Synopsys SNPS · USD

Segment DisclosureSegment reporting is based upon the “management approach,” i.e., how management organizes our operating segments for which separate financial information is (1) available and (2) evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance. Our CODM is our CEO.We have two reportable segments: (1) Design Automation, which includes our advanced silicon design, verification products and services, 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 interface, foundation, security, and embedded processor IP, IP subsystems, and IP implementation services.We completed our assessment of our organizational structure after the Ansys Merger and concluded that Ansys is included within our Design Automation segment based on how our CODM evaluates the financial results in making operational decisions, allocating resources and assessing performance.The financial information provided to and used by the CODM to assist in making operational decisions, allocating resources, and assessing performance includes consolidated financial information as well as revenue, adjusted operating income, and adjusted operating margin information for the Design Automation, and Design IP segments, accompanied by disaggregated information relating to revenue by geographic region.The Software Integrity business constituted its own reportable segment under Topic 280. In accordance with applicable accounting guidance, the results of the Software Integrity business were presented as discontinued operations in the consolidated statements of income and, as such, have been excluded from both continuing operations and segment results for all periods presented. See Note 3. Discontinued Operations of the Notes to Consolidated Financial Statements in this Annual Report.

RevenueDisaggregated RevenueThe following table shows the percentage of revenue by product groups:Year Ended October 31,202520242023EDA62.0 %66.4 %69.2 %Design IP24.8 %31.1 %29.0 %Ansys10.7 %— %— %Other2.5 %2.5 %1.8 %Total100.0 %100.0 %100.0 %For additional information on our product groups and the revenue attributable to them by product type, refer to Part I, Item 1, Business in this Annual Report.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 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.A contract asset is recorded when revenue is recognized before we have the unconditional right to invoice or retains performance risk concerning that performance obligation. These contract assets transition to receivables when the rights become unconditional, generally upon the completion of a milestone. The contract assets listed below are included in prepaid and other current assets and other long-term assets in our consolidated balance sheets.Contract balances are as follows:As of October 31,20252024 (in thousands)Contract assets, net$1,222,029 $757,075 Unbilled receivables$45,528 $44,166 Deferred revenue$2,628,518 $1,732,568 Long-term contract assets were $336.4 million as of October 31, 2025.During fiscal 2025, we recognized revenue of $1.5 billion that was included in the deferred revenue balance as of October 31, 2024, including previously unfulfilled contracts that have expired and are no longer subject to an implied promise to provide future services. During fiscal 2024, we recognized revenue of $1.5 billion, that was included in the deferred revenue balance as of October 31, 2023, 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 $11.4 billion as of October 31, 2025, which includes $2.

Income TaxesThe domestic and foreign components of our total income before provision for income taxes are as follows: Year Ended October 31, 202520242023 (in thousands)United States$983,195 $1,333,132 $1,144,410 Foreign409,947 180,726 161,060 Total income before provision for income taxes$1,393,142 $1,513,858 $1,305,470 The components of the provision (benefit) for income taxes are as follows: Year Ended October 31, 202520242023 (in thousands)Current:Federal$376,014 $345,859 $252,186 State25,041 19,808 23,042 Foreign118,696 110,021 22,869 519,751 475,688 298,097 Deferred:Federal(339,076)(312,677)(191,249)State(109,078)(39,164)(219)Foreign(15,606)(24,129)(16,441)(463,760)(375,970)(207,909)Provision (benefit) for income taxes$55,991 $99,718 $90,188 The provision (benefit) for income taxes differs from the taxes computed with the statutory federal income tax rate as follows: Year Ended October 31, 202520242023 (in thousands)Statutory federal tax$292,560 $317,912 $274,149 State tax (benefit), net of federal effect 26,897 48,393 438 Federal tax credits(64,818)(70,119)(60,500)Tax (benefit) on foreign earnings28,008 3,316 (17,571)Foreign-derived intangible income deduction(106,903)(104,835)(80,034)Tax settlements— — (23,752)Stock-based compensation20,583 (43,419)(39,995)Changes in valuation allowance(148,006)(57,371)29,631 Capital loss on the sale of investments(30,868)— — Acquisition costs17,877 — — Other20,661 5,841 7,822 Provision (benefit) for income taxes$55,991 $99,718 $90,188 On December 22, 2017, the Tax Cuts and Jobs Act (Tax Act) was enacted, which significantly changed prior U.S. tax law and includes numerous provisions that affect our business. Effective in our fiscal 2023 year, the Tax Act requires that research and development expenditures be capitalized and amortized instead of being deducted when incurred. Domestic research is capitalized over five years and foreign research is capitalized over fifteen years. Capitalization of research and development expenditures also results in a corresponding deferred tax benefit and decreased our effective tax rate due to increasing the foreign-derived intangible income deduction.We have provided for foreign withholding taxes on 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.

LeasesWe 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:Year Ended October 31,202520242023(in thousands)Operating lease expense (1)$117,722 $92,222 $90,680 Variable lease expense (2)32,389 23,835 20,395 Total lease expense$150,111 $116,057 $111,075 (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:Year Ended October 31,202520242023(in thousands)Cash paid for amounts included in the measurement of operating lease liabilities(1)$115,481 $99,905 $88,983 ROU assets obtained in exchange for operating lease liabilities(2)$153,178 $100,480 $101,390 (1) Cash paid for amounts included in the measurement of operating lease liabilities included cash from discontinued operations of $5.2 million and $5.7 million in fiscal 2024 and 2023.(2) ROU assets obtained in exchange for operating lease liabilities included ROU assets from discontinued operations of $2.2 million and $1.2 million in fiscal 2024 and 2023.Lease term and discount rate information related to our operating leases as of the end of the period presented are as follows:As of October 31,20252024Weighted-average remaining lease term (in years)6.887.59Weighted-average discount rate3.40 %2.

Business CombinationsFiscal 2025On July 17, 2025, we completed our acquisition of 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. Pursuant to the Merger Agreement, Merger Sub merged with and into Ansys (the Ansys Merger), with Ansys surviving the Ansys Merger as a wholly owned subsidiary of Synopsys. At the effective time of the Ansys Merger (the Effective Time), each share of common stock, par value $0.01 per share, of Ansys (Ansys Common Stock) issued and outstanding immediately prior to the Effective Time (subject to certain exceptions) was converted into the right to receive (i) 0.3399 (the Exchange Ratio) of a share of common stock, par value $0.01 per share, of Synopsys (Synopsys Common Stock) (in the aggregate, the Stock Consideration) and (ii) $199.91 in cash, without interest (the Per Share Cash Amount, and in the aggregate, the Cash Consideration) (the Stock Consideration and the Cash Consideration, collectively, the Merger Consideration). In addition, we assumed certain outstanding Ansys options and other outstanding unvested Ansys equity awards held by continuing Ansys employees. The aggregate purchase consideration was approximately $34.9 billion, consisting of cash of $17.6 billion, 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 10. Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities of the Notes to Consolidated Financial Statements in this Annual Report.

We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These risks include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to employees or customers; violation of privacy or security laws and other litigation and legal risk; and reputational risks. We maintain a cybersecurity program and incident response plan to coordinate the activities we take to protect against, detect, respond to and remediate cybersecurity incidents, as such term is defined in Item 106(a) of Regulation S-K, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.We have implemented cybersecurity processes, technologies, and controls to aid in our efforts to identify, assess, and manage material risks, as well as to test and improve our incident response plan. Our approach includes, among other things:•Security and privacy reviews designed to identify risks from new features, software, suppliers, and vendors; • A vulnerability management program designed to identify software vulnerabilities;•A variety of tools designed to monitor our networks, systems, and data for suspicious activity;•An internal red team program that simulates cyber threats, enhancing our ability to fix vulnerabilities before they are exploited by threat actors;•A threat intelligence program designed to model and research our adversaries; •Products and services to structure, test, and assess the rigor of our software security practices;•A variety of privacy, cybersecurity, and incident response trainings and simulations, including mandatory yearly training for all employees, additional training for all Information Technology and Information Security personnel, and regular controlled penetration testing and cyber incident exercises to test the robustness of our data security protections and incident response readiness; •For suppliers and service providers, pre-engagement risk-based diligence, contractual security and notification provisions, and ongoing monitoring as appropriate; and•Maintaining cyber liability insurance that covers certain liabilities related to data breaches and related incidents.

DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive Proxy Statement relating to the registrant’s 2026 Annual Meeting of Stockholders, scheduled to be held on April 16, 2026, are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. Except as expressly incorporated by reference, the registrant’s Proxy Statement shall not be deemed to be part of this report.

ContingenciesLegal Proceedings We are subject to routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate outcome of any litigation is often uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial condition. We regularly review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount is estimable, we accrue a liability for the estimated loss. Legal proceedings are inherently uncertain and as circumstances change, it is possible that the amount of any accrued liability may increase, decrease, or be eliminated.We have determined that 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 MattersWe 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, refer to Note 17. Income Taxes of the Notes to Consolidated Financial Statements in this Annual Report.