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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q (this Quarterly Report) includes forward-looking statements, which involve risks, uncertainties and other factors that could cause Synopsys, Inc.'s (Synopsys, we, our or us) actual results, time frames or achievements to differ materially from those expressed or implied in such forward-looking statements. Readers are urged to carefully review and consider the various disclosures regarding these risks and uncertainties made in this Quarterly Report, including those identified below in Part II, Item 1A, Risk Factors, and in other documents we file from time to time with the Securities and Exchange Commission (SEC). Forward-looking statements include any statements that are not statements of historical fact and include, but are not limited to, statements concerning our short-term and long-term financial targets, expectations and objectives; our businesses, business segments, strategies, partnerships, initiatives and opportunities, including, among other things, the reallocation of resources in our Design IP segment to higher growth opportunities and planned restructuring activities; industry growth and technological trends, such as artificial intelligence (AI), including our development and planned commercialization thereof; business and market outlook; the potential impact of the uncertain macroeconomic environment and global economic conditions on our financial results; the impact of current and future U.S. and foreign trade regulations, government actions and regulatory changes, such as export control restrictions and tariffs; the ANSYS, Inc. (Ansys) integration and its expected impact, including expected synergies and the timing thereof, our ability to create joint solutions as a combined company, and related accounting changes; planned acquisitions or divestitures, including the expected completion of the sale of the Processor IP Solutions (Processor IP) business, and their anticipated timing and impact; our key customers, customer concentration, customer engagement, customer demand and market expansion; results and strategies related to our products, technology and services, including product development and our planned product releases and capabilities; the expected realization of our contracted but unsatisfied or partially unsatisfied performance obligations (backlog); planned stock repurchases; our expected tax rate; and the status, expected outcome or expected impact of litigation and/or regulatory investigations. Forward-looking statements may be identified by words including, but not limited to, “may,” “will,” “could,” “would,” “can,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project,” “continue,” “forecast,” "likely," "potential," "seek," or the negatives of such terms and similar expressions. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. All subsequent written or oral forward-looking statements attributable to Synopsys or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.
The following summary and overview of our financial condition and results of operations are qualified in their entirety by the more complete discussions and should be read together with our condensed consolidated financial statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report, the risk factors set forth in Part II, Item 1A of this Quarterly Report, and with our audited consolidated financial statements and the related notes thereto contained 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).
Overview
Financial Performance Summary
For the second quarter of fiscal 2026, our results reflect continued, strong execution and the resiliency of our business, including 42% revenue growth compared to the second quarter of fiscal 2025, primarily due to strength across our business and Ansys' contribution of $652.4 million in revenue, partially offset by weakness in our Design IP segment.
The following table sets forth some of our key quarterly unaudited financial information:
| Three Months Ended April 30, | Six Months Ended April 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions, except per share amounts) | |||||||||||||||||||||||
| Revenue | $ | 2,276.0 | $ | 1,604.3 | $ | 4,684.8 | $ | 3,059.6 | |||||||||||||||
| Cost of revenue | $ | 629.9 | $ | 318.3 | $ | 1,267.2 | $ | 588.3 | |||||||||||||||
| Operating expenses | $ | 1,525.7 | $ | 909.5 | $ | 3,094.1 | $ | 1,843.0 | |||||||||||||||
| Operating income | $ | 120.4 | $ | 376.4 | $ | 323.5 | $ | 628.3 |
| Net income from continuing operations attributed to Synopsys | $ | 17.1 | $ | 349.2 | $ | 82.1 | $ | 644.9 | |||||||||||||||
| Net loss from discontinued operations attributed to Synopsys | $ | — | $ | (3.9) | $ | — | $ | (3.9) | |||||||||||||||
| Diluted net income (loss) per share attributed to Synopsys: | |||||||||||||||||||||||
| Continuing operations | $ | 0.09 | $ | 2.24 | $ | 0.43 | $ | 4.13 | |||||||||||||||
| Discontinued operations | $ | — | $ | (0.03) | $ | — | $ | (0.03) |
Financial performance summary for the three months ended April 30, 2026 compared to the same period of fiscal 2025:
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Revenues were $2.3 billion, an increase of $671.7 million or 42%, which includes revenues from Ansys of $652.4 million. The remaining growth came organically due to strength across our business, partially offset by weakness in our Design IP segment.
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Total cost of revenue and operating expenses was $2.2 billion, an increase of $927.8 million or 76%, reflecting $394.2 million of amortization expense related to intangible assets acquired from the acquisition of Ansys (the Ansys Merger), as well as an increase of $244.5 million in employee-related costs primarily due to the headcount increases as a result of the Ansys Merger.
Financial performance summary for the six months ended April 30, 2026 compared to the same period of fiscal 2025:
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Revenues were $4.7 billion, an increase of $1.6 billion or 53%, which includes revenues from Ansys of $1.5 billion. The remaining growth came organically due to strength across our business, partially offset by weakness in our Design IP segment.
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Total cost of revenue and operating expenses was $4.4 billion, an increase of $1.9 billion or 79%, reflecting $788.3 million of amortization expense related to intangible assets acquired from the Ansys Merger, as well as an increase of $594.7 million in employee-related costs primarily due to the headcount increases as a result of the Ansys Merger.
Business Summary
Synopsys delivers industry-leading silicon design, 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. For more information about our business segments and product groups, see Part I, Item 1, Business in our Annual Report.
We have consistently grown our revenue since 2005, despite periods of global economic uncertainty. We achieved these results because of our solid execution, leading technologies and strong customer relationships, and because we generally recognize our revenue for software licenses over the arrangement period, which typically approximates two to three years. See Note 2. Summary of Significant Accounting Policies and Basis of Presentation of the Notes to Consolidated Financial Statements in our Annual Report for a discussion on our revenue recognition policy*.* The revenue we recognize in a particular period generally results from selling efforts in prior periods rather than the current period. As a result, decreases as well as increases in customer spending do not immediately affect our revenue in a significant way.
Our growth strategy is focused on expanding our total addressable market by maximizing the capabilities of R&D teams across industries spanning semiconductor, high-tech, industrial, aerospace, and more with engineering solutions from silicon to systems. Our priorities are to maintain and expand our technology leadership, drive sustainable growth and efficiently scale to accelerate our strategy. Our revenue growth from period to period is expected to vary based on the mix of our time-based and upfront products. Our upfront products have grown at a faster rate than our time-based products in recent periods, which has resulted in, and may in the future result in, increased fluctuation in our business, operating results and overall financial position on a quarterly basis. Such fluctuation may be more pronounced depending on demand from our larger customers. See Part II, Item 1A, Risk Factors, "Our operating results may fluctuate in the future, which may adversely affect our stock price" of this Quarterly Report for further discussion on potential fluctuations in our operating results. Based on our leading
technologies, customer relationships, business model, diligent expense management, and acquisition strategy, we believe that we will continue to execute our strategies successfully.
Acquisition of Ansys
On July 17, 2025 (the Acquisition Date), we completed our acquisition of ANSYS, Inc. (Ansys) pursuant to the terms of the previously announced Agreement and Plan of Merger, dated as of January 15, 2024 (the Merger Agreement) by and among Synopsys, Ansys and ALTA Acquisition Corp. (Merger Sub), a Delaware corporation and a wholly owned subsidiary of Synopsys (the Ansys Merger). See Note 4. Acquisition of Ansys of the Notes to Condensed Consolidated Financial Statements for more information on the Ansys Merger.
See Part II, Item 1A, Risk Factors for more on risks related to the Ansys Merger.
Impact of the Current Macroeconomic Environment
The current macroeconomic environment reflects the effects of, among other things, changes in U.S. and global trade policy, including the tariffs enacted beginning in 2025 by the U.S. and other governments and subsequent tariff and trade policy revisions, sustained global inflationary pressures and elevated interest rates, potential economic slowdowns or recessions, supply chain disruptions, geopolitical pressures and instability, and fluctuations in foreign exchange rates. This uncertain macroeconomic environment has resulted in increased volatility in global markets. While we have seen continued strength in the artificial intelligence and high-performance computing sectors, certain industries such as industrial, automotive and consumer electronics have experienced more modest growth. The current uncertain macroeconomic environment has led some of our customers to postpone their decision making, delay their drawdowns under non-cancellable commitments, decrease their spending and/or delay their payments to us.
We expect growth across most geographies in fiscal 2026; however, we are expecting a challenging near-term environment, including in China, due to macroeconomic factors and Trade Restrictions (as defined below). See the discussion below under the heading "Impact of Global Trade Policy and the Current Geopolitical Environment" and in Part II, Item 1A, Risk Factors, "We are subject to governmental export and import requirements that could subject us to liability and restrict our ability to sell our products and services, which could impair our ability to compete in international markets" for further discussion of the impact of Trade Restrictions, including export control regulations and geopolitical events, on Synopsys.
While our time-based model provides stability to our business, operating results and overall financial position, the broader implications of these macroeconomic or geopolitical events, particularly in the long term, remain uncertain. Further, the negative impact of these events or disruptions may be deferred due to our business model. See Part II, Item 1A, Risk Factors, “Uncertainty in the macroeconomic environment, and its potential impact on the semiconductor and electronics industries, may negatively affect our business, operating results and financial condition” and "Our operating results may fluctuate in the future, which may adversely affect our stock price" for further discussion of the impact of global economic uncertainty on our business, operations and financial condition and potential fluctuations in our operating results, respectively.
Impact of Global Trade Policy and the Current Geopolitical Environment
We are actively monitoring changes to global trade policy, such as changes to U.S. Export Regulations (as defined below) and developments related to the tariffs enacted by the U.S. government. Beginning in fiscal 2025, the U.S. government has imposed a number of new and higher U.S. tariffs on imports from countries around the world. Certain countries responded to the U.S. tariffs by imposing or threatening retaliatory tariffs. There may be additional changes to tariffs or new tariffs and other aspects of global trade policy in fiscal 2026 in the U.S. and other countries due to global trade negotiations and other factors. These changes in global trade policy have not had a material impact on our business, operating results or financial condition to date.
The Bureau of Industry and Security of the U.S. Department of Commerce (BIS) has continued to publish changes to U.S. export control regulations (the U.S. Export Regulations), including, among other things, the inclusion of certain Chinese technology companies on the Entity List, restrictions on the export of electronic computer-aided design (ECAD) software specially designed for the development of certain ICs, as well as controls on ECAD software for advanced semiconductor packaging involving multiple chips or chiplets, and certain other restrictions on China’s access to certain semiconductor and advanced computing technology. U.S.-China relations remain fluid, in particular with respect to trade policy and export restrictions relating to dual-use technologies. China export control restrictions, including certain BIS restrictions that were imposed in the third quarter of 2025 and
subsequently rescinded as disclosed in our prior filings, negatively impacted our business in China, including in our Design IP segment, and may continue to impact design starts or other aspects of our business in China in the future. The evolving nature of U.S. Export Regulations, including the potential for new and expanded license requirements of this or similar nature, creates uncertainty regarding the current and future impacts on our business. We anticipate additional changes to the U.S. Export Regulations or other U.S. or non-U.S. export, sanctions, or similar trade requirements (collectively, the Trade Restrictions) in the future, but we cannot forecast the scope or timing of such changes, nor the impact on our business. We will continue to monitor such developments, including potential additional Trade Restrictions, new or expanded license requirements, and other regulatory or policy changes by the U.S. and foreign governments.
For more on risks related to government export and import restrictions such as the U.S. government’s Entity List and other U.S. Export Regulations, see Part II, Item 1A, Risk Factors, “We are subject to governmental export and import requirements that could subject us to liability and restrict our ability to sell our products and services, which could impair our ability to compete in international markets.”
We are also monitoring other geopolitical pressures around the world, including, among others, changes in China-Taiwan and U.S.-China relations, the conflicts in Ukraine and the Middle East and other regional or global military conflicts or instability. Any significant disruption caused by these or other geopolitical pressures or conflicts could materially affect our employees, business, operating results, financial condition or customers in those regions of the world. For example, Synopsys has employees, operations, customers and strategic partners in the Middle East. While we are actively monitoring the ongoing conflicts, they have not had a material impact on our business, operating results or financial condition to date.
See Part II, Item 1A, Risk Factors for further discussion of the impact of global economic and geopolitical uncertainty on our business, operations and financial condition.
Business Segments
Design Automation. This segment includes our advanced silicon design, verification products and services, and Ansys products, and system integration products and services. This segment also includes digital, custom and field programmable gate array (FPGA) integrated circuit (IC) design software, verification software and hardware products, and manufacturing software products. Designers use our electronic design automation (EDA) products to accelerate and automate the chip design process, reduce errors and enable more powerful and robust designs, with improved productivity for faster time to market. Engineers use our S&A solutions to virtually test and optimize designs across various physics domains, such as structural analysis, thermal analysis, and computational fluid dynamics (CFD).
Design IP. This segment includes our logic libraries, embedded memories, wired interface IP, memory interface IP, security IP, and embedded processors that serve companies primarily in the semiconductor and electronics industries. We are a leading provider of high-quality, silicon-proven IP solutions for system-on-chips (SoCs). This includes IP that has been optimized to address specific application requirements for the mobile, automotive, digital home, Internet of Things and AI/data center markets, enabling designers to quickly develop SoCs in these areas.
Critical Accounting Estimates
A critical accounting estimate is defined as one that has a material impact on our financial condition and results of operations and requires us to make difficult, complex or subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain. Where applicable, we base these estimates and assumptions on historical experience and evaluate them on an ongoing basis to ensure that they remain reasonable under current conditions. Actual results could differ from those estimates.
We believe the critical accounting policies that reflect more significant judgments and estimates used in the preparation of our consolidated financial statements regarding critical accounting estimates are Revenue Recognition and Business Combinations. There have been no material changes in our critical accounting estimates during the six months ended April 30, 2026 since our Annual Report for fiscal 2025.
Results of Operations
Our results of operations for the three and six months ended April 30, 2026 reflect the inclusion of Ansys' results of operations. As discussed above, we completed the Ansys Merger on July 17, 2025 and therefore our results of operations for the three and six months ended April 30, 2025 do not include Ansys' results of operations for such time periods, impacting the period comparisons discussed below.
Revenue
Our revenues are generated from two business segments: the Design Automation segment and the Design IP segment. See Note 17. Segment Disclosure of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for more information about our reportable segments and revenue by geographic regions.
Further disaggregation of the revenues into various products and services within these two segments is summarized as follows:
Design Automation Segment
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EDA solutions include digital, custom and FPGA IC design software, verification software and hardware products, Ansys semiconductor products, system integration products and services, and obligations to provide unspecified updates and support services. EDA products and services are typically sold through Technology Subscription License (TSL) arrangements that grant customers the right to access and use all of the licensed products at the outset of an arrangement; software updates are generally made available throughout the entire term of the arrangement. The duration of our TSL contracts is generally two to three years, though it may vary for specific arrangements. We have concluded that the software licenses in TSL contracts are not distinct from the obligation to provide unspecified software updates to the licensed software throughout the license term, because the multiple software licenses and support represent inputs to a single, combined offering, and timely, relevant software updates are integral to maintaining the utility of the software licenses. We recognize revenue for the combined performance obligation under TSL contracts ratably over the term of the license.
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In the case of arrangements involving the sale of hardware products, we generally have two performance obligations. The first performance obligation is to transfer the hardware product, which includes software integral to the functionality of the hardware product. The second performance obligation is to provide maintenance on the hardware and its embedded software, which includes rights to technical support, hardware repairs and software updates that are all provided over the same term and have the same time-based pattern of transfer to the customer. The portion of the transaction price allocated to the hardware product is generally recognized as revenue at the time of shipment because the customer obtains control of the product at that point in time. We have concluded that control generally transfers at that point in time because the customer has the ability to direct the use of the asset and an obligation to pay for the hardware. The portion of the transaction price allocated to the maintenance obligation is recognized as revenue ratably over the maintenance term.
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S&A solutions allow engineers to virtually test and optimize designs across various physics domains, such as structural analysis, thermal analysis, and CFD. S&A software solutions are offered as subscription solutions and also as perpetual licenses. Software subscription arrangements include bundles of time-based software licenses with support services, which includes rights to technical support and software updates that are provided over the support term and are transferred to the customer over time. In such subscription arrangements, the updates to time-based software licenses are not considered integral to maintaining the utility of the software. We consider the license and support services as separate performance obligations. In these instances, we allocate the total consideration received for the revenue arrangement to the separate performance obligations based on the standalone selling prices of the time-based software license and support service. The time-based software license revenue is presented as upfront products revenue, recognized at a point of time upon the later of the delivery date or the beginning of the license period, and the revenue related to the support service is presented as maintenance and service revenue and is recognized over the term of the arrangement. Perpetual license arrangements typically include a perpetual license sold with support services, which includes a stand-ready obligation to provide technical support and software updates over the support term. We allocate the total consideration received for the bundled perpetual and support service arrangements based on the standalone selling prices of the perpetual license and support service. Revenue from perpetual licenses is presented as upfront product revenue and is
recognized at a point in time upon the later of the delivery date or the beginning of the license period. Revenue from support service is classified as maintenance and service revenue and is recognized ratably over the term of the contract, as we satisfy the support service performance obligation. For our reseller business, we evaluate whether we are the principal or agent for reporting purposes. Beginning in the second quarter of fiscal 2026, we have enhanced our channel partner arrangements to improve oversight and pricing visibility. Specifically, we now have visibility into end-customer pricing, improved delivery control over key distributors, and are able to provide routine maintenance to the end customers. As a result, we report our revenue from reseller arrangements on a gross basis beginning in the second quarter of fiscal 2026.
- Revenue from professional service contracts is recognized over time, generally using costs incurred or hours expended to measure progress. We have a history of reasonably estimating project status and the costs necessary to complete projects. A number of internal and external factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes.
Design IP Segment
- Design IP includes our logic libraries, embedded memories, wired interface IP, memory interface IP, security IP, and embedded processors. These arrangements generally have two performance obligations which consist of transferring of the licensed IP and providing related support, which includes rights to technical support and software updates that are provided over the support term and are transferred to the customer over time. Revenue allocated to the IP licenses is recognized at a point in time upon the later of the delivery date or the beginning of the license period, and revenue allocated to support is recognized over the support term. Royalties are recognized as revenue in the quarter in which the applicable customer sells its products that incorporate our IP. Payments for IP contracts are generally received upon delivery of the IP. Revenue related to the customization of certain IP is recognized over time, generally using costs incurred or hours expended to measure progress.
Our customer arrangements can involve multiple products and various license rights, and our customers negotiate with us over many aspects of these arrangements. For example, they generally request a broader portfolio of solutions, support and services and seek more favorable terms such as expanded license usage, future purchase rights and other unique rights at an overall lower total cost. No single factor typically drives our customers’ buying decisions, and we compete on all fronts to serve customers in highly competitive markets. Customers generally negotiate the total value of the arrangement rather than just unit pricing or volumes.
Total Revenue
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| Design Automation | $ | 1,821.8 | $ | 1,122.3 | $ | 699.5 | 62 | % | |||||||||||||||
| Design IP | 454.2 | 482.0 | (27.8) | (6) | % | ||||||||||||||||||
| Total | $ | 2,276.0 | $ | 1,604.3 | $ | 671.7 | 42 | % | |||||||||||||||
| Six months ended | |||||||||||||||||||||||
| Design Automation | $ | 3,823.6 | $ | 2,142.5 | $ | 1,681.1 | 78 | % | |||||||||||||||
| Design IP | 861.2 | 917.1 | (55.9) | (6) | % | ||||||||||||||||||
| Total | $ | 4,684.8 | $ | 3,059.6 | $ | 1,625.2 | 53 | % |
Our revenues are subject to fluctuations, primarily due to customer requirements including customer demand, timing requirements and the value of contract renewals. For example, we experience fluctuations in our revenues due to factors such as the timing of IP product sales, Flexible Spending Account (FSA) drawdowns, royalties, and hardware products sales. As revenues from sales of IP products, hardware products and S&A product licenses are recognized upfront, customer demand and timing requirements for such IP products, hardware products and S&A product licenses could result in increased variability of our total revenues.
Contracted but unsatisfied or partially unsatisfied performance obligations (backlog) were $11.0 billion as of April 30, 2026, which includes $1.8 billion in non-cancellable FSA commitments from customers where actual product
selection and quantities of specific products or services are to be determined by customers at a later date. We have elected to exclude future sales-based royalty payments from the remaining performance obligations. Approximately 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.
The amount and composition of unsatisfied performance obligations will fluctuate period to period. We do not believe the amount of unsatisfied performance obligations is indicative of future sales or revenue, or that such obligations at the end of any given period correlates with actual sales performance of a particular geography or particular products and services. For more information regarding our revenue during the three and six months ended April 30, 2026, including our contract balances as of such date, see Note 5. Revenue of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report*.*
The increase in total revenues for the three and six months ended April 30, 2026 compared to the same periods in fiscal 2025 was primarily due to Ansys' contribution of $652.4 million and $1.5 billion in revenue, respectively, for the three and six months ended April 30, 2026, including a $12.5 million increase due to the accounting change in Ansys' channel partner business, and strength across our business, partially offset by weakness in our Design IP segment.
For a discussion of revenue by geographic areas, see Note 17. Segment Disclosure of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report.
Time-Based Products Revenue
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | $ | 945.6 | $ | 828.3 | $ | 117.3 | 14 | % | |||||||||||||||
| Percentage of total revenue | 42 | % | 52 | % | |||||||||||||||||||
| Six months ended | $ | 1,897.2 | $ | 1,656.6 | $ | 240.6 | 15 | % | |||||||||||||||
| Percentage of total revenue | 41 | % | 54 | % |
The increase in time-based products revenue for the three and six months ended April 30, 2026 compared to the same periods in fiscal 2025 was primarily attributable to Ansys' contribution of $78.7 million and $157.1 million in time-based products revenue, respectively for the three and six months ended April 30, 2026, and an increase in TSL license revenue from arrangements booked in prior periods.
Upfront Products Revenue
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | $ | 546.3 | $ | 510.7 | $ | 35.6 | 7 | % | |||||||||||||||
| Percentage of total revenue | 24 | % | 32 | % | |||||||||||||||||||
| Six months ended | $ | 1,287.8 | $ | 878.8 | $ | 409.0 | 47 | % | |||||||||||||||
| Percentage of total revenue | 27 | % | 29 | % |
Changes in upfront products revenue are generally attributable to normal fluctuations in the extent and timing of customer requirements, which can drive the amount of upfront orders and revenue in any particular period.
The increase in upfront products revenue for the three and six months ended April 30, 2026 compared to the same periods in fiscal 2025 was primarily due to Ansys' contribution of $149.3 million and $532.3 million, respectively for the three and six months ended April 30, 2026 in upfront products revenue, partially offset by a decrease in license revenue due to timing of customer requirements for IP products and the Optical Solutions Group divestiture.
Upfront products revenue as a percentage of total revenue will likely fluctuate based on the timing of IP, hardware and S&A product sales. Such fluctuations will continue to be impacted by the timing of shipments and FSA drawdowns due to customer requirements.
Maintenance and Service Revenue
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| Maintenance revenue | $ | 539.9 | $ | 117.8 | $ | 422.1 | 358 | % | |||||||||||||||
| Professional service and other revenue | 244.2 | 147.4 | 96.8 | 66 | % | ||||||||||||||||||
| Total | $ | 784.1 | $ | 265.2 | $ | 518.9 | 196 | % | |||||||||||||||
| Percentage of total revenue | 34 | % | 16 | % | |||||||||||||||||||
| Six months ended | |||||||||||||||||||||||
| Maintenance revenue | $ | 1,077.6 | $ | 235.0 | $ | 842.6 | 359 | % | |||||||||||||||
| Professional service and other revenue | 422.2 | 289.2 | 133.0 | 46 | % | ||||||||||||||||||
| Total | $ | 1,499.8 | $ | 524.2 | $ | 975.6 | 186 | % | |||||||||||||||
| Percentage of total revenue | 32 | % | 17 | % |
The increase in maintenance revenue for the three and six months ended April 30, 2026 compared to the same periods in fiscal 2025 was primarily due to an increase in the volume of arrangements that include maintenance largely due to Ansys' contribution of $402.9 million and $807.3 million in maintenance revenue, respectively, for the three and six months ended April 30, 2026.
The increase in professional service and other revenue for the three and six months ended April 30, 2026 compared to the same periods in fiscal 2025 was primarily due to Ansys' contribution of $21.5 million and $41.3 million in professional service and other revenue, respectively, for the three and six months ended April 30, 2026 and the timing of IP customization projects.
Cost of Revenue
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| Cost of products revenue | $ | 232.9 | $ | 216.2 | $ | 16.7 | 8 | % | |||||||||||||||
| Cost of maintenance and service revenue | 148.6 | 94.4 | 54.2 | 57 | % | ||||||||||||||||||
| Amortization of acquired intangible assets | 248.4 | 7.7 | 240.7 | 3,126 | % | ||||||||||||||||||
| Total | $ | 629.9 | $ | 318.3 | $ | 311.6 | 98 | % | |||||||||||||||
| Percentage of total revenue | 28 | % | 20 | % | |||||||||||||||||||
| Six months ended | |||||||||||||||||||||||
| Cost of products revenue | $ | 475.3 | $ | 385.0 | $ | 90.3 | 23 | % | |||||||||||||||
| Cost of maintenance and service revenue | 295.3 | 187.0 | 108.3 | 58 | % | ||||||||||||||||||
| Amortization of acquired intangible assets | 496.6 | 16.3 | 480.3 | 2,947 | % | ||||||||||||||||||
| Total | $ | 1,267.2 | $ | 588.3 | $ | 678.9 | 115 | % | |||||||||||||||
| Percentage of total revenue | 27 | % | 19 | % |
Our cost of revenue is comprised of three categories: cost of products revenue, cost of maintenance and service revenue, and amortization of acquired intangible assets.
Cost of products revenue. Cost of products revenue includes costs related to products sold and software licensed, hardware-related costs including inventory provisions, allocated operating costs related to product support and distribution, and royalties paid to third-party vendors.
Cost of maintenance and service revenue. Cost of maintenance and service revenue includes costs to deliver our maintenance services, such as hotline and on-site support, production services and documentation of maintenance updates.
Amortization of acquired intangible assets. Amortization of acquired intangible assets, included in cost of revenue, consists of the amortization of core/developed technology and certain contract rights intangible assets related to acquisitions.
The increase in costs of products revenue and costs of maintenance and service revenue for the three months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to increases in employee-related costs as a result of headcount increases from the Ansys Merger, which contributed $25.9 million, $16.1 million in costs to fulfill IP consulting arrangements, and $10.2 million in IT and facility costs. The increase in amortization of acquired intangible assets for the three months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to an increase of $242.3 million in connection with the Ansys Merger.
The increase in costs of products revenue and costs of maintenance and service revenue for the six months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to increases in employee-related costs as a result of headcount increases from the Ansys Merger, which contributed $54.6 million, $31.0 million in costs to fulfill IP consulting arrangements, $22.3 million in IT and facility costs and $22.3 million in hardware-related costs including inventory provisions. The increase in amortization of acquired intangible assets for the six months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to an increase of $484.4 million in connection with the Ansys Merger.
Operating Expenses
Research and Development
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | $ | 700.1 | $ | 554.0 | $ | 146.1 | 26 | % | |||||||||||||||
| Percentage of total revenue | 31 | % | 35 | % | |||||||||||||||||||
| Six months ended | $ | 1,415.1 | $ | 1,107.2 | $ | 307.9 | 28 | % | |||||||||||||||
| Percentage of total revenue | 30 | % | 36 | % |
The increase in research and development expenses for the three months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to increases of $116.2 million in employee-related costs due to headcount increases from the Ansys Merger, $36.7 million in IT and facility costs, and $20.5 million in the change in the fair value of our executive deferred compensation plan assets, partially offset by a decrease in employee-related costs due to headcount decreases as a result of the 2026 Plan (as defined in Restructuring Charges below).
The increase in research and development expenses for the six months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to increases of $243.2 million in employee-related costs due to headcount increases from the Ansys Merger, $74.3 million in IT and facility costs and $15.8 million in the change in the fair value of our executive deferred compensation plan assets, partially offset by a decrease in employee-related costs due to headcount decreases as a result of the 2026 Plan.
Sales and Marketing
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | $ | 382.0 | $ | 215.0 | $ | 167.0 | 78 | % | |||||||||||||||
| Percentage of total revenue | 17 | % | 13 | % | |||||||||||||||||||
| Six months ended | $ | 778.4 | $ | 424.2 | $ | 354.2 | 83 | % | |||||||||||||||
| Percentage of total revenue | 17 | % | 14 | % |
The increase in sales and marketing expenses for the three months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to increases of $123.8 million in employee-related costs due to headcount increases from the Ansys Merger, $19.5 million in IT and facility costs and $7.3 million in the change in the fair value of our executive deferred compensation plan assets, partially offset by a decrease in employee-related costs due to headcount decreases as a result of the 2026 Plan.
The increase in sales and marketing expenses for the six months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to increases of $267.6 million in employee-related costs due to headcount increases from the Ansys Merger, $38.9 million in IT and facility costs and $6.9 million in the change in the fair value of our executive deferred compensation plan assets, offset in part by a decrease in employee-related costs due to headcount decreases as a result of the 2026 Plan.
General and Administrative
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | $ | 172.4 | $ | 136.5 | $ | 35.9 | 26 | % | |||||||||||||||
| Percentage of total revenue | 8 | % | 9 | % | |||||||||||||||||||
| Six months ended | $ | 355.2 | $ | 303.6 | $ | 51.6 | 17 | % | |||||||||||||||
| Percentage of total revenue | 8 | % | 10 | % |
The increase in general and administrative expenses for the three months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to increases of $23.6 million in employee-related costs due to headcount increases from the Ansys Merger, $4.3 million in the change in the fair value of our executive deferred compensation plan assets, $3.9 million in depreciation and maintenance expense and $2.2 million in IT and facility costs, partially offset by a decrease of $12.0 million in consulting and other professional fees.
The increase in general and administrative expenses for the six months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to increases of $63.3 million in employee-related costs due to headcount increases from the Ansys Merger, $7.3 million in depreciation and maintenance expense and $4.2 million in IT and facility costs, partially offset by a decrease of $54.0 million in consulting and other professional fees.
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets, included in operating expenses, consists of the amortization of trademarks, trade names and customer relationships intangible assets related to acquisitions.
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | 155.3 | 4.0 | 151.3 | 3,783 | % | ||||||||||||||||||
| Percentage of total revenue | 7 | % | — | % | |||||||||||||||||||
| Six months ended | 311.3 | 8.0 | 303.3 | 3,791 | % | ||||||||||||||||||
| Percentage of total revenue | 7 | % | — | % |
The increase in amortization of acquired intangible assets for the three and six months ended April 30, 2026 compared to the same periods in fiscal 2025 was primarily due to amortization expense related to intangible assets acquired from the Ansys Merger. See Note 6. Goodwill and Intangible Assets of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for a schedule of future amortization amounts.
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. We recorded restructuring charges of $115.9 million and $234.2 million for the three and six months ended April 30, 2026, respectively. See Note 10. Restructuring Charges of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for more information.
Interest Expense
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | $ | (133.4) | $ | (94.3) | $ | (39.1) | 41 | % | |||||||||||||||
| Percentage of total revenue | (6) | % | (6) | % | |||||||||||||||||||
| Six months ended | $ | (296.1) | $ | (105.5) | $ | (190.6) | 181 | % | |||||||||||||||
| Percentage of total revenue | (6) | % | (3) | % |
The increase in interest expense for the three months ended April 30, 2026 as compared to the same period in fiscal 2025 was primarily due to interest on the Senior Notes issued in the second quarter of fiscal 2025 in connection with the Ansys Merger.
The increase in interest expense for the six months ended April 30, 2026 as compared to the same period in fiscal 2025 was primarily due to interest on the Senior Notes issued in the second quarter of fiscal 2025 and the borrowing under the Term Loan Agreement in the third quarter of fiscal 2025 in connection with the Ansys Merger. See Note 11. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further detail on our debt obligations*.*
Other Income (Expense), Net
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| Interest income | $ | 12.9 | $ | 89.9 | $ | (77.0) | (86) | % | |||||||||||||||
| Gains (losses) on assets related to deferred compensation plan | 13.8 | (20.1) | 33.9 | (169) | % | ||||||||||||||||||
| Foreign currency exchange losses | (1.5) | (0.2) | (1.3) | 650 | % | ||||||||||||||||||
| Loss on sale of strategic investments | — | (2.4) | 2.4 | (100) | % | ||||||||||||||||||
| Gain on sale of building | — | 51.4 | (51.4) | (100) | % | ||||||||||||||||||
| Other, net | 7.0 | (4.5) | 11.5 | (256) | % | ||||||||||||||||||
| Total | $ | 32.2 | $ | 114.1 | $ | (81.9) | (72) | % | |||||||||||||||
| Six months ended | |||||||||||||||||||||||
| Interest income | $ | 30.3 | $ | 125.6 | $ | (95.3) | (76) | % | |||||||||||||||
| Gains (losses) on assets related to deferred compensation plan | 27.6 | (0.5) | 28.1 | (5,620) | % | ||||||||||||||||||
| Foreign currency exchange losses | (7.4) | (0.1) | (7.3) | 7,300 | % | ||||||||||||||||||
| Loss on sale of strategic investments | — | (2.4) | 2.4 | (100) | % | ||||||||||||||||||
| Gain on sale of building | — | 51.4 | (51.4) | (100) | % | ||||||||||||||||||
| Other, net | 20.4 | (9.5) | 29.9 | (315) | % | ||||||||||||||||||
| Total | $ | 70.9 | $ | 164.5 | $ | (93.6) | (57) | % |
The decrease in other income (expense), net for the three and six months ended April 30, 2026 as compared to the same periods in fiscal 2025 was primarily due to the gain recognized from the sale of an office building for the three and six months ended April 30, 2025, lower interest income as a result of lower average cash balances, partially offset by an increase in the change in fair value of our executive deferred compensation plan assets.
Segment Operating Results
We do not allocate certain operating expenses managed at a consolidated level to our reportable segments. These unallocated expenses consist primarily of amortization of acquired intangible assets, stock-based compensation expense, changes in the fair value of deferred compensation plan, restructuring charges, and acquisition/divestiture related items. See Note 17. Segment Disclosure of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for more information.
Design Automation Segment
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| Adjusted operating income | $ | 789.1 | $ | 458.8 | $ | 330.3 | 72 | % | |||||||||||||||
| Adjusted operating margin | 43 | % | 41 | % | 2 | % | 5 | % | |||||||||||||||
| Six months ended | |||||||||||||||||||||||
| Adjusted operating income | $ | 1,736.6 | $ | 863.4 | $ | 873.2 | 101 | % | |||||||||||||||
| Adjusted operating margin | 45 | % | 40 | % | 5 | % | 13 | % |
The increase in adjusted operating income for the three and six months ended April 30, 2026 compared to the same periods in fiscal 2025 was primarily due to an increase in revenue from arrangements booked in prior periods.
Design IP Segment
| April 30, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| Adjusted operating income | $ | 110.7 | $ | 150.5 | $ | (39.8) | (26) | % | |||||||||||||||
| Adjusted operating margin | 24 | % | 31 | % | (7) | % | (23) | % | |||||||||||||||
| Six months ended | |||||||||||||||||||||||
| Adjusted operating income | $ | 176.8 | $ | 277.1 | $ | (100.3) | (36) | % | |||||||||||||||
| Adjusted operating margin | 21 | % | 30 | % | (9) | % | (30) | % |
The decrease in adjusted operating income for the three and six months ended April 30, 2026 compared to the same periods in fiscal 2025 was primarily due to lower revenue as we continue to reallocate resources to the highest growth opportunities.
Income Taxes
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 foreign-derived intangible income deduction. The capital loss on the sale of our ownership in OpenLight was included in the first quarter of 2025.
See Note 19. Income Taxes of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion.
Liquidity and Capital Resources
Our principal sources of liquidity are funds generated from our business operations and funds that may be drawn down under our revolving credit facility.
As of April 30, 2026, we held $2.5 billion in cash, cash equivalents and short-term investments. We also held $4.3 million in restricted cash primarily associated with deposits for office leases and employee loan programs. Our cash equivalents consisted primarily of taxable money market mutual funds, time deposits and highly liquid investments with maturities of three months or less. Our short-term investments include U.S. government and municipal obligations, and investment-grade available-for-sale debt with an overall weighted-average credit rating of approximately AA.
As of April 30, 2026, approximately $1.5 billion of our cash and cash equivalents were domiciled in various foreign jurisdictions. We have provided for foreign withholding taxes on the undistributed earnings of certain of our foreign subsidiaries to the extent such earnings are no longer considered to be indefinitely reinvested in the operations of those subsidiaries.
Our debt and liquidity needs increased as a result of completing the Ansys Merger. We funded the cash consideration in the Ansys Merger (the Cash Consideration) from the issuance of the Senior Notes and the borrowings under the Term Loan Agreement. See Note 11. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion.
During the second quarter of fiscal 2025, we entered into a deferred payment agreement to defer the cash settlement of the 2025 Rate Lock Agreements over a period of 5.5 years. As of April 30, 2026, we had $99.5 million outstanding balance under the deferred payment agreement related to the 2025 Rate Lock agreements. See Note 8. Financial Assets and Liabilities of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion.
There were no other significant changes to our material cash requirements, including contractual and other obligations, as presented in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report.
Based on past performance and current expectations, we believe that our existing cash, cash equivalents and short-term investments and sources of liquidity, as well as the debt financing, will be sufficient to satisfy our cash requirements, including repayment of outstanding debt, over the next twelve-month period and beyond. Our future cash requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of our spending to support our research and development efforts, and our investments in or acquisitions of businesses, applications or technologies.
The following sections discuss changes in our condensed consolidated statements of cash flows and other commitments of our liquidity and capital resources during the six months ended April 30, 2026.
Cash Flows
| Six Months Ended April 30, | |||||||||||||||||
| 2026 | 2025 | $ Change | |||||||||||||||
| (dollars in millions) | |||||||||||||||||
| Cash provided by operating activities | $ | 1,485.8 | $ | 207.9 | $ | 1,277.9 | |||||||||||
| Cash provided by (used in) investing activities | $ | (89.4) | $ | 54.0 | $ | (143.4) | |||||||||||
| Cash provided by (used in) financing activities | $ | (1,864.1) | $ | 9,954.6 | $ | (11,818.7) |
Cash Provided by Operating Activities
We expect cash from our operating activities to fluctuate as a result of a number of factors, including the timing of billings and collections, operating results, and the timing and amount of tax and other liability payments. Cash provided by operations is dependent primarily upon the payment terms of our license agreements. We generally receive cash from upfront arrangements much sooner than from time-based products revenue, in which the license fee is typically paid either quarterly or annually over the term of the license.
The increase in net cash provided by operating activities for the six months ended April 30, 2026 compared to the same period in fiscal 2025 was primarily due to contributions from Ansys, organic growth in our business (excluding Ansys), higher accounts receivable collections, and the non-recurring unrealized loss from settlement of the interest rate treasury lock of $121.6 million in the second quarter of fiscal 2025, partially offset by higher disbursements for operations, including vendor and tax payments, and lower net income of $560.9 million.
Cash Provided by (Used in) Investing Activities
Net cash used in investing activities was $89.4 million for the six months ended April 30, 2026 compared to net cash provided by investing activities of $54.0 million for the same period in fiscal 2025. The increase in cash used in investing activities was driven by net cash proceeds from the sale of an office building of $74.3 million in the second quarter of fiscal year 2025, proceeds of $70.1 million from the deferred consideration and final working capital adjustment payment received in connection with the Software Integrity Divestiture in the first half of fiscal 2025, and lower cash inflows of $6.4 million from the net proceeds from the purchases, sales and maturities of investments, partially offset by a decrease in the purchases of property and equipment of $6.8 million.
Cash Provided by (Used in) Financing Activities
Net cash used in financing activities was $1.9 billion for the six months ended April 30, 2026 compared to net cash provided by financing activities of $10.0 billion for the same period in fiscal 2025. In the first half of fiscal 2026, the cash used in financing activities consisted of the repayment of the remaining $3.5 billion of the Term Loans, purchases of treasury stock of $262.5 million and purchase of equity forward contract of $37.5 million in the second quarter of fiscal 2026, partially offset by net proceeds of $2.0 billion from the sale of our common stock pursuant to a securities purchase agreement with NVIDIA Corporation in the first quarter of fiscal 2026. In the first half of fiscal 2025, the cash provided by financing activities was primarily driven by the non-recurring net cash proceeds of $10.0 billion from our debt issuance.
Bridge Commitment Letter, Term Loan, Revolving Credit Facilities and Senior Notes
In January 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 the Ansys Merger, as well as the other transactions contemplated by the Merger Agreement. On the Acquisition Date, we reduced the total Bridge Commitment to $0.
In February 2024, we entered into a term loan facility credit agreement (the Term Loan Agreement) in connection with the financing of the Ansys Merger. In July 2025, we borrowed the full $4.3 billion available under the Term Loan Agreement to fund a portion of the Cash Consideration and to pay transaction fees, premiums and expenses related to the Ansys Merger. The Term Loan Agreement contains 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.
In March 2025, we issued $10.0 billion in aggregate principal amount of senior notes (the Senior Notes) with net proceeds of approximately $9.9 billion. The net proceeds of the Senior Notes were used to fund a portion of the Cash Consideration and to pay related transaction fees and expenses in the Ansys Merger. 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.
In February 2024, we entered into a Sixth Amendment Agreement, 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. 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, there was no outstanding balance under the Revolving Credit Agreement, and we were in compliance with all covenants thereunder.
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. As of April 30, 2026, we had $12.2 million outstanding balance under the agreement.
For additional information, see Note 11. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report.
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. The pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions, our debt repayment obligations, our stock price, and economic and market conditions.
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.
The IR Act was enacted in the United States on August 16, 2022. The IR Act imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. 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 April 30, 2026, this has not had any impact on our consolidated financial statements.
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