Item 1. Financial Statements

SYNOPSYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except par value amounts)

			April 30, 2026						October 31, 2025
ASSETS
Current assets:
Cash and cash equivalents			$	2,412,472					$	2,888,030
Short-term investments			71,966						72,929
Total cash, cash equivalents and short-term investments			2,484,438						2,960,959
Accounts receivable, net			1,267,305						1,505,427
Inventories			441,836						365,190
Prepaid and other current assets			1,195,391						1,180,526
Current assets held for sale			48,248						—
Total current assets			5,437,218						6,012,102
Property and equipment, net			714,744						696,693
Operating lease right-of-use assets, net			697,112						702,008
Goodwill			26,853,807						26,899,215
Intangible assets, net			11,875,418						12,679,591
Deferred income taxes			113,642						112,159
Other long-term assets			1,197,086						1,122,693
Total assets			$	46,889,027					$	48,224,461
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities			$	1,185,204					$	1,326,211
Operating lease liabilities			135,523						128,205
Deferred revenue			2,419,876						2,245,961
Short-term debt			22,117						22,117
Current liabilities held for sale			27,912						—
Total current liabilities			3,790,632						3,722,494
Long-term operating lease liabilities			670,475						680,698
Long-term deferred revenue			389,419						382,557
Long-term debt			10,013,845						13,462,398
Other long-term liabilities			1,547,591						1,649,299
Total liabilities			16,411,962						19,897,446
Stockholders’ equity:
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding			—						—
Common stock, $0.01 par value: 400,000 shares authorized; 191,444 and 185,994 shares outstanding, respectively			1,928						1,860
Capital in excess of par value			20,565,562						18,640,947
Retained earnings			10,397,550						10,315,487
Treasury stock, at cost: 593 and 1,222 shares, respectively			(242,827)						(398,278)
Accumulated other comprehensive loss			(244,082)						(232,414)
Total Synopsys stockholders’ equity			30,478,131						28,327,602
Non-controlling interest			(1,066)						(587)
Total stockholders’ equity			30,477,065						28,327,015
Total liabilities and stockholders’ equity			$	46,889,027					$	48,224,461

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,
			2026						2025						2026						2025
Revenue:
Time-based products			$	945,624					$	828,326					$	1,897,165					$	1,656,564
Upfront products			546,252						510,676						1,287,782						878,800
Total products revenue			1,491,876						1,339,002						3,184,947						2,535,364
Maintenance and service			784,109						265,264						1,499,836						524,217
Total revenue			2,275,985						1,604,266						4,684,783						3,059,581
Cost of revenue:
Products			232,897						216,216						475,299						385,058
Maintenance and service			148,597						94,471						295,335						187,008
Amortization of acquired intangible assets			248,356						7,660						496,598						16,256
Total cost of revenue			629,850						318,347						1,267,232						588,322
Gross margin			1,646,135						1,285,919						3,417,551						2,471,259
Operating expenses:
Research and development			700,124						553,979						1,415,112						1,107,195
Sales and marketing			381,998						215,021						778,373						424,220
General and administrative			172,418						136,497						355,150						303,583
Amortization of acquired intangible assets			155,275						3,996						311,268						7,996
Restructuring charges			115,894						—						234,176						—
Total operating expenses			1,525,709						909,493						3,094,079						1,842,994
Operating income			120,426						376,426						323,472						628,265
Interest expense			(133,364)						(94,336)						(296,079)						(105,475)
Other income (expense), net			32,214						114,101						70,936						164,518
Income before income taxes			19,276						396,191						98,329						687,308
Provision for income taxes			2,408						47,181						16,745						40,887
Net income from continuing operations			16,868						349,010						81,584						646,421
Loss from discontinued operations, net of income taxes			—						(3,900)						—						(3,900)
Net income			16,868						345,110						81,584						642,521
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest			(237)						(222)						(479)						1,506
Net income attributed to Synopsys			$	17,105					$	345,332					$	82,063					$	641,015
Net income (loss) attributed to Synopsys:
Continuing operations			$	17,105					$	349,232					$	82,063					$	644,915
Discontinued operations			—						(3,900)						—						(3,900)
Net income			$	17,105					$	345,332					$	82,063					$	641,015
Net income (loss) per share attributed to Synopsys - basic:
Continuing operations			$	0.09					$	2.25					$	0.43					$	4.17
Discontinued operations			—						(0.02)						—						(0.03)
Basic net income per share			$	0.09					$	2.23					$	0.43					$	4.14
Net income (loss) per share attributed to Synopsys - diluted:
Continuing operations			$	0.09					$	2.24					$	0.43					$	4.13
Discontinued operations			—						(0.03)						—						(0.03)
Diluted net income per share			$	0.09					$	2.21					$	0.43					$	4.10
Shares used in computing per share amounts:
Basic			191,464						154,927						190,513						154,666
Diluted			192,144						156,088						191,580						156,218

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,
			2026						2025						2026						2025
Net income			$	16,868					$	345,110					$	81,584					$	642,521
Other comprehensive income (loss):
Change in foreign currency translation adjustment			(37,947)						44,764						586						16,127
Change in unrealized gains (losses) on available-for-sale securities, net of tax of $0 for periods presented			(281)						52						(207)						9
Cash flow hedges:
Deferred gains (losses), net of tax of $1,789 and $5,332 for the three and six months ended April 30, 2026, respectively, and of $10,507 and $22,002 for each of the same periods in fiscal 2025, respectively			(5,763)						(45,708)						(17,299)						(82,155)
Reclassification adjustment on deferred (gains) losses included in net income, net of tax of $(1,350) and $(2,003) for the three and six months ended April 30, 2026, respectively, and of $(783) and $(2,186) for each of the same periods in fiscal 2025, respectively			3,592						2,675						5,252						6,263
Other comprehensive income (loss), net of tax effects			(40,399)						1,783						(11,668)						(59,756)
Comprehensive income (loss)			(23,531)						346,893						69,916						582,765
Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest			(237)						(222)						(479)						1,506
Comprehensive income (loss) attributed to Synopsys			$	(23,294)					$	347,115					$	70,395					$	581,259

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, 2026			191,449						$	1,915					$	20,562,001					$	10,380,445					$	(191,851)					$	(203,683)					$	30,548,827					$	(829)					$	30,547,998
Net income																					17,105																		17,105						(237)						16,868
Other comprehensive income (loss), net of tax effects																																	(40,399)						(40,399)												(40,399)
Purchases of treasury stock			(640)						6						(6)												(262,500)												(262,500)												(262,500)
Equity forward contract, net															(37,500)																								(37,500)												(37,500)
Common stock issued, net of shares withheld for employee taxes			635						7						(181,236)												211,524												30,295												30,295
Stock-based compensation															222,303																								222,303												222,303
Balance at April 30, 2026			191,444						$	1,928					$	20,565,562					$	10,397,550					$	(242,827)					$	(244,082)					$	30,478,131					$	(1,066)					$	30,477,065
Balance at October 31, 2025			185,994						$	1,860					$	18,640,947					$	10,315,487					$	(398,278)					$	(232,414)					$	28,327,602					$	(587)					$	28,327,015
Net income																					82,063																		82,063						(479)						81,584
Other comprehensive income (loss), net of tax effects																																	(11,668)						(11,668)												(11,668)
Purchases of treasury stock			(640)						6						(6)												(262,500)												(262,500)												(262,500)
Equity forward contract, net															(37,500)																								(37,500)												(37,500)
Common stock issued for private placement			4,822						48						1,999,952																								2,000,000												2,000,000
Common stock issued for prior acquisition			1						1						189												478												668												668
Common stock issued, net of shares withheld for employee taxes			1,267						13						(519,047)												417,473												(101,561)												(101,561)
Stock-based compensation															481,027																								481,027												481,027
Balance at April 30, 2026			191,444						$	1,928					$	20,565,562					$	10,397,550					$	(242,827)					$	(244,082)					$	30,478,131					$	(1,066)					$	30,477,065
															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 for 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

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,
			2026						2025
Cash flows from operating activities:
Net income			$	81,584					$	642,521
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation			907,177						96,838
Reduction of operating lease right-of-use assets			72,852						51,728
Amortization of capitalized costs to obtain revenue contracts			41,158						25,405
Stock-based compensation			481,027						388,186
Allowance for credit losses			14,842						15,940
Loss on sale of strategic investments			—						2,435
Gain on sale of building			—						(51,385)
Loss on divestitures, net of transaction costs			—						8,299
Amortization of bridge financing costs			—						40,411
Amortization of debt issuance costs			16,903						2,348
Deferred income taxes			(121,045)						(237,170)
Other			(153)						(181)
Net changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable			234,512						(74,098)
Inventories			(85,832)						(39,766)
Prepaid and other current assets			44,649						(140,472)
Other long-term assets			(87,060)						(36,058)
Accounts payable and accrued liabilities			(114,629)						(242,529)
Operating lease liabilities			(74,166)						(48,617)
Income taxes			(122,420)						(36,870)
Deferred revenue			196,367						(37,412)
Unrealized loss on settlement of interest rate treasury lock			—						(121,643)
Net cash provided by operating activities			1,485,766						207,910
Cash flows from investing activities:
Proceeds from maturities of short-term investments			11,180						35,461
Proceeds from sales of short-term investments			3,656						22,015
Purchases of short-term investments			(13,903)						(47,558)
Purchases of strategic investments			(781)						(3,368)
Purchases of property and equipment, net			(89,518)						(96,303)
Proceeds from sale of building			—						74,279
Proceeds from business divestiture, net of cash divested			—						70,082
Other			—						(611)
Net cash provided by (used in) investing activities			(89,366)						53,997
Cash flows from financing activities:
Proceeds from debt, net of issuance costs			—						10,034,464
Repayment of debt			(3,462,369)						(1,289)
Issuances of common stock			116,136						118,308
Payments for taxes related to net share settlement of equity awards			(217,884)						(166,872)
Common stock issuance for private placement			2,000,000						—
Purchase of equity forward contract			(37,500)						—
Purchases of treasury stock			(262,500)						—
Redemption of redeemable non-controlling interest			—						(30,000)
Net cash provided by (used in) financing activities			(1,864,117)						9,954,611
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(9,247)						8,186
Net change in cash, cash equivalents and restricted cash			(476,964)						10,224,704
Cash, cash equivalents and restricted cash, beginning of year			2,893,721						3,898,729
Cash, cash equivalents and restricted cash, end of period			$	2,416,757					$	14,123,433

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) is the leader in engineering solutions from silicon to systems, enabling customers to rapidly innovate AI-powered products. We deliver industry-leading silicon design, intellectual property (IP), simulation and analysis (S&A) solutions, and design services. We partner closely with our customers across a wide range of industries to maximize their R&D capability and productivity, powering innovation today that ignites the ingenuity of tomorrow.

We are a global leader in supplying the mission-critical electronic design automation (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.

We are the global leader in engineering S&A software. Our Ansys® solutions portfolio is widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial equipment, materials and chemicals, consumer products, healthcare and construction. These products enable customers to analyze designs on-premises and/or via the cloud, providing a common platform for fast, efficient and cost-conscious product development, from design concept to final-stage testing, validation and deployment. These products and services are part of our Design Automation segment.

We also offer a broad and comprehensive portfolio of semiconductor IP solutions, which are pre-designed circuits that engineers use as components of larger chip designs to reduce development risk and speed time to market. Our high quality, silicon-proven semiconductor IP includes logic libraries, embedded memories, wired interface IP, memory interface IP, security IP, and embedded processors. To accelerate IP integration and silicon bring-up, our IP Accelerated initiative provides architecture design expertise, customized IP subsystems, 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, 2025 as filed with the SEC on December 22, 2025 (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. Our fiscal year end is October 31 and our fiscal quarters end on January 31, April 30, and July 31 of each year.

Acquisition of Ansys. On July 17, 2025 (the Acquisition Date), we completed the acquisition of ANSYS, Inc. (Ansys), a provider of broad engineering simulation and analysis software and services for $199.91 in cash and 0.3399 of a share of our common stock in exchange for each ordinary share of Ansys for a total consideration of $34.9 billion.

We accounted for the acquisition of Ansys by applying the acquisition method of accounting for business combinations. See Note 4. Business Combination and Note 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Consolidated Financial Statements in our Annual Report for additional information.

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

Recent Accounting Pronouncements Not Yet Adopted

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 is effective for our annual reports beginning in fiscal 2026 with early adoption 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.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU allows companies to apply a practical expedient when estimating credit losses on current accounts receivable and contract assets. The ASU will be effective for us beginning in fiscal 2027 and will be applied on a prospective basis. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software costs and clarifies the criteria for capitalization. The ASU will be effective for us beginning in fiscal 2029, either on a prospective, retrospective, or a modified basis. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements. The ASU is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. The ASU will be effective for us 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 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.

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, net of transaction costs, of $868.8 million recorded in fiscal 2024. In the second quarter of fiscal 2025, we finalized some working capital adjustments and recorded $8.3 million as a reduction to the previously recorded gain, resulting in a total pre-tax gain, net of transaction costs, of $860.5 million from the Software Integrity Divestiture. See Note 3. Discontinued Operations of the Notes to Consolidated Financial Statements in our Annual Report for additional information.

There was no Software Integrity related activity for the three and six months ended April 30, 2026.

Note 4. Acquisition of Ansys

On the Acquisition Date, we completed the acquisition of Ansys (the Ansys Merger) for approximately $34.9 billion, consisting of cash of $17.6 billion (the Cash Consideration), Synopsys Common Stock with a fair value of $17.1 billion, and the balance related to the assumption of certain outstanding Ansys equity awards and the settlement of pre-existing relationships. We acquired Ansys to combine Synopsys’ semiconductor electronic design automation expertise with Ansys’ S&A capabilities to address the growing demand for integrated design and simulation tools across various industries.

We funded the Cash Consideration in the Ansys Merger through a combination of cash on hand, the net proceeds from the issuance of the Senior Notes, and the borrowings under the Term Loan Agreement, each as defined and discussed in Note 11. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements.

We allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on their preliminary estimated fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of acquisition. These estimates and assumptions are believed to be reasonable, but they are inherently uncertain and may be subject to material change as additional information becomes available during the respective measurement period, which will not exceed 12 months from applicable acquisition date. The primary areas that are preliminary relate to the fair values of goodwill, intangible assets, certain tangible assets and liabilities, and income taxes.

Transaction Costs

Transaction costs for acquisitions, primarily related to the Ansys Merger, were $7.6 million and $18.2 million during the three and six months ended April 30, 2026, respectively. Transaction costs for acquisitions were $65.0 million and $121.8 million during the three and six months ended April 30, 2025, respectively. These costs mainly consisted of professional fees, administrative costs for closed and pending acquisitions, as well as the Bridge Commitment financing costs, and were expensed as incurred in our condensed consolidated statements of income.

Supplemental Pro Forma Information (Unaudited)

The following unaudited pro forma financial information presents combined results of operations for the period presented, as if Ansys had been acquired as of the beginning of fiscal year 2024.

									Three Months Ended April 30,												Six Months Ended April 30,
									2025												2025
									(in thousands)
Pro forma total revenue									$	2,157,992											$	4,375,675
Pro forma net income									$	18,614											$	74,980

This information is provided for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2024, or of the results of our future operations of the combined business.

Note 5. Revenue

Disaggregated Revenue

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

			Three Months Ended April 30,												Six Months Ended April 30,
			2026						2025						2026						2025
EDA			51.0		%				66.9		%				48.3		%				67.1		%
Design IP			20.0		%				30.0		%				18.4		%				30.0		%
Ansys			28.7		%				—		%				32.8		%				—		%
Other			0.3		%				3.1		%				0.5		%				2.9		%
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) in our condensed consolidated balance sheets. For specific software, hardware, and IP agreements with payment plans, we record 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. Unbilled receivables are presented as accounts receivable, net, in the condensed consolidated balance sheets.

A contract asset is recorded when revenue is recognized before we have the unconditional right to invoice or retain performance risk concerning that performance obligation. These contract assets transition to receivables when the rights become unconditional, generally upon the completion of a milestone. The contract assets listed below are included in prepaid and other current assets and other long-term assets in the condensed consolidated balance sheets.

Contract balances are as follows:

			As of
			April 30, 2026						October 31, 2025
			(in thousands)
Contract assets, net			$	1,119,650					$	1,222,029
Unbilled receivables			$	28,620					$	45,528
Deferred revenue			$	2,809,295					$	2,628,518

Long-term contract assets were $359.7 million and $336.4 million as of April 30, 2026 and October 31, 2025, respectively.

During the three and six months ended April 30, 2026, we recognized revenue of $598.7 million and $1.7 billion, respectively, that was included in the deferred revenue balance as of October 31, 2025, 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 $11.0 billion as of April 30, 2026, which includes $1.8 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 49% of the backlog as of April 30, 2026, 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, 2026, we recognized $27.9 million and $61.7 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods. 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.

Costs of Obtaining a Contract with Customer

Capitalized commission costs, net of accumulated amortization, as of April 30, 2026 were $119.1 million, of which $31.8 million are included in prepaid and other current assets, and $87.3 million in other long-term assets in our

condensed consolidated balance sheets. Amortization of these assets were $21.9 million and $41.2 million during the three and six months ended April 30, 2026, respectively, and are included in sales and marketing expense in our condensed consolidated statements of income. Amortization of these assets were $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.

Note 6. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill during the six months ended April 30, 2026 are as follows:

			(in thousands)
Balance at October 31, 2025			$	26,899,215
Adjustments			(43,278)
Effect of foreign currency translation			(2,130)
Balance at April 30, 2026			$	26,853,807

Intangible Assets

Intangible assets as of April 30, 2026 consist of the following:

			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
			(in thousands)
Core/developed technology			$	7,314,600					$	1,317,353					$	5,997,247
Customer relationships			5,415,568						718,972						4,696,596
Contract rights intangible			612,855						348,636						264,219
Trademarks and trade names			962,925						45,569						917,356
Total			$	14,305,948					$	2,430,530					$	11,875,418

Intangible assets as of October 31, 2025 consist of the following:

			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
			(in thousands)
Core/developed technology			$	7,309,753					$	929,901					$	6,379,852
Customer relationships			5,415,558						428,377						4,987,181
Contract rights intangible			614,358						239,808						374,550
Trademarks and trade names			962,925						24,917						938,008
Total			$	14,302,594					$	1,623,003					$	12,679,591

Amortization expense related to intangible assets consists of the following:

			Three Months Ended April 30,												Six Months Ended April 30,
			2026						2025						2026						2025
			(in thousands)
Core/developed technology			$	193,619					$	7,337					$	387,142					$	15,526
Customer relationships			144,949						3,993						290,616						7,989
Contract rights intangible			54,737						323						109,456						730
Trademarks and trade names			10,326						3						20,652						7
Total			$	403,631					$	11,656					$	807,866					$	24,252

The following table presents the estimated future amortization of acquired intangible assets as of April 30, 2026:

Fiscal year			(in thousands)
Remainder of fiscal 2026			$	805,653
2027			1,545,111
2028			1,384,601
2029			1,381,906
2030			1,376,058
2031 and thereafter			5,382,089
Total			$	11,875,418

Note 7. Balance Sheet Components

			As of
			April 30, 2026						October 31, 2025
			(in thousands)
Accounts payable and accrued liabilities:
Payroll and related benefits			$	701,291					$	822,575
Accounts payable			179,257						164,766
Accrued income taxes			45,020						94,664
Interest payable			42,603						49,826
Other accrued liabilities			217,033						194,380
Total			$	1,185,204					$	1,326,211
Other long-term liabilities:
Deferred tax liability			$	877,749					$	1,001,070
Deferred compensation plan liabilities			468,523						447,232
Other			201,319						200,997
Total			$	1,547,591					$	1,649,299

Assets Held for Sale

On January 14, 2026, we entered into a definitive agreement for the sale of our Processor IP Solutions (Processor IP) business to GlobalFoundries Inc. as part of our reallocation of resources to the highest growth opportunities in our Design IP segment.

The Processor IP business is part of the Design IP segment and we have determined that we met the criteria to classify the assets and liabilities of this business as held for sale. The divestiture does not represent a strategic shift in operations that would have a major effect on our business and is also not material to our business and therefore does not meet the criteria to be classified as discontinued operations.

The sale is expected to be completed in June 2026, subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals.

The following table presents the major classes of assets and liabilities classified as held for sale as of April 30, 2026:

			(in thousands)
Assets:
Accounts receivable, net			$	541
Inventories			72
Prepaid and other assets			5,623
Property and equipment, net			2,127
Operating lease right-of-use assets, net			1,870
Goodwill			38,015
Total current assets held for sale			$	48,248
Liabilities:
Accounts payable and accrued liabilities			$	1,841
Operating lease liabilities			1,744
Deferred revenue			24,327
Total current liabilities held for sale			$	27,912

Note 8. Financial Assets and Liabilities

Cash Equivalents and Short-term Investments

As of April 30, 2026, 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			$	196,433					$	—					$	—					$	—					$	196,433
U.S. Treasury, agency & T-bills			1,645						—						—						—						1,645
Total:			$	198,078					$	—					$	—					$	—					$	198,078
Short-term investments:
U.S. Treasury, agency & T-bills			$	5,656					$	5					$	—					$	—					$	5,661
Municipal bonds			23,442						23						(51)						—						23,414
Corporate debt securities			42,697						98						(81)						—						42,714
Other			177						—						—						—						177
Total:			$	71,972					$	126					$	(132)					$	—					$	71,966

*(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, 2026 are as follows:

			Amortized Cost						Fair Value
			(in thousands)
1 year or less			$	28,479					$	28,515
1-5 years			43,493						43,451
Total			$	71,972					$	71,966

As of October 31, 2025, the balances of our cash equivalents and short-term investments are as follows:

			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses Less Than 12 Continuous Months						Gross Unrealized Losses 12 Continuous Months or Longer						Estimated Fair Value**(1)**
			(in thousands)
Cash equivalents:
Money market funds			$	52,978					$	—					$	—					$	—					$	52,978
Total:			$	52,978					$	—					$	—					$	—					$	52,978
Short-term investments:
U.S. Treasury, agency & T-bills			$	6,661					$	19					$	—					$	—					$	6,680
Municipal bonds			22,004						61						—						—						22,065
Corporate debt securities			43,878						139						(18)						—						43,999
Other			185						—						—						—						185
Total:			$	72,728					$	219					$	(18)					$	—					$	72,929

*(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 deposits for 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, 2026						October 31, 2025
			(in thousands)
Cash and cash equivalents			$	2,412,472					$	2,888,030
Restricted cash included in prepaid and other current assets			3,270						4,680
Restricted cash included in other long-term assets			1,015						1,011
Cash, cash equivalents and restricted cash			$	2,416,757					$	2,893,721

Non-marketable equity securities. Our portfolio of non-marketable equity securities consists of strategic investments in privately held companies. There were no material impairments of non-marketable equity securities during the three and six months ended April 30, 2026 and 2025.

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 provided by 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 provided by 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) (OCI) 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 OCI 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, 2026 and 2025.

During the first quarter of fiscal 2025, we entered into 6-month interest rate hedge contracts (the 2025 Rate Lock Agreements) with notional value of $2.0 billion to manage the variability in cash flows due to changes in benchmark interest rate related to the Senior Notes (as defined in Note 11. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements). These derivatives were designated as cash flow hedges with unrealized gains and losses deferred in 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, 2026, the unamortized portion of the fair value of the 2025 Rate Lock Agreements was $113.5 million. We had no interest rate hedge contracts outstanding as of April 30, 2026.

During the second quarter of fiscal 2025, we entered into a deferred payment agreement with the counterparty bank to defer the cash settlement of 2025 Rate Lock Agreements over a period of 5.5 years with installments due semi-annually. The implied interest rate is 3.45%. This liability is recognized in our condensed consolidated balance sheets as short-term debt for the portion due within the next 12 months and as long-term debt for the remaining portion. There were no debt covenants applicable to the deferred payment agreement.

Non-designated Hedging Activities

Our foreign exchange forward contracts that are used to hedge non-functional currency denominated balance sheet assets and liabilities are not designated as hedging instruments. Accordingly, any gains or losses from changes in the fair value of the forward contracts are recorded in other income (expense), net. The gains and losses on these forward contracts generally offset the gains and losses associated with the underlying assets and liabilities, which are also recorded in other income (expense), net. The duration of the forward contracts for hedging our balance sheet exposure is approximately one month.

We also have certain foreign exchange forward contracts for hedging certain international revenues and expenses that are not designated as hedging instruments. Accordingly, any gains or losses from changes in the fair value of these forward contracts are recorded in other income (expense), net. The gains and losses on these forward contracts generally offset the gains and losses associated with the foreign currency in operating income. The duration of these forward contracts is usually less than one year. The overall goal of our hedging program is to minimize the impact of currency fluctuations on the net income over the fiscal year.

The effects of the non-designated foreign currency derivative instruments in the condensed consolidated statements of income are summarized as follows:

			Three Months Ended April 30,												Six Months Ended April 30,
			2026						2025						2026						2025
			(in thousands)
Gains (losses) recorded in other income (expense), net			$	(7,790)					$	11,186					$	(12,087)					$	6,765

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

			As of
			April 30, 2026						October 31, 2025
			(in thousands)
Total gross notional amounts			$	1,780,365					$	1,587,863
Net fair value			$	(23,220)					$	(1,234)

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, 2026
Other current assets			$	15,619					$	184
Accrued liabilities			$	38,174					$	849
Balance at October 31, 2025
Other current assets			$	8,598					$	265
Accrued liabilities			$	9,504					$	593

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, 2026
Foreign exchange contracts			Revenue						$	7,720					Revenue						$	1,085
Foreign exchange contracts			Operating expenses						(13,483)						Operating expenses						(3,346)
Interest rate contracts			Interest expense						—						Interest expenses						(1,331)
Total									$	(5,763)											$	(3,592)
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 expense						(73,146)						Interest expense						(888)
Total									$	(45,708)											$	(2,675)
Six months ended April 30, 2026
Foreign exchange contracts			Revenue						$	10,647					Revenue						$	2,275
Foreign exchange contracts			Operating expenses						(27,946)						Operating expenses						(4,864)
Interest rate contracts			Interest expense						—						Interest expenses						(2,663)
Total									$	(17,299)											$	(5,252)
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 expense						(93,216)						Interest expense						(888)
Total									$	(82,155)											$	(6,263)

Note 9. Fair Value Measurements

ASC 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes guidelines and enhances disclosure requirements for fair value measurements. The accounting guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The accounting guidance also establishes a fair value hierarchy based on the independence of the source and objective evidence of the inputs used. There are three fair value hierarchies based upon the level of inputs that are significant to fair value measurement:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical instruments in active markets;

Level 2—Observable inputs other than quoted prices for identical instruments in active markets, quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in inactive markets, and model-driven valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3—Unobservable inputs derived from fair valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

On a recurring basis, we measure the fair value of certain assets and liabilities, which include cash equivalents, short-term investments, marketable securities, non-qualified deferred compensation plan assets, contingent consideration receivable, and foreign currency derivative contracts.

Our cash equivalents, short-term investments and marketable securities are classified within Level 1 or Level 2 because they are valued using quoted market prices in an active market or alternative independent pricing sources and models utilizing market observable inputs.

Our non-qualified deferred compensation plan assets consist of money market and mutual funds invested in domestic and international marketable securities that are directly observable in active markets and are therefore classified within Level 1.

Our foreign currency derivative contracts are classified within Level 2 because these contracts are not actively traded, and the valuation inputs are based on quoted prices and market observable data of similar instruments.

Our borrowings under our Credit and Term Loan facilities are classified within Level 2 because these borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to us for debt with similar terms and maturities. See Note 11. 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.

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, 2026:

									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			$	196,433					$	196,433					$	—					$	—
U.S. Treasury, agency & T-bills			1,645						—						1,645						—
Short-term investments:
U.S. Treasury, agency & T-bills			5,661						—						5,661						—
Municipal bonds			23,414						—						23,414						—
Corporate debt securities			42,714						—						42,714						—
Other			177						—						177						—
Prepaid and other current assets:
Foreign currency derivative contracts			15,803						—						15,803						—
Contingent consideration receivable			22,202						—						—						22,202
Other long-term assets:
Deferred compensation plan assets			468,523						468,523						—						—
Marketable equity securities			515						515						—						—
Total assets			$	777,087					$	665,471					$	89,414					$	22,202
Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts			$	39,023					$	—					$	39,023					$	—
Other long-term liabilities:
Deferred compensation plan liabilities			468,523						468,523						—						—
Total liabilities			$	507,546					$	468,523					$	39,023					$	—

Assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2025:

									Fair Value Measurement Using
Description			Total						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
			(in thousands)
Assets
Cash equivalents:
Money market funds			$	52,978					$	52,978					$	—					$	—
Short-term investments:
U.S. Treasury, agency & T-bills			6,680						—						6,680						—
Municipal bonds			22,065						—						22,065						—
Corporate debt securities			43,999						—						43,999						—
Other			185						—						185						—
Prepaid and other current assets:
Foreign currency derivative contracts			8,863						—						8,863						—
Contingent consideration receivable			22,202						—						—						22,202
Other long-term assets:
Deferred compensation plan assets			447,232						447,232						—						—
Marketable equity securities			785						785						—						—
Total assets			$	604,989					$	500,995					$	81,792					$	22,202
Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts			$	10,097					$	—					$	10,097					$	—
Other long-term liabilities:
Deferred compensation plan liabilities			447,232						447,232						—						—
Total liabilities			$	457,329					$	447,232					$	10,097					$	—

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. Restructuring Charges

In November 2025, we initiated a restructuring plan for involuntary employee terminations as part of a business reorganization (the 2026 Plan). Total charges under the 2026 Plan are expected to be in the range of $300.0 million to $350.0 million, and consist primarily of severance costs and other one-time termination benefits. The 2026 Plan is anticipated to be completed by the end of fiscal 2027, with majority of the workforce reduction in fiscal 2026.

During the three and six months ended April 30, 2026, we recorded restructuring charges of $115.9 million and $234.2 million, respectively, and made payments of $44.2 million and $130.2 million, respectively, under the 2026 Plan. As of April 30, 2026, the outstanding restructuring related liabilities were $104.0 million and recorded in accounts payable and accrued liabilities in the condensed consolidated balance sheets.

Note 11. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities

The following table summarizes our borrowings as of April 30, 2026:

						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												(75,729)
Total Senior Notes												9,924,271
Deferred payment on settlement of interest rate treasury lock												99,526
Other borrowings												12,165
Total												$	10,035,962
Reported as:
Short-term debt												$	22,117
Long-term debt												10,013,845
Total												$	10,035,962

Senior Notes:

On March 17, 2025, we issued $10.0 billion in aggregate principal amount of senior, unsecured and unsubordinated long-term notes, which mature on various dates from April 1, 2027 to April 1, 2055 (collectively, the Senior Notes). Our total proceeds were approximately $9.9 billion, net of original issuance discount of $17.0 million and total issuance costs of $70.2 million. Interest on the Senior Notes is payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2025. The discount and issuance costs on our Senior Notes are amortized to interest expense over the terms of the respective notes using the effective interest method. The effective rates for the Senior Notes include the interest on the notes, the accretion of the discount and the amortization of issuance costs.

The Senior Notes were issued under an indenture, dated as of March 17, 2025 (the Base Indenture), as supplemented by the first supplemental indenture, dated as of March 17, 2025 (the Supplemental Indenture and, together with the Base Indenture, the Indenture), each between Synopsys and U.S. Bank Trust Company, National Association, as trustee.

The net proceeds of the Senior Notes were used to fund a portion of the Cash Consideration in the Ansys Merger and pay related transaction fees and expenses.

The Indenture contains provisions for early redemption of the Senior Notes and also 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, 2026. 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, 2026, we were in compliance with all of our covenants under the Indenture.

During the first quarter of fiscal 2025, we entered into 6-month interest rate hedge contracts with an aggregate notional amount of $2.0 billion to manage the variability in cash flows due to changes in benchmark interest rates related to the Senior Notes. These interest rate hedge contracts were terminated and settled during the second quarter of fiscal 2025, and we entered into a deferred payment agreement with the counterparty bank to defer the cash settlement. See Note 8. Financial Assets and Liabilities of the Notes to Condensed Consolidated Financial Statements for more information on these cash flow hedging activities.

Bridge Commitment:

On January 15, 2024, we entered into a bridge commitment letter with certain financial institutions that committed to provide, subject to the satisfaction of customary closing conditions, an aggregate principal amount of $16.0 billion (the Bridge Commitment) for the purpose of financing a portion of the aggregate Cash Consideration and related fees and expenses in connection with the Ansys Merger, as well as the other transactions contemplated pursuant to the terms of the Agreement and Plan of Merger, dated as of January 15, 2024. On the Acquisition Date, we reduced the total Bridge Commitment to $0.

Term Loan:

On February 13, 2024, we entered into a term loan facility credit agreement (the Term Loan Agreement) in connection with the financing of the Ansys Merger. On the Acquisition Date, we borrowed the full $4.3 billion available under the Term Loan Agreement to fund a portion of the Cash Consideration and to pay transaction fees, premiums and expenses related to the Ansys Merger.

The Term Loan Agreement provides for two tranches of senior unsecured term loans: a $1.45 billion tranche (Tranche 1) that matures on July 17, 2027 and a $2.85 billion tranche (Tranche 2) that matures on July 17, 2028. On October 17, 2025, we made an early repayment of $850.0 million on the Tranche 1 Term Loan. During the first quarter of fiscal 2026, we paid off the remaining $3.5 billion, and the Term Loans were terminated upon repayment.

Under the Term Loan Agreement, borrowings bear interest on the principal amount outstanding at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate (as defined in the Term Loan Agreement) plus an applicable margin based on the credit ratings of Synopsys ranging from 0.875% to 1.375% (in the case of Tranche 1) or 1.000% to 1.500% (in the case of Tranche 2) or (ii) the ABR (as defined in the Term Loan Agreement) plus an applicable margin based on the credit ratings of Synopsys ranging from 0.000% to 0.375% (in the case of Tranche 1) or 0.000% to 0.500% (in the case of Tranche 2).

The Term Loan Agreement contained a financial covenant requiring that Synopsys maintain a maximum consolidated leverage ratio, as well as certain other non-financial covenants. As of April 30, 2026, the term loans were fully paid and terminated.

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 became effective on the Acquisition Date. The Sixth Amendment amended the financial covenant to allow netting of the cash proceeds of certain debt incurred to finance the Ansys Merger as well as certain other modifications set forth therein. The Sixth Amendment, among other things, also amended: (i) the applicable margin used to determine the interest that accrues on loans and the facility fee payable under the revolving credit facility to be based on our credit ratings, (ii) the financial covenant thresholds under the financial covenant in the Revolving Credit Agreement requiring us to maintain a maximum consolidated leverage ratio and (iii) certain conditions to borrowing, other non-financial covenants and events of default.

The Revolving Credit Agreement contains a financial covenant requiring us to maintain a maximum consolidated leverage ratio, as well as other non-financial covenants. As of April 30, 2026, we were in compliance with the financial covenant as well as the other covenants.

Interest under the Revolving Credit Agreement accrues on dollar-denominated loans at a floating rate based on, at Synopsys’ election, (i) the Adjusted Term SOFR Rate (as defined in the Revolving Credit Agreement) plus an applicable margin based on our credit ratings ranging from 0.795% to 1.200% or (ii) the ABR (as defined in the Revolving Credit Agreement) plus an applicable margin based on our credit ratings ranging from 0.000% to 0.200%. In addition to the interest on any outstanding loans, Synopsys is also required to pay a facility fee on the entire portion of the revolving credit facility ranging from 0.080% to 0.175% based on the credit ratings of Synopsys on the daily amount of the revolving commitment.

There was no outstanding balance under the Revolving Credit Agreement as of April 30, 2026 and October 31, 2025.

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, 2026, we had $12.2 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, 2026 are as follows:

			Principal Payments
Fiscal year			(in thousands)
Remainder of fiscal 2026			$	12,411
2027			1,024,820
2028			1,024,820
2029			24,820
2030			2,024,820
2031 and thereafter			6,000,000
Total			$	10,111,691

Note 12. Leases

We have operating lease arrangements for office space, data center, equipment and other corporate assets. These leases have various expiration dates through December 31, 2042, some of which include options to extend the leases for up to 15 years. We consider the lease renewal options in determining the lease term and include associated potential option payments in lease payments when it is reasonably certain that the renewal options will be exercised.

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

			Three Months Ended April 30,												Six Months Ended April 30,
			2026						2025						2026						2025
			(in thousands)
Operating lease expense (1)			$	37,244					$	26,063					$	74,451					$	51,115
Variable lease expense (2)			12,105						6,797						22,622						13,557
Total lease expense			$	49,349					$	32,860					$	97,073					$	64,672

(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,
			2026						2025
			(in thousands)
Cash paid for amounts included in the measurement of operating lease liabilities			$	69,942					$	52,374
ROU assets obtained in exchange for operating lease liabilities			$	70,891					$	70,957

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, 2026						October 31, 2025
Weighted-average remaining lease term (in years)			6.54						6.88
Weighted-average discount rate			3.46		%				3.40		%

The following table represents the maturities of our future lease payments due under operating leases as of April 30, 2026:

			Lease Payments
Fiscal year			(in thousands)
Remainder of fiscal 2026			$	76,968
2027			166,029
2028			152,626
2029			140,668
2030			111,140
2031 and thereafter			256,469
Total future minimum lease payments			903,900
Less: Imputed interest			97,902
Total lease liabilities			$	805,998

In addition, the sublease income from facilities leased by us, due to us as of April 30, 2026 are as follows:

			Lease Receipts
Fiscal year			(in thousands)
Remainder of fiscal 2026			$	9,558
2027			19,689
2028			20,280
2029			20,888
2030			17,867
Total			$	88,282

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, 2026						October 31, 2025
			(in thousands)
Cumulative currency translation adjustments			$	(136,871)					$	(137,457)
Unrealized gains (losses) on derivative instruments, net of taxes			(107,205)						(95,158)
Unrealized gains (losses) on available-for-sale securities, net of taxes			(6)						201
Total			$	(244,082)					$	(232,414)

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,
			2026						2025						2026						2025
			(in thousands)
Reclassifications:
Gains (losses) on cash flow hedges, net of taxes
Revenues			$	1,085					$	1,282					$	2,275					$	280
Operating expenses			(3,346)						(3,069)						(4,864)						(5,655)
Interest expense			(1,331)						(888)						(2,663)						(888)
Total			$	(3,592)					$	(2,675)					$	(5,252)					$	(6,263)

Amounts reclassified during the six months ended April 30, 2026 and 2025 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 (the Board) approved and publicly announced a stock repurchase program (the Program) with authorization to purchase up to $1.5 billion of our common stock. In February 2026, the Board approved a replenishment of the Program with authorization to purchase up to $2.0 billion of our common stock. As of April 30, 2026, $1.7 billion remained available for future stock repurchases under the Program.

In March 2026, we entered into an accelerated stock repurchase agreement (the March 2026 ASR) to repurchase an aggregate of $250.0 million of our common stock. Pursuant to the March 2026 ASR, we made a prepayment of $250.0 million to receive initial deliveries of shares valued at $212.5 million. The remaining share repurchase of $37.5 million will be completed no later than June 1, 2026. Under the terms of the March 2026 ASR, the specific number of shares that we will ultimately repurchase will be based on the volume-weighted average share price of our common stock during the repurchase period, less a discount.

During the three months ended April 30, 2026, we also repurchased on the open market approximately 126.7 thousand shares of our common stock pursuant to the Program, at an average price of $394.78 per share for an aggregate purchase price of $50.0 million.

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,
			2026						2025						2026						2025
			(in thousands)
Shares repurchased			640						—						640						—
Aggregate purchase price			$	262,500					$	—					$	262,500					$	—
Reissuance of treasury stock			635						528						1,268						1,034

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,
			2026						2025						2026						2025
			(in thousands)
Cost of products			$	18,506					$	23,050					$	38,479					$	43,527
Cost of maintenance and service			11,411						9,502						24,551						18,493
Research and development expense			110,694						109,717						233,909						212,413
Sales and marketing expense			51,150						36,700						111,717						71,650
General and administrative expense			30,542						22,754						72,371						42,103
Stock-based compensation expense before taxes			222,303						201,723						481,027						388,186
Income tax benefit			(33,768)						(32,659)						(73,068)						(62,847)
Stock-based compensation expense after taxes			$	188,535					$	169,064					$	407,959					$	325,339

During the three and six months ended April 30, 2026 and 2025, 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,
			2026						2025						2026						2025
Expected life (in years)			1.67						2.67						1.67 - 2.87						2.67 - 2.79
Risk-free interest rate			3.38		%				3.90		%				3.38% - 3.48%						3.90% - 4.39%
Volatility			55.12		%				33.40		%				44.90% - 55.12%						33.40% - 34.72%
Weighted average grant date fair value per share			$322.60						$409.94						$454.13						$458.66

As of April 30, 2026, we had $1.1 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 1.7 years. As of April 30, 2026, we had $146.4 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,
			2026						2025						2026						2025
			(in thousands)
Intrinsic value of awards exercised			$	14,240					$	34,479					$	24,602					$	54,837

Note 16. Net Income (Loss) Per Share

We compute basic net income 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 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,
			2026						2025						2026						2025
			(in thousands, except per share amounts)
Numerator:
Net income from continuing operations attributed to Synopsys			$	17,105					$	349,232					$	82,063					$	644,915
Net loss from discontinued operations attributed to Synopsys			—						(3,900)						—						(3,900)
Net income attributed to Synopsys			$	17,105					$	345,332					$	82,063					$	641,015
Denominator:
Weighted average common shares for basic net income per share			191,464						154,927						190,513						154,666
Dilutive effect of common share equivalents from equity-based compensation			680						1,161						1,067						1,552
Weighted average common shares for diluted net income per share			192,144						156,088						191,580						156,218
Net income (loss) per share attributed to Synopsys - basic:
Continuing operations			$	0.09					$	2.25					$	0.43					$	4.17
Discontinued operations			—						(0.02)						—						(0.03)
Basic net income per share			$	0.09					$	2.23					$	0.43					$	4.14
Net income (loss) per share attributed to Synopsys - diluted:
Continuing operations			$	0.09					$	2.24					$	0.43					$	4.13
Discontinued operations			—						(0.03)						—						(0.03)
Diluted net income per share			$	0.09					$	2.21					$	0.43					$	4.10
Anti-dilutive employee stock-based awards excluded			1,720						1,897						781						413

Private Placement

In December 2025, we entered into a securities purchase agreement with NVIDIA Corporation, pursuant to which we sold an aggregate of approximately 4.8 million shares of our common stock in a private placement at a price of $414.79 per share for net proceeds of $2.0 billion.

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 our chief operating decision maker (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, Ansys products, 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 logic libraries, embedded memories, wired interface IP, memory interface IP, security IP, and embedded processors.

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.

Information by reportable segment is as follows:

			Three Months Ended April 30,												Six Months Ended April 30,
			2026						2025						2026						2025
			(in thousands)
Total Segments:
Revenue			$	2,275,985					$	1,604,266					$	4,684,783					$	3,059,581
Cost of revenue and operating expenses			1,376,269						994,996						2,771,415						1,919,094
Adjusted operating income			899,716						609,270						1,913,368						1,140,487
Adjusted operating margin			40		%				38		%				41		%				37		%
Design Automation:
Revenue			$	1,821,776					$	1,122,235					$	3,823,594					$	2,142,451
Cost of revenue and operating expenses			1,032,718						663,479						2,087,004						1,279,025
Adjusted operating income			789,058						458,756						1,736,590						863,426
Adjusted operating margin			43		%				41		%				45		%				40		%
Design IP:
Revenue			$	454,209					$	482,031					$	861,189					$	917,130
Cost of revenue and operating expenses			343,551						331,517						684,411						640,069
Adjusted operating income			110,658						150,514						176,778						277,061
Adjusted operating margin			24		%				31		%				21		%				30		%

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, restructuring charges, 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:

			Three Months Ended April 30,												Six Months Ended April 30,
			2026						2025						2026						2025
			(in thousands)
Total segment adjusted operating income			$	899,716					$	609,270					$	1,913,368					$	1,140,487
Reconciling items:
Amortization of acquired intangible assets			(403,631)						(11,656)						(807,866)						(24,252)
Stock-based compensation expense			(222,303)						(201,723)						(481,027)						(388,186)
Restructuring charges			(115,894)						—						(234,176)						—
Acquisition/divestiture related items			(23,649)						(39,571)						(39,241)						(100,252)
Deferred compensation plan			(13,813)						20,106						(27,586)						468
Total operating income			$	120,426					$	376,426					$	323,472					$	628,265

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,
			2026						2025						2026						2025
			(in thousands)
Revenue:
United States			$	974,422					$	649,299					$	2,070,507					$	1,260,009
Europe			378,077						194,843						845,110						348,514
China			240,402						157,506						451,485						331,454
Korea			265,418						257,595						512,034						507,980
Other			417,666						345,023						805,647						611,624
Consolidated			$	2,275,985					$	1,604,266					$	4,684,783					$	3,059,581

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,
			2026						2025						2026						2025
			(in thousands)
Interest income			$	12,885					$	89,890					$	30,319					$	125,611
Gains (losses) on assets related to deferred compensation plan			13,813						(20,106)						27,586						(468)
Foreign currency exchange gains (losses)			(1,542)						(178)						(7,369)						(115)
Loss on sale of strategic investments			—						(2,435)						—						(2,435)
Gain on sale of building			—						51,385						—						51,385
Other, net			7,058						(4,455)						20,400						(9,460)
Total			$	32,214					$	114,101					$	70,936					$	164,518

Note 19. Income Taxes

Effective Tax Rate

We estimate our annual effective tax rate at the end of each fiscal quarter. The effective tax rate reflects our estimations of annual pre-tax income, the geographic mix of pre-tax income, interpretations of applicable tax laws and the potential outcomes of audits.

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

			Three Months Ended April 30,												Six Months Ended April 30,
			2026						2025						2026						2025
			(in thousands)
Income before income taxes			$	19,276					$	396,191					$	98,329					$	687,308
Provision for income taxes			$	2,408					$	47,181					$	16,745					$	40,887
Effective tax rate			12.5		%				11.9		%				17.0		%				5.9		%

Our effective tax rate increased in the three and six months ended April 30, 2026, as compared to the same periods in fiscal 2025, primarily due to the reduced benefit from stock-based compensation and the foreign-derived intangible income deduction. The benefit of the capital loss on the sale of our ownership in OpenLight was included in the first quarter of 2025.

Our effective tax rate for the six months ended April 30, 2026, is lower than the statutory federal corporate tax rate of 21% primarily due to U.S. federal research tax credits, the foreign-derived intangible income deduction, and U.S. foreign tax credits, partially offset by the effect of non-deductible stock-based compensation.

The timing of the resolution of income tax examinations, and the amounts and timing of various tax payments that are part of the settlement process, are highly uncertain. Variations in such amounts and/or timing could cause large fluctuations in the balance sheet classification of current and non-current assets and liabilities. During the next 12 months, it is reasonably possible that certain audits and ongoing tax litigation will be resolved, or that the statute of limitations on certain state and foreign income and withholding taxes will expire, or both. Given the uncertainty as to ultimate settlement terms, the timing of payment and the impact of such settlements on other uncertain tax positions, we estimate a potential decrease in underlying unrecognized tax benefits to be between $0 and $28.0 million.

Non-U.S. Examinations

One of our Korean subsidiaries, Ansys Korea, is currently involved in various stages of Tax Tribunal and Korea's High Court appeals regarding Korea's National Tax Service assessments of withholding taxes against Ansys Korea for calendar tax years 2017 to 2023. In connection with this matter, we have recorded the net impact of the unrecognized tax benefit and offsetting foreign tax credit.

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

Legislative Developments

On July 4, 2025, President Donald J. Trump signed H.R. 1, the One Big Beautiful Bill Act (OBBB) into law. The legislation includes corporate income tax changes, including the restoration of immediate expensing for domestic research and experimental expenditures effective beginning in our fiscal 2026, resulting in a decrease to our current cash tax liabilities. Immediate expensing of research and development expenditures also results in a corresponding increase to our effective tax rate due to decreasing the foreign-derived intangible income deduction. The most significant effects began in our fiscal 2026, with certain provisions extending into fiscal 2027.

Effective in fiscal 2024, we are subject to the new 15% corporate alternative minimum tax (CAMT) enacted as part of the Inflation Reduction Act of 2022 (IR Act). We do not expect to be subject to CAMT in fiscal 2026, due to our regular tax liability exceeding CAMT. The details of the computation will be subject to final regulations issued by the U.S. Department of the Treasury. We will monitor regulatory developments and will continue to evaluate the impact, if any, of the CAMT.

The IR Act 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. Based on an evaluation of our stock repurchase and issuance activity, no excise tax liability has been recorded as of April 30, 2026.

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 Organisation for Economic Co-operation and Development (the OECD) has model rules for a global minimum tax framework, which is a two-pillar solution to address tax challenges arising from digitalization of the economy. This two-pillar solution includes the Pillar Two Model Rules (Pillar 2), which define global minimum tax rules and imposes a 15% minimum tax rate. Various countries have started to enact new laws related to Pillar 2, including certain new laws effective beginning of fiscal 2025. As of April 30, 2026, the impact of Pillar 2 is not material.

Note 20. Contingencies

Legal Proceedings

We are subject to routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. For more detail on currently pending legal proceedings, see Part II, Item 1, Legal Proceedings. 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 the potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount is estimable, we accrue a liability for the estimated loss. Legal proceedings are inherently uncertain and as circumstances change, it is possible that the amount of any accrued liability may increase, decrease or be eliminated.

We have determined that no disclosure of estimated loss is required for a claim against us because: (1) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (2) a reasonably possible loss or range of loss cannot be estimated; or (3) such estimate is immaterial.

Tax Matters

We undergo examination from time to time by U.S. and foreign authorities for non-income based taxes, such as sales, use and value-added taxes, and are currently under examination by tax authorities in certain jurisdictions. If the potential loss from such examinations is considered probable and the amount or the range of loss could be estimated, we would accrue a liability for the estimated expense.

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.