024

ASSETS
Current assets:
Cash and cash equivalents $ 2,526,475   $ 3,896,532  
Short-term investments 67,235   153,869  
      Total cash, cash equivalents and short-term investments 2,593,710   4,050,401  
Accounts receivable, net 1,392,373   934,470  
Inventories 382,056   361,849  

Prepaid and other current assets 1,153,172   1,122,946  
Current assets held for sale
74,317   —  
Total current assets 5,595,628   6,469,666  
Property and equipment, net 699,688   563,006  
Operating lease right-of-use assets, net 693,368   565,917  
Goodwill 26,945,723   3,448,850  
Intangible assets, net 13,079,912   195,164  

Deferred income taxes 97,061   1,247,258  
Other long-term assets 1,118,876   583,700  

Total assets $ 48,230,256   $ 13,073,561  
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 1,283,204   $ 1,163,592  
Operating lease liabilities 127,452   94,791  

Deferred revenue 1,991,429   1,391,737  
Short-term debt 22,117   —  
Current liabilities held for sale
20,005   —  
Total current liabilities 3,444,207   2,650,120  
Long-term operating lease liabilities 672,729   574,065  

Long-term deferred revenue 383,405   340,831  
Long-term debt 14,318,016   15,601  
Other long-term liabilities 1,797,713   469,738  

Total liabilities 20,616,070   4,050,355  
Redeemable non-controlling interest —   30,000  
Stockholders’ equity:
Preferred stock, $ 0.01 par value: 2,000 shares authorized; none outstanding
—   —  
Common stock, $ 0.01 par value: 400,000 shares authorized; 185,460 and 154,112 shares outstanding, respectively
1,855   1,541  
Capital in excess of par value 18,549,871   1,211,206  
Retained earnings 9,866,791   8,984,105  
Treasury stock, at cost: 1,756 and 3,148 shares, respectively
( 572,091 ) ( 1,025,770 )
Accumulated other comprehensive income (loss) ( 231,895 ) ( 180,380 )
Total Synopsys stockholders’ equity 27,614,531   8,990,702  
Non-controlling interest ( 345 ) 2,504  
Total stockholders’ equity 27,614,186   8,993,206  
Total liabilities, redeemable non-controlling interest and stockholders’ equity $ 48,230,256   $ 13,073,561  

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)
3

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
Revenue:
Time-based products $ 892,364   $ 803,147   $ 2,548,928   $ 2,389,924  
Upfront products 516,404   442,528   1,395,204   1,281,283  
Total products revenue 1,408,768   1,245,675   3,944,132   3,671,207  
Maintenance and service 330,969   280,074   855,186   820,243  
Total revenue 1,739,737   1,525,749   4,799,318   4,491,450  
Cost of revenue:
Products 230,895   179,536   615,953   553,753  
Maintenance and service 103,301   96,630   290,309   275,348  
Amortization of acquired intangible assets
46,368   14,510   62,624   41,165  
Total cost of revenue 380,564   290,676   968,886   870,266  
Gross margin 1,359,173   1,235,073   3,830,432   3,621,184  
Operating expenses:
Research and development 625,301   508,872   1,732,496   1,527,542  
Sales and marketing 259,480   211,491   683,700   640,117  
General and administrative 280,550   150,437   584,133   396,464  
Amortization of acquired intangible assets
28,573   4,062   36,569   12,152  

Total operating expenses 1,193,904   874,862   3,036,898   2,576,275  
Operating income 165,269   360,211   793,534   1,044,909  
Interest expense
( 146,502 ) ( 11,742 ) ( 251,977 ) ( 20,547 )
Other income (expense), net
170,543   43,526   335,061   166,617  
Income before income taxes 189,310   391,995   876,618   1,190,979  
Provision (benefit) for income taxes ( 52,967 ) ( 30,712 ) ( 12,080 ) 37,634  
Net income from continuing operations
242,277   422,707   888,698   1,153,345  
Income (loss) from discontinued operations, net of income taxes —   ( 17,813 ) ( 3,900 ) ( 13,155 )
Net income
242,277   404,894   884,798   1,140,190  
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest
( 232 ) ( 3,161 ) 1,274   ( 9,084 )
Net income attributed to Synopsys $ 242,509   $ 408,055   $ 883,524   $ 1,149,274  

Net income (loss) attributed to Synopsys:
Continuing operations
$ 242,509   $ 425,868   $ 887,424   $ 1,162,429  
Discontinued operations
—   ( 17,813 ) ( 3,900 ) ( 13,155 )
Net income
$ 242,509   $ 408,055   $ 883,524   $ 1,149,274  

Net income (loss) per share attributed to Synopsys - basic:
Continuing operations
$ 1.51   $ 2.78   $ 5.67   $ 7.60  
Discontinued operations
$ —   $ ( 0.12 ) $ ( 0.03 ) $ ( 0.08 )
Basic net income per share
$ 1.51   $ 2.66   $ 5.64   $ 7.52  

Net income (loss) per share attributed to Synopsys - diluted:
Continuing operations
$ 1.50   $ 2.73   $ 5.61   $ 7.46  
Discontinued operations
$ —   $ ( 0.12 ) $ ( 0.02 ) $ ( 0.09 )
Diluted net income per share
$ 1.50   $ 2.61   $ 5.59   $ 7.37  

Shares used in computing per share amounts:
Basic 160,174   153,417   156,536   152,885  
Diluted 161,682   156,131   158,176   155,863  

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,
  2025 2024 2025 2024
Net income $ 242,277   $ 404,894   $ 884,798   $ 1,140,190  
Other comprehensive income (loss):
Change in foreign currency translation adjustment 2,747   4,913   18,874   4,526  
Change in unrealized gains (losses) on available-for-sale securities, net of tax of $ 0 for periods presented
( 387 ) 885   ( 378 ) 1,764  
Cash flow hedges:
Deferred gains (losses), net of tax benefit (loss) of $( 1,666 ) and $ 20,336 for the three and nine months ended July 31, 2025, respectively and of $( 1,989 ) and $( 1,970 ) for each of the same periods in fiscal 2024, respectively
5,598   4,181   ( 76,558 ) 7,656  
Reclassification adjustment on deferred (gains) losses included in net income, net of tax of $( 18 ) and $( 2,204 ) for the three and nine months ended July 31, 2025, respectively, and of $ 348 and $( 2,083 ), for each of the same periods in fiscal 2024, respectively
283   ( 2,078 ) 6,547   2,356  
Other comprehensive income (loss), net of tax effects 8,241   7,901   ( 51,515 ) 16,302  
Comprehensive income 250,518   412,795   833,283   1,156,492  
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest ( 232 ) ( 3,161 ) 1,274   ( 9,084 )
Comprehensive income attributed to Synopsys $ 250,750   $ 415,956   $ 832,009   $ 1,165,576  

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 Total
Stockholders’
Equity

Common Stock
  Shares Amount
Balance at April 30, 2025
155,146   $ 1,552   $ 1,219,021   $ 9,624,282   $ ( 689,001 ) $ ( 240,136 ) $ 9,915,718   $ ( 113 ) $ 9,915,605  
Net income 242,509   242,509   ( 232 ) 242,277  
Other comprehensive income (loss), net of tax effects 8,241   8,241   8,241  

Common stock issued upon the acquisition of Ansys
29,955   300   17,105,238   17,105,538   17,105,538  
Assumption of equity awards in connection with the acquisition of Ansys
130,963   130,963   130,963  
Common stock issued, net of shares withheld for employee taxes 359   3   ( 173,074 ) 116,910   ( 56,161 ) ( 56,161 )
Stock-based compensation 267,723   267,723   267,723  

Balance at July 31, 2025
185,460   $ 1,855   $ 18,549,871   $ 9,866,791   $ ( 572,091 ) $ ( 231,895 ) $ 27,614,531   $ ( 345 ) $ 27,614,186  

Balance at October 31, 2024
154,112   $ 1,541   $ 1,211,206   $ 8,984,105   $ ( 1,025,770 ) $ ( 180,380 ) $ 8,990,702   $ 2,504   $ 8,993,206  
Net income 883,524   883,524   2,112   885,636  
Other comprehensive income (loss), net of tax effects ( 51,515 ) ( 51,515 ) ( 51,515 )

Common stock issued upon the acquisition of Ansys
29,955   300   17,105,238   17,105,538   17,105,538  
Assumption of equity awards in connection with the acquisition of Ansys
130,963   130,963   130,963  
Common stock issued, net of shares withheld for employee taxes 1,393   14   ( 558,370 ) 453,679   ( 104,677 ) ( 104,677 )
Stock-based compensation 655,200   655,200   709   655,909  
Adjustments to redeemable non-controlling interest ( 838 ) ( 838 ) ( 838 )
Deconsolidation of non-controlling interest upon the sale of subsidiary 5,634   5,634   ( 5,670 ) ( 36 )
Balance at July 31, 2025
185,460   $ 1,855   $ 18,549,871   $ 9,866,791   $ ( 572,091 ) $ ( 231,895 ) $ 27,614,531   $ ( 345 ) $ 27,614,186  

Capital in
Excess of
Par
Value Retained
Earnings Treasury
Stock Accumulated
Other
Comprehensive
Income (Loss) Total 
Synopsys
Stockholders’
Equity Non-controlling
Interest Total
Stockholders’
Equity

Common Stock
  Shares Amount
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 income 408,055   408,055   ( 783 ) 407,272  
Other comprehensive income (loss), net of tax effects 7,901   7,901   7,901  

Common stock issued, net of shares withheld for employee taxes 409   4   ( 170,884 ) 133,119   ( 37,761 ) ( 37,761 )
Stock-based compensation 180,418   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 income 1,149,274   1,149,274   ( 2,154 ) 1,147,120  
Other comprehensive income (loss), net of tax effects 16,302   16,302   16,302  
Purchases of treasury stock ( 74 ) ( 1 ) 1   ( 45,000 ) ( 45,000 ) ( 45,000 )
Equity forward contract, net 45,000   45,000   45,000  
Common stock issued, net of shares withheld for employee taxes 1,634   16   ( 666,689 ) 532,215   ( 134,458 ) ( 134,458 )
Stock-based compensation 536,401   536,401   3,625   540,026  
Adjustments for redeemable non-controlling interest ( 6,929 ) ( 6,929 ) ( 6,929 )
Recognition of non-controlling interest upon issuance of subsidiary stock 1,498   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  

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,
  2025 2024
Cash flows from operating activities:
Net income $ 884,798   $ 1,140,190  
Adjustments to reconcile net income to net cash provided by operating activities:

Amortization and depreciation 211,307   180,149  
Reduction of operating lease right-of-use assets 80,789   72,196  
Amortization of capitalized costs to obtain revenue contracts 38,920   57,071  
Stock-based compensation 655,909   540,026  
Allowance for credit losses 23,559   14,696  
(Gain) loss on sale of strategic investments
3,635   ( 55,077 )
Gain on sale of building
( 51,385 ) —  
Loss on divestitures, net of transaction costs
8,299   —  
Amortization of bridge financing costs
41,996   18,435  
Amortization of debt issuance costs
6,790   —  
Deferred income taxes ( 326,610 ) ( 276,840 )
Other ( 737 ) ( 3,730 )
Net changes in operating assets and liabilities, net of effects from acquisitions and dispositions:

Accounts receivable ( 27,989 ) 59,159  
Inventories ( 34,068 ) ( 71,303 )
Prepaid and other current assets 120,348   ( 350,652 )
Other long-term assets ( 427,793 ) ( 137,159 )
Accounts payable and accrued liabilities 31,384   17,532  
Operating lease liabilities ( 78,360 ) ( 72,254 )
Income taxes ( 140,347 ) ( 241,952 )
Deferred revenue ( 19,932 ) ( 46,276 )
Unrealized loss on settlement of interest rate treasury lock
( 121,643 ) —  
Net cash provided by operating activities
878,870   844,211  
Cash flows from investing activities:
Proceeds from maturities of short-term investments
53,630   98,265  
Proceeds from sales of short-term investments
148,809   200  
Purchases of short-term investments ( 47,558 ) ( 97,181 )
Proceeds from sales of strategic investments
3,470   55,696  
Purchases of strategic investments
( 4,086 ) ( 1,240 )
Purchases of property and equipment, net ( 134,908 ) ( 118,772 )
Proceeds from sale of building
74,279   —  
Acquisitions, net of cash acquired ( 16,681,257 ) ( 156,947 )
Proceeds from business divestiture, net of cash divested
142,546   —  

Other ( 611 ) —  
Net cash used in investing activities
( 16,445,686 ) ( 219,979 )
Cash flows from financing activities:
Proceeds from debt, net of issuance costs
14,329,340   —  
Repayment of debt
( 2,579 ) ( 2,607 )
Payment of bridge financing and term loan costs
—   ( 72,265 )
Issuances of common stock 138,101   143,148  
Payments for taxes related to net share settlement of equity awards ( 242,791 ) ( 278,571 )

Redemption of redeemable non-controlling interest
( 30,000 ) —  

Other ( 463 ) ( 1,096 )
Net cash provided by (used in) financing activities
14,191,608   ( 211,391 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash 8,649   5,458  
Net change in cash, cash equivalents and restricted cash ( 1,366,559 ) 418,299  

7

Cash, cash equivalents and restricted cash, beginning of year, including cash from discontinued operations
3,898,729   1,441,187  
Cash, cash equivalents and restricted cash, end of period, including cash from discontinued operations
2,532,170   1,859,486  
Less: Cash, cash equivalents and restricted cash from discontinued operations
—   17,441  
Cash, cash equivalents and restricted cash from continuing operations
$ 2,532,170   $ 1,842,045  

See the accompanying Notes to Condensed Consolidated Financial Statements (unaudited) .
8

SYNOPSYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Description of Business
Synopsys, Inc. (Synopsys, we, our or us) is the leader in engineering solutions from silicon to systems, enabling customers to rapidly innovate AI-powered products. We deliver trusted and comprehensive solutions spanning silicon design, silicon intellectual property (IP), simulation and analysis (S&A) as well as design services. We partner closely with our customers across a wide range of industries to maximize their R&D capability and productivity, powering innovation today that ignites the ingenuity of tomorrow.
We are a global leader in supplying the mission-critical 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.
Following the completion of the Ansys Merger (as defined below), we are the global leader in engineering S&A software. Our Ansys® solutions portfolio is widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial equipment, materials and chemicals, consumer products, healthcare and construction. These products enable customers to analyze designs on-premises and/or via the cloud, providing a common platform for fast, efficient and cost-conscious product development, from design concept to final-stage testing, validation and deployment. 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, 2024 as filed with the SEC on December 19, 2024 (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. Historically, our fiscal year had been 52- or 53-week periods ending on the Saturday nearest to October 31. Fiscal 2024 was a 53-week year ending on November 2, 2024.
9

We have changed our fiscal year end from the Saturday nearest to October 31 and consisting of 52 or 53 fiscal weeks to a fiscal year end of October 31 each year. The fiscal year change became effective with our fiscal 2025, which began on November 3, 2024. Our fiscal quarters will end on January 31, April 30, July 31 and October 31 of each year.
The third quarter of fiscal 2025 and 2024 ended on July 31, 2025 and August 3, 2024, respectively. Our results of operations for the first nine months of fiscal 2025 and fiscal 2024 included 271 days and 280 days, respectively. For presentation purposes, the condensed consolidated financial statements and accompanying notes refer to the closest calendar month end.
Acquisition of Ansys. On July 17, 2025 (the Closing Date or Acquisition Date), we completed the acquisition of ANSYS, Inc. (Ansys), a provider of broad engineering simulation and analysis software and services for $ 199.91 in cash and 0.3399 of a share of our common stock in exchange for each ordinary share of Ansys for a total consideration of $ 34.9  billion .
We accounted for the acquisition of Ansys by applying the acquisition method of accounting for business combinations. The unaudited condensed consolidated financial statements in this Quarterly Report include the financial results of Ansys prospectively from the Acquisition Date. See Note 4. Acquisition of Ansys and Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements for additional information.
Significant Accounting Policies. We updated our accounting policy for Revenue Recognition in the third quarter of fiscal 2025. There have been no other material changes to our significant accounting policies included in our Annual Report.
Revenue Recognition. S&A software solutions are offered as subscription solutions and also as perpetual licenses. Software subscription arrangements include bundles of time-based software licenses with support services, which includes rights to technical support and software updates that are provided over the support term and are transferred to the customer over time. In such subscription arrangements, the updates to time-based software licenses are not considered integral to maintaining the utility of the software. We consider the license and support services as separate performance obligations. In these instances, we allocate the total consideration received for the revenue arrangement to the separate performance obligations based on the standalone selling prices of the time-based software license and support service. The time-based software license revenue is presented as upfront products revenue, recognized at a point of time upon the later of the delivery date or the beginning of the license period, and the revenue related to the support service is presented as maintenance and service revenue and is recognized over the term of the arrangement. Perpetual license arrangements typically include a perpetual license sold with support services, which includes a stand-ready obligation to provide technical support and software updates over the support term. We allocate the total consideration received for the bundled perpetual and support service arrangements based on the standalone selling prices of the perpetual license and support service. Revenue from perpetual licenses is presented as upfront product revenue and is recognized at a point in time upon the later of the delivery date or the beginning of the license period. Revenue from support service is classified as maintenance and service revenue and is recognized ratably over the term of the contract, as we satisfy the support service performance obligation.
Recently Adopted 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. We adopted the standard as of the beginning of fiscal 2025 on a prospective basis and the adoption did not have a material impact on our condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
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 reports beginning in fiscal 2025, and interim period reports beginning in fiscal 2026. We are currently
10

evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures. We will adopt this ASU for our annual report for the fiscal year ending October 31, 2025.
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 be effective for us beginning in fiscal 2026 and will be applied on a prospective ba sis. Early adoption is permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income-Expense Disaggregation (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires the disclosure of additional information related to certain costs and expenses, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income statement line item. The ASU also requires disclosure of the total amount of selling expenses and our definition of selling expenses. The ASU will be effective for our annual reports beginning in fiscal 2028, and interim period reports beginning in fiscal 2029 either on a prospective or retrospective basis. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

Note 3. Discontinued Operations
On September 30, 2024, we completed the sale of our former Software Integrity business (the Software Integrity Divestiture) to entities controlled by funds affiliated with Clearlake Capital Group, L.P. and Francisco Partners (together, the Sponsors). The aggregate consideration for the sale was $ 1.65  billion, comprised of: (i) cash of $ 1.48  billion received upon closing; (ii) $ 121.5  million reflecting the present value of $ 125.0  million in deferred consideration receivable in equal installments over five fiscal quarters beginning on January 17, 2025, subject to acceleration at our option prior to the closing of the Ansys Merger; (iii) $ 22.2  million reflecting the fair value of contingent consideration of up to $ 475.0  million receivable upon the Sponsors achieving a specified rate of return in the event of one or more potential liquidity transactions; and (iv) additional consideration receivable of $ 27.1  million as a result of net working capital adjustments. As a result of the Software Integrity Divestiture, we derecognized net assets of $ 720.5  million and incurred transaction costs of $ 61.7  million, resulting in a pre-tax gain of $ 868.8  million in fiscal 2024.
In the second quarter of fiscal 2025, we finalized the working capital adjustments and received $ 20.0  million from the Sponsors. The remainder receivable balance of $ 7.1  million was recorded as a reduction to the previously recorded gain from the Software Integrity Divestiture. We recorded a total pre-tax gain, net of transaction costs, of $ 860.5  million from the Software Integrity Divestiture.
We have received the entire deferred consideration installment payments of $ 125.0  million as of July 31, 2025. There was no material change to the fair value of the contingent consideration receivable at the quarter end.
The financial results of the Software Integrity business were presented as income from discontinued operations, net of income taxes in 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:
11

Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
2025 2024 2025 2024
(in thousands)

Revenue
$ —   $ 127,917   $ —   $ 392,579  
Cost of revenue
—   40,279   —   136,010  
Operating expenses
—   91,854   —   262,745  
Other income (expense), net
—   605   —   1,601  
Income (loss) from discontinued operations
—   ( 3,611 ) —   ( 4,575 )
Loss on Software Integrity Divestiture
—   —   ( 8,299 ) —  
Income (loss) from discontinued operations before income taxes —   ( 3,611 ) ( 8,299 ) ( 4,575 )
Income tax provision (benefit) —   14,202   ( 4,399 ) 8,580  
Income (loss) from discontinued operations, net of income taxes $ —   $ ( 17,813 ) $ ( 3,900 ) $ ( 13,155 )

The following table presents significant non-cash items and capital expenditures of discontinued operations for the period presented:

Nine Months Ended 
 July 31,
2025 2024
(in thousands)

Amortization and depreciation
$ —   $ 16,317  
Reduction of operating lease right-of-use assets
$ —   $ 2,162  
Amortization of capitalized costs to obtain revenue contracts
$ —   $ 20,808  
Stock-based compensation
$ —   $ 47,476  
Deferred income taxes
$ ( 6,933 ) $ 18,939  
Purchases of property and equipment
$ —   $ 972  

Note 4. Acquisition of Ansys
On July 17, 2025, we completed our acquisition of Ansys pursuant to the terms of the previously announced Agreement and Plan of Merger, dated as of January 15, 2024 (the Merger Agreement) by and among Synopsys, Ansys and ALTA Acquisition Corp. (Merger Sub), a Delaware corporation and a wholly owned subsidiary of Synopsys. Pursuant to the Merger Agreement, Merger Sub merged with and into Ansys (the Ansys Merger), with Ansys surviving the Ansys Merger as a wholly owned subsidiary of Synopsys. At the effective time of the Ansys Merger (the Effective Time), each share of common stock, par value $ 0.01 per share, of Ansys (Ansys Common Stock) issued and outstanding immediately prior to the Effective Time (subject to certain exceptions) was converted into the right to receive (i) 0.3399 (the Exchange Ratio) of a share of common stock, par value $ 0.01 per share, of Synopsys (Synopsys Common Stock) (in the aggregate, the Stock Consideration) and (ii) $ 199.91 in cash, without interest (the Per Share Cash Amount, and in the aggregate, the Cash Consideration) (the Stock Consideration and the Cash Consideration, collectively, the Merger Consideration). In addition, we assumed certain outstanding Ansys options and other outstanding unvested Ansys equity awards held by continuing Ansys employees.
The aggregate purchase consideration was approximately $ 34.9  billion, consisting of cash of $ 17.6  billion, S ynopsys Common Stock with a fair value of $ 17.1  billion, and the balance related to the assumption of certain outstanding Ansys equity awards and the settlement of pre-existing relationships. We acquired Ansys to combine Synopsys’ semiconductor electronic design automation expertise with Ansys’ S&A capabilities to address the growing demand for integrated design and simulation tools across various industries.
We funded the Cash Consideration in the Ansys Merger through a combination of cash on hand, the net proceeds from the issuance of the Senior Notes, and the borrowings under the Term Loan Agreement, each as defined and discussed in Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements .
The aggregate purchase consideration was preliminarily allocated as follows:
12

(in thousands)

Cash for outstanding Ansys Common Stock (1)
$ 17,613,185  
Fair value of Synopsys Common Stock issued for outstanding Ansys Common Stock (2)
17,105,538  

Fair value of assumed Ansys equity awards attributable to pre-combination services (3)
130,963  
Settlement of pre-existing relationships
8,794  
Total purchase consideration
34,858,480  
Less: cash acquired
( 931,740 )
Total purchase consideration, net of cash acquired
$ 33,926,740  
Allocations

Total current assets
902,639  
Property and equipment
105,193  
Goodwill
23,493,632  
Intangible assets
12,990,000  
Other long-term assets
256,210  
Deferred revenue
( 637,076 )
Other current liabilities
( 310,082 )
Long-term deferred revenue
( 34,070 )
Long-term deferred tax liabilities
( 2,677,401 )
Other long-term liabilities
( 162,305 )
$ 33,926,740  

(1) Represents the total cash paid to settle 88.1  million outstanding shares of Ansys Common Stock as of the Acquisition Date at $ 199.91 per share and a small portion for the settlement of fractional shares.
(2) Represents the fair value of 30.0  million shares of Synopsys Common Stock issued to settle 88.1  million outstanding shares of Ansys Common Stock. Synopsys issued 0.3399 of a share of Synopsys Common Stock for each Ansys share. The fair value of Synopsys Common Stock was $ 571.20 per share as of the Acquisition Date.
(3) Represents the fair value of assumed Ansys options and RSUs attributed to pre-combination services. See Note 15. Stock-Based Compensation for additional information.
We allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on their preliminary estimated fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of acquisition. These estimates and assumptions are believed to be reasonable, but they are inherently uncertain and may be subject to material change as additional information becomes available during the respective measurement period, which will not exceed 12 months from applicable acquisition date. The primary areas that are preliminary relate to the fair values of goodwill, intangible assets, certain tangible assets and liabilities, and income taxes.
Goodwill is primarily attributed to the assembled workforce and anticipated synergies and economies of scale expected from the integration of the Ansys business. The synergies include certain cost savings, operating efficiencies and other strategic benefits projected to be achieved as a result of the Ansys Merger. The goodwill was assigned to the Design Automation reporting unit and the amount recognized was not deductible for tax purposes.
The operating results of Ansys have been included in our condensed consolidated financial statements for the three and nine months ended July 31, 2025 from the Acquisition Date, and were not material to our financial results for either of these periods.
Transaction Costs
Transaction costs for acquisitions, primarily related to the Ansys Merger, were $ 114.9 million and $ 236.7 million during the three and nine months ended July 31, 2025, respectively. Transaction costs for acquisitions, including the Ansys Merger, were $ 53.0 million and $ 110.2 million during the three and nine months ended July 31, 2024, 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.
Intangible Assets
13

The estimated fair value and weighted average useful life of the Ansys intangible assets were as follows:

Fair value
Useful Lives

(in thousands)
(in years)

Core/developed technologies (1)
$ 6,500,000   6 - 9

Customer relationships (2)
5,100,000   9
Contract rights intangible (3)
440,000   2
Trademarks and trade names (4)
950,000   23
Total identified intangible assets
$ 12,990,000  

(1) Core/developed technology was identified from the products of Ansys and its preliminary fair value was determined using the relief-from-royalty method under the income approach. The relief-from-royalty method applies a royalty rate to projected income to quantify the benefit of owning the intangible asset rather than paying a royalty for use of the asset. The discount rate was determined at the time of measurement based on an analysis of the implied internal rate of return of the transaction, weighted-average cost of capital, and weighted-average return on assets. The economic useful life was determined based on the technology cycle related to each developed technology, as well as the cash-flows over the forecast period.

(2) Customer relationships represent the preliminary fair value of future projected revenue that will be derived from sales of products to existing Ansys customers. The fair value was determined using the multi-period excess earnings method under the income approach, which involves isolating the net earnings attributable to the asset being measured based on present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. The economic useful life was determined based on historical customer turnover rates and the useful life of developed technology.

(3) Contract rights intangible which represents contracted but unsatisfied or partially unsatisfied performance obligations, primarily relates to the dollar value of purchase arrangements with customers. The preliminary fair value was determined using the multi-period excess earnings method under the income approach. The economic useful life is based on the time to fulfill the outstanding order backlog obligation.

(4)Trademarks and trade names refers to Ansys brand assets. The preliminary fair value was determined by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue attributable to Ansys brand assets. The economic useful life was determined based on the expected usage period of the brand assets and the anticipated cash flows over the forecast period.
We believe the amounts of purchased intangible assets recorded above represent the fair values of and approximate the amounts a market participant would pay for these intangible assets as of the date of the Ansys Merger.
The Optical Solutions Group and PowerArtist RTL Divestiture
Following the determination that it was a necessary step towards obtaining governmental approval of and successfully closing the Ansys Merger, on September 3, 2024, we signed a definitive agreement for the sale of our Optical Solutions Group (OSG) to Keysight Technologies, Inc. (such sale, the Optical Solutions Divestiture). Ansys has similarly entered into a definitive agreement with Keysight Technologies, Inc. for the sale of its PowerArtist RTL business (such sale, together with the Optical Solutions Divestiture, the Regulatory Divestitures). The Regulatory Divestitures are subject to customary closing conditions, including approval by regulatory authorities. The assets and liabilities of OSG and PowerArtist have been classified as assets held for sale in the condensed consolidated balance sheets as of the Acquisition Date. OSG and PowerArtist are included in our Design Automation segment.
The following table presents the major classes of assets and liabilities classified as held for sale as of July 31, 2025.
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(in thousands)
Assets:

Accounts receivable, net
$ 18,507  
Inventories
281  
Prepaid and other current assets 6,282  
Property and equipment, net
576  
Operating lease right-of-use assets, net
1,978  
Goodwill
31,523  
Intangible assets, net
15,170  

Total current assets held for sale
$ 74,317  
Liabilities:

Accounts payable and accrued liabilities
$ 882  
Operating lease liabilities
2,103  
Deferred revenue
17,020  

Total current liabilities held for sale
$ 20,005  

The Regulatory Divestitures did not represent a strategic shift in operations that would have a major effect on the Company's business and are also not material to our financial results, therefore, are not presented as discontinued operations. The measurement of assets held for sale to fair value less costs to sell resulted in a gain which will not be recognized until realized on the date of sale.
Supplemental Pro Forma Information (Unaudited)
The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, as if Ansys had been acquired as of the beginning of fiscal year 2024.

Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
2025 2024 2025 2024
(in thousands)
Pro forma total revenue
$ 2,290,354   $ 2,105,893   $ 6,666,029   $ 6,385,630  
Pro forma net income (loss)
$ 214,539   $ 107,135   $ 294,183   $ ( 127,250 )

The unaudited pro forma financial information reflects significant non-recurring adjustments, including transaction costs of $ 298.4  million, stock-based compensation costs of $ 71.5  million, and severance costs of $ 8.2  million. This information is provided for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2024, or of the results of our future operations of the combined business.

Note 5. 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,
2025 2024 2025 2024
EDA 68.6   % 66.9   % 67.6   % 66.8   %
Design IP 24.6   % 30.4   % 28.0   % 30.9   %
Simulation and Analysis
4.5   % —   % 1.6   % —   %
Other 2.3   % 2.7   % 2.8   % 2.3   %
Total 100.0   % 100.0   % 100.0   % 100.0   %

Contract Balances
The timing of revenue recognition may differ from the timing of invoicing customers, resulting in receivables, contract assets, or contract liabilities (deferred revenue) on Synopsys's condensed consolidated balance sheets. For specific software, hardware, and IP agreements with payment plans, Synopsys records an unbilled receivable associated with revenue recognized upon transfer of control, as it holds an unconditional right to invoice and receive payment in the future for those transferred products or services.
A contract asset is recorded when revenue is recognized before Synopsys has the unconditional right to invoice or retains performance risk concerning that performance obligation. These contract assets transition to receivables when the rights become unconditional, generally upon the completion of a milestone. The contract assets listed below are included in prepaid and other current assets and other long-term assets in the condensed consolidated balance sheets.
Contract balances are as follows:
As of
July 31, 2025 October 31, 2024
  (in thousands)
Contract assets, net $ 1,177,744   $ 757,075  
Unbilled receivables $ 44,936   $ 44,166  
Deferred revenue $ 2,374,834   $ 1,732,568  

During the three and nine months ended July 31, 2025, we recognized revenue of $ 245.0 million and $ 1.4 billion, respectively, that was included in the deferred revenue balance as of October 31, 2024, 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 $ 10.1 billion as of July 31, 2025, which includes $ 1.3 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 46 % of the backlog as of July 31, 2025, excluding non-cancellable FSA, is expected to be recognized as revenue over the next 12 months, with the remainder to be 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, 2025, we recognized $ 44.5 million and $ 95.2 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods. 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.
Costs of Obtaining a Contract with Customer
Capitalized commission costs, net of accumulated amortization, as of July 31, 2025 were $ 67.9 million, of which $ 1.4 million are included in prepaid and other current assets, and $ 66.5 million in other long-term assets in our condensed consolidated balance sheets. Amortization of these assets was $ 13.5 million and $ 38.9 million during the three and nine months ended July 31, 2025, respectively, and are included in sales and marketing expense in our condensed consolidated statements of income. Amortization of these assets was $ 12.6 million and $ 36.3 million
16

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.

Note 6. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill during the nine months ended July 31, 2025 are as follows:
  (in thousands)

Balance at October 31, 2024
$ 3,448,850  
Additions 23,493,632  
Adjustments ( 19,470 )
Effect of foreign currency translation 22,711  
Balance at July 31, 2025
$ 26,945,723  

The change in goodwill during the nine months ended July 31, 2025 resulted primarily from $ 23.5 billion related to the Ansys Merger. For additional information, refer to Note 4. Acquisition of Ansys .
Intangible Assets
Intangible assets as of July 31, 2025 consist of the following:

Gross Carrying Amount Accumulated
Amortization Net Carrying Amount

  (in thousands)
Core/developed technology $ 7,271,070   $ 699,991   $ 6,571,079  
Customer relationships 5,399,231   269,100   5,130,131  
Contract rights intangible 613,263   182,895   430,368  

Trademarks and trade names 961,325   12,991   948,334  

Total $ 14,244,889   $ 1,164,977   $ 13,079,912  

Intangible assets as of October 31, 2024 consist of the following:

Gross Carrying Amount Accumulated
Amortization
and Impairment Net Carrying Amount

  (in thousands)
Core/developed technology $ 904,347   $ 777,518   $ 126,829  
Customer relationships 314,140   247,025   67,115  
Contract rights intangible 176,382   175,170   1,212  

Trademarks and trade names 12,925   12,917   8  

Total $ 1,407,794   $ 1,212,630   $ 195,164  

17

Amortization expense related to intangible assets consists of the following:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Core/developed technology $ 37,357   $ 13,447   $ 52,883   $ 38,373  
Customer relationships 26,907   4,058   34,895   11,467  
Contract rights intangible 9,011   1,063   9,741   3,465  

Trademarks and trade names 1,666   4   1,674   12  

Total $ 74,941   $ 18,572   $ 99,193   $ 53,317  

The following table presents the estimated future amortization of acquired intangible assets as of July 31, 2025:

Fiscal year (in thousands)
Remainder of fiscal 2025 $ 405,134  
2026 1,613,162  
2027 1,544,552  
2028 1,383,210  
2029 1,380,773  
2030 and thereafter 6,753,081  

Total $ 13,079,912  

Note 7. Balance Sheet Components

As of
July 31, 2025 October 31, 2024
(in thousands)

Other long-term assets:
Deferred compensation plan assets $ 426,862   $ 386,757  
Contract assets, net
355,802   —  
Capitalized commission, net 66,572   72,801  

Other 269,640   124,142  
Total $ 1,118,876   $ 583,700  

Accounts payable and accrued liabilities:
Payroll and related benefits $ 733,539   $ 624,823  
Accrued income taxes 17,063   147,115  
Other accrued liabilities 198,554   184,321  
Interest payable
201,103   —  
Accounts payable 132,945   207,333  
Total $ 1,283,204   $ 1,163,592  

Other long-term liabilities:
Deferred tax liability
$ 1,188,824   $ 36,557  
Deferred compensation plan liabilities 426,862   386,757  
Other 182,027   46,424  
Total $ 1,797,713   $ 469,738  

Note 8. Financial Assets and Liabilities
Cash Equivalents and Short-term Investments
18

As of July 31, 2025, the balances of our cash equivalents and short-term investments are as follows:
Amortized Cost Gross
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 $ 267,586   $ —   $ —   $ —   $ 267,586  

Total: $ 267,586   $ —   $ —   $ —   $ 267,586  
Short-term investments:
U.S. Treasury, agency & T-bills $ 5,020   $ 1   $ ( 3 ) $ —   $ 5,018  
Municipal bonds 17,126   5   ( 4 ) —   17,127  

Corporate debt securities 44,905   17   ( 20 ) —   44,902  

Other 188   $ —   $ —   — 188  
Total: $ 67,239   $ 23   $ ( 27 ) $ —   $ 67,235  

(1) See Note 9. Fair Value Measurements for further discussion on fair values.
The contractual maturities of our available-for-sale debt securities as of July 31, 2025 are as follows:

Amortized Cost Fair Value
(in thousands)
1 year or less
$ 20,278   $ 20,292  
1-5 years 46,961   46,943  

Total $ 67,239   $ 67,235  

As of October 31, 2024, the balances of our cash equivalents and short-term investments are as follows:
Amortized Cost Gross
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 $ 869,972   $ —   $ —   $ —   $ 869,972  
U.S. Treasury, agency & T-bills 7,984   1   —   —   7,985  

Total: $ 877,956   $ 1   $ —   $ —   $ 877,957  
Short-term investments:
U.S. Treasury, agency & T-bills $ 19,411   $ 44   $ ( 6 ) $ —   $ 19,449  

Corporate debt securities 105,024   349   ( 115 ) ( 2 ) 105,256  
Asset-backed securities 29,061   130   ( 7 ) ( 20 ) 29,164  

Total: $ 153,496   $ 523   $ ( 128 ) $ ( 22 ) $ 153,869  

(1) See Note 9. Fair Value Measurements for further discussion on fair values.
Restricted cash. We include amounts generally described as restricted cash in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown in the condensed consolidated statements of cash flows. Restricted cash is primarily associated with office leases and employee loan programs.
19

The following table provides a reconciliation of cash, cash equivalents and restricted cash included in the condensed consolidated balance sheets and the condensed consolidated statements of cash flows:
As of
July 31, 2025 October 31, 2024
(in thousands)
Cash and cash equivalents $ 2,526,475   $ 3,896,532  
Restricted cash included in prepaid and other current assets 4,717   1,529  
Restricted cash included in other long-term assets 978   668  
Cash, cash equivalents and restricted cash
$ 2,532,170   $ 3,898,729  

Non-marketable equity securities. Our portfolio of non-marketable equity securities consists of strategic investments in privately held companies. During the first quarter of fiscal 2024, we completed the sale of certain strategic investments in privately-held companies. The gain recognized from the sales was $ 55.1  million and included in other income (expense), net, in our condensed consolidated statements of income. There were no material impairments of non-marketable equity securities during the three and nine months ended July 31, 2025 and 2024.
Derivatives
We recognize derivative instruments as either assets or liabilities in the condensed consolidated balance sheets at fair value and provide qualitative and quantitative disclosures about such derivatives. We operate internationally and are exposed to potentially adverse movements in foreign currency exchange and interest rates. We enter into hedges in the form of foreign currency forward contracts to reduce our exposure to foreign currency rate changes on non-functional currency denominated forecasted transactions and balance sheet positions including: (1) certain assets and liabilities, (2) shipments forecasted to occur within approximately one month , (3) future billings and revenue on previously shipped orders, and (4) certain future intercompany invoices denominated in foreign currencies.
The majority of the forward contracts are short-term with maturity of up to 30 months at inception. We do not use foreign currency forward contracts for speculative or trading purposes. We enter into foreign exchange forward contracts with high credit quality financial institutions that are rated "A" or above and to date have not experienced nonperformance by counterparties. In addition, we mitigate credit risk in derivative transactions by permitting net settlement of transactions with the same counterparty and anticipate continued performance by all counterparties to such agreements.
The assets or liabilities associated with the forward contracts are recorded at fair value in other current assets or accrued liabilities in the condensed consolidated balance sheets. The accounting for gains and losses resulting from changes in fair value depends on the use of the foreign currency forward contract and whether it is designated and qualifies for hedge accounting. The cash flow impact upon settlement of the derivative contracts is included in net cash used in operating activities in the condensed consolidated statements of cash flows.
Additionally, in order to manage interest rate exposure related to anticipated debt transactions, in the first quarter of fiscal 2025, we entered into treasury rate lock agreements to hedge against unfavorable interest rate changes. The accounting for gains and losses resulting from changes in fair value depends on whether these are designated and qualify for hedge accounting. The assets or liabilities associated with these derivatives are recorded at fair value in other current assets or accrued liabilities in the condensed consolidated balance sheets. The cash flow impact upon settlement of these derivative contracts is included in net cash used in operating activities in the condensed consolidated statements of cash flows.
Cash Flow Hedging Activities
Certain foreign exchange forward contracts are designated and qualify as cash flow hedges. These contracts have durations of up to 30 months or less. Certain forward contracts are rolled over periodically to capture the full length of exposure to our foreign currency risk, which can be up to three years . To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on the hedged transactions. The related gains or losses resulting from changes in fair value of these hedges is initially reported, net of tax, as a component of other comprehensive income (loss) in stockholders’ equity and reclassified into revenue or operating expenses, as appropriate, at the time the hedged transactions affect earnings. We expect a majority of the hedge balance in other comprehensive income (loss) to be reclassified to the statements of income after the next 12 months.
20

We did not record any gains or losses related to discontinuation of foreign exchange forward contracts cash flow hedges during the nine months ended July 31, 2025 and 2024.
During the first quarter of fiscal 2025, we entered into 6-month interest rate hedge contracts (the 2025 Rate Lock Agreements) with notional value of $ 2.0  billion to lock the benchmark interest rate prior to expected debt issuances with 10-year and 30-year terms. The objective of the 2025 Rate Lock Agreements was to hedge the risk associated with the variability in interest rates due to the changes in the benchmark rate leading up to the closing of the intended financing on the notional amount being hedged. To receive hedge accounting treatment, the hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on the hedged transactions. These derivatives are designated as cash flow hedges with unrealized gains and losses deferred in other comprehensive income (loss) (OCI). The 2025 Rate Lock Agreements terminated and settled in the second quarter of fiscal 2025, and we recorded the fair value of $ 121.6  million as a loss within OCI. The unrealized loss of $ 121.6 million is being amortized to interest expense over the life of the related debt. We expect $ 7.0 million of the unrealized loss to be amortized to interest expense over the next 12 months. As of July 31, 2025, the unamortized portion of the fair value of the 2025 Rate Lock Agreements was $ 118.7  million. We had no interest rate hedge contracts outstanding as of July 31, 2025.
During the second quarter of fiscal 2025, we entered into a deferred payment agreement with the counterparty bank to defer the cash settlement of 2025 Rate Lock Agreements over a period of 5.5 years with installments due semi-annually. The implied interest rate is 3.45 %. This liability is recognized in our condensed consolidated balance sheets as short-term debt for the portion due within the next 12 months and as long-term debt for the remaining portion. There were no debt covenants applicable to the deferred payment agreement.
Non-designated Hedging Activities
Our foreign exchange forward contracts that are used to hedge non-functional currency denominated balance sheet assets and liabilities are not designated as hedging instruments. Accordingly, any gains or losses from changes in the fair value of the forward contracts are recorded in other income (expense), net. The gains and losses on these forward contracts generally offset the gains and losses associated with the underlying assets and liabilities, which are also recorded in other income (expense), net. The duration of the forward contracts for hedging our balance sheet exposure is approximately one month .
We also have certain foreign exchange forward contracts for hedging certain international revenues and expenses that are not designated as hedging instruments. Accordingly, any gains or losses from changes in the fair value of these forward contracts are recorded in other income (expense), net. The gains and losses on these forward contracts generally offset the gains and losses associated with the foreign currency in operating income. The duration of these forward contracts is usually less than one year . The overall goal of our hedging program is to minimize the impact of currency fluctuations on the net income over the fiscal year.
The effects of the non-designated foreign currency derivative instruments in the condensed consolidated statements of income are summarized as follows:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Gains (losses) recorded in other income (expense), net
$ ( 5,298 ) $ 955   $ 1,467   $ ( 110 )

The notional amounts in the table below for foreign currency derivative instruments provide one measure of the transaction volume outstanding:

As of
July 31, 2025 October 31, 2024
  (in thousands)
Total gross notional amounts $ 1,223,925   $ 1,686,341  
Net fair value $ 4,371   $ 1,819  

21

Our exposure to the market gains or losses will vary over time as a function of currency exchange rates. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
The following table represents the condensed consolidated balance sheets location and amount of foreign currency derivative instrument fair values segregated between designated and non-designated hedge instruments:

Fair values of
derivative instruments
designated as hedging
instruments Fair values of
derivative instruments
not designated as
hedging instruments
  (in thousands)
Balance at July 31, 2025

Other current assets $ 10,422   $ 679  
Accrued liabilities $ 4,166   $ 2,564  
Balance at October 31, 2024

Other current assets $ 8,839   $ 12  
Accrued liabilities $ 6,918   $ 114  

The following table represents the location of the amount of gains and losses on derivative instrument fair values for designated hedge instruments, net of tax in the condensed consolidated statements of income:

Location of 
gains (losses) recognized in OCI on derivatives Amount of 
gains (losses) recognized in OCI on
derivatives
(effective portion) Location of
gains (losses)
reclassified from OCI Amount of
gains (losses)
reclassified from
OCI
(effective portion)
  (in thousands)
Three months ended 
 July 31, 2025
Foreign exchange contracts Revenue $ 4,751   Revenue $ 1,056  
Foreign exchange contracts Operating expenses 847   Operating expenses ( 8 )
Interest rate contracts Interest expense
—   Interest expenses ( 1,331 )
Total $ 5,598   $ ( 283 )
Three months ended 
 July 31, 2024
Foreign exchange contracts Revenue $ 4,501   Revenue $ 2,689  
Foreign exchange contracts Operating expenses ( 320 ) Operating expenses ( 611 )
Total $ 4,181   $ 2,078  
Nine months ended 
 July 31, 2025
Foreign exchange contracts Revenue $ 17,953   Revenue $ 1,336  
Foreign exchange contracts Operating expenses ( 1,295 ) Operating expenses ( 5,664 )
Interest rate contracts Interest expense
( 93,216 ) Interest expenses ( 2,219 )
Total $ ( 76,558 ) $ ( 6,547 )
Nine months ended 
 July 31, 2024
Foreign exchange contracts Revenue $ 1,936   Revenue $ ( 1,593 )
Foreign exchange contracts Operating expenses 5,720   Operating expenses ( 763 )
Total $ 7,656   $ ( 2,356 )

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Note 9. Fair Value Measurements
ASC 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes guidelines and enhances disclosure requirements for fair value measurements. The accounting guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The accounting guidance also establishes a fair value hierarchy based on the independence of the source and objective evidence of the inputs used. There are three fair value hierarchies based upon the level of inputs that are significant to fair value measurement:
Level 1 —Observable inputs that reflect quoted prices (unadjusted) for identical instruments in active markets;
Level 2 —Observable inputs other than quoted prices for identical instruments in active markets, quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in inactive markets, and model-driven valuations in which all significant inputs and significant value drivers are observable in active markets; and
Level 3 —Unobservable inputs derived from fair valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
On a recurring basis, we measure the fair value of certain assets and liabilities, which include cash equivalents, short-term investments, marketable securities, non-qualified deferred compensation plan assets, contingent consideration receivable, and foreign currency derivative contracts.
Our cash equivalents, short-term investments and marketable securities are classified within Level 1 or Level 2 because they are valued using quoted market prices in an active market or alternative independent pricing sources and models utilizing market observable inputs.
Our non-qualified deferred compensation plan assets consist of money market and mutual funds invested in domestic and international marketable securities that are directly observable in active markets and are therefore classified within Level 1.
Our foreign currency derivative contracts are classified within Level 2 because these contracts are not actively traded, and the valuation inputs are based on quoted prices and market observable data of similar instruments.
Our borrowings under our Credit and Term Loan facilities are classified within Level 2 because these borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to us for debt with similar terms and maturities. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements for more information on these borrowings.
Our contingent consideration receivable, which was recorded in connection with the Software Integrity Divestiture, was classified within Level 3 because it was estimated using significant inputs that were not observable in the market. See Note 3. Discontinued Operations of the Notes to Condensed Consolidated Financial Statements for additional information.
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Assets/Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below as of July 31, 2025:

    Fair Value Measurement Using
Description Total Quoted Prices in 
Active Markets
for Identical Assets
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
 Inputs
(Level 3)
  (in thousands)
Assets
Cash equivalents:
Money market funds $ 267,586   $ 267,586   $ —   $ —  

Short-term investments:
U.S. Treasury, agency & T-bills 5,018   —   5,018   —  
Municipal bonds 17,127   —   17,127   —  

Corporate debt securities 44,902   —   44,902   —  

Other 188   —   188   —  
Prepaid and other current assets:
Foreign currency derivative contracts 11,101   —   11,101   —  
Contingent consideration receivable 22,202   —   —   22,202  
Other long-term assets:
Deferred compensation plan assets 426,862   426,862   —   —  
Marketable equity securities
969   969   —   —  
Total assets $ 795,955   $ 695,417   $ 78,336   $ 22,202  

Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts $ 6,730   $ —   $ 6,730   $ —  

Other long-term liabilities:
Deferred compensation plan liabilities 426,862   426,862   —   —  
Total liabilities $ 433,592   $ 426,862   $ 6,730   $ —  

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Assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2024:
    Fair Value Measurement Using
Description Total Quoted Prices in 
Active Markets
for Identical Assets
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable 
Inputs
(Level 3)
  (in thousands)
Assets
Cash equivalents:
Money market funds $ 869,972   $ 869,972   $ —   $ —  
U.S. Treasury, agency & T-bills 7,985   —   7,985   —  

Short-term investments:
U.S. Treasury, agency & T-bills 19,449   —   19,449   —  

Corporate debt securities 105,256   —   105,256   —  
Asset-backed securities 29,164   —   29,164   —  

Prepaid and other current assets:
Foreign currency derivative contracts 8,851   —   8,851   —  
Contingent consideration receivable 22,202   —   —   22,202  
Other long-term assets:
Deferred compensation plan assets 386,757   386,757   —   —  
Total assets $ 1,449,636   $ 1,256,729   $ 170,705   $ 22,202  
Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts $ 7,032   $ —   $ 7,032   $ —  
Other long-term liabilities:
Deferred compensation plan liabilities 386,757   386,757   —   —  
Total liabilities $ 393,789   $ 386,757   $ 7,032   $ —  

Assets/Liabilities Measured at Fair Value on a Non-Recurring Basis
Non-Marketable Equity Securities
Non-marketable equity securities are classified within Level 3 as they are valued using a combination of observable transaction price and unobservable inputs or data in an inactive market due to the absence of market price and inherent lack of liquidity.

Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities
The following table summarizes our borrowings as of July 31, 2025:
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Effective Interest Rate Amount
(in thousands)

Fixed-rate 4.550 % Senior Notes due on April 1, 2027
4.840   % $ 1,000,000  
Fixed-rate 4.650 % Senior Notes due on April 1, 2028
4.850   % 1,000,000  
Fixed-rate 4.850 % Senior Notes due on April 1, 2030
4.980   % 2,000,000  
Fixed-rate 5.000 % Senior Notes due on April 1, 2032
5.150   % 1,500,000  
Fixed-rate 5.150 % Senior Notes due on April 1, 2035
5.270   % 2,400,000  
Fixed-rate 5.700 % Senior Notes due on April 1, 2055
5.800   % 2,100,000  
Term Loan due on July 17, 2027
5.670   % 1,450,000  
Term Loan due on July 17, 2028
5.770   % 2,850,000  
Total 14,300,000  
Unamortized discount and issuance costs
( 94,474 )
Total Senior Notes and Term Loan
14,205,526  
Deferred payment on settlement of interest rate treasury lock
121,643  
Other borrowings
12,964  
Total
$ 14,340,133  
Reported as:

Short-term debt
$ 22,117  
Long-term debt 14,318,016  
Total $ 14,340,133  

Senior Notes:
On March 17, 2025, we issued $ 10.0  billion in aggregate principal amount of senior, unsecured and unsubordinated long-term notes, including $ 1.0  billion aggregate principal amount of 4.550 % Senior Notes due April 1, 2027 (the 2027 Senior Notes), $ 1.0  billion aggregate principal amount of 4.650 % Senior Notes due April 1, 2028 (the 2028 Senior Notes), $ 2.0  billion aggregate principal amount of 4.850 % Senior Notes due April 1, 2030,(the 2030 Senior Notes), $ 1.5  billion aggregate principal amount of 5.000 % Senior Notes due April 1, 2032 (the 2032 Senior Notes), $ 2.4  billion aggregate principal amount of 5.150 % Senior Notes due April 1, 2035 (the 2035 Senior Notes) and $ 2.1  billion aggregate principal amount of 5.700 % Senior Notes due April 1, 2055 (the 2055 Senior Notes and together with the 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes, 2032 Senior Notes and 2035 Senior Notes, the Senior Notes). Our total proceeds were approximately $ 9.9  billion, net of original issuance discount of $ 17.0  million and total issuance costs of $ 70.2  million. Interest on the Senior Notes is payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2025. The discount and issuance costs on our Senior Notes are amortized to interest expense over the terms of the respective notes using the effective interest method. The effective rates for the Senior Notes include the interest on the notes, the accretion of the discount and the amortization of issuance costs.
The Senior Notes were issued under an indenture, dated as of March 17, 2025 (the Base Indenture), as supplemented by the first supplemental indenture, dated as of March 17, 2025 (the Supplemental Indenture and, together with the Base Indenture, the Indenture), each between Synopsys and U.S. Bank Trust Company, National Association, as trustee.
The net proceeds of the Senior Notes were used to fund a portion of the Cash Consideration in the Ansys Merger, pay related transaction fees and expenses, as well as repay Ansys’ outstanding indebtedness.
At any time and from time to time prior to their respective par call dates (as defined in the Indenture and applicable series of Senior Notes or, in the case of the 2027 Senior Notes, prior to the maturity date), Synopsys may redeem the applicable series of the Senior Notes at its option, in whole or in part, at any time and from time to time, at the “make-whole” redemption price (calculated as set forth in the Indenture and applicable series of Senior Notes), plus, in each case, accrued and unpaid interest, if any, on the Senior Notes being redeemed to, but excluding, the redemption date. In addition, on or after the applicable par call date, Synopsys may redeem the 2028 Senior Notes, 2030 Senior Notes, 2032 Senior Notes, 2035 Senior Notes or 2055 Senior Notes at its option, in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the Senior Notes being redeemed plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable redemption date.
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The Indenture contains covenants limiting Synopsys’ ability to create certain liens and enter into certain sale and leaseback transactions. These covenants are subject to important limitations and exceptions as set forth in the Indenture.
Based on the trading prices of the Senior Notes, the fair value of our Senior Notes was $ 10.0  billion as of July 31, 2025. While the Senior Notes are recorded at cost, the fair value of long-term debt was determined based on observable market prices in less active markets and categorized as Level 2 for purposes of the fair value measurement hierarchy.
As of July 31, 2025, we were in compliance with all of our covenants under the Indenture.
During the first quarter of fiscal 2025, we entered into 6-month interest rate hedge contracts with an aggregate notional amount of $ 2.0  billion to manage the variability in cash flows due to changes in benchmark interest rates related to the Senior Notes. These interest rate hedge contracts were terminated and settled during the second quarter of fiscal 2025, and we entered into a deferred payment agreement with the counterparty bank to defer the cash settlement. See Note 8. Financial Assets and Liabilities of the Notes to Condensed Consolidated Financial Statements for more information on these cash flow hedging activities.
Bridge Commitment:
On January 15, 2024, we entered into the Bridge Commitment Letter with certain financial institutions that committed to provide, subject to the satisfaction of customary closing conditions, the bridge commitment (the Bridge Commitment) for the purpose of financing a portion of the aggregate Cash Consideration 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.
On October 3, 2024, we reduced the Bridge Commitment by $ 1.1  billion to $ 10.6  billion following the closing of the Software Integrity Divestiture. On March 17, 2025, we further reduced the Bridge Commitment by $ 9.9  billion following the issuance of the Senior Notes. On the Acquisition Date, we terminated the approximately $ 690.0  million in remaining Bridge Commitment, reducing total Bridge Commitment to $ 0 .
Term Loan:
On February 13, 2024, we entered into a term loan facility credit agreement (the Term Loan Agreement) in connection with the financing of the Ansys Merger. On July 17, 2025, we borrowed the full $ 4.3  billion available under the Term Loan Agreement to fund a portion of the Cash Consideration in the Ansys Merger and to pay transaction fees, premiums and expenses related to the Ansys Merger.
The Term Loan Agreement provides for two tranches of senior unsecured term loans: a $ 1.45  billion tranche (Tranche 1) that matures on July 17, 2027 and a $ 2.85  billion tranche (Tranche 2) that matures on July 17, 2028. The outstanding balance under the Term Loan Agreement as of July 31, 2025 was $ 4.3  billion.
Under the Term Loan Agreement, borrowings bear interest on the principal amount outstanding at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate (as defined in the Term Loan Agreement) plus an applicable margin based on the credit ratings of Synopsys ranging from 0.875 % to 1.375 % (in the case of Tranche 1) or 1.000 % to 1.500 % (in the case of Tranche 2) or (ii) the ABR (as defined in the Term Loan Agreement) plus an applicable margin based on the credit ratings of Synopsys ranging from 0.000 % to 0.375 % (in the case of Tranche 1) or 0.000 % to 0.500 % (in the case of Tranche 2).
The Term Loan Agreement contains a financial covenant requiring that Synopsys maintain a maximum consolidated leverage ratio, as well as certain other non-financial covenants. As of July 31, 2025, we were in compliance with the financial covenant.
Revolving Credit Facilities:
On February 13, 2024, we entered into a Sixth Amendment Agreement (the Sixth Amendment), which amended and restated our previous revolving credit agreement, dated as of December 14, 2022 (as amended and restated, the Revolving Credit Agreement).
The Revolving Credit Agreement provides an unsecured $ 850.0  million committed multicurrency revolving credit facility and an unsecured uncommitted incremental revolving loan facility of up to $ 150.0  million. The maturity date of the revolving credit facility is December 14, 2027, which may be extended at our option.
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Under the Sixth Amendment, certain amendments became effective on February 13, 2024 and certain additional amendments became effective on the Acquisition Date. The Sixth Amendment amended the financial covenant to allow netting of the cash proceeds of certain debt incurred to finance the Ansys Merger as well as certain other modifications set forth therein. The Sixth Amendment, among other things, also amended: (i) the applicable margin used to determine the interest that accrues on loans and the facility fee payable under the revolving credit facility to be based on our credit ratings, (ii) the financial covenant thresholds under the financial covenant in the Revolving Credit Agreement requiring us to maintain a maximum consolidated leverage ratio and (iii) certain conditions to borrowing, other non-financial covenants and events of default.
The Revolving Credit Agreement contains a financial covenant requiring us to maintain a maximum consolidated leverage ratio, as well as other non-financial covenants. As of July 31, 2025, we were in compliance with the financial covenant.
Interest under the Revolving Credit Agreement accrues on dollar-denominated loans at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate plus an applicable margin based on our credit ratings ranging from 0.795 % to 1.200 % or (ii) the ABR plus an applicable margin based on our credit ratings ranging from 0.000 % to 0.200 %. In addition to the interest on any outstanding loans, Synopsys is also required to pay a facility fee on the entire portion of the revolving credit facility ranging from 0.080 % to 0.175 % based on the credit ratings of Synopsys on the daily amount of the revolving commitment.
There was no outstanding balance under the Revolving Credit Agreement as of July 31, 2025 and October 31, 2024.
Other Borrowings:
In July 2018, we entered into a 12-year 220.0 million Renminbi (approximately $ 33.0 million) credit agreement with a lender in China to support our facilities expansion. Borrowings bear interest at a floating rate based on the 5-year Loan Prime Rate plus 0.74 %. As of July 31, 2025, we had $ 13.0 million outstanding balance under the agreement.
The carrying amount of the short-term and long-term debt approximates the estimated fair value.
The future principal payments of debt as of July 31, 2025 are as follows:

Principal Payments

Fiscal year (in thousands)
Remainder of fiscal 2025 $ 11,058  
2026 24,710  
2027 2,474,710  
2028 3,874,710  
2029 24,710  
2030 and thereafter 8,024,709  
Total $ 14,434,607  

Note 11. Leases
We have operating lease arrangements for office space, data center, equipment and other corporate assets. These leases have various expiration dates through December 31, 2042, some of which include options to extend the leases for up to 15 years. We consider the lease renewal options in determining the lease term and include associated potential option payments in lease payments when it is reasonably certain that the renewal options will be exercised.
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The components of our lease expense during the period presented are as follows:
Three Months Ended July 31, Nine Months Ended July 31,
2025 2024 2025 2024
(in thousands)
Operating lease expense (1)
$ 29,398   $ 23,800   $ 80,513   $ 67,848  

Variable lease expense (2)
8,686   5,182   22,243   16,761  
Total lease expense $ 38,084   $ 28,982   $ 102,756   $ 84,609  

(1) Operating lease expense includes immaterial amounts of short-term leases, net of sublease income.
(2) Variable lease expense includes payments to lessors that are not fixed or determinable at lease commencement date. These payments primarily consist of maintenance, property taxes, insurance and variable indexed based payments.
Supplemental cash flow information during the period presented is as follows:
Nine Months Ended July 31,
2025 2024
(in thousands)
Cash paid for amounts included in the measurement of operating lease liabilities (1)
$ 79,819   $ 74,715  
ROU assets obtained in exchange for operating lease liabilities (2)
$ 110,069   $ 64,790  

(1) Cash paid for amounts included in the measurement of operating lease liabilities included cash from discontinued operations of $ 4.3 million during the nine months ended July 31, 2024.
(2) ROU assets obtained in exchange for operating lease liabilities included ROU assets from discontinued operations of $ 0.7 million during the nine months ended July 31, 2024.
Lease term and discount rate information related to our operating leases as of the end of the period presented are as follows:
As of
July 31, 2025 October 31, 2024
Weighted-average remaining lease term (in years) 6.81 7.59
Weighted-average discount rate 3.33   % 2.86   %

The following table represents the maturities of our future lease payments due under operating leases as of July 31, 2025:
Lease Payments
Fiscal year (in thousands)
Remainder of fiscal 2025 $ 34,397  
2026 152,997  
2027 149,967  
2028 136,922  
2029 127,192  
2030 and thereafter 294,037  
Total future minimum lease payments
895,512  
Less: Imputed interest 95,331  
Total lease liabilities
$ 800,181  

In addition, the sublease income from facilities leased by us, due to us as of July 31, 2025 are as follows:
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Lease Receipts
Fiscal year (in thousands)
Remainder of fiscal 2025 $ 4,604  
2026 18,767  
2027 19,689  
2028 20,280  
2029 20,888  
2030 and thereafter 17,867  
Total $ 102,095  

Note 12. Redeemable Non-controlling Interest
During the second quarter of fiscal 2022, we acquired a 75 % equity interest in OpenLight Photonics, Inc. (OpenLight) for cash consideration of $ 90.0  million. The remaining 25 % equity interest in OpenLight was held by Juniper Networks, Inc. (the Minority Investor) from their contribution of IP and certain tangible assets.
The agreement with the Minority Investor contained redemption features whereby the interest held by the Minority Investor was redeemable either (1) at the option of the Minority Investor on or after the third anniversary of the acquisition or sooner in certain circumstances or (2) at our option beginning on the third anniversary of the acquisition. This option was exercisable at the greater of fair value at the time of redemption or $ 30.0  million. The fair value of the option was initially valued at $ 10.1  million, resulting in a total consideration of $ 100.1  million.
As of the end of fiscal 2024, upon issuance of new OpenLight stock, our ownership interest in OpenLight was reduced to 71 % and Juniper's was reduced to 24 % . On December 23, 2024, we exercised the call option to purchase the remaining ownership interest held by Juniper at a redemption price of $ 30.0  million, bringing our ownership interest in OpenLight to 95 %.
Subsequently on December 30, 2024, we divested our entire ownership interest in OpenLight. We had previously recorded an impairment charge of $ 53.5  million related to acquired intangible assets in OpenLight in fiscal 2024. See Note 6. Goodwill and Intangible Assets of the Notes to Consolidated Financial Statements in our Annual Report for more information. The goodwill related to the OpenLight acquisition was assigned to our Design Automation reporting unit. The resulting loss on the OpenLight divestiture, included in other income (expense), net in the condensed consolidated statements of income, was not material to our results of operation.
During the first quarter of fiscal 2025, prior to the exercise of the call option, OpenLight incurred a net loss of $ 3.5  million, of which $ 0.8  million was attributable to redeemable non-controlling interest. We have excluded the financial results of OpenLight from our condensed consolidated financial statements from the date of sale.

Note 13. Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss), on an after-tax basis where applicable, are as follows:

As of
July 31, 2025 October 31, 2024
  (in thousands)
Cumulative currency translation adjustments $ ( 143,080 ) $ ( 161,954 )
Unrealized gains (losses) on derivative instruments, net of taxes ( 88,811 ) ( 18,800 )
Unrealized gains (losses) on available-for-sale securities, net of taxes ( 4 ) 374  
Total $ ( 231,895 ) $ ( 180,380 )

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The effect of amounts reclassified out of each component of accumulated other comprehensive income (loss) into net income is as follows:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Reclassifications:
Gains (losses) on cash flow hedges, net of taxes
Revenues $ 1,056   $ 2,689   $ 1,336   $ ( 1,593 )
Operating expenses ( 8 ) ( 611 ) ( 5,664 ) ( 763 )
Interest expense
( 1,331 ) —   ( 2,219 ) —  

Total $ ( 283 ) $ 2,078   $ ( 6,547 ) $ ( 2,356 )

Amounts reclassified during the nine months ended July 31, 2025 and 2024 primarily consisted of gains (losses) from our cash flow hedging activities. See Note 8. Financial Assets and Liabilities of the Notes to Condensed Consolidated Financial Statements.

Note 14. Stock Repurchase Program
In fiscal 2022, our Board of Directors approved a stock repurchase program (the Program) with authorization to purchase up to $ 1.5 billion of our common stock. As of July 31, 2025, $ 194.3 million remained available for future repurchases under the Program. However, in connection with the Ansys Merger, we have suspended the Program until we reduce our debt levels.
Stock repurchase activities as well as the reissuance of treasury stock for employee stock-based compensation purposes are as follows:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024 (1)

  (in thousands)
Total shares repurchased —   —   —   74  

Total cost of the repurchased shares $ —   $ —   $ —   $ 45,000  
Reissuance of treasury stock 359   409   1,393   1,634  

(1) Included the 73,903 shares and $ 45.0 million equity forward contract from the August 2023 Accelerated Share Repurchase settled in November 2023.

Note 15. Stock-Based Compensation
As of the Acquisition Date, we assumed outstanding equity incentive awards under the following Ansys equity incentive plans: (i) the Fourth Amended and Restated Ansys, Inc. 1996 Stock Option and Grant Plan, (ii) the Fifth Amended and Restated Ansys, Inc. 1996 Stock Option and Grant Plan, and (iii) the Ansys, Inc. 2021 Equity and Incentive Compensation Plan (each, an Assumed Equity Plan, and collectively the Assumed Equity Plans). The awards under the Assumed Equity Plans, previously issued in the form of stock options and RSUs, were generally settled as follows:
(1)    Each award of Ansys restricted stock units (RSUs) held by non-employee directors and specified employees that were outstanding immediately prior to the Acquisition Date (the specified RSUs), including any RSUs deferred as part of Ansys' director deferred compensation program, was canceled and terminated and converted into the right to receive the Merger Consideration as of the Acquisition Date.
(2)    Each award of Ansys stock options and RSUs (other than specified RSUs) that was outstanding and unvested immediately prior to the Acquisition Date was assumed by us (each, an Assumed Option and Assumed RSU, and collectively, the Assumed Equity Awards) and converted to stock options exercisable and RSUs settleable in the number of shares of our common stock equal to the product of (i) the number of Ansys shares underlying such Assumed Equity Awards as of immediately prior to the Acquisition Date multiplied by (ii) the conversion ratio defined in the Merger Agreement. Any Ansys performance-based RSUs that were assumed by us will only be
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subject to time-based vesting. The number of Ansys shares underlying the performance-based RSUs for which the performance period was not complete as of the Acquisition Date was based on the target level of performance, and the number of Ansys shares underlying the performance-based RSUs for which the performance period was complete as of the Acquisition Date was based on the actual level of performance. The Assumed Equity Awards generally retain all of the rights, terms and conditions of the respective plans under which they were originally granted, including the same service-based vesting schedule, applicable thereto.
As of the Acquisition Date, the estimated fair value of the Assumed Equity Awards was $ 639.7  million, of which $ 131.0  million was recognized as goodwill and the balance of $ 508.7  million will be recognized as stock-based compensation expense over the remainder term of the Assumed Equity Awards. The fair value of the Assumed Equity Awards for services rendered through the Acquisition Date was recognized as a component of the purchase consideration, with the remaining fair value related to the post-combination services to be recorded as stock-based compensation over the remaining vesting period. A total of 1.1 million shares of our common stock underlying the Assumed Equity Awards that will be recognized as stock-based compensation expense have an estimated weighted average fair value at the Acquisition Dat e of $ 453.83 per sh are.
During the three months ended July 31, 2025, stock-based compensation expense included $ 67.2  million related to the Assumed Equity Awards in connection with the Ansys Merger. As of July 31, 2025, we had $ 432.5  million of total unrecognized stock-based compensation expense relating to RSUs underlying the outstanding Assumed Equity Awards, which is expected to be recognized over a weighted-average period of 1.74 years.
The compensation cost recognized in the condensed consolidated statements of income for our stock compensation arrangements is as follows:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Cost of products $ 22,943   $ 14,645   $ 66,470   $ 44,824  
Cost of maintenance and service 10,222   9,677   28,715   28,126  
Research and development expense 113,861   89,279   326,274   269,087  
Sales and marketing expense 45,564   30,251   117,214   91,811  
General and administrative expense 75,133   20,502   117,236   58,702  
Stock-based compensation expense from continuing operations before taxes
267,723   164,354   655,909   492,550  
Stock-based compensation expense from discontinued operations before taxes
—   17,185   —   47,476  
Total stock-based compensation expense before taxes
267,723   181,539   655,909   540,026  
Income tax benefit ( 38,686 ) ( 29,972 ) ( 94,779 ) ( 89,158 )
Stock-based compensation expense after taxes $ 229,037   $ 151,567   $ 561,130   $ 450,868  

During the three and nine months ended July 31, 2025 and 2024, we recognized stock-based compensation expense relating to RSUs granted to senior executives with certain market, performance and service conditions (market-based RSUs). The grant date fair value of the market-based RSUs and the assumptions used in the Monte Carlo simulation model to determine the grant date fair value during the periods are as follows:

  Nine Months Ended 
 July 31,
  2025 2024
Expected life (in years) 2.67 - 2.79
2.89

Risk-free interest rate 3.90 % - 4.39 %
4.41 %

Volatility 33.40 % - 34.72 %
34.03 %

Grant date fair value $ 409.94 - $ 464.17
$ 600.29

As of July 31, 2025, we had $ 1.7 billion of total unrecognized stock-based compensation expense relating to options, RSUs and restricted stock awards, which is expected to be recognized over a weighted-average period of 2.0 years. As of July 31, 2025, we had $ 109.2 million of unrecognized stock-based compensation expense relating
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to our Employee Stock Purchase Plan, which is expected to be recognized over a period of approximately 2.0 years.
The intrinsic values of equity awards exercised during the periods are as follows:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Intrinsic value of awards exercised $ 31,834   $ 90,973   $ 86,671   $ 166,993  

Note 16. Net Income (Loss) Per Share
We compute basic net income (loss) per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the dilution from potential common shares outstanding such as stock options and unvested RSUs and awards during the period using the treasury stock method.
The table below reconciles the weighted average common shares used to calculate basic net income (loss) per share with the weighted average common shares used to calculate diluted net income (loss) per share:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands, except per share amounts)
Numerator:
Net income from continuing operations attributed to Synopsys
$ 242,509   $ 425,868   $ 887,424   $ 1,162,429  
Net income (loss) from discontinued operations attributed to Synopsys —   ( 17,813 ) ( 3,900 ) ( 13,155 )
Net income attributed to Synopsys $ 242,509   $ 408,055   $ 883,524   $ 1,149,274  
Denominator:
Weighted average common shares for basic net income per share 160,174   153,417   156,536   152,885  
Dilutive effect of common share equivalents from equity-based compensation 1,508   2,714   1,640   2,978  
Weighted average common shares for diluted net income per share 161,682   156,131   158,176   155,863  
Net income (loss) per share attributed to Synopsys - basic:
Continuing operations
$ 1.51   $ 2.78   $ 5.67   $ 7.60  
Discontinued operations
$ —   $ ( 0.12 ) $ ( 0.03 ) $ ( 0.08 )
Basic net income per share
$ 1.51   $ 2.66   $ 5.64   $ 7.52  
Net income (loss) per share attributed to Synopsys - diluted:
Continuing operations
$ 1.50   $ 2.73   $ 5.61   $ 7.46  
Discontinued operations
$ —   $ ( 0.12 ) $ ( 0.02 ) $ ( 0.09 )
Diluted net income per share
$ 1.50   $ 2.61   $ 5.59   $ 7.37  
Anti-dilutive employee stock-based awards excluded 479   211   430   203  

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Note 17. Segment Disclosure
Segment reporting is based upon the “management approach,” i.e., how management organizes our operating segments for which separate financial information is (1) available and (2) evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance. Our CODM is our CEO.
We have two reportable segments: (1) Design Automation, which includes our advanced silicon design, verification products and services, S&A solutions, system integration products and services, digital, custom and field programmable gate array (FPGA) IC design software, verification software and hardware products, manufacturing software products and other; and (2) Design IP, which includes our interface, foundation, security, and embedded processor IP, IP subsystems, and IP implementation services.
We completed our assessment of our organizational structure after the Ansys Merger and concluded that Ansys will be included within our Design Automation segment based on how our CODM will evaluate the financial results in making operational decisions, allocating resources and assessing performance.
The financial information provided to and used by the CODM to assist in making operational decisions, allocating resources, and assessing performance includes consolidated financial information as well as revenue, adjusted operating income, and adjusted operating margin information for the Design Automation and Design IP segments, accompanied by disaggregated information relating to revenue by geographic region.
The Software Integrity business constituted its own reportable segment under Topic 280. In accordance with applicable accounting guidance, the results of the Software Integrity business were 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. See Note 3. Discontinued Operations of the Notes to Condensed Consolidated Financial Statements .
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Information by reportable segment is as follows:
  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Total Segments:
Revenue $ 1,739,737   $ 1,525,749   $ 4,799,318   $ 4,491,450  
Adjusted operating income 669,778   610,589   1,810,265   1,758,823  
Adjusted operating margin 38   % 40   % 38   % 39   %
Design Automation:
Revenue $ 1,312,166   $ 1,062,666   $ 3,454,617   $ 3,102,938  
Adjusted operating income 583,755   440,864   1,447,181   1,218,574  
Adjusted operating margin 44   % 41   % 42   % 39   %
Design IP:
Revenue $ 427,571   $ 463,083   $ 1,344,701   $ 1,388,512  
Adjusted operating income 86,023   169,725   363,084   540,249  
Adjusted operating margin 20   % 37   % 27   % 39   %

Certain operating expenses are not allocated to the segments and are managed at a consolidated level. The unallocated expenses managed at a consolidated level, including amortization of acquired intangible assets, stock-based compensation, changes in the fair value of deferred compensation plan, and acquisition/divestiture related items, are presented in the table below to provide a reconciliation of the total adjusted operating income from segments to our consolidated operating income from continuing operations:
  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Total segment adjusted operating income $ 669,778   $ 610,589   $ 1,810,265   $ 1,758,823  
Reconciling items:
Amortization of acquired intangible assets
( 74,941 ) ( 18,572 ) ( 99,193 ) ( 53,317 )
Stock-based compensation expense ( 267,723 ) ( 164,354 ) ( 655,909 ) ( 492,550 )
Deferred compensation plan ( 43,417 ) ( 25,780 ) ( 42,949 ) ( 76,276 )

Acquisition/divestiture related items
( 118,428 ) ( 41,672 ) ( 218,680 ) ( 91,771 )
Total operating income $ 165,269   $ 360,211   $ 793,534   $ 1,044,909  

The CODM does not use total assets by segment to evaluate segment performance or allocate resources. As a result, total assets by segment are not disclosed.
In allocating revenue to particular geographic areas, the CODM considers where individual “seats” or licenses to our products are located. Revenue is defined as revenue from external customers. Revenue related to operations in the United States and other geographic areas are: 

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Revenue:
United States $ 816,194   $ 660,479   $ 2,076,203   $ 2,015,066  
Europe 178,595   144,631   527,109   429,377  
China 247,288   266,699   578,742   729,583  
Korea 202,117   194,817   710,097   569,538  
Other 295,543   259,123   907,167   747,886  
Consolidated $ 1,739,737   $ 1,525,749   $ 4,799,318   $ 4,491,450  

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Geographic revenue data for multi-regional, multi-product transactions reflect internal allocations and are therefore subject to certain assumptions and to our allocation methodology.

Note 18. Other Income (Expense), Net
The following table presents the components of other income (expense), net:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Interest income $ 131,417   $ 15,717   $ 257,027   $ 40,508  

Gains (losses) on assets related to deferred compensation plan 43,417   25,780   42,949   76,276  
Foreign currency exchange gains (losses) 1,221   329   1,106   3,438  
Gain (loss) on sale of strategic investments
( 1,200 ) —   ( 3,635 ) 55,077  
Gain on sale of building
—   —   51,385   —  
Other, net ( 4,312 ) 1,700   ( 13,771 ) ( 8,682 )
Total $ 170,543   $ 43,526   $ 335,061   $ 166,617  

Assets Held for Sale
During the second quarter of fiscal 2025, we completed the sale of an office building for cash consideration of $ 74.3  million, net of selling costs. We recognized a pre-tax gain on sale of $ 51.4  million, which was included in other income (expense), net in the condensed consolidated statements of income.

Note 19. Income Taxes
Effective Tax Rate
We estimate our annual effective tax rate at the end of each fiscal quarter. The effective tax rate reflects our estimations of annual pre-tax income, the geographic mix of pre-tax income, interpretations of applicable tax laws and the potential outcomes of audits.
The following table presents the provision for income taxes and the effective tax rates:

  Three Months Ended 
 July 31, Nine Months Ended 
 July 31,
  2025 2024 2025 2024
  (in thousands)
Income before income taxes $ 189,310   $ 391,995   $ 876,618   $ 1,190,979  
Provision (benefit) for income taxes $ ( 52,967 ) $ ( 30,712 ) $ ( 12,080 ) $ 37,634  
Effective tax rate ( 28.0 ) % ( 7.8 ) % ( 1.4 ) % 3.2   %

Our effective tax rate decreased in the three months ended July 31, 2025, as compared to the same period in fiscal 2024, primarily due to the tax benefits from a full valuation allowance release against California research credits.
Our effective tax rate for the nine months ended July 31, 2025, is lower than the statutory federal corporate tax rate of 21 % primarily due to the capital loss on the sale of our ownership in OpenLight in the first quarter of 2025, tax benefits from the release of a full valuation allowance against California research credits, U.S. federal research tax credits, foreign-derived intangible income deduction, excess tax benefits from stock-based compensation and U.S. foreign tax credits, partially offset by state taxes, capitalized transaction costs and the effect of non-deductible stock-based compensation.
The timing of the resolution of income tax examinations, and the amounts and timing of various tax payments that are part of the settlement process, are highly uncertain. Variations in such amounts and/or timing could cause large fluctuations in the balance sheet classification of current and non-current assets and liabilities. During the next 12 months, it is reasonably possible that certain audits and ongoing tax litigation will be resolved, or that the statute of limitations on certain state and foreign income and withholding taxes will expire, or both. Given the uncertainty as to ultimate settlement terms, the timing of payment and the impact of such settlements on other uncertain tax
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positions, we estimate a potential decrease in underlying unrecognized tax benefits to be between $ 0 and $ 9.0 million.
Non-U.S. Examinations
One of our Korean subsidiaries, Ansys Korea, is currently involved in various stages of Tax Tribunal and Korea's High Court appeals regarding Korea's National Tax Service assessments of withholding taxes against Ansys Korea for 2017-2023. In connection with this matter, we have recorded the net impact of the unrecognized tax benefit and offsetting foreign tax credit.
We are under examinations by tax authorities in certain jurisdictions. No material assessments have been proposed in these examinations.
Legislative Developments
On July 4, 2025, President Donald J. Trump signed H.R. 1, the One Big Beautiful Bill Act (OBBB) into law. The OBBB includes many changes to corporate income tax law and will go into effect in fiscal 2026 and fiscal 2027 for Synopsys. We are currently evaluating the impacts of OBBB.
Effective in fiscal 2024, we are subject to the new 15% corporate alternative minimum tax (CAMT) enacted as part of the Inflation Reduction Act of 2022 (IR Act). We do not expect to be subject to CAMT in fiscal 2025, due to our regular tax liability exceeding CAMT. The details of the computation will be subject to final regulations issued by the U.S. Department of the Treasury. We will monitor regulatory developments and will continue to evaluate the impact, if any, of the CAMT.
The IR Act generally imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. In general, the total taxable value of shares repurchased is reduced by the fair market value of any newly issued shares during the taxable year. There has been no impact to our consolidated financial statements for this.
On June 27, 2024, California enacted SB-167, which suspends the use of California net operating loss and limits the use of California research tax credits to $5 million for our fiscal 2025-2027. On June 29, 2024, California enacted SB-175, which provides a refund mechanism effective beginning in our fiscal 2025 for the incremental tax that was paid as a result of SB-167.
The Organization for Economic Co-operation and Development (OECD) has a two-pillar solution to address tax challenges arising from digitalization of the economy. This two-pillar solution includes the Pillar Two Model Rules (Pillar Two) which define global minimum tax rules and imposes a 15% minimum tax rate. Various countries have started to enact new laws related to Pillar Two, including certain new laws effective beginning in fiscal 2025. As of July 31, 2025, the impact of Pillar 2 is not material.

Note 20. Contingencies
Legal Proceedings
We are subject to routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate outcome of any litigation is often uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial condition. We regularly review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount is estimable, we accrue a liability for the estimated loss. Legal proceedings are inherently uncertain and as circumstances change, it is possible that the amount of any accrued liability may increase, decrease or be eliminated.
We have determined that no disclosure of estimated loss is required for a claim against us because: (1) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (2) a reasonably possible loss or range of loss cannot be estimated; or (3) such estimate is immaterial.
Tax Matters
We undergo examination from time to time by U.S. and foreign authorities for non-income based taxes, such as sales, use and value-added taxes, and are currently under examination by tax authorities in certain jurisdictions. If the potential loss from such examinations is considered probable and the amount or the range of loss could be estimated, we would accrue a liability for the estimated expense.
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In addition to the foregoing, we are, from time to time, party to various other claims and legal proceedings in the ordinary course of our business, including with tax and other governmental authorities. For a description of certain of these other matters, see Note 19. Income Taxes of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q (this Quarterly Report) includes forward-looking statements, which involve risks, uncertainties and other factors that could cause Synopsys, Inc.'s (Synopsys, we, our or us) actual results, time frames or achievements to differ materially from those expressed or implied in such forward-looking statements. Readers are urged to carefully review and consider the various disclosures regarding these risks and uncertainties made in this Quarterly Report, including those identified below in Part II, Item 1A, Risk Factors, and in other documents we file from time to time with the Securities and Exchange Commission (SEC). Forward-looking statements include any statements that are not statements of historical fact and include, but are not limited to, statements concerning strategies related to our products, technology and services; business and market outlook, opportunities, strategies and technological trends, such as artificial intelligence (AI); acquisitions and their expected impact, such as our recent acquisition of ANSYS, Inc. (Ansys), including unexpected difficulties or expenditures relating thereto, our ability to successfully integrate and to realize the anticipated synergies, on a timely basis or at all, and the diversion of management time on integration-related matters; planned dispositions and their expected impact, including the Regulatory Divestitures (as defined below), and their potential impact on our ability to realize the benefits of the Ansys Merger; the level of, and obligations associated with, our indebtedness, including the debts incurred in connection with the Ansys Merger (as defined below); our plan to reallocate resources in our Design IP segment to higher growth opportunities; the anticipated impact of China export control restrictions, including the Q3 2025 BIS Restrictions (as defined below); the potential impact of the uncertain macroeconomic environment on our financial results, including, but not limited to, the effects of sustained global inflationary pressures and elevated interest rates, potential economic slowdowns or recessions, supply chain disruptions, geopolitical pressures, including, among others, the unknown impact of current and future U.S. and foreign trade regulations, government actions and regulatory changes, such as export control restrictions and tariffs, and regional or global military conflicts, and fluctuations in foreign exchange rates, and associated global economic conditions; customer concentration, demand and market expansion; our planned product releases and capabilities; industry growth rates; the expected realization of our contracted but unsatisfied or partially unsatisfied performance obligations (backlog); software trends; planned stock repurchases; our expected tax rate; and the impact and result of pending legal, administrative and tax proceedings. Forward-looking statements may be identified by words including, but not limited to, “may,” “will,” “could,” “would,” “can,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project,” “continue,” “forecast,” "likely," "potential," "seek," or the negatives of such terms and similar expressions. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. All subsequent written or oral forward-looking statements attributable to Synopsys or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.
The following summary and overview of our financial condition and results of operations are qualified in their entirety by the more complete discussions and should be read together with our condensed consolidated financial statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report, the risk factors set forth in Part II, Item 1A of this Quarterly Report, and with our audited consolidated financial statements and the related notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024, as filed with the SEC on December 19, 2024 (our Annual Report).

Overview
Unless otherwise noted, this Management’s Discussion and Analysis of Financial Condition and Results of Operations relates solely to our continuing operations and does not include the operations of our former Software Integrity business. See Note 3. Discontinued Operations of the Notes to Condensed Consolidated Financial Statements for additional information about the sale of our former Software Integrity business (the Software Integrity Divestiture).
Financial Performance Summary
For the third quarter of fiscal 2025, our results reflect strength in our Design Automation segment, including strong demand for our hardware products, offset by weakness in our Design IP segment, due to several headwinds, including China export control restrictions, such as the Q3 2025 BIS Restrictions, which disrupted customer design starts in China, weaker than expected demand from a major foundry customer, and certain roadmap and resource decisions that did not yield their intended results. In response to this weakness in our Design IP segment, we will be taking actions to sharpen our execution and reallocate resources to the highest growth opportunities.

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The following table sets forth some of our key quarterly unaudited financial information:

Three Months Ended July 31, Nine Months Ended July 31,
2025*
2024 2025*
2024
(in millions, except per share amounts)

Revenue
$ 1,739.7  $ 1,525.7  $ 4,799.3  $ 4,491.5 
Cost of revenue
$ 380.6  $ 290.7  $ 968.9  $ 870.3 
Operating expenses
$ 1,193.9  $ 874.9  $ 3,036.9  $ 2,576.3 
Operating income
$ 165.3  $ 360.2  $ 793.5  $ 1,044.9 
Net income from continuing operations attributed to Synopsys
$ 242.5  $ 425.9  $ 887.4  $ 1,162.4 
Net income (loss) from discontinued operations attributed to Synopsys $ —  $ (17.8) $ (3.9) $ (13.2)
Diluted net income (loss) per share attributed to Synopsys:
Continuing operations
$ 1.50  $ 2.73  $ 5.61  $ 7.46 
Discontinued operations
$ —  $ (0.12) $ (0.02) $ (0.09)

*The operating results of Ansys, which have been included in our financial results for the three and nine months ended July 31, 2025 for the period from July 17, 2025 through July 31, 2025, were not material to our overall results.
Financial performance summary for the three months ended July 31, 2025 compared to the same period of fiscal 2024:
• Revenues were $1.7 billion, an increase of $214.0 million or 14%, primarily due to revenue growth across a majority of products and geographies, offset by weakness in our Design IP segment due to several headwinds, including China export control restrictions, such as the Q3 2025 BIS Restrictions, weaker than expected demand from a major foundry customer, and certain roadmap and resource decisions that did not yield their intended results.
• Total cost of revenue and operating expenses was $1.6 billion, an increase of $408.9 million or 35%, primarily due to increases of $196.8 million in employee-related costs resulting from headcount increases through organic growth, $65.7 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger , and $63.7 million of amortization expense related to inta ngible assets acquired from the Ansys Merg er.
Financial performance summary for the nine months ended July 31, 2025 compared to the same period of fiscal 2024:
• Revenues were $4.8 billion, an increase of $307.8 million or 7%, primarily due to revenue growth across a majority of products and geographies, partially offset by the impact of the extra week in the first quarter of fiscal 2024 of approximately $63.2 million, and weakness in our Design IP segment due to several headwinds, including China export control restrictions, such as the Q3 2025 BIS Restrictions, weaker than expected demand from a major foundry customer, and certain roadmap and resource decisions that did not yield their intended results.
• Total cost of revenue and operating expenses was $4.0 billion, an increase of $559.2 million or 16% primarily due to increases of $330.2 million in employee-related costs resulting from headcount increases through organic growth, $121.3 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger, and $63.7 million of amortization expense related to intangible assets acquired from the Ansys Merger.
Business Summary
Synopsys delivers industry-leading silicon design, IP, simulation and analysis (S&A) solutions as well as design services. We partner closely with our customers across a wide range of industries to maximize their R&D capability and productivity, powering innovation today that ignites the ingenuity of tomorrow. For more information about our business segments and product groups, see Part I, Item 1, Business in our Annual Report.
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We have consistently grown our revenue since 2005, despite periods of global economic uncertainty. We achieved these results because of our solid execution, leading technologies and strong customer relationships, and because we generally recognize our revenue for software licenses over the arrangement period, which typically approximates three years. See Note 2. Summary of Significant Accounting Policies and Basis of Presentation of the Notes to Consolidated Financial Statements in our Annual Report for a discussion on our revenue recognition policy . The revenue we recognize in a particular period generally results from selling efforts in prior periods rather than the current period. As a result, decreases as well as increases in customer spending do not immediately affect our revenue in a significant way.
Our growth strategy is focused on expanding our total addressable market by maximizing the capabilities of R&D teams across industries spanning semiconductor, high-tech, industrial, aerospace, and more with engineering solutions from silicon to systems. Our priorities are to maintain and expand our technology leadership, drive sustainable growth and efficiently scale to accelerate our strategy. Our revenue growth from period to period is expected to vary based on the mix of our time-based and upfront products. Our upfront products have grown at a faster rate than our time-based products in recent periods, which has resulted in, and may in the future result in, increased fluctuation in our business, operating results and overall financial position on a quarterly basis. Such fluctuation may be more pronounced depending on demand from our larger customers. See Part II, Item 1A, Risk Factors, " Our operating results may fluctuate in the future, which may adversely affect our stock price" of this Quarterly Report for further discussion on potential fluctuations in our operating results. Based on our leading technologies, customer relationships, business model, diligent expense management, and acquisition strategy, we believe that we will continue to execute our strategies successfully.
Acquisition of Ansys
On July 17, 2025 (the Acquisition Date), we completed our acquisition of ANSYS, Inc. (Ansys) pursuant to the terms of the previously announced Agreement and Plan of Merger, dated as of January 15, 2024 (the Merger Agreement) by and among Synopsys, Ansys and ALTA Acquisition Corp. (Merger Sub), a Delaware corporation and a wholly owned subsidiary of Synopsys (the Ansys Merger). See Note 4. Acquisition of Ansys of the Notes to Condensed Consolidated Financial Statements for more information on the Ansys Merger.
For more on risks related to the Ansys Merger, see Part II, Item 1A, Risk Factors , “ Risks Related to the Ansys Merger " of this Quarterly Report.
Impact of the Current Macroeconomic and Geopolitical Environment
Uncertainty in the macroeconomic environment, including the effects of, among other things, changes in U.S. and global trade policy, including the recently proposed and enacted tariffs by the U.S. and other governments, sustained global inflationary pressures and elevated interest rates, potential economic slowdowns or recessions, supply chain disruptions, geopolitical pressures, fluctuations in foreign exchange rates, and associated global economic conditions, have resulted in increased volatility in global markets. While we have seen continued strength in the artificial intelligence and high-performance computing sectors, certain industries such as industrial, automotive and consumer electronics have recovered more slowly from recent macroeconomic uncertainty. The current uncertain macroeconomic environment has led some of our customers to postpone their decision-making, delay their drawdowns under non-cancellable commitments, decrease their spending and/or delay their payments to us.
We expect growth across our geographies in fiscal 2025 with the exception of China, where we are continuing to experience a challenging economic environment due to the collective impact of macroeconomic factors and Trade Restrictions (as defined below). See the discussion below under the heading "Developments in Export Control Regulations" and in Part II, Item 1A, Risk Factors, "We are subject to governmental export and import requirements that could subject us to liability and restrict our ability to sell our products and services, which could impair our ability to compete in international markets" of this Quarterly Report for further discussion of the impact of Trade Restrictions, including export control regulations, on Synopsys.
We are also actively monitoring the recent changes in U.S. and global trade policy, such as the recently proposed and enacted tariffs by the U.S. government. Certain countries have responded to the U.S. tariffs by imposing or threatening retaliatory tariffs. There may be additional changes to tariff levels and other aspects of global trade policy in fiscal 2025 in the U.S. and other countries due to global trade negotiations and other factors. While we are actively monitoring these changes in global trade policy and the effects they may have on our business and broader macroeconomic environment, they have not had a material impact on our business, operating results or financial condition to date.
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We are also monitoring other geopolitical pressures around the world, including, among others, changes in China-Taiwan and U.S.-China relations, the conflicts in Ukraine and the Middle East and other regional or global military conflicts. Any significant disruption caused by these or other geopolitical pressures or conflicts could materially affect our employees, business, operating results, financial condition or customers in those regions of the world. For example, Synopsys has employees, operations, customers and strategic partners in the Middle East. While we are actively monitoring the conflicts in the Middle East, at this time they have not had a material impact on our business, operating results or financial condition to date.
While our time-based model provides stability to our business, operating results and overall financial position, the broader implications of these macroeconomic or geopolitical events, particularly in the long term, remain uncertain. Further, the negative impact of these events or disruptions may be deferred due to our business model. See Part II, Item 1A, Risk Factors, “ Uncertainty in the macroeconomic environment, and its potential impact on the semiconductor and electronics industries, may negatively affect our business, operating results and financial condition ” and " Our operating results may fluctuate in the future, which may adversely affect our stock price" of this Quarterly Report for further discussion of the impact of global economic and geopolitical uncertainty on our business, operations and financial condition and potential fluctuations in our operating results, respectively.
Developments in Export Control Regulations
The Bureau of Industry and Security of the U.S. Department of Commerce (BIS) has continued to publish changes to U.S. export control regulations (the U.S. Export Regulations), including, among other things, the inclusion of certain Chinese technology companies on the Entity List, restrictions on the export of electronic computer-aided design (ECAD) software specially designed for the development of ICs with Gate-All-Around Field-Effect Transistor structures, as well as controls on ECAD software for advanced semiconductor packaging involving multiple chips or chiplets, and certain other restrictions on China’s access to certain semiconductor and advanced computing technology. U.S.-China relations remain fluid, in particular with respect to trade policy and export restrictions relating to dual-use technologies. For example, on May 29, 2025, Synopsys received a so-called “is-informed” letter from the BIS imposing a license requirement for the export, reexport, or in-country transfer of EDA software and technology classified under export control classification numbers (ECCNs) 3D991 and 3E991 when a party to the transaction is located in China or is a Chinese “military end user,” wherever located (such restrictions, the Q3 2025 BIS Restrictions). The Q3 2025 BIS Restrictions were subsequently rescinded on July 2, 2025.
China export control restrictions, including the Q3 2025 BIS Restrictions, have negatively impacted our business in China, including in our Design IP segment, and may continue to impact design starts or other aspects of our business in China in the future. The evolving nature of U.S. Export Regulations, including the potential for new and expanded license requirements of this or similar nature, creates uncertainty regarding the current and future impacts on our business. We anticipate additional changes to the U.S. Export Regulations or other U.S. or non-U.S. export, sanctions, or similar trade requirements (collectively, the Trade Restrictions) in the future, but we cannot forecast the scope or timing of such changes, nor the impact on our business. We will continue to monitor such developments, including potential additional Trade Restrictions, new or expanded license requirements, and other regulatory or policy changes by the U.S. and foreign governments.
For more on risks related to government export and import restrictions such as the U.S. government’s Entity List and other U.S. or non-U.S. Export Regulations, see Part I, Item 1A, Risk Factors , “ We are subject to governmental export and import requirements that could subject us to liability and restrict our ability to sell our products and services, which could impair our ability to compete in international markets .”
Business Segments
Design Automation. This segment includes our advanced silicon design, verification products and services, S&A solutions, and system integration products. This segment also includes digital, custom and field programmable gate array (FPGA) integrated circuit (IC) design software, verification software and hardware products, system integration products and services, and manufacturing software products. Designers use our EDA products to accelerate and automate the chip design process, reduce errors and enable more powerful and robust designs, with improved productivity for faster time to market. Engineers use our S&A solutions to virtually test and optimize designs across various physics domains, such as structural analysis, thermal analysis, and computational fluid dynamics (CFD).
Design IP. This segment includes our interface, foundation, security, and embedded processor IP, IP subsystems, and IP implementation services that serve companies primarily in the semiconductor and electronics industries. We are a leading provider of high-quality, silicon-proven IP solutions for system-on-chips (SoCs). This includes IP that
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has been optimized to address specific application requirements for the mobile, automotive, digital home, Internet of Things and AI/data center markets, enabling designers to quickly develop SoCs in these areas.
Fiscal Year and Fiscal Quarter End
Historically, our fiscal years had been 52- or 53-week periods ending on the Saturday nearest to October 31. Fiscal 2024 was a 53-week year ending on November 2, 2024.
We have changed our fiscal year end from the Saturday nearest to October 31 and consisting of 52 or 53 fiscal weeks to a fiscal year end of October 31 each year. The fiscal year change became effective with our fiscal 2025, which began on November 3, 2024. Our fiscal quarters will end on January 31, April 30, July 31 and October 31 of each year.
The third quarter of fiscal 2025 and 2024 ended on July 31, 2025 and August 3, 2024, respectively. Our results of operations for the first nine months of fiscal 2025 and fiscal 2024 included 271 days and 280 days, respectively. The extra week in the first quarter of fiscal 2024 resulted in approximately $63.2 million of additional revenue, and approximately $52.5 million of additional expenses, including approximately $10.6 million in stock-based compensation costs from continuing operations.
For presentation purposes, this Quarterly Report refers to the closest calendar month end for the third quarter of fiscal 2024.

Critical Accounting Estimates
Our condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In preparing these financial statements, we make estimates and assumptions that can affect the reported amounts of assets, liabilities, revenues and expenses, and net income. On an ongoing basis, we evaluate our estimates based on historical experience and various other assumptions we believe are reasonable under the circumstances. Our actual results may differ from these estimates.
The accounting policies that most frequently require us to make estimates and assumptions and therefore are critical to understanding our results of operations, are Revenue Recognition and Business Combinations. We updated our critical accounting estimates for Business Combinations in the third quarter of fiscal 2025. There have been no material changes in our critical accounting estimates other than those related to Business Combinations during the nine months ended July 31, 2025 since our Annual Report for fiscal 2024.
Business Combinations
We allocate the purchase price of acquired companies to the tangible assets acquired, liabilities assumed and intangible assets acquired based upon their estimated fair values on the acquisition date with the exception of contract assets and contract liabilities (deferred revenue) which are recognized and measured on the acquisition date in accordance with our "Revenue Recognition" policy in Note 2. Summary of Significant Accounting Policies and Basis of Presentation , as if we had originated the contracts. The excess of the purchase price over the fair values of these net tangible and intangible assets acquired is recorded as goodwill.
Accounting for business combinations requires management to make significant estimates and assumptions for the valuation of intangible assets. Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include, but are not limited to:
• future expected cash flows which includes estimates of software license sales, subscriptions, support agreements and consulting contracts;
• projected expenses which include cost of revenue, research and development and selling, general and administrative expenses (including estimated expenses required to generate the revenues attributable to different intangible assets);
• historical and expected customer attrition rates and anticipated growth in revenue from acquired customers;
• royalty rates applied to acquired developed technology platforms and other intangible assets;
• expected obsolescence rates and estimated useful lives of technology-related intangible assets;
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• the expected use of the acquired assets; and
• discount rates used to discount expected future cash flows to present value, which are typically derived from the implied rate of return on the transaction and a weighted-average cost of capital analysis with adjustments made to reflect inherent risks of the individual assets being valued;
The fair value of the definite-lived intangibles was determined using variations of the income approach.
With our acquisition of Ansys, the fair value of developed technologies and trade names was determined by applying the relief from royalty method under the income approach. The relief from royalty method applies a royalty rate to projected income to quantify the benefit of owning the intangible asset rather than paying a royalty for use of the asset. The economic useful life for developed technology was determined based on historical technology obsolescence patterns and prospective technological developments. The estimated economic useful life of the trade names was determined based on the expected probability of continued use of the brand asset. We assumed royalty rates ranging from 35.0% to 45.0% for existing technology, and 2.5% for trade names. The present value of operating cash flows from the existing technology and trade names was determined using discount rate of approximately 10.0%.
Customer relationships represent the fair value of the existing relationships with the acquired company’s customers. Their fair value was determined using the multi-period excess earnings method under the income approach, which involves isolating the net earnings attributable to the asset being measured based on the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the asset over its remaining useful life. The economic useful life was determined based on historical customer turnover rates. Projected income from existing customer relationships considered customer retention rates (i.e. gross retention and net retention including upsell) ranging from 85.0% to 105.0% for the direct sales channel and 70.0% to 90.0% for the indirect sales channel. The present value of operating cash flows from existing customers was determined using a discount rate of approximately 10.0%.
Contract rights intangible (i.e. order backlog) represents contracted but unsatisfied or partially unsatisfied performance obligations, primarily related to the dollar value of purchase arrangements with customers, effective as of a given point in time, that are based on mutually agreed terms. The fair value was determined by using the multi-period excess earnings method under the income approach. The economic useful life is based on the time to achieve 90.0% of cumulative undiscounted cash flows. The present value of operating cash flows from order backlog was determined using a discount rate of approximately 5.9%.
We believe that our preliminary estimates and assumptions related to the fair value of acquired intangible assets are reasonable, but significant judgment is involved. As a result, during the measurement period, which will not exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of the purchase price of our acquisitions, whichever comes first, any subsequent adjustments are recorded to our Consolidated Statements of Income or Condensed Consolidated Statement of Income.

Results of Operations
Revenue
Our revenues are generated from two business segments: the Design Automation segment and the Design IP segment. See Note 17. Segment Disclosure of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for more information about our reportable segments and revenue by geographic regions.
Further disaggregation of the revenues into various products and services within these two segments is summarized as follows:
Design Automation Segment
• EDA solutions include digital, custom and FPGA IC design software, verification software and hardware products, system integration products and services, and obligations to provide unspecified updates and support services. EDA products and services are typically sold through Technology Subscription License (TSL) arrangements that grant customers the right to access and use all of the licensed products at the outset of an arrangement; software updates are generally made available throughout the entire term of the arrangement. The duration of our TSL contracts is generally three years, though it may vary for specific arrangements. We have concluded that the software licenses in TSL contracts are
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