SYNOPSYS INC
For the period ended Jul 31, 2025. Filed Sep 9, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2025 · Filed Sep 9, 2025
SNPS$450.46+2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-04-30; filed 2025-05-28.
0000883241-25-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-07-31; filed 2025-09-09.
0000883241-25-000024
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 149 previous paragraphs and 157 current paragraphs.
67 unchanged; 60 reworded; 28 added; 17 removed; 5 previous and 2 current paragraphs rearranged.
Tables are not compared: 17 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
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.
Current report
*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.
Current report
•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.
Current report
Acquisition of Ansys
Current report
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 Ansysof the Notes to Condensed Consolidated Financial Statements for more information on the Ansys Merger.
Current report
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.
Current report
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.
Current report
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:
Current report
•future expected cash flows which includes estimates of software license sales, subscriptions, support agreements and consulting contracts;
Current report
•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);
Current report
•historical and expected customer attrition rates and anticipated growth in revenue from acquired customers;
Current report
•royalty rates applied to acquired developed technology platforms and other intangible assets;
Current report
•expected obsolescence rates and estimated useful lives of technology-related intangible assets;
Current report
•the expected use of the acquired assets; and
Current report
•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;
Current report
The fair value of the definite-lived intangibles was determined using variations of the income approach.
Current report
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%.
Current report
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%.
Current report
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%.
Current report
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.
Current report
•Simulation and analysis (S&A) solutions allow engineers to virtually test and optimize designs across various physics domains, such as structural analysis, thermal analysis, and CFD. 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.
Current report
Ansys Merger, $2.7 million in depreciation and maintenance expense, and $2.1 million in the change in the fair value of our executive deferred compensation plan assets.
Current report
Our debt and liquidity needs increased as a result of completing the Ansys Merger. We funded the Cash Consideration in the Ansys Merger from the issuance of the Senior Notes and the borrowings under the Term Loan Agreement. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion.
Current report
Financial Assets and Liabilitiesof the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion.
Current report
During the third quarter of fiscal 2025, we borrowed the full $4.3 billion available under the Term Loan Agreement to fund a portion of the Cash Consideration and to pay transaction fees, premiums and expenses related to the Ansys Merger. As of July 31, 2025, the outstanding balance under the Term Loan Agreement was $4.3 billion. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion.
Current report
As of July 31, 2025, we had $1.4 billion of purchase obligations, with $1.0 billion payable within 12 months. Although open purchase orders are considered enforceable and legally binding, the terms may allow us the option to cancel, reschedule and adjust our requirements based on our business needs prior to the delivery of goods or performance of services.
Current report
The increase in net cash used in investing activities for the nine months ended July 31, 2025 compared to the same period in fiscal 2024 was driven by higher cash paid for acquisitions, net of cash acquired, of $16.5 billion mainly for the Ansys Merger, partially offset by proceeds of $142.5 million received in connection with the Software Integrity
Current report
On February 13, 2024, we entered intoa 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 and to pay transaction fees, premiums and expenses related to the Ansys Merger.
Removed paragraphs (17)
Previous report
•Revenues were $1.6 billion, an increase of $149.6 million or 10%, primarily due to revenue growth across a majority of products and geographies.
Previous report
•Operating income was $376.4 million, an increase of $44.4 million or 13%.
Previous report
•Operating income was $628.3 million, a decrease of $56.4 million or 8%.
Previous report
Pending Acquisition of Ansys
Previous report
On January 15, 2024, we entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire all of the outstanding shares of Ansys, a provider of broad engineering simulation and analysis software and services, in a cash-and-stock transaction (the Ansys Merger) that values Ansys at approximately $35.0 billion, based on the closing price of Synopsys common stock on December 21, 2023.
Previous report
Under the terms of the Merger Agreement, at the effective time of the Ansys Merger (the Effective Time), each share of Ansys common stock issued and outstanding immediately prior to the Effective Time (with certain exceptions set forth in the Merger Agreement) will be converted into the right to receive 0.3450 (the Exchange Ratio) of a share of Synopsys common stock and $197.00 in cash, without interest. The Exchange Ratio is expected to result in Ansys equityholders and Synopsys equityholders owning approximately 16.5% and 83.5%, respectively, of the combined company on a pro forma basis following the Effective Time. The Merger Agreement also provides for Synopsys’ assumption of certain outstanding Ansys options and other unvested Ansys equity awards held by continuing Ansys employees. If the stock consideration to be issued by Synopsys in connection with the Ansys Merger exceeds 19.9999% of the shares of Synopsys common stock issued and outstanding immediately prior to the Effective Time, the Exchange Ratio will be reduced to the minimum extent necessary to ensure that the aggregate number of shares of Synopsys common stock to be issued in connection with the Ansys Merger does not exceed such threshold, and the cash consideration will be correspondingly increased to offset such adjustment.
Previous report
Pursuant to the Merger Agreement, at the Effective Time, two members of the board of directors of Ansys selected by mutual agreement of Synopsys and Ansys will become members of the Board of Directors of Synopsys. If the closing occurs less than six months prior to the next annual meeting of Synopsys’ stockholders, Synopsys will nominate such directors for election at such meeting. On March 19, 2024, Synopsys and Ansys mutually agreed to designate Dr. Ajei Gopal, the current President and Chief Executive Officer of Ansys, to become a member of the Synopsys Board of Directors at the Effective Time, subject to the completion of Synopsys’ director nomination process and satisfaction of all applicable eligibility requirements established by Synopsys’ Corporate Governance and Nominating Committee. Ansys and Synopsys have not yet determined or agreed on the remaining member of the Ansys board of directors to be appointed to the Synopsys Board of Directors.
Previous report
The Ansys Merger was approved by the holders of a majority of the outstanding shares of Ansys common stock on May 22, 2024 and is anticipated to close in the first half of calendar year 2025. The Ansys Merger is subject to the satisfaction or waiver of customary closing conditions, including, among other things, the clearance of the Ansys Merger under certain antitrust and foreign investment regimes, and the continued effectiveness of the registration statement on Form S-4 (File No. 333-277912) filed by us on March 14, 2024 and declared effective by the SEC on April 17, 2024. 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 to Keysight Technologies, Inc. (the Optical Solutions Divestiture). The Optical Solutions Divestiture is subject to customary closing conditions, including review by regulatory authorities, and the successful closing of the Ansys Merger.
Previous report
We and Ansys each have termination rights under the Merger Agreement. A fee of $1.5 billion may be payable by us to Ansys, or a fee of $950.0 million may be payable by Ansys to us, upon termination of the Merger Agreement under specified circumstances, each as more fully described in the Merger Agreement. The receipt of financing by us is not a condition to complete the Ansys Merger.
Previous report
In connection with the execution of the Merger Agreement, we entered into a commitment letter on January 15, 2024 (the Bridge Commitment Letter) with certain financial institutions that committed to provide, subject to the satisfaction of customary closing conditions, a senior unsecured bridge facility (the Bridge Commitment). The Bridge Commitment currently provides for an aggregate principal amount of up to approximately $690 million, after reduction following the closing of the sale of our Software Integrity business to entities controlled by funds affiliated with Clearlake Capital Group, L.P. and Francisco Partners (such sale, the Software Integrity Divestiture) and the issuance of the Senior Notes (as defined below). On February 13, 2024, we entered into a term loan facility credit agreement (the Term Loan Agreement), which provides us with the ability to borrow up to $4.3 billion at the closing of the Ansys Merger, subject to the satisfaction of customary closing conditions for similar facilities. On March 17, 2025, we issued $1 billion aggregate principal amount of 4.550% Senior Notes due April 1, 2027 (the 2027 Senior Notes), $1 billion aggregate principal amount of 4.650% Senior Notes due April 1, 2028 (the 2028 Senior Notes), $2 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) in connection with the Ansys Merger. The net proceeds of the issuance of the Senior Notes and the borrowings under the Term Loan Agreement are intended to be used to fund a portion of the cash consideration to be paid in the Ansys Merger, to pay related transaction fees and expenses and to repay Ansys’ outstanding indebtedness. 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 the Senior Notes, Bridge Commitment and the Term Loan Agreement.
Previous report
•Revenue recognition; and
Previous report
The increase in adjusted operating income for the three months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to an increase in the revenue of IP products driven by timing of customer demands.
Previous report
The pending Ansys Merger will continue to result in a material increase in our debt and liquidity needs impacting our capital needs during the next twelve months and beyond. We intend to fund our anticipated $19 billion cash consideration payment through a combination of cash on hand, including net proceeds from the issuance of the Senior Notes and the Software Integrity Divestiture, the fully-committed debt financing in place for approximately $4.99 billion (which includes approximately$690 million under the Bridge Commitment), and any net cash proceeds to be received from the sale of certain businesses and assets, including the Optical Solutions Divestiture. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion.
Previous report
The commitments to provide the Bridge Commitment may be terminated in whole or reduced in part, at our discretion. In addition, the Bridge Commitment Letter provides that net cash proceeds received from certain debt and equity issuances, including the Senior Notes, or the sale of certain businesses and assets, including the Software Integrity Divestiture, as well as term loan commitments under certain qualifying term loan facilities, will result in mandatory commitment reductions under the Bridge Commitment.
Previous report
On February 13, 2024, we entered into the Term Loan Agreement in connection with the financing of the pending Ansys Merger. The Term Loan Agreement provides us with the ability to borrow up to $4.3 billion at the closing of the Ansys Merger, subject to the satisfaction of customary closing conditions for similar facilities, for the purpose of financing a portion of the cash consideration to be paid in the Ansys Merger and paying related fees and expenses in connection with the Ansys Merger and the other transactions contemplated by the Merger Agreement.
Previous report
On May 14, 2024, a ticking fee began to accrue under the Term Loan Agreement in an amount equal to a rate per annum equal to 0.10% times the actual daily undrawn portion of the commitments in respect of the term loan facility. This ticking fee will accrue until the earlier of (i) termination or expiration of the commitments under the term loan facility or (ii) the funding of the commitments, at which point the accrued amount of the ticking fee will become payable.
Previous report
Interest accrues on dollar-denominated loans at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate (as defined in the Revolving Credit Agreement) plus an applicable margin or (ii) the ABR (as defined in the Revolving Credit Agreement) plus an applicable margin. The applicable margin for Adjusted Term SOFR Rate based loans ranges from 0.785% to 0.975%, based upon Synopsys’ consolidated leverage ratio. The applicable margin for ABR based loans is 0.000%. 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 0.09% to 0.15% based on Synopsys’ consolidated leverage ratio on the daily amount of the revolving commitment.
Reworded paragraphs (60)
Previous wording
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); planned acquisitions and their expected impact, such as our pending acquisition of ANSYS, Inc. (Ansys); planned dispositions and their expected impact; 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 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 th…
Excerpt shortened here; the source contains the full paragraph.
Current wording
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…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
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 Statementsfor additional information about the Software Integrity Divestiture.
Current wording
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 Statementsfor additional information about the sale of our former Software Integrity business (the Software Integrity Divestiture).
Previous wording
For the second quarter of fiscal 2025, our results reflect our consistent execution and resilient business model, with our revenue and operating income reflecting the effects of the timing of customer spending for hardware and IP, and changes in our revenue mix in the second quarter of fiscal 2025. The following table sets forth some of our key quarterly unaudited financial information:
Current wording
The following table sets forth some of our key quarterly unaudited financial information:
Previous wording
•Total cost of revenue and operating expenses was $1.2 billion, an increase of $105.2 million or 9%, primarily due to an increase of $106.4 million in employee-related costs resulting from headcount increases through organic growth.
Current wording
•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 Merger.
Previous wording
Financial performance summary for the six months ended April 30, 2025 compared to the same period of fiscal 2024:
Current wording
Financial performance summary for the nine months ended July 31, 2025 compared to the same period of fiscal 2024:
Previous wording
•Revenues were $3.1 billion, an increase of $93.9 million or 3%, 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.
Current wording
•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.
Previous wording
•Total cost of revenue and operating expenses was $2.4 billion, an increase of $150.3 million or 7% primarily due to increases of $133.4 million in employee-related costs resulting from headcount increases through organic growth, and $55.5 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger.
Current wording
•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.
Previous wording
Synopsys delivers trusted and comprehensive silicon to systems design solutions, from EDA, including system verification and validation solutions, to silicon IP. We partner closely with semiconductor and systems customers across a wide range of industries to maximize their engineering and research and development capacity. We are catalyzing the era of pervasive intelligence, 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.
Current wording
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.
Previous wording
Our growth strategy is based on maintaining and building on our leadership in our Design Automation products, expanding and proliferating our Design IP offerings and continuing to expand our product portfolio and our total addressable market. 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. 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.
Current wording
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.
Previous wording
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 volatility in credit, equity and foreign currency 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.
Current wording
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.
Previous wording
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 global trade restrictions. See the discussion below 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 export control regulations on Synopsys.
Current wording
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.
Previous wording
We are also actively monitoring geopolitical pressures around the world, including 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.
Current wording
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.
Previous wording
The Bureau of Industry and Security of the U.S. Department of Commerce has published 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 to China’s access to certain semiconductor and advanced computing technology. We currently believe that the U.S. Export Regulations and non-U.S. export requirements (collectively, the Export Regulations) do not materially impact our business. We anticipate additional changes to the Export Regulations 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, and other regulatory or policy changes by the U.S. and foreign governments.
Current wording
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.
Previous wording
For more on risks related to government export and import restrictions such as the U.S. government’s Entity List and other 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.”
Current wording
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.”
Previous wording
Design Automation. This segment includes our advanced silicon design, verification products and services 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.
Current wording
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).
Previous wording
The second quarter of fiscal 2025 and 2024 ended on April 30, 2025 and May 4, 2024, respectively. Our results of operations for the first six months of fiscal 2025 and fiscal 2024 included 179 days and 189 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.
Current wording
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.
Previous wording
For presentation purposes, this Quarterly Report refers to the closest calendar month end for the second quarter of fiscal 2024.
Current wording
For presentation purposes, this Quarterly Report refers to the closest calendar month end for the third quarter of fiscal 2024.
Previous wording
The accounting policies that most frequently require us to make estimates and assumptions and therefore are critical to understanding our results of operations, are:
Current wording
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.
Previous wording
Our revenues are subject to fluctuations, primarily due to customer requirements including the timing and value of contract renewals. For example, we experience fluctuations in our revenues due to factors such as the timing of IP product sales, Flexible Spending Account (FSA) drawdowns, royalties, and hardware products sales. As revenues from IP products sales and hardware products sales are recognized upfront, customer demand and timing requirements for such IP products and hardware products could result in increased variability of our total revenues.
Current wording
Our revenues are subject to fluctuations, primarily due to customer requirements including customer demand, timing requirements and the value of contract renewals. For example, we experience fluctuations in our revenues due to factors such as the timing of IP product sales, Flexible Spending Account (FSA) drawdowns, royalties, and hardware products sales. As revenues from IP products sales and hardware products sales are recognized upfront, customer demand and timing requirements for such IP products and hardware products could result in increased variability of our total revenues.
Previous wording
Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) as of April 30, 2025 were $8.1 billion, which includes $1.2 billion in non-cancellable 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 42% of the backlog as of April 30, 2025, excluding non-cancellable FSA, is expected to be recognized as revenue over the next 12 months, with the remainder recognized thereafter. The majority of the remaining backlog is expected to be recognized in the following three years.
Current wording
Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) as of July 31, 2025 were $10.1 billion, which includes $1.3 billion in non-cancellable 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 recognized thereafter. The majority of the remaining backlog is expected to be recognized in the following three years.
Previous wording
The amount and composition of unsatisfied performance obligations will fluctuate period to period. We do not believe the amount of unsatisfied performance obligations is indicative of future sales or revenue, or that such obligations at the end of any given period correlates with actual sales performance of a particular geography or particular products and services. For more information regarding our revenue during the three and six months ended April 30, 2025, including our contract balances as of such date, see Note 5. Revenue of the Notes to Condensed Consolidated Financial Statementsin this Quarterly Report.
Current wording
The amount and composition of unsatisfied performance obligations will fluctuate period to period. We do not believe the amount of unsatisfied performance obligations is indicative of future sales or revenue, or that such obligations at the end of any given period correlates with actual sales performance of a particular geography or particular products and services. For more information regarding our revenue during the three and nine months ended July 31, 2025, including our contract balances as of such date, see Note 5. Revenue of the Notes to Condensed Consolidated Financial Statementsin this Quarterly Report.
Previous wording
The increase in total revenues for the three and six months ended April 30, 2025 compared to the same periods in fiscal 2024 was primarily due to revenue growth of our business across a majority of product groups and geographies. The increase for the six-month period was partially offset bythe impact of the extra week in the first quarter of fiscal 2024 of approximately $63.2 million.
Current wording
The increase in total revenues for the three and nine months ended July 31, 2025 compared to the same periods in fiscal 2024 was primarily due to revenue growth of our business across a majority of product groups 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. The increase for the nine-month period was also partially offset bythe impact of the extra week in the first quarter of fiscal 2024 of approximately $63.2 million.
Previous wording
The increase in time-based products revenue for the three andsix months ended April 30, 2025 compared to the same periods in fiscal 2024 was primarily attributable to an increase in TSL license revenue from arrangements booked in prior periods. The increase for the six-month period was partially offset by the impact of the extra week in the first quarter of fiscal 2024.
Current wording
The increase in time-based products revenue for the three andnine months ended July 31, 2025 compared to the same periods in fiscal 2024 was primarily attributable to an increase in TSL license revenue from arrangements booked in prior periods. The increase for the nine-month period was partially offset by the impact of the extra week in the first quarter of fiscal 2024.
Previous wording
The increase in upfront products revenue for thethree andsix months ended April 30, 2025 compared to the same periods in fiscal 2024 was primarily due to an increase in the sale of IP and hardware products, driven by higher demand from customers.
Current wording
The increase in upfront products revenue for thethree andnine months ended July 31, 2025 compared to the same periods in fiscal 2024 was primarily due to an increase in the sale of hardware products, driven by higher demand from customers.
Previous wording
The increase in maintenance revenue for the threeandsix months ended April 30, 2025 compared to the same periods in fiscal 2024 was primarily due to an increase in the volume of arrangements that include maintenance.
Current wording
The increase in maintenance revenue for the threeand nine months ended July 31, 2025 compared to the same periods in fiscal 2024 was primarily due to an increase in the volume of arrangements that include maintenance largely due to contributions from Ansys following the completion ofthe Ansys Merger.
Previous wording
The decrease in professional service and other revenue for the three and six months ended April 30, 2025 compared to the same periods in fiscal 2024 was primarily due to the timing of IP customization projects.
Current wording
The decrease in professional service and other revenue for the three and nine months ended July 31, 2025 compared to the same periods in fiscal 2024 was primarily due to the timing of IP customization projects.
Previous wording
The increase in cost of revenue for the three months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $23.2 million in employee-related costs as a result of headcount increases from hiring, and $9.0 million in hardware-related costs including inventory provisions, partially offset by a decrease of $5.8 million in amortization of acquired technology-related intangible assets.
Current wording
The increase in cost of revenue for the three months ended July 31, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $35.7 million in hardware-related costs including inventory provisions, $31.9 million in amortization of acquired technology-related and contract rights intangible assets mainly in connection with the Ansys Merger, and $24.1 million in employee-related costs as a result of headcount increases from organic growth, partially offset by a decrease of $5.2 million in costs to fulfill IP consulting arrangements.
Previous wording
The increase in cost of revenue for thesix months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $29.7 million in employee-related costs as a result of headcount increases from hiring, $3.7 million in hardware-related costs including inventory provisions, partially offset by decreases of $10.4 million in amortization of acquired technology-related intangible assets, $4.1 millionin IT and facility costs, $3.4 million in costs to fulfill IP consulting arrangements, and $2.7 million in the change in the fair value of our executive deferred compensation plan assets .
Current wording
The increase in cost of revenue for the nine months ended July 31, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $53.8 million in employee-related costs as a result of headcount increases from organic growth, $39.5 million in hardware-related costs including inventory provisions, and $21.4 million in amortization of acquired technology-related and contract rights intangible assets mainly in connection with the Ansys Merger, partially offset by decreases of $8.6 million in costs to fulfill IP consulting arrangements, $4.9 million in IT and facility costs, and $2.0 million in the change in the fair value of our executive deferred compensation plan assets.
Previous wording
The increase in research and development expenses for the three months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $63.2 million in employee-related costs as a result of headcount increases as we continue to expand and enhance our product portfolio, $9.5 million in IT and facility costs, and $5.3 million in consultant and contractor costs, partially offset by a decrease of $19.7 million in the change in the fair value of our executive deferred compensation plan assets.
Current wording
The increase in research and development expenses for the three months ended July 31, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $82.2 million in employee-related costs as a result of headcount increases from organic growth as we continue to expand and enhance our product portfolio and, to a lesser extent, from the Ansys Merger, $12.2 million in the change in the fair value of our executive deferred compensation plan assets, $11.9 million in IT and facility costs, and $10.7 million in consultant and contractor costs.
Previous wording
The increase in research and development expenses for thesix months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $82.5 million in employee-related costs as a result of headcount increases as we continue to expand and enhance our product portfolio, $16.9 million in IT and facility costs, and $15.7 million in consultant and contractor costs, partially offset by a decrease of $27.7 million in the change in the fair value of our executive deferred compensation plan assets.
Current wording
The increase in research and development expenses for thenine months ended July 31, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $164.7 million in employee-related costs as a result of headcount increases from organic growth, as we continue to expand and enhance our product portfolio, $28.8 million in IT and facility costs, and $26.3 million in consultant and contractor costs, partially offset by a decrease of $15.4 million in the change in the fair value of our executive deferred compensation plan assets.
Previous wording
The increase in sales and marketing expenses for the three months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to an increase of $13.9 million in employee-related costs due to headcount increases, partially offset by a decrease of $6.0 million in the change in the fair value of our executive deferred compensation plan assets.
Current wording
The increase in sales and marketing expenses for the three months ended July 31, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $33.5 million in employee-related costs due to headcount increases from organic growth as well as from the Ansys Merger, $8.8 million in IT and facility costs, and $2.6 million in the change in the fair value of our executive deferred compensation plan assets.
Previous wording
The decrease in sales and marketing expenses for thesix months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to decreases of $15.5 million in the change in the fair value of our executive deferred compensation plan assets, and $3.2 million in IT and facility costs, partially offset by an increase of $13.7 million in employee-related costs due to headcount increases.
Current wording
The increase in sales and marketing expenses for thenine months ended July 31, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $47.2 million in employee-related costs due to headcount increases from organic growth as well as from the Ansys Merger, and $5.5 million in IT and facility costs, partially offset by a decrease of $12.9 million in the change in the fair value of our executive deferred compensation plan assets.
Previous wording
The increase in general and administrative expenses for thesix months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $55.5 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger, and $7.5 million in employee-related costs due to headcount increases from hiring, partially offset by a decrease of $5.1 million in the change in the fair value of our executive deferred compensation plan assets.
Current wording
The increase in general and administrative expenses for the three months ended July 31, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $65.7 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger, $57.0 million in employee-related costs primarily related to the
Previous wording
The increase in general and administrative expenses for the three months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $21.1 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger, and $6.1 million in employee-related costs due to headcount increases from hiring, partially offset by a decrease of $3.7 million in the change in the fair value of our executive deferred compensation plan assets.
Current wording
The increase in general and administrative expenses for thenine months ended July 31, 2025 compared to the same period in fiscal 2024 was primarily due to increases of $121.3 million in legal, consulting and other professional fees mainly in connection with the Ansys Merger, $64.5 million in employee-related costs primarily related to the Ansys Merger, and $4.6 million in depreciation and maintenance expense, partially offset by a decrease of $3.0 million in the change in the fair value of our executive deferred compensation plan assets.
Previous wording
Amortization of acquired intangible assets for the three and six months ended April 30, 2025 compared to the same periods in fiscal 2024 was relatively flat primarily due to acquired intangible assets that were fully amortized, offset by additions of acquired intangible assets in fiscal 2024. See Note 6. Goodwill and Intangible Assetsof the Notes to Condensed Consolidated Financial Statements for a schedule of future amortization amounts.
Current wording
The increase in amortization of acquired intangible assets for the three and nine months ended July 31, 2025 compared to the same periods in fiscal 2024 was primarily due to amortization expense related to intangible assets acquired from the Ansys Merger. See Note 6. Goodwill and Intangible Assetsof the Notes to Condensed Consolidated Financial Statements for a schedule of future amortization amounts.
Previous wording
The increase in interest expense for the three and six months ended April 30, 2025 as compared to the same periods in fiscal 2024 was primarily due tothe issuance of the Senior Notesin the second quarter of fiscal 2025. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilitiesof the Notes to Condensed Consolidated Financial Statementsfor further detail on our debt obligations.
Current wording
The increase in interest expense for the three and nine months ended July 31, 2025 as compared to the same periods in fiscal 2024 was primarily due to interest on the Senior Notes issued in the second quarter of fiscal 2025 and the borrowing under the Term Loan Agreement in the third quarter of fiscal 2025 in connection with the Ansys Merger. See Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilitiesof the Notes to Condensed Consolidated Financial Statementsfor further detail on our debt obligations.
Previous wording
The increase in other income (expense) for the three and six months ended April 30, 2025 as compared to the same periods in fiscal 2024 was primarily due to higher interest income as a result of higher cash balance and the gain recognized from the sale of an office building, partially offset by a decrease in the change in fair value of our executive deferred compensation plan assets. The increase for the six-month period was also partially offset by the impact of gain recognized from the sale of strategic investments in the first quarter of fiscal 2024.
Current wording
The increase in other income (expense) for the nine months ended July 31, 2025 as compared to the same period in fiscal 2024 was primarily due to higher interest income as a result of higher average cash balances and the gain recognized from the sale of an office building, partially offset by the impact of gain recognized from the sale of strategic investments in the first quarter of fiscal 2024 and a decrease in the change in fair value of our executive deferred compensation plan assets.
Previous wording
The increase in adjusted operating income for the three and six months ended April 30, 2025 compared to the same periods in fiscal 2024 was primarily due to an increase in revenue from arrangements booked in prior periods.
Current wording
The increase in adjusted operating income for the three and nine months ended July 31, 2025 compared to the same periods in fiscal 2024 was primarily due to an increase in revenue from our hardware business and arrangements booked in prior periods.
Previous wording
The decrease in adjusted operating income for the six months ended April 30, 2025 compared to the same period in fiscal 2024 was primarily due to an increase in employee-related costs due to headcount increases.
Current wording
The decrease in adjusted operating income for the three and nine months ended July 31, 2025 compared to the same periods in fiscal 2024 was primarily due to lower revenue from the impact of China export control restrictions, including 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, as well as an increase in employee-related costs due to headcount increases.
Previous wording
Our effective tax rate decreased in the three and six months ended April 30, 2025, as compared to the same periods in fiscal 2024, primarily due to capital loss on the sale of our ownership in OpenLight in the first quarter of 2025.
Current wording
Our effective tax rate decreased in the nine months ended July 31, 2025, as compared to the same period in fiscal 2024, primarily due to capital loss on the sale of our ownership in OpenLight in the first quarter of 2025 and tax benefits from a full valuation allowance release against California research credits.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The increase in other income (expense) for the three months ended July 31, 2025 as compared to the same period in fiscal 2024 was primarily due to higher interest income as a result of higher average cash balances and an increase in the change in fair value of our executive deferred compensation plan assets.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
There have been no material changes in our critical accounting estimates during the six months ended April 30, 2025 since our Annual Report for fiscal 2024. Refer to Item 7A, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II of our Annual Report for a complete description of our critical accounting estimates.
Previous report — wording carried elsewhere
•amends 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;
Previous report — wording carried elsewhere
•amends the financial covenant thresholds under the financial covenant in the Revolving Credit Agreement requiring us to maintain a maximum consolidated leverage ratio; and
Previous report — wording carried elsewhere
•amends certain conditions to borrowing, other non-financial covenants and events of default.
Previous report — wording carried elsewhere
As of April 30, 2025, we had $122.5 million outstanding balance under the deferred payment agreement related to the 2025 Rate Lock agreements. See Note 8. Financial Assets and Liabilities of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion.