Item 1. Financial Statements

SYNOPSYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except par value amounts)

			April 30, 2025						October 31, 2024
ASSETS
Current assets:
Cash and cash equivalents			$	14,119,095					$	3,896,532
Short-term investments			144,816						153,869
Total cash, cash equivalents and short-term investments			14,263,911						4,050,401
Accounts receivable, net			1,002,195						934,470
Inventories			395,339						361,849
Prepaid and other current assets			1,217,584						1,122,946
Total current assets			16,879,029						6,469,666
Property and equipment, net			571,982						563,006
Operating lease right-of-use assets, net			585,704						565,917
Goodwill			3,461,272						3,448,850
Intangible assets, net			173,394						195,164
Deferred income taxes			1,509,159						1,247,258
Other long-term assets			575,977						583,700
Total assets			$	23,756,517					$	13,073,561
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities			$	903,546					$	1,163,592
Operating lease liabilities			104,170						94,791
Deferred revenue			1,375,398						1,391,737
Short-term debt			22,962						—
Total current liabilities			2,406,076						2,650,120
Long-term operating lease liabilities			587,438						574,065
Long-term deferred revenue			331,133						340,831
Long-term debt			10,027,681						15,601
Other long-term liabilities			488,584						469,738
Total liabilities			13,840,912						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; 155,146 and 154,112 shares outstanding, respectively			1,552						1,541
Capital in excess of par value			1,219,021						1,211,206
Retained earnings			9,624,282						8,984,105
Treasury stock, at cost: 2,115 and 3,148 shares, respectively			(689,001)						(1,025,770)
Accumulated other comprehensive income (loss)			(240,136)						(180,380)
Total Synopsys stockholders’ equity			9,915,718						8,990,702
Non-controlling interest			(113)						2,504
Total stockholders’ equity			9,915,605						8,993,206
Total liabilities, redeemable non-controlling interest and stockholders’ equity			$	23,756,517					$	13,073,561

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

SYNOPSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except per share amounts)

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
Revenue:
Time-based products			$	828,326					$	781,714					$	1,656,564					$	1,586,777
Upfront products			510,676						396,389						878,800						838,755
Total products revenue			1,339,002						1,178,103						2,535,364						2,425,532
Maintenance and service			265,264						276,609						524,217						540,169
Total revenue			1,604,266						1,454,712						3,059,581						2,965,701
Cost of revenue:
Products			216,216						198,719						385,058						374,217
Maintenance and service			94,471						88,178						187,008						178,718
Amortization of acquired intangible assets			7,660						13,500						16,256						26,655
Total cost of revenue			318,347						300,397						588,322						579,590
Gross margin			1,285,919						1,154,315						2,471,259						2,386,111
Operating expenses:
Research and development			553,979						493,136						1,107,195						1,018,670
Sales and marketing			215,021						209,783						424,220						428,626
General and administrative			136,497						114,763						303,583						246,027
Amortization of acquired intangible assets			3,996						4,561						7,996						8,090
Total operating expenses			909,493						822,243						1,842,994						1,701,413
Operating income			376,426						332,072						628,265						684,698
Interest expense			(94,336)						(7,067)						(105,475)						(8,805)
Other income (expense), net			114,101						16,525						164,518						123,091
Income before income taxes			396,191						341,530						687,308						798,984
Provision (benefit) for income taxes			47,181						45,437						40,887						68,346
Net income from continuing operations			349,010						296,093						646,421						730,638
Income (loss) from discontinued operations, net of income taxes			(3,900)						(7,004)						(3,900)						4,658
Net income			345,110						289,089						642,521						735,296
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest			(222)						(3,018)						1,506						(5,923)
Net income attributed to Synopsys			$	345,332					$	292,107					$	641,015					$	741,219
Net income (loss) attributed to Synopsys:
Continuing operations			$	349,232					$	299,111					$	644,915					$	736,561
Discontinued operations			(3,900)						(7,004)						(3,900)						4,658
Net income			$	345,332					$	292,107					$	641,015					$	741,219
Net income (loss) per share attributed to Synopsys - basic:
Continuing operations			$	2.25					$	1.96					$	4.17					$	4.83
Discontinued operations			$	(0.02)					$	(0.05)					$	(0.03)					$	0.03
Basic net income per share			$	2.23					$	1.91					$	4.14					$	4.86
Net income (loss) per share attributed to Synopsys - diluted:
Continuing operations			$	2.24					$	1.92					$	4.13					$	4.73
Discontinued operations			$	(0.03)					$	(0.04)					$	(0.03)					$	0.03
Diluted net income per share			$	2.21					$	1.88					$	4.10					$	4.76
Shares used in computing per share amounts:
Basic			154,927						152,971						154,666						152,629
Diluted			156,088						155,770						156,218						155,610

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

SYNOPSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
Net income			$	345,110					$	289,089					$	642,521					$	735,296
Other comprehensive income (loss):
Change in foreign currency translation adjustment			44,764						(18,677)						16,127						(387)
Change in unrealized gains (losses) on available-for-sale securities, net of tax of $0 for periods presented			52						(133)						9						879
Cash flow hedges:
Deferred gains (losses), net of tax benefit of $10,507 and $22,002 for the three and six months ended April 30, 2025, respectively and of $3,022 and $19 for each of the same periods in fiscal 2024, respectively			(45,708)						(7,135)						(82,155)						3,475
Reclassification adjustment on deferred (gains) losses included in net income, net of tax of $(783) and $(2,186) for the three and six months ended April 30, 2025, respectively, and of $(741) and $(2,431), for each of the same periods in fiscal 2024, respectively			2,675						1,156						6,263						4,434
Other comprehensive income (loss), net of tax effects			1,783						(24,789)						(59,756)						8,401
Comprehensive income			346,893						264,300						582,765						743,697
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest			(222)						(3,018)						1,506						(5,923)
Comprehensive income attributed to Synopsys			$	347,115					$	267,318					$	581,259					$	749,620

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

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 January 31, 2025			154,618						$	1,547					$	1,127,181					$	9,278,950					$	(860,967)					$	(241,919)					$	9,304,792					$	109					$	9,304,901
Net income																					345,332																		345,332						(222)						345,110
Other comprehensive income (loss), net of tax effects																																	1,783						1,783												1,783
Common stock issued, net of shares withheld for employee taxes			528						5						(109,883)												171,966												62,088												62,088
Stock-based compensation															201,723																								201,723												201,723
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
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																					641,015																		641,015						2,344						643,359
Other comprehensive income (loss), net of tax effects																																	(59,756)						(59,756)												(59,756)
Common stock issued, net of shares withheld for employee taxes			1,034						11						(385,296)												336,769												(48,516)												(48,516)
Stock-based compensation															387,477																								387,477						709						388,186
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 April 30, 2025			155,146						$	1,552					$	1,219,021					$	9,624,282					$	(689,001)					$	(240,136)					$	9,915,718					$	(113)					$	9,915,605
															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 January 31, 2024			152,536						$	1,525					$	1,183,473					$	7,188,550					$	(1,539,340)					$	(163,224)					$	6,670,984					$	4,590					$	6,675,574
Net income																					292,107																		292,107						(727)						291,380
Other comprehensive income (loss), net of tax effects																																	(24,789)						(24,789)												(24,789)
Common stock issued, net of shares withheld for employee taxes			668						7						(177,289)												217,786												40,504												40,504
Stock-based compensation															176,645																								176,645						1,190						177,835
Adjustments to redeemable non-controlling interest																					(2,291)																		(2,291)												(2,291)
Recognition of non-controlling interest upon issuance of subsidiary stock																																							—						(415)						(415)
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
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																					741,219																		741,219						(1,371)						739,848
Other comprehensive income (loss), net of tax effects																																	8,401						8,401												8,401
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			1,225						12						(495,805)												399,096												(96,697)												(96,697)
Stock-based compensation															355,983																								355,983						2,504						358,487
Adjustments for redeemable non-controlling interest																					(4,552)																		(4,552)												(4,552)
Recognition of non-controlling interest upon issuance of subsidiary stock															1,498																								1,498						(2,445)						(947)
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

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

SYNOPSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

			Six Months Ended April 30,
			2025						2024
Cash flows from operating activities:
Net income			$	642,521					$	735,296
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation			96,838						123,886
Reduction of operating lease right-of-use assets			51,728						48,179
Amortization of capitalized costs to obtain revenue contracts			25,405						37,912
Stock-based compensation			388,186						358,487
Allowance for credit losses			15,940						9,987
(Gain) loss on sale of strategic investments			2,435						(55,077)
Gain on sale of building			(51,385)						—
Loss on divestitures, net of transaction costs			8,299						—
Amortization of bridge financing costs			40,411						7,085
Amortization of debt issuance costs			2,348						—
Deferred income taxes			(237,170)						(170,854)
Other			(181)						(2,607)
Net changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable			(74,098)						20,889
Inventories			(39,766)						(60,518)
Prepaid and other current assets			(140,472)						(191,595)
Other long-term assets			(36,058)						(104,551)
Accounts payable and accrued liabilities			(242,529)						(142,086)
Operating lease liabilities			(48,617)						(48,709)
Income taxes			(36,870)						(229,536)
Deferred revenue			(37,412)						52,612
Unrealized loss on settlement of interest rate treasury lock			(121,643)						—
Net cash provided by operating activities			207,910						388,800
Cash flows from investing activities:
Proceeds from maturities of short-term investments			35,461						63,159
Proceeds from sales of short-term investments			22,015						—
Purchases of short-term investments			(47,558)						(65,861)
Proceeds from sales of strategic investments			—						55,696
Purchases of strategic investments			(3,368)						(860)
Purchases of property and equipment, net			(96,303)						(78,763)
Proceeds from sale of building			74,279						—
Acquisitions, net of cash acquired			—						(139,557)
Proceeds from business divestiture, net of cash divested			70,082						—
Other			(611)						—
Net cash provided by (used in) investing activities			53,997						(166,186)
Cash flows from financing activities:
Proceeds from debt, net of issuance costs			10,034,464						—
Repayment of debt			(1,289)						(1,303)
Payment of bridge financing and term loan costs			—						(54,715)
Issuances of common stock			118,308						115,111
Payments for taxes related to net share settlement of equity awards			(166,872)						(212,577)
Redemption of redeemable non-controlling interest			(30,000)						—
Other			—						(1,096)
Net cash provided by (used in) financing activities			9,954,611						(154,580)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			8,186						2,423
Net change in cash, cash equivalents and restricted cash			10,224,704						70,457

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			14,123,433						1,511,644
Less: Cash, cash equivalents and restricted cash from discontinued operations			—						6,445
Cash, cash equivalents and restricted cash from continuing operations			$	14,123,433					$	1,505,199

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

SYNOPSYS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Description of Business

Synopsys, Inc. (Synopsys, we, our or us) delivers trusted and comprehensive silicon to systems design solutions, from electronic design automation (EDA), including system verification and validation solutions, to silicon intellectual property (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.

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. 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.

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 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. For

presentation purposes, the condensed consolidated financial statements and accompanying notes refer to the closest calendar month end.

Significant Accounting Policies. There have been no material changes to our significant accounting policies included in our Annual Report*.*

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 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 basis. 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 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 our pending acquisition of ANSYS, Inc. (Ansys); (iii) $22.2 million reflecting the fair value of contingent consideration of up to $475 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 also received the first two deferred consideration installment payments of $50.0 million during the six months ended April 30, 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:

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
									(in thousands)
Revenue			$	—					$	126,421					$	—					$	264,662
Cost of revenue			—						45,749						—						95,731
Operating expenses			—						89,626						—						170,891
Other income (expense), net			—						340						—						996
Income (loss) from discontinued operations			—						(8,614)						—						(964)
Loss on Software Integrity Divestiture			(8,299)						—						(8,299)						—
Income (loss) from discontinued operations before income taxes			(8,299)						(8,614)						(8,299)						(964)
Income tax benefits			4,399						1,610						4,399						5,622
Income (loss) from discontinued operations, net of income taxes			$	(3,900)					$	(7,004)					$	(3,900)					$	4,658

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

			Six Months Ended April 30,
			2025						2024
			(in thousands)
Amortization and depreciation			$	—					$	16,317
Reduction of operating lease right-of-use assets			$	—					$	2,588
Amortization of capitalized costs to obtain revenue contracts			$	—					$	14,260
Stock-based compensation			$	—					$	30,291
Deferred income taxes			$	(6,933)					$	13,562
Purchases of property and equipment			$	—					$	929

Note 4. Pending Acquisition of Ansys

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.

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 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.

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 (OSG) to Keysight Technologies, Inc. (such sale, 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. As such, the Optical Solutions Divestiture is not considered probable and thus the assets and liabilities of OSG have not been classified as assets held for sale in the condensed consolidated balance sheets.

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.

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 $690.0 million after reduction following the closing of the Software Integrity Divestiture and the issuance of the Senior Notes (as defined in Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements ). 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, for the purpose of financing a portion of the cash consideration to be paid for the Ansys Merger and paying related fees and expenses in connection with the Ansys Merger and the other transactions contemplated by the Merger Agreement. 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 Term Loan.

Transaction costs for acquisitions were $65.0 million and $121.8 million during the three and six months ended April 30, 2025, respectively. Transaction costs for acquisitions were $25.3 million and $57.2 million during the three and six months ended April 30, 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.

Note 5. Revenue

Disaggregated Revenue

The following table shows the percentage of revenue by product groups:

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
EDA			66.9		%				69.3		%				67.1		%				66.7		%
Design IP			30.0		%				27.5		%				30.0		%				31.2		%
Other			3.1		%				3.2		%				2.9		%				2.1		%
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 invoicing and Synopsys lacks 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 in the condensed consolidated balance sheets.

Contract balances are as follows:

			As of
			April 30, 2025						October 31, 2024
			(in thousands)
Contract assets, net			$	898,056					$	757,075
Unbilled receivables			$	46,161					$	44,166
Deferred revenue			$	1,706,531					$	1,732,568

During the three and six months ended April 30, 2025, we recognized revenue of $373.6 million and $1.1 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 $8.1 billion as of April 30, 2025, which includes $1.2 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 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 to be recognized thereafter. The majority of the remaining backlog is expected to be recognized in the following three years.

During the three and six months ended April 30, 2025, we recognized $25.7 million and $50.7 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods. During the three and six months ended April 30, 2024, we recognized $27.4 million and $52.8 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 April 30, 2025 were $67.0 million and are included in other long-term assets in our condensed consolidated balance sheets. Amortization of these assets was $12.9 million and $25.4 million during the three and six months ended April 30, 2025, respectively, and are included in sales and marketing expense in our condensed consolidated statements of income. Amortization of these assets was $12.4 million and $23.7 million during the three and six months ended April 30, 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 six months ended April 30, 2025 are as follows:

			(in thousands)
Balance at October 31, 2024			$	3,448,850
Effect of foreign currency translation			12,422
Balance at April 30, 2025			$	3,461,272

Intangible Assets

Intangible assets as of April 30, 2025 consist of the following:

			Gross Carrying Amount						Accumulated Amortization						Net Amount
			(in thousands)
Core/developed technology			$	812,112					$	699,467					$	112,645
Customer relationships			316,056						255,790						60,266
Contract rights intangible			177,111						176,629						482
Trademarks and trade names			12,925						12,924						1
Total			$	1,318,204					$	1,144,810					$	173,394

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

			Gross Carrying Amount						Accumulated Amortization and Impairment						Net 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

Amortization expense related to intangible assets consists of the following:

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Core/developed technology			$	7,337					$	12,963					$	15,526					$	24,926
Customer relationships			3,993						3,884						7,989						7,409
Contract rights intangible			323						1,210						730						2,402
Trademarks and trade names			3						4						7						8
Total			$	11,656					$	18,061					$	24,252					$	34,745

The following table presents the estimated future amortization of acquired intangible assets as of April 30, 2025:

Fiscal year			(in thousands)
Remainder of fiscal 2025			$	21,998
2026			35,919
2027			30,972
2028			25,379
2029			24,520
2030 and thereafter			34,606
Total			$	173,394

Note 7. Balance Sheet Components

			As of
			April 30, 2025						October 31, 2024
			(in thousands)
Other long-term assets:
Deferred compensation plan assets			$	388,851					$	386,757
Capitalized commission, net			67,029						72,801
Other			120,097						124,142
Total			$	575,977					$	583,700
Accounts payable and accrued liabilities:
Payroll and related benefits			$	422,935					$	624,823
Accrued income taxes			119,572						147,115
Other accrued liabilities			276,299						184,321
Accounts payable			84,740						207,333
Total			$	903,546					$	1,163,592
Other long-term liabilities:
Deferred compensation plan liabilities			$	388,851					$	386,757
Other			99,733						82,981
Total			$	488,584					$	469,738

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 8. Financial Assets and Liabilities

Cash Equivalents and Short-term Investments

As of April 30, 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			$	630,455					$	—					$	—					$	—					$	630,455
Total:			$	630,455					$	—					$	—					$	—					$	630,455
Short-term investments:
U.S. Treasury, agency & T-bills			$	15,009					$	30					$	—					$	—					$	15,039
Corporate debt securities			102,630						320						(45)						—						102,905
Asset-backed securities			26,794						95						(5)						(12)						26,872
Total:			$	144,433					$	445					$	(50)					$	(12)					$	144,816

*(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 April 30, 2025 are as follows:

			Amortized Cost						Fair Value
			(in thousands)
1 year or less			$	75,105					$	75,243
1-5 years			65,249						65,488
5-10 years			1,689						1,699
>10 years			2,390						2,386
Total			$	144,433					$	144,816

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.

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
			April 30, 2025						October 31, 2024
			(in thousands)
Cash and cash equivalents			$	14,119,095					$	3,896,532
Restricted cash included in prepaid and other current assets			3,288						1,529
Restricted cash included in other long-term assets			1,050						668
Cash, cash equivalents and restricted cash			$	14,123,433					$	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 six months ended April 30, 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.

We did not record any gains or losses related to discontinuation of foreign exchange forward contracts cash flow hedges during the six months ended April 30, 2025 and 2024.

During the three months ended January 31, 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 April 30, 2025, the unamortized portion of the fair value of the 2025 Rate Lock Agreements was $120.5 million. We had no interest rate hedge contracts outstanding as of April 30, 2025.

During the three months ended April 30, 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 April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Gains (losses) recorded in other income (expense), net			$	11,186					$	(4,355)					$	6,765					$	(1,066)

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

			As of
			April 30, 2025						October 31, 2024
			(in thousands)
Total gross notional amounts			$	1,243,451					$	1,686,341
Net fair value			$	2,959					$	1,819

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 April 30, 2025
Other current assets			$	9,135					$	5
Accrued liabilities			$	6,037					$	144
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 April 30, 2025
Foreign exchange contracts			Revenue						$	12,689					Revenue						$	1,282
Foreign exchange contracts			Operating expenses						14,749						Operating expenses						(3,069)
Interest rate contracts			Interest expenses						(73,146)						Interest expenses						(888)
Total									$	(45,708)											$	(2,675)
Three months ended April 30, 2024
Foreign exchange contracts			Revenue						$	(2,507)					Revenue						$	(1,019)
Foreign exchange contracts			Operating expenses						(4,628)						Operating expenses						(137)
Total									$	(7,135)											$	(1,156)
Six months ended April 30, 2025
Foreign exchange contracts			Revenue						$	13,203					Revenue						$	280
Foreign exchange contracts			Operating expenses						(2,142)						Operating expenses						(5,655)
Interest rate contracts			Interest expenses						(93,216)						Interest expenses						(888)
Total									$	(82,155)											$	(6,263)
Six months ended April 30, 2024
Foreign exchange contracts			Revenue						$	(2,565)					Revenue						$	(4,282)
Foreign exchange contracts			Operating expenses						6,040						Operating expenses						(152)
Total									$	3,475											$	(4,434)

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, non-qualified deferred compensation plan assets, contingent consideration receivable, and foreign currency derivative contracts.

Our cash equivalents and short-term investments 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.

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 April 30, 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			$	630,455					630,455						$	—					$	—
Short-term investments:
U.S. Treasury, agency & T-bills			15,039						—						15,039						—
Corporate debt securities			102,905						—						102,905						—
Asset-backed securities			26,872						—						26,872						—
Prepaid and other current assets:
Foreign currency derivative contracts			9,140						—						9,140						—
Contingent consideration receivable			22,202						—						—						22,202
Other long-term assets:
Deferred compensation plan assets			388,851						388,851						—						—
Total assets			$	1,195,464					$	1,019,306					$	153,956					$	22,202
Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts			$	6,181					$	—					$	6,181					$	—
Other long-term liabilities:
Deferred compensation plan liabilities			388,851						388,851						—						—
Total liabilities			$	395,032					$	388,851					$	6,181					$	—

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 April 30, 2025:

						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
Total												10,000,000
Unamortized discount and issuance costs												(85,989)
Total Senior Notes												9,914,011
Deferred payment on settlement of interest rate treasury lock												122,488
Other borrowings												14,144
Total												$	10,050,643
Reported as:
Short-term debt												22,962
Long-term debt												10,027,681
Total												10,050,643

Senior Notes:

On March 17, 2025, we issued $10 billion in aggregate principal amount of senior, unsecured and unsubordinated long-term notes, including $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). 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 are intended to be used to fund a portion of the cash consideration to be paid for the Ansys Merger, related transaction fees and expenses, as well as repay Ansys’ outstanding indebtedness.

If (i) the Ansys Merger is not consummated on or before the later of (x) January 31, 2026 and (y) the date that is five business days after any later date upon which “Closing” is permitted to occur under the terms of the Merger Agreement (as mutually agreed upon by the parties to such agreement) (the Special Mandatory Redemption End Date) or (ii) Synopsys notifies the trustee under the Indenture in writing that Synopsys will not pursue consummation of the Ansys Merger, Synopsys will be required to redeem all outstanding 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes and 2032 Senior Notes (the Special Mandatory Redemption), at a special mandatory redemption price equal to 101% of the aggregate principal amount of the 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes and 2032 Senior Notes, plus accrued and unpaid interest, if any, to, but excluding, the date upon which the 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes and 2032 Senior Notes will be redeemed. The 2035 Senior Notes and 2055 Senior Notes are not subject to the Special Mandatory Redemption. In the event of a Special Mandatory Redemption, the proceeds of the 2035 Senior Notes and 2055 Senior Notes will be used for general corporate purposes, which may include repayment of 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 (as defined in the Indenture and applicable series of Senior Notes), 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.

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 April 30, 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 April 30, 2025, we were in compliance with all of our covenants under the Indenture.

During the three months ended January 31, 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 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.

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. The Bridge Commitment currently provides for an aggregate principal amount of up to $690 million.

The proceeds of any borrowing under the Bridge Commitment will be used to finance a portion of the cash consideration to be paid for the Ansys Merger, the related fees and expenses, and certain other transactions, as contemplated by the Merger Agreement.

As of April 30, 2025, the unamortized bridge financing costs of $1.4 million is included in other long-term assets in our condensed consolidated balance sheets.

Term Loan:

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.

The Term Loan Agreement provides for two tranches of senior unsecured term loans: a $1.45 billion tranche (Tranche 1) that matures two years after funding and a $2.85 billion tranche (Tranche 2) that matures three years after funding. There was no outstanding balance under the Term Loan Agreement as of April 30, 2025.

The Term Loan Agreement contains a financial covenant requiring that Synopsys maintain a maximum consolidated leverage ratio commencing the last day of the first fiscal quarter ending on or after the completion of the Ansys Merger, as well as other non-financial covenants. Under the Term Loan Agreement, borrowings will 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).

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.

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.

Under the Sixth Amendment, certain amendments became effective on February 13, 2024 and certain additional amendments will become effective upon the completion of the Ansys Merger. Upon the effective 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. Upon the completion of the Ansys Merger, the Sixth Amendment, among other things: (i) 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, (ii) amends the financial covenant thresholds under the financial covenant in the Revolving Credit Agreement requiring us to maintain a maximum consolidated leverage ratio and (iii) amends 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 April 30, 2025, we were in compliance with the financial covenant.

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.

Subject to the completion of the Ansys Merger, interest under the Revolving Credit Agreement will accrue 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 will also be 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 April 30, 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 April 30, 2025, we had $14.1 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 April 30, 2025 are as follows:

			Principal Payments
Fiscal year			(in thousands)
Remainder of fiscal 2025			$	12,344
2026			24,689
2027			1,024,689
2028			1,024,689
2029			24,689
2030 and thereafter			8,024,689
Total			$	10,135,789

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 10 years. Because we are not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments.

The components of our lease expense during the period presented are as follows:

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Operating lease expense (1)			$	26,063					$	21,814					$	51,115					$	44,048
Variable lease expense (2)			6,797						5,952						13,557						11,579
Total lease expense			$	32,860					$	27,766					$	64,672					$	55,627

(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:

			Six Months Ended April 30,
			2025						2024
			(in thousands)
Cash paid for amounts included in the measurement of operating lease liabilities(1)			$	52,374					$	49,608
ROU assets obtained in exchange for operating lease liabilities(2)			$	70,957					$	12,224

(1) Cash paid for amounts included in the measurement of operating lease liabilities included cash from discontinued operations of $2.9 million during the six months ended April 30, 2024.

(2) ROU assets obtained in exchange for operating lease liabilities included ROU assets from discontinued operations of $0.2 million during the six months ended April 30, 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
			April 30, 2025						October 31, 2024
Weighted-average remaining lease term (in years)			7.21						7.59
Weighted-average discount rate			3.05		%				2.86		%

The following table represents the maturities of our future lease payments due under operating leases as of April 30, 2025:

			Lease Payments
Fiscal year			(in thousands)
Remainder of fiscal 2025			$	59,973
2026			122,550
2027			122,965
2028			108,996
2029			101,896
2030 and thereafter			256,593
Total future minimum lease payments			772,973
Less: Imputed interest			81,365
Total lease liabilities			$	691,608

In addition, the sublease income from facilities leased by us, due to us as of April 30, 2025 are as follows:

			Lease Receipts
Fiscal year			(in thousands)
Remainder of fiscal 2025			$	9,164
2026			18,767
2027			19,689
2028			20,280
2029			20,888
2030 and thereafter			17,867
Total			$	106,655

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
			April 30, 2025						October 31, 2024
			(in thousands)
Cumulative currency translation adjustments			$	(145,827)					$	(161,954)
Unrealized gains (losses) on derivative instruments, net of taxes			(94,692)						(18,800)
Unrealized gains (losses) on available-for-sale securities, net of taxes			383						374
Total			$	(240,136)					$	(180,380)

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

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Reclassifications:
Gains (losses) on cash flow hedges, net of taxes
Revenues			$	1,282					$	(1,019)					$	280					$	(4,282)
Operating expenses			(3,069)						(137)						(5,655)						(152)
Interest expense			(888)						—						(888)						—
Total			$	(2,675)					$	(1,156)					$	(6,263)					$	(4,434)

Amounts reclassified during the six months ended April 30, 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 April 30, 2025, $194.3 million remained available for future repurchases under the Program. However, in connection with the pending Ansys Merger, we have suspended the Program until we reduce our expected 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 April 30,												Six Months Ended April 30,
			2025						2024						2025						2024**(1)**
			(in thousands)
Total shares repurchased			—						—						—						74
Total cost of the repurchased shares			$	—					$	—					$	—					$	45,000
Reissuance of treasury stock			528						668						1,034						1,225

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

Note 15. Stock-Based Compensation

The compensation cost recognized in the condensed consolidated statements of income for our stock compensation arrangements is as follows:

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Cost of products			$	23,050					$	13,918					$	43,527					$	30,179
Cost of maintenance and service			9,502						9,273						18,493						18,449
Research and development expense			109,717						88,671						212,413						179,808
Sales and marketing expense			36,700						30,987						71,650						61,560
General and administrative expense			22,754						19,842						42,103						38,200
Stock-based compensation expense from continuing operations before taxes			201,723						162,691						388,186						328,196
Stock-based compensation expense from discontinued operations before taxes			—						15,144						—						30,291
Total stock-based compensation expense before taxes			201,723						177,835						388,186						358,487
Income tax benefit			(32,659)						(28,809)						(62,847)						(58,075)
Stock-based compensation expense after taxes			$	169,064					$	149,026					$	325,339					$	300,412

During the three and six months ended April 30, 2025 and 2024, we recognized stock-based compensation expense relating to restricted stock units (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:

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
Expected life (in years)			2.67 years						—						2.67 years - 2.79 years						2.89 years
Risk-free interest rate			3.90		%				—						3.90% - 4.39%						4.41%
Volatility			33.40		%				—						33.40% - 34.72%						34.03%
Grant date fair value			$409.94						—						$409.94 - $464.17						$600.29

As of April 30, 2025, we had $1.5 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 2.2 years. As of April 30, 2025, we had $154.8 million of unrecognized stock-based compensation expense relating 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 April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Intrinsic value of awards exercised			$	34,479					$	48,164					$	54,837					$	76,019

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 April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands, except per share amounts)
Numerator:
Net income from continuing operations attributed to Synopsys			$	349,232					$	299,111					$	644,915					$	736,561
Net income (loss) from discontinued operations attributed to Synopsys			(3,900)						(7,004)						(3,900)						4,658
Net income attributed to Synopsys			$	345,332					$	292,107					$	641,015					$	741,219
Denominator:
Weighted average common shares for basic net income per share			154,927						152,971						154,666						152,629
Dilutive effect of common share equivalents from equity-based compensation			1,161						2,799						1,552						2,981
Weighted average common shares for diluted net income per share			156,088						155,770						156,218						155,610
Net income (loss) per share attributed to Synopsys - basic:
Continuing operations			$	2.25					$	1.96					$	4.17					$	4.83
Discontinued operations			$	(0.02)					$	(0.05)					$	(0.03)					$	0.03
Basic net income per share			$	2.23					$	1.91					$	4.14					$	4.86
Net income (loss) per share attributed to Synopsys - diluted:
Continuing operations			$	2.24					$	1.92					$	4.13					$	4.73
Discontinued operations			$	(0.03)					$	(0.04)					$	(0.03)					$	0.03
Diluted net income per share			$	2.21					$	1.88					$	4.10					$	4.76
Anti-dilutive employee stock-based awards excluded			1,897						208						413						202

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, 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.

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.

Information by reportable segment is as follows:

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Total Segments:
Revenue			$	1,604,266					$	1,454,712					$	3,059,581					$	2,965,701
Adjusted operating income			609,270						543,042						1,140,487						1,148,234
Adjusted operating margin			38		%				37		%				37		%				39		%
Design Automation:
Revenue			$	1,122,235					$	1,054,933					$	2,142,451					$	2,040,272
Adjusted operating income			458,756						418,245						863,426						777,710
Adjusted operating margin			41		%				40		%				40		%				38		%
Design IP:
Revenue			$	482,031					$	399,779					$	917,130					$	925,429
Adjusted operating income			150,514						124,797						277,061						370,524
Adjusted operating margin			31		%				31		%				30		%				40		%

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 April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Total segment adjusted operating income			$	609,270					$	543,042					$	1,140,487					$	1,148,234
Reconciling items:
Amortization of acquired intangible assets			(11,656)						(18,061)						(24,252)						(34,745)
Stock-based compensation expense			(201,723)						(162,691)						(388,186)						(328,196)
Deferred compensation plan			20,106						(11,051)						468						(50,496)
Acquisition/divestiture related items			(39,571)						(19,167)						(100,252)						(50,099)
Total operating income			$	376,426					$	332,072					$	628,265					$	684,698

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 April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Revenue:
United States			$	649,299					$	630,766					$	1,260,009					$	1,354,587
Europe			194,843						147,476						348,514						284,746
China			157,506						221,820						331,454						462,884
Korea			257,595						192,676						507,980						374,721
Other			345,023						261,974						611,624						488,763
Consolidated			$	1,604,266					$	1,454,712					$	3,059,581					$	2,965,701

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 April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Interest income			$	89,890					$	11,640					$	125,611					$	24,791
Gains (losses) on assets related to deferred compensation plan			(20,106)						11,051						(468)						50,496
Foreign currency exchange gains (losses)			(178)						(257)						(115)						3,108
Gain (loss) on sale of strategic investments			(2,435)						—						(2,435)						55,077
Gain on sale of building			51,385						—						51,385						—
Other, net			(4,455)						(5,909)						(9,460)						(10,381)
Total			$	114,101					$	16,525					$	164,518					$	123,091

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 takes into account our estimations of annual pre-tax income, the geographic mix of pre-tax income and interpretations of tax laws and possible outcomes of audits.

The following table presents the provision for income taxes and the effective tax rates:

			Three Months Ended April 30,												Six Months Ended April 30,
			2025						2024						2025						2024
			(in thousands)
Income before income taxes			$	396,191					$	341,530					$	687,308					$	798,984
Provision (benefit) for income taxes			$	47,181					$	45,437					$	40,887					$	68,346
Effective tax rate			11.9		%				13.3		%				5.9		%				8.6		%

Our effective tax rate for the six months ended April 30, 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, 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 and the effect of non-deductible stock-based compensation.

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 the capital loss on the sale of our ownership in OpenLight in the first quarter of 2025.

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. We believe that in the coming 12 months, it is reasonably possible that either certain audits and ongoing tax litigation will conclude or 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 positions, the range of the estimated potential decrease in underlying unrecognized tax benefits is between $0 and $9.0 million.

Non-U.S. Examinations

We are under examination by the tax authorities in certain jurisdictions. No material assessments have been proposed in these examinations.

Legislative Developments

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 any impact of CAMT in fiscal 2025, due to our regular tax liability exceeding CAMT. The details of the computation will be subject to final regulations to be 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. As of fiscal 2025, this has not had any impact on our condensed consolidated financial statements.

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. Included in this two-pillar solution is the Pillar Two Model Rules (Pillar Two) which define global minimum tax rules and include 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 April 30, 2025, we do not expect the impact of Pillar 2 to be 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, except as set forth below, 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.

Mentor Patent Litigation

Prior to the legal settlement as further described below, we were engaged in complex patent litigation with Mentor Graphics Corporation (Mentor) involving several actions in different forums. We succeeded to the litigation when we acquired Emulation & Verification Engineering S.A. on October 4, 2012.

Legal Settlement

In March 2017, Siemens PLM Software (now Siemens Industry Software Inc. or SISW) acquired Mentor. On June 29, 2018, we, SISW and Mentor settled all outstanding patent litigation between us and Mentor for a $65.0 million payment made from us to Mentor. As a result of the settlement, the litigation with Mentor was dismissed and the injunction entered in connection with that litigation was vacated. The settlement included mutual seven-year patent cross-licenses between us and SISW, and between us and Mentor. We and Mentor also amended an existing interoperability agreement to collaborate on a wide range of EDA products for the benefit of our mutual customers (the interoperability amendment). The interoperability amendment includes a one-time termination charge between $0.0 and $25.0 million, payable to SISW under certain conditions. Mentor no longer exists as an independent entity and is succeeded by SISW.

In June 2024, the parties extended the existing patent cross-license to December 31, 2031, and entered into a new cross-license of patents related to certain computer-aided engineering technology. The new cross-license is conditioned on the close of the Ansys Merger and expires on December 31, 2031. The interoperability amendment expires by its terms on June 29, 2025.

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.

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.