SYNOPSYS INC

Non-GAAP Financial Measures and Segment Adjustments

Non-GAAP Financial Performance Measures

Synopsys presents non-GAAP financial results, including non-GAAP operating margin and non-GAAP earnings per share (EPS) growth, in this proxy statement to provide investors with an additional tool to evaluate Synopsys’ operating results in a manner that focuses on what Synopsys believes to be its core business operations and what Synopsys uses to evaluate its business operations and for internal budgeting and resource allocation processes. Synopsys’ management does not itself, nor does it suggest that investors should, consider non-GAAP financial results in isolation from, as superior to, or as a substitute for, financial information prepared in accordance with GAAP. Non-GAAP financial results exclude the following items:

(i)Amortization of acquired intangible assets. Synopsys incurs expenses from amortization of acquired intangible assets, which may include impairment charges from write-downs of acquired intangible assets. Acquired intangible assets include, among other things, core/developed technology, customer relationships, contract rights, trademarks and trade names, and other intangibles related to acquisitions. Synopsys amortizes the intangible assets over their estimated useful lives. Synopsys does not enter into acquisitions on a predictable cycle. The amount of an acquisition’s purchase price allocated to intangible assets and their estimated useful lives can vary significantly and are unique to each acquisition. From time to time, Synopsys incurs impairment charges due to write-downs of acquired intangible assets. Synopsys believes that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets, including impairment charges, provides investors and others with a consistent basis for comparison across accounting periods. Synopsys also excludes this item because such expenses are non-cash in nature and believes the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding Synopsys’ core operational performance and liquidity, and ability to invest in research and development and fund future acquisitions and capital expenditures.

(ii)Stock-based compensation. Stock-based compensation expenses consist primarily of expenses related to restricted stock units, stock options, employee stock purchase rights and other stock awards, including such expenses associated with acquisitions. Synopsys excludes stock-based compensation expense from its non-GAAP financial measures primarily because it is not an expense that typically requires or will require cash settlement by Synopsys. Further, the expense for the fair value of the stock-based instruments Synopsys utilizes may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards and, therefore, is not used by management to assess the core profitability of Synopsys’ business operations.

(iii)Acquisition/divestiture-related items. In connection with certain of its business combinations and/or divestitures, Synopsys incurs significant expenses that it would not have otherwise incurred as part of its business operations. These expenses include, among other things, compensation expenses, professional fees and other direct expenses, concurrent restructuring activities and divestiture activities, including employee severance and other exit costs, bridge financing costs, costs related to integration activities, debt forgiveness, changes to the fair value of contingent consideration related to the acquired company, and amortization of the fair value difference of below-market value assets arising from arrangements entered into or acquired in conjunction with an acquisition. Synopsys also recognizes the gains and losses from the mark-up of equity or cost method investments to fair value upon obtaining control through acquisition. Synopsys excludes these items because they are related to acquisitions and divestitures and have no direct correlation to the core operation of its business. Further, because Synopsys does not acquire or divest businesses on a predictable cycle and the terms of each transaction can vary significantly and are unique to each transaction, Synopsys believes it is useful to exclude such expenses when looking for a consistent basis for comparison across accounting periods.

(iv)Restructuring charges. Synopsys initiates restructuring activities to align its costs to its operating plans and business strategies based on then-current economic conditions, and such activities have a specific and defined term. Restructuring costs generally include severance and other termination benefits related to voluntary retirement programs, involuntary headcount reductions and facilities closures. Such restructuring costs include elimination of operational redundancy, permanent reductions in workforce and facilities closures and, therefore, are not considered by Synopsys to be a part of the core operation of its business and are not used by management when assessing the core profitability and performance of its business operations.

(v)Gains (losses) on the sale of strategic investments. Synopsys excludes gains and losses on the sale of equity investments in privately held companies because it does not believe they are reflective of Synopsys' core business and operating results.

(vi)Deferred compensation. Synopsys excludes changes in the fair value of its non-qualified deferred compensation plan because Synopsys does not use these to assess the core profitability of Synopsys' business operations.

(vii)Income tax effect of non-GAAP pre-tax adjustments. Excluding the income tax effect of non-GAAP pre-tax adjustments from the provision for income taxes assists investors in understanding the tax provision associated with those adjustments and the effect on net income. Beginning in fiscal year 2026, Synopsys will transition from an annual non-GAAP tax rate to a three-year normalized non-GAAP tax rate. Synopsys believes this will provide better consistency across reporting periods by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency and do not necessarily reflect Synopsys' normal operations. This rate is based on Synopsys' projected annual rate through fiscal year 2028, primarily due to the completion of the acquisition of Ansys in the third quarter

Appendix B

of fiscal year 2025 and the enactment of One Big Beautiful Bill Act (the OBBB), which affects taxable income starting in fiscal year 2026 over the next several years. In projecting this rate, Synopsys evaluated its historical and projected mix of U.S. and international profit before tax, excluding the impact of stock-based compensation, the amortization of purchased intangibles and other GAAP only adjustments described above. Synopsys also considered other factors, including its current tax structure, U.S. tax law changes, such as the OBBB which impacts Synopsys' expensing of U.S. research expenditures commencing in fiscal year 2026, and changes to foreign derived intangible income commencing in fiscal year 2027.

GAAP TO NON-GAAP RECONCILIATION OF OPERATING MARGIN

(UNAUDITED)

(1)The adjustment includes non-GAAP expenses attributable to non-controlling interest and redeemable non-controlling interest.

(2)The adjustment excludes the amortization of bridge financing costs entered into in connection with the acquisition of Ansys that was recorded in interest expense, and certain divestiture related items that were recorded in other income (expense), net in our unaudited consolidated statements of income.

GAAP TO NON-GAAP RECONCILIATION OF EPS GROWTH(1)

(UNAUDITED)

(1)Synopsys' fourth quarter of fiscal year 2025 and 2024 ended on October 31, 2025 and November 2, 2024, respectively. For presentation purposes, we refer to the closest calendar month end. Fiscal year 2024 was a 53-week year, which included an extra week in the first quarter.

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Appendix B

Segment Adjustments

BUSINESS SEGMENT REPORTING(1)

(UNAUDITED, IN MILLIONS)

(1)Synopsys manages the business on a long-term, annual basis, and considers quarterly fluctuations of revenue and profitability as normal elements of our business. Amounts may not foot due to rounding.

Synopsys provides segment information, namely revenue, adjusted segment operating income and adjusted segment operating margin, in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting. Synopsys' chief operating decision maker ("CODM") is our Chief Executive Officer. In evaluating our business segments, the CODM considers the income and expenses that the CODM believes are directly related to those segments. The CODM does not allocate certain operating expenses managed at a consolidated level to our business segments and, as a result, the reported operating income and operating margin do not include these unallocated expenses as shown in the table below. These unallocated expenses 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:

TOTAL ADJUSTED SEGMENT OPERATING INCOME RECONCILIATION(1)

(UNAUDITED, IN MILLIONS)

(1)Synopsys manages the business on a long-term, annual basis, and considers quarterly fluctuations of revenue and profitability as normal elements of our business. Amounts may not foot due to rounding.

(2)The adjustment includes non-GAAP expenses attributable to non-controlling interest and redeemable non-controlling interest.

(3)The adjustment excludes the amortization of bridge financing costs entered into in connection with the acquisition of Ansys that was recorded in interest expense, and certain divestiture related items that were recorded in other income (expense), net in our unaudited consolidated statements of income.