Synopsys (SNPS) 8-K Synopsys Posts Financial Results for Second Quarter Fiscal Year 2023

Exhibit 99.1

PRESS RELEASE

INVESTOR CONTACT:

Trey Campbell

Synopsys, Inc.

650-584-4289

Synopsys-ir@synopsys.com

EDITORIAL CONTACT:

Jim Brady

Synopsys, Inc.

408-482-4719

jim.brady@synopsys.com

Synopsys Posts Financial Results for Second Quarter Fiscal Year 2023

Q2 FY 2023 Financial Highlights

• Revenue: $1.395 billion

• GAAP earnings per diluted share: $1.76

• Non-GAAP earnings per diluted share: $2.54

MOUNTAIN VIEW, Calif. – May 17, 2023 – Synopsys, Inc. (Nasdaq: SNPS) today reported results for its second quarter of fiscal year 2023. Revenue for the second quarter of fiscal year 2023 was $1.395 billion, compared to $1.279 billion for the second quarter of fiscal year 2022.

“Synopsys generated excellent financial results and operational execution in the second quarter. We exceeded all our guidance targets, while reaching another quarterly revenue record,” said Aart de Geus, Chair and CEO of Synopsys. “Our financial performance is the product of a relentless drive for technology innovation and years of building trust in our customer base. Our industry-leading AI-driven design platform, Synopsys.ai, unleashes our next wave of impact as our customers drive a groundswell of ‘smart, secure, and safe’ new products.”

“Exceptional execution across the company drove strong quarterly financial performance,” said Shelagh Glaser, CFO of Synopsys. “We have a resilient business model uncommon in software companies and remain confident in our business. We are raising our full year guidance and expect revenue growth of 14-15%, non-GAAP operating margin accretion of 150 basis points to 34.5%, and non-GAAP earnings per share growth of 21-22%.”

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GAAP Results

On a generally accepted accounting principles (GAAP) basis, net income for the second quarter of fiscal year 2023 was $272.9 million, or $1.76 per diluted share, compared to $294.8 million, or $1.89 per diluted share, for the second quarter of fiscal year 2022.

Non-GAAP Results

On a non-GAAP basis, net income for the second quarter of fiscal year 2023 was $393.3 million, or $2.54 per diluted share, compared to non-GAAP net income of $390.8 million, or $2.50 per diluted share, for the second quarter of fiscal year 2022.

For a reconciliation of net income, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see “GAAP to Non-GAAP Reconciliation” in the accompanying tables below.

Business Segments

Synopsys reports revenue and operating income in three segments: (1) Design Automation, which includes digital and custom integrated circuit (IC) design software, verification hardware and software products, manufacturing-related design products, field-programmable gate array (FPGA) design software, optical products, professional services, and other; (2) Design IP, which includes our Synopsys IP portfolio; and (3) Software Integrity, which includes solutions that test software code for security vulnerabilities and quality defects, as well as professional and managed services. Further information regarding these segments is provided at the end of this press release.

Financial Targets

Synopsys also provided its consolidated financial targets for the third quarter and full fiscal year 2023. These financial targets assume no further changes to export control restrictions or the current U.S. government “Entity List” restrictions. These targets constitute forward-looking statements and are based on current expectations. For a discussion of factors that could cause actual results to differ materially from these targets, see “Forward-Looking Statements” below.

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Third Quarter and Fiscal Year 2023 Financial Targets ⁽¹⁾

(in millions except per share amounts)

	Range for Three Months Ending						Range for Fiscal Year Ending
	July 31, 2023						October 31, 2023
	Low			High			Low			High
Revenue	$	1,465		$	1,495		$	5,790		$	5,830
GAAP Expenses	$	1,143		$	1,163		$	4,520		$	4,565
Non-GAAP Expenses	$	970		$	980		$	3,790		$	3,820
Non-GAAP Other Income (Expense)	$	—		$	2		$	4		$	8
Non-GAAP Tax Rate		16	%		16	%		16	%		16	%
Outstanding Shares (fully diluted)		155			158			155			158
GAAP EPS	$	1.88		$	1.99		$	7.44		$	7.60
Non-GAAP EPS	$	2.70		$	2.75		$	10.77		$	10.84
Operating Cash Flow								~ $1,650

(1) Synopsys’ third quarter of fiscal year 2023 and fiscal year 2023 will end on July 29, 2023 and October 28, 2023, respectively. For presentation purposes, we refer to the closest calendar month end.

For a reconciliation of Synopsys’ third quarter and fiscal year 2023 targets, including expenses, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see “GAAP to Non-GAAP Reconciliation” in the accompanying tables below.

Earnings Call Open to Investors

Synopsys will hold a conference call for financial analysts and investors today at 2:00 p.m. Pacific Time. A live webcast of the call will be available on Synopsys’ corporate website at www.synopsys.com. A webcast replay will also be available on the corporate website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the third quarter in August 2023. Synopsys will post copies of the prepared remarks on its website following today’s call. In addition, Synopsys makes additional information available in a financial supplement and corporate overview presentation, also posted on the corporate website.

Effectiveness of Information

The targets included in this press release, the statements made during the earnings conference call and the information contained in the financial supplement and the corporate overview presentation (available on Synopsys’ corporate website at www.synopsys.com) represent Synopsys’ expectations and beliefs as of May 17, 2023. Although this press release, copies of the prepared remarks made during the earnings conference call, the financial supplement, and the corporate overview presentation will remain available on Synopsys’ website through the date of the earnings call for the third quarter fiscal year 2023, their continued availability through such date does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys undertakes no duty and does not intend to update any forward-looking statement, whether as a result of new information or future events, or otherwise update, the targets given in this press release unless required by law.

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Availability of Final Financial Statements

Synopsys will include final financial statements for the second quarter of fiscal year 2023 in its quarterly report on Form 10-Q to be filed on or before June 8, 2023.

About Synopsys

Synopsys, Inc. (Nasdaq: SNPS) is the Silicon to Software^™ partner for innovative companies developing the electronic products and software applications we rely on every day. As an S&P 500 company, Synopsys has a long history of being a global leader in electronic design automation (EDA) and semiconductor IP and offers the industry’s broadest portfolio of application security testing tools and services. Whether you’re a system-on-chip (SoC) designer creating advanced semiconductors, or a software developer writing more secure, high-quality code, Synopsys has the solutions needed to deliver innovative products. Learn more at www.synopsys.com.

GAAP to Non-GAAP Reconciliation

Synopsys continues to provide all information required in accordance with GAAP, but acknowledges evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Accordingly, Synopsys presents non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Synopsys’ operating results in a manner that focuses on what Synopsys believes to be its core business operations and what Synopsys uses to evaluate its business operations and for internal planning and forecasting purposes. These non-GAAP measures may be different from non-GAAP measures used by other companies. Synopsys’ management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, superior to, or as a substitute for, financial information prepared in accordance with GAAP. Synopsys’ management believes it is useful for itself and investors to review, as applicable, both GAAP financial measures that include: (i) the amortization of acquired intangible assets, (ii) the impact of stock compensation, (iii) acquisition-related items, (iv) restructuring charges, (v) the effects of certain settlements, final judgments and loss contingencies related to legal proceedings, and (vi) the income tax effect of non-GAAP pre-tax adjustments; and the non-GAAP financial measures that exclude such information in order to assess the performance of Synopsys’ business operations and for planning and forecasting in subsequent periods.

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Synopsys utilizes an annual non-GAAP tax rate in calculating non-GAAP financial measures to provide better consistency across interim reporting periods by eliminating the effects of certain non-recurring and other period-specific items, which can vary in size and frequency and do not necessarily reflect Synopsys’ normal operations, and to more closely align its tax rate with its expected geographic earnings mix. This annual non-GAAP tax rate was based on an evaluation of Synopsys’ historical and projected mix of U.S. and international profit before tax, taking into account the impact of non-GAAP adjustments, U.S. tax law changes, as well as other factors such as our current tax structure, existing tax positions and expected recurring tax incentives.

Synopsys previously elected to maintain an annual non-GAAP tax rate of 18% for fiscal year 2023 given uncertainty surrounding further U.S. corporate tax law changes. Based on a re-evaluation of federal tax laws that require research and development expense to be capitalized commencing in Synopsys’ first quarter of fiscal year 2023, Synopsys elected to update its annual non-GAAP tax rate for fiscal year 2023 to 16% on February 17, 2023. Synopsys does not currently anticipate any additional significant changes to U.S. corporate tax law, its geographic earnings mix, or significant tax law changes in major jurisdictions where it operates that would result in further adjustment to its fiscal year 2023 annual non-GAAP tax rate.

When possible, Synopsys provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed below, as well as Item 2.02 of Synopsys’ Current Report on Form 8-K filed on May 17, 2023, for additional information about the measures Synopsys uses to evaluate its core business operations. Synopsys is unable to provide a reconciliation of certain non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis because doing so would not be possible without unreasonable effort due to, among other things, the potential variability and limited visibility of the excluded items. For the same reasons, Synopsys is unable to address the probable significance of the unavailable information.

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Reconciliation of Second Quarter Fiscal Year 2023 Results

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP net income and earnings per diluted share for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Second Quarter Fiscal Year 2023 Results⁽¹⁾

(unaudited and in thousands, except per share amounts)

	Three Months Ended April 30,						Six Months Ended April 30,
	2023			2022			2023			2022
GAAP net income attributed to Synopsys	$	272,910		$	294,781		$	544,446		$	608,468
Adjustments:
Amortization of intangible assets		23,449			21,367			47,827			43,727
Stock compensation		143,012			110,061			276,879			205,832
Acquisition-related items		2,711			4,023			5,306			6,100
Restructuring charges		4,140			311			44,999			12,057
Tax adjustments		(52,947	)		(39,703	)		(119,512	)		(108,456	)
Non-GAAP net income attributed to Synopsys	$	393,275		$	390,840		$	799,945		$	767,728
	Three Months Ended April 30,						Six Months Ended April 30,
	2023			2022			2023			2022
GAAP net income per diluted share attributed to Synopsys	$	1.76		$	1.89		$	3.51		$	3.88
Adjustments:
Amortization of intangible assets		0.15			0.14			0.31			0.28
Stock compensation		0.92			0.70			1.79			1.31
Acquisition-related items		0.02			0.03			0.03			0.04
Restructuring charges		0.03			—			0.29			0.08
Tax adjustments		(0.34	)		(0.26	)		(0.77	)		(0.69	)
Non-GAAP net income per diluted share attributed to Synopsys	$	2.54		$	2.50		$	5.16		$	4.90
Shares used in computing net income per diluted share amounts:		154,730			156,167			155,044			156,815

(1) Synopsys’ second quarter of fiscal year 2023 and 2022 ended on April 29, 2023 and April 30, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

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Reconciliation of 2023 Targets

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP targets for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Third Quarter Fiscal Year 2023 Targets ⁽¹⁾

(in thousands, except per share amounts)

	Range for Three Months Ending July 31, 2023
	Low			High
Target GAAP expenses	$	1,143,000		$	1,163,000
Adjustments:
Amortization of intangible assets		(25,000	)		(28,000	)
Stock compensation		(148,000	)		(155,000	)
Target non-GAAP expenses	$	970,000		$	980,000

	Range for Three Months Ending July 31, 2023
	Low			High
Target GAAP earnings per diluted share attributed to Synopsys	$	1.88		$	1.99
Adjustments:
Amortization of intangible assets		0.18			0.16
Stock compensation		0.99			0.95
Tax adjustments		(0.35	)		(0.35	)
Target non-GAAP earnings per diluted share attributed to Synopsys	$	2.70		$	2.75
Shares used in non-GAAP calculation (midpoint of target range)		156,500			156,500

GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2023 Targets ⁽¹⁾

(in thousands, except per share amounts)

	Range for Fiscal Year Ending October 31, 2023
	Low			High
Target GAAP expenses	$	4,520,305		$	4,565,305
Adjustments:
Amortization of intangible assets		(100,000	)		(105,000	)
Stock compensation		(580,000	)		(590,000	)
Acquisition-related items		(5,306	)		(5,306	)
Restructuring charges		(44,999	)		(44,999	)
Target non-GAAP expenses	$	3,790,000		$	3,820,000

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	Range for Fiscal Year Ending
	October 31, 2023
	Low			High
Target GAAP earnings per diluted share attributed to Synopsys	$	7.44		$	7.60
Adjustments:
Amortization of intangible assets		0.67			0.64
Stock compensation		3.77			3.71
Acquisition-related items		0.03			0.03
Restructuring charges		0.29			0.29
Tax adjustments		(1.43	)		(1.43	)
Target non-GAAP earnings per diluted share attributed to Synopsys	$	10.77		$	10.84
Shares used in non-GAAP calculation (midpoint of target range)		156,500			156,500

(1) Synopsys’ third quarter of fiscal year 2023 and fiscal year 2023 will end on July 29, 2023 and October 28, 2023, respectively. For presentation purposes, we refer to the closest calendar month end.

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements regarding Synopsys’ short-term and long-term financial targets, expectations and objectives; strategies related to our products, technology and services; business and market outlook, opportunities and strategies; the expected impact of U.S. and foreign government actions and regulatory changes, including export control restrictions on our financial results; the potential impact of the uncertain macroeconomic environment on our financial results; customer demand and market expansion; our planned product releases and capabilities; industry growth rates; software trends; planned acquisitions and stock repurchases; our expected tax rate; and the impact and result of pending legal, administrative and tax proceedings. These statements involve risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in such forward-looking statements. Such risks, uncertainties and factors include, but are not limited to: macroeconomic conditions and uncertainty in the global economy; uncertainty in the growth of the semiconductor and electronics industries; the highly competitive industry we operate in; actions by the U.S. or foreign governments, such as the imposition of additional export restrictions or tariffs; consolidation among our customers and our dependence on a relatively small number of large customers; risks and compliance obligations relating to the global nature of our operations;

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and more. Additional information on potential risks, uncertainties and other factors that could affect Synopsys’ results is included in filings we make with the SEC from time to time, including in the sections entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2022 and in our latest Quarterly Report on Form 10-Q. The financial information contained in this press release should be read in conjunction with the consolidated financial statements and notes thereto included in Synopsys’ most recent reports on Forms 10-K and 10-Q each as may be amended from time to time. Synopsys’ financial results for its second quarter fiscal year 2023 are not necessarily indicative of Synopsys’ operating results for any future periods. The information provided herein is as of May 17, 2023. Synopsys undertakes no duty, and does not intend, to update any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law.

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SYNOPSYS, INC.

Unaudited Condensed Consolidated Statements of Income⁽¹⁾

(in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	April 30,						April 30,
	2023			2022			2023			2022
Revenue:
Time-based products	$	808,196		$	723,821		$	1,590,509		$	1,431,304
Upfront products		345,524			336,625			682,182			704,899
Total products revenue		1,153,720			1,060,446			2,272,691			2,136,203
Maintenance and service		241,143			218,783			483,512			413,281
Total revenue		1,394,863			1,279,229			2,756,203			2,549,484
Cost of revenue:
Products		184,732			150,690			359,099			316,089
Maintenance and service		95,410			87,666			186,757			165,891
Amortization of intangible assets		17,872			14,455			36,512			27,815
Total cost of revenue		298,014			252,811			582,368			509,795
Gross margin		1,096,849			1,026,418			2,173,835			2,039,689
Operating expenses:
Research and development		485,597			389,964			950,926			773,935
Sales and marketing		222,115			191,573			432,900			372,083
General and administrative		91,083			73,957			188,447			154,965
Amortization of intangible assets		6,582			6,912			13,299			15,912
Restructuring charges		4,140			311			44,999			12,057
Total operating expenses		809,517			662,717			1,630,571			1,328,952
Operating income		287,332			363,701			543,264			710,737
Other income (expense), net		4,253			(23,913	)		27,545			(43,706	)
Income before income taxes		291,585			339,788			570,809			667,031
Provision (benefit) for income taxes		21,637			45,896			32,234			59,798
Net income		269,948			293,892			538,575			607,233
Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest		(2,962	)		(889	)		(5,871	)		(1,235	)
Net income attributed to Synopsys	$	272,910		$	294,781		$	544,446		$	608,468
Net income per share attributed to Synopsys:
Basic	$	1.79		$	1.93		$	3.57		$	3.97
Diluted	$	1.76		$	1.89		$	3.51		$	3.88
Shares used in computing per share amounts:
Basic		152,187			153,090			152,294			153,154
Diluted		154,730			156,167			155,044			156,815

(1) Synopsys’ second quarter of fiscal year 2023 and 2022 ended on April 29, 2023 and April 30, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

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SYNOPSYS, INC.

Unaudited Condensed Consolidated Balance Sheets ⁽¹⁾

(in thousands, except par value amounts)

	April 30, 2023			October 31, 2022
ASSETS:
Current assets:
Cash and cash equivalents	$	1,544,592		$	1,417,608
Short-term investments		150,846			147,913
Total cash, cash equivalents & short-term investments		1,695,438			1,565,521
Accounts receivable, net		779,892			796,091
Inventories		256,426			211,927
Prepaid and other current assets		429,179			439,130
Total current assets		3,160,935			3,012,669
Property and equipment, net		546,439			483,300
Operating lease right-of-use assets, net		576,727			559,090
Goodwill		3,888,249			3,842,234
Intangible assets, net		357,113			386,446
Deferred income taxes		774,391			670,653
Other long-term assets		486,878			463,695
Total assets	$	9,790,732		$	9,418,087
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued liabilities	$	701,816		$	809,403
Operating lease liabilities		78,056			54,274
Deferred revenue		1,968,808			1,910,822
Total current liabilities		2,748,680			2,774,499
Long-term operating lease liabilities		591,667			581,273
Long-term deferred revenue		191,413			154,472
Long-term debt		20,201			20,824
Other long-term liabilities		365,949			327,829
Total liabilities		3,917,910			3,858,897
Redeemable non-controlling interest		35,877			38,664
Stockholders’ equity:
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding		—			—
Common stock, $0.01 par value: 400,000 shares authorized; 152,251 and 152,375 shares outstanding, respectively		1,523			1,524
Capital in excess of par value		1,330,072			1,487,126
Retained earnings		6,075,009			5,534,307
Treasury stock, at cost: 5,010 and 4,886 shares, respectively		(1,428,748	)		(1,272,955	)
Accumulated other comprehensive income (loss)		(145,997	)		(234,277	)
Total Synopsys stockholders’ equity		5,831,859			5,515,725
Non-controlling interest		5,086			4,801
Total stockholders’ equity		5,836,945			5,520,526
Total liabilities, redeemable non-controlling interest and stockholders’ equity	$	9,790,732		$	9,418,087

(1) Synopsys’ second quarter of fiscal year 2023 ended April 29, 2023 and its fiscal year 2022 ended on October 29, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

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SYNOPSYS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows ⁽¹⁾

(in thousands)

	Six Months Ended April 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	538,575		$	607,233
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation		116,922			111,962
Reduction of operating lease right-of-use assets		48,073			42,412
Amortization of capitalized costs to obtain revenue contracts		39,588			34,574
Stock-based compensation		277,485			205,832
Allowance for credit losses		6,134			(4,516	)
Deferred income taxes		(125,090	)		8,944
Other non-cash		4,972			7,479
Net changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable		9,289			(169,785	)
Inventories		(48,648	)		7,725
Prepaid and other current assets		49,437			(2,417	)
Other long-term assets		(75,324	)		(8,701	)
Accounts payable and accrued liabilities		(162,840	)		(181,008	)
Operating lease liabilities		(31,634	)		(43,963	)
Income taxes		94,587			(34,246	)
Deferred revenue		76,165			324,176
Net cash provided by operating activities		817,691			905,701
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of short-term investments		67,717			43,653
Purchases of short-term investments		(68,738	)		(45,158	)
Proceeds from sales of long-term investments		7,248			582
Purchases of long-term investments		—			(7,000	)
Purchases of property and equipment		(91,368	)		(67,367	)
Acquisitions, net of cash acquired		(41,324	)		(109,060	)
Capitalization of software development costs		(1,247	)		(1,065	)
Other		—			(600	)
Net cash used in investing activities		(127,712	)		(186,015	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt		(1,294	)		(75,938	)
Issuances of common stock		132,808			120,710
Payments for taxes related to net share settlement of equity awards		(116,838	)		(101,126	)
Purchase of equity forward contract		(45,000	)		—
Purchases of treasury stock		(560,724	)		(500,000	)
Other		(122	)		(2,709	)
Net cash used in financing activities		(591,170	)		(559,063	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		27,708			(19,955	)
Net change in cash, cash equivalents and restricted cash		126,517			140,668
Cash, cash equivalents and restricted cash, beginning of year		1,419,864			1,435,183
Cash, cash equivalents and restricted cash, end of period	$	1,546,381		$	1,575,851

(1) Synopsys’ second quarter of fiscal year 2023 and 2022 ended on April 29, 2023 and April 30, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

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SYNOPSYS, INC.

Business Segment Reporting ⁽¹⁾⁽³⁾

(in millions)

	Three Months Ended April 30, 2023			Three Months Ended April 30, 2022			Six Months Ended April 30, 2023			Six Months Ended April, 2022
Revenue by segment
- Design Automation	$	927.6		$	817.8		$	1,817.4		$	1,621.7
% of Total		66.5	%		64.0	%		66.0	%		63.7	%
- Design IP	$	335.2		$	348.5		$	678.8		$	707.4
% of Total		24.0	%		27.2	%		24.6	%		27.7	%
- Software Integrity	$	132.1		$	112.9		$	260.0		$	220.4
% of Total		9.5	%		8.8	%		9.4	%		8.6	%
Total segment revenue	$	1,394.9		$	1,279.2		$	2,756.2		$	2,549.5
Adjusted operating income by segment
- Design Automation	$	360.1		$	321.4		$	706.1		$	614.7
- Design IP	$	86.3		$	135.7		$	203.9		$	289.9
- Software Integrity	$	18.3		$	13.0		$	33.8		$	25.0
Total adjusted segment operating income	$	464.7		$	470.2		$	943.9		$	929.5
Adjusted operating margin by segment
- Design Automation		38.8	%		39.3	%		38.9	%		37.9	%
- Design IP		25.8	%		38.9	%		30.0	%		41.0	%
- Software Integrity		13.9	%		11.5	%		13.0	%		11.4	%
Total adjusted segment operating margin		33.3	%		36.8	%		34.2	%		36.5	%

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Total Adjusted Segment Operating Income Reconciliation ^(1)(2)(3)

(in millions)

	Three Months Ended April 30, 2023		Three Months Ended April 30, 2022			Six Months Ended April 30, 2023		Six Months Ended April 30, 2022
GAAP total operating income – as reported	$	287.3	$	363.7		$	543.3	$	710.7
Other expenses managed at consolidated level
-Amortization of intangible assets (4)		24.5		21.4			49.8		43.7
-Stock compensation (4)		143.3		110.1			277.5		205.8
-Non-qualified deferred compensation plan		2.8		(29.3	)		23.0		(48.9	)
-Acquisition-related items		2.7		4.0			5.3		6.1
-Restructuring charges		4.1		0.3			45.0		12.1
Total adjusted segment operating income	$	464.7	$	470.2		$	943.9	$	929.5

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

(2) These segments results are consistent with the information required by ASC 280, Segment Reporting. Synopsys’ chief operating decision maker (CODM) is our Chief Executive Officer. The CODM does not allocate certain operating expenses managed at a consolidated level to our reportable segments and, as a result, the reported operating income and operating margin do not include these unallocated expenses as shown in the table above.

(3) Synopsys’ second quarter of fiscal year 2023 and 2022 ended on April 29, 2023 and April 30, 2022, respectively. For presentation purposes, we refer to the closest calendar month end.

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

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