SANTA CRUZ, Calif. Two words summarize how Aart de Geus, Synopsys Inc. chairman and CEO, views the company's fourth fiscal quarter and fiscal year 2006: "really good." Synopsys Wednesday (Nov. 29) reported quarterly and annual revenue growth of 11 percent and 10.4 percent respectively, as well as positive net income for the quarter and the year, compared with net losses in 2005.
For the fiscal fourth quarter ending Oct. 31, 2006, Synopsys reported revenue of $283.4 million, compared to $254.8 million in the prior year quarter. For fiscal 2006, Synopsys reported revenue of $1.096 billion, compared to $991.9 million in fiscal 2005.
Net GAAP income in the fourth quarter of 2006 was $9.6 million, compared to a loss of $13.5 million in the prior year quarter. Net GAAP income in fiscal 2006 was $24.3 million, compared to a net loss of $15.5 million in the prior year quarter.
De Geus said that Synopsys strength was "across the board" during the latest quarter, but he cited the company's IC Compiler implementation suite, SystemVerilog verification products, design for manufacturability (DFM) tools, and "fast Spice" capabilities for analog/mixed-signal design as particularly strong areas. And while there are "signs of caution" in the semiconductor industry, prospects are good for 2007, he said.
In the past couple of years, Synopsys has taken a revenue hit as it transitioned to ratable, time-based licenses. That transition is now complete, De Geus said, with more than 90 percent of products sold on a ratable basis. "We grew our backlog to over $2 billion, which gives us a tremendous degree of stability in our future outlook," he said. "And we come into every quarter with over 90 percent of revenues in hand. Not many software companies in the world can say that."
Synopsys' 10 percent year-over-year revenue increase, however, comes at a time when the EDA industry may be growing even faster. A Gartner Dataquest forecast issued in October predicted that 2006 EDA revenues will be up 13.3 percent over 2005.
It's also unclear how the market will respond. While Synopsys' third fiscal quarter topped analyst expectations and upped guidance, some analysts
remained unenthusiastic about the prospects for the company's short-term stock price, citing weaker-than-expected fiscal fourth quarter guidance, lack of confidence in fiscal third quarter bookings strength, and concerns about expenses.
Synopsys Wednesday also released guidance for 2007. For the first fiscal quarter, the company expects revenues between $292 and $300 million, and GAAP earnings per share between 10 to 15 cents. For the fiscal year 2007, Synopsys expects revenues between $1.180 and $1.205 billion, with GAAP earnings per share between 60 and 73 cents.