Financial Analysis

Business Combinations Fiscal 2025 On 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, S ynopsys Common Stock with a fair value of $17.1 billio …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Contingencies Legal Proceedings We are subject to routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate outcome of any litigation is often uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial condition. We regularly review the status of each significant matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount is estimable, we accrue a liability for the estimated loss. Legal proceedings are inherently uncertain and as circumstances change, it is possible that the amount of any accrued liability may increase, decrease, or be eliminated. We have determined that no disclosure of estimated loss is required for a claim against us because: (1) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (2) a reasonably possible loss or range of loss cannot be estimated; or (3) such estimate is immaterial. Tax Matters We undergo examination from time to time by U.S. and foreign authorities for non-income based taxes, such as sales, use and value-added taxes, and are currently under examination by tax authorities in certain jurisdictions. If the potential loss from such examinations is considered probable and the amount or the range of loss could be estimated, we would accrue a …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities The following table summarizes our borrowings as of October 31, 2025: Effective Interest Rate Amount (in thousands) Fixed-rate 4.550% Senior Notes due on April 1, 2027 4.840 % $ 1,000,000 Fixed-rate 4.650% Senior Notes due on April 1, 2028 4.850 % 1,000,000 Fixed-rate 4.850% Senior Notes due on April 1, 2030 4.980 % 2,000,000 Fixed-rate 5.000% Senior Notes due on April 1, 2032 5.150 % 1,500,000 Fixed-rate 5.150% Senior Notes due on April 1, 2035 5.270 % 2,400,000 Fixed-rate 5.700% Senior Notes due on April 1, 2055 5.800 % 2,100,000 Term Loan due on July 17, 2027 5.390 % 600,000 Term Loan due on July 17, 2028 5.480 % 2,850,000 Total 13,450,000 Unamortized discount and issuance costs (89,156) Total Senior Notes and Term Loan 13,360,844 Deferred payment on settlement of interest rate treasury lock 110,585 Other borrowings 13,086 Total $ 13,484,515 Reported as: Short-term debt $ 22,117 Long-term debt 13,462,398 Total $ 13,484,515 Senior Notes On March 17, 2025, we issued $10.0 billion in aggregate principal amount of senior, unsecured and unsubordinated long-term notes, including $1.0 billion aggregate principal amount of 4.550% Senior Notes due April 1, 2027 (the 2027 Senior Notes), $1.0 billion aggregate principal amount of 4.650% Senior Notes due April 1, 2028 (the 2028 Senior Notes), $2.0 billion aggregate principal amount of 4.850% Senior Notes due April 1, 2030 (the 2030 Senior Notes), $1.5 bi …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table shows the percentage of revenue by product groups: Year Ended October 31, 2025 2024 2023 EDA 62.0 % 66.4 % 69.2 % Design IP 24.8 % 31.1 % 29.0 % Ansys 10.7 % % % Other 2.5 % 2.5 % 1.8 % Total 100.0 % 100.0 % 100.0 % …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Employee Benefit Plans Employee Stock Purchase Plan Under our Employee Stock Purchase Plan (ESPP), participating employees are granted the right to purchase shares of common stock at a price per share that is 85% of the lesser of the fair market value of the shares at (1) the beginning of an offering period (generally, a rolling two year period) or (2) the purchase date (generally occurring at the end of each semi-annual purchase period), subject to the terms of ESPP, including a limit on the number of shares that may be purchased in a purchase period. On April 10, 2025, our stockholders approved amendments to the ESPP to increase the number of shares of common stock authorized for issuance under the plan by 2.2 million shares. During fiscal 2025, 2024 and 2023, we issued 0.5 million, 0.5 million, and 0.6 million shares, respectively, under the ESPP at average per share prices of $375.72, $315.24 and $266.82, respectively. As of October 31, 2025, 14.7 million shares of common stock were reserved for future issuance under the ESPP. Equity Incentive Plans 2006 Employee Equity Incentive Plan. On April 25, 2006, our stockholders approved the 2006 Employee Equity Incentive Plan (2006 Employee Plan), which provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, RSU awards, stock appreciation rights and other forms of equity compensation, including performance stock awards and performance cash awards, as determined by the plan adminis …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Fair Value Measurements ASC 820-10, Fair Value Measurements and Disclosures , defines fair value, establishes guidelines and enhances disclosure requirements for fair value measurements. The accounting guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The accounting guidance also establishes a fair value hierarchy based on the independence of the source and objective evidence of the inputs used. There are three fair value hierarchies based upon the level of inputs that are significant to fair value measurement: Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical instruments in active markets; Level 2 Observable inputs other than quoted prices for identical instruments in active markets, quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in inactive markets, and model-driven valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3 Unobservable inputs derived from fair valuation techniques in which one or more significant inputs or significant value drivers are unobservable. On a recurring basis, we measure the fair value of certain assets and liabilities, which include cash equivalents, short-term investments, marketable securities, non-qualified deferred compensation plan assets, contingent consideration receivable, and foreign currency deriva …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Goodwill and Intangible Assets Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of the net tangible and identifiable intangible assets acquired in business combination. The change in the goodwill during fiscal 2025 resulted primarily from $23.4 billion related to the Ansys Merger. For additional information, refer to Note 4. Business Combination of the Notes to Consolidated Financial Statements in this Annual Report. We performed the required annual goodwill assessment in the fourth quarter of fiscal 2025, and concluded the goodwill was not impaired. There was no goodwill impairment in fiscal 2025, 2024 and 2023. Goodwill activity by reportable segment consists of the following: Design Automation Design IP Total (in thousands) Balance at October 31, 2023 $ 2,400,682 $ 945,383 $ 3,346,065 Additions 61,803 34,339 96,142 Adjustments 170 170 Effect of foreign currency translation 6,602 (129) 6,473 Balance at October 31, 2024 2,469,257 979,593 3,448,850 Additions 23,442,889 23,442,889 Adjustments (OSG Divestiture) (19,471) (19,471) Effect of foreign currency translation 24,255 2,692 26,947 Balance at October 31, 2025 $ 25,916,930 $ 982,285 $ 26,899,215 Intangible Assets Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be fully recoverable. The change in the gross carrying amounts of intangible assets in fiscal 2025 was due to the …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes The domestic and foreign components of our total income before provision for income taxes are as follows: Year Ended October 31, 2025 2024 2023 (in thousands) United States $ 983,195 $ 1,333,132 $ 1,144,410 Foreign 409,947 180,726 161,060 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, 2025 2024 2023 (in thousands) Current: Federal $ 376,014 $ 345,859 $ 252,186 State 25,041 19,808 23,042 Foreign 118,696 110,021 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, 2025 2024 2023 (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 earnings 28,008 3,316 (17,571) Foreign-derived intangible income deduction (106,903) (104,835) (80,034) Tax settlements (23,752) Stock-based compensation 20,583 (43,419) (39,995) Changes in valuation allowance (148,006) (57,371) 29,631 Capital loss on the sale of investments (30,868) Acquisition costs 17,877 Other 20,661 5,841 7,822 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases We have operating lease arrangements for office space, data center, equipment and other corporate assets. These leases have various expiration dates through December 31, 2042, some of which include options to extend the leases for up to 15 years. We consider the lease renewal options in determining the lease term and include associated potential option payments in lease payments when it is reasonably certain that the renewal options will be exercised. The components of our lease expense during the period presented are as follows: Year Ended October 31, 2025 2024 2023 (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, 2025 2024 2023 (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 li …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Pronouncements In June 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which applies to all equity securities measured at fair value that are subject to contractual sale restrictions. This change prohibits entities from taking into account contractual restrictions on the sale of equity securities when estimating fair value and introduces required disclosures for such transactions. We adopted the standard as of the beginning of fiscal 2025 on a prospective basis and the adoption did not have a material impact on our consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segments profit or loss and assets. The ASU is effective for our annual reports beginning in fiscal 2025 and interim period reports beginning in fiscal 2026. We adopted the standard during fiscal 2025, on a retrospective basis, and the adoption provide …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Restructuring Charges In the first quarter of fiscal 2023, we initiated a restructuring plan for involuntary employee terminations as part of a business reorganization (the 2023 Plan). The 2023 Plan was substantially completed in the third quarter of fiscal 2023 and total charges under the 2023 Plan consisting primarily of severance costs and facility exit costs were $77.0 million, of which $23.9 million were related to discontinued operations. During fiscal 2025, we made payments of $0.8 million related to continuing operations under the 2023 Plan. As of October 31, 2025, $0.7 million were recorded in accounts payable and accrued liabilities, and the remaining outstanding restructuring related liabilities of $3.1 million were recorded in other long-term liabilities in the consolidated balance sheets. During fiscal 2024, we made payments of $3.6 million related to continuing operations and $0.5 million related to discontinued operations under the 2023 Plan. As of October 31, 2024, the payroll and related benefits liabilities of $0.8 million were recorded in accounts payable and accrued liabilities, and the remaining outstanding restructuring related liabilities of $3.8 million were recorded in other long-term liabilities in the consolidated balance sheets. During fiscal 2023, we recorded restructuring charges related to continuing operations of $53.1 million and made payments of $44.9 million under the 2023 Plan. We recorded restructuring charges related to discontinued opera …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

Revenue Disaggregated Revenue The following table shows the percentage of revenue by product groups: Year Ended October 31, 2025 2024 2023 EDA 62.0 % 66.4 % 69.2 % Design IP 24.8 % 31.1 % 29.0 % Ansys 10.7 % % % Other 2.5 % 2.5 % 1.8 % Total 100.0 % 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, 2025 2024 (in thousands) Contract assets, net $ 1,222,029 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment Disclosure Segment reporting is based upon the management approach, i.e., how management organizes our operating segments for which separate financial information is (1) available and (2) evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance. Our CODM is our CEO. We have two reportable segments: (1) Design Automation, which includes our advanced silicon design, verification products and services, 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 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Summary of Significant Accounting Policies and Basis of Presentation Basis of Presentation and Principles of Consolidation. Historically, our fiscal years have been 52- or 53-week periods ending on the Saturday nearest to October 31. Fiscal 2024 was a 53-week year ended on November 2, 2024, and fiscal 2023 was a 52-week year ended on October 28, 2023. We have changed our fiscal year end from the Saturday nearest to October 31 and consisting of 52 or 53 fiscal weeks to a fiscal year end of October 31 each year. The fiscal year change became effective with our fiscal 2025, which began on November 3, 2024. Our fiscal quarters end on January 31, April 30, July 31 and October 31 of each year. Our results of operations for the fiscal 2025, fiscal 2024 and fiscal 2023 included 363 days, 371 days, and 364 days respectively. For presentation purposes, the consolidated financial statements and accompanying notes refer to the closest calendar month end. The consolidated financial statements include our accounts and the accounts of our wholly and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates. To prepare financial statements in conformity with U.S. GAAP, management must make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates and could have a material impact on our operating results and fi …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

Acquisition of Ansys On July 17, 2025, we completed the acquisition of Ansys (the Ansys Merger) for approximately $34.9 billion, consisting of cash of $17.6 billion (the Cash Consideration), S ynopsys 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 Condensed Consolidated Financial Statements . We allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on their preliminary estimated fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of acquisition. These estimates and assumptions are believed to be reasonable, but they are inherently uncertain and may be subject to material change as additional information becomes available during the respecti …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Contingencies Legal Proceedings We are subject to routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. For more detail on currently pending legal proceedings, see Part II, Item 1, Legal Proceedings . The ultimate outcome of any litigation is often uncertain and unfavorable outcomes could have a negative impact on our results of operations and financial condition. We regularly review the status of each significant matter and assess 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 Matters We undergo examination from time to time by U.S. and foreign authorities for non-income based taxes, such as sales, use and value-added taxes, and are currently under examination by tax authorities in certain jurisdictions. If the potential loss from such examinations i …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Senior Notes, Bridge Commitment Letter, Term Loan and Revolving Credit Facilities The following table summarizes our borrowings as of January 31, 2026: Effective Interest Rate Amount (in thousands) Fixed-rate 4.550% Senior Notes due on April 1, 2027 4.840 % $ 1,000,000 Fixed-rate 4.650% Senior Notes due on April 1, 2028 4.850 % 1,000,000 Fixed-rate 4.850% Senior Notes due on April 1, 2030 4.980 % 2,000,000 Fixed-rate 5.000% Senior Notes due on April 1, 2032 5.150 % 1,500,000 Fixed-rate 5.150% Senior Notes due on April 1, 2035 5.270 % 2,400,000 Fixed-rate 5.700% Senior Notes due on April 1, 2055 5.800 % 2,100,000 Total 10,000,000 Unamortized discount and issuance costs (78,336) Total Senior Notes 9,921,664 Deferred payment on settlement of interest rate treasury lock 110,585 Other borrowings 11,961 Total $ 10,044,210 Reported as: Short-term debt $ 22,117 Long-term debt 10,022,093 Total $ 10,044,210 Senior Notes: On March 17, 2025, we issued $10.0 billion in aggregate principal amount of senior, unsecured and unsubordinated long-term notes, which mature on various dates from April 1, 2027 to April 1, 2055 (collectively, the Senior Notes). Our total proceeds were approximately $9.9 billion, net of original issuance discount of $17.0 million and total issuance costs of $70.2 million. Interest on the Senior Notes is payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2025. The discount and issuance costs on our Senior Notes are amortized to interes …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table shows the percentage of revenue by product groups: Three Months Ended January 31, 2026 2025 EDA 45.6 % 67.3 % Design IP 16.9 % 29.9 % Ansys 36.8 % % Other 0.7 % 2.8 % Total 100.0 % 100.0 % …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Stock-Based Compensation The compensation cost recognized in the condensed consolidated statements of income for our stock compensation arrangements is as follows: Three Months Ended January 31, 2026 2025 (in thousands) Cost of products $ 19,973 $ 20,477 Cost of maintenance and service 13,140 8,991 Research and development expense 123,215 102,696 Sales and marketing expense 60,567 34,950 General and administrative expense 41,829 19,349 Stock-based compensation expense before taxes 258,724 186,463 Income tax benefit (40,749) (30,655) Stock-based compensation expense after taxes $ 217,975 $ 155,808 During the three months ended January 31, 2026 and 2025, we recognized stock-based compensation expense relating to RSUs granted to senior executives with certain market, performance and service conditions (market-based RSUs). The grant date fair value of the market-based RSUs and the assumptions used in the Monte Carlo simulation model to determine the grant date fair value during the periods are as follows: Three Months Ended January 31, 2026 2025 Expected life (in years) 2.87 2.79 Risk-free interest rate 3.48% 4.39% Volatility 44.90% 34.72% Weighted average grant date fair value per share $537.83 $464.17 As of January 31, 2026, we had $1.3 billion of total unrecognized stock-based compensation expense relating to options, RSUs and restricted stock awards, which is expected to be recognized over a weighted-average period of 1.8 years. As of January 31, 2026, we had $53.3 million of …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Fair Value Measurements ASC 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes guidelines and enhances disclosure requirements for fair value measurements. The accounting guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The accounting guidance also establishes a fair value hierarchy based on the independence of the source and objective evidence of the inputs used. There are three fair value hierarchies based upon the level of inputs that are significant to fair value measurement: Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical instruments in active markets; Level 2 Observable inputs other than quoted prices for identical instruments in active markets, quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in inactive markets, and model-driven valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3 Unobservable inputs derived from fair valuation techniques in which one or more significant inputs or significant value drivers are unobservable. On a recurring basis, we measure the fair value of certain assets and liabilities, which include cash equivalents, short-term investments, marketable securities, non-qualified deferred compensation plan assets, contingent consideration receivable, and foreign currency derivat …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill during the three months ended January 31, 2026 are as follows: (in thousands) Balance at October 31, 2025 $ 26,899,215 Adjustments (39,616) Effect of foreign currency translation 21,290 Balance at January 31, 2026 $ 26,880,889 Intangible Assets Intangible assets as of January 31, 2026 consist of the following: Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in thousands) Core/developed technology $ 7,236,330 $ 1,040,891 $ 6,195,439 Customer relationships 5,398,388 553,408 4,844,980 Contract rights intangible 596,819 275,391 321,428 Trademarks and trade names 962,325 34,643 927,682 Total $ 14,193,862 $ 1,904,333 $ 12,289,529 Intangible assets as of October 31, 2025 consist of the following: Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in thousands) Core/developed technology $ 7,309,753 $ 929,901 $ 6,379,852 Customer relationships 5,415,558 428,377 4,987,181 Contract rights intangible 614,358 239,808 374,550 Trademarks and trade names 962,925 24,917 938,008 Total $ 14,302,594 $ 1,623,003 $ 12,679,591 Amortization expense related to intangible assets consists of the following: Three Months Ended January 31, 2026 2025 (in thousands) Core/developed technology $ 193,523 $ 8,189 Customer relationships 145,667 3,996 Contract rights intangible 54,719 407 Trademarks and trade names 10,326 4 Total $ 404,235 $ 12,596 The following table presents the estimated …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes Effective Tax Rate We estimate our annual effective tax rate at the end of each fiscal quarter. The effective tax rate reflects our estimations of annual pre-tax income, the geographic mix of pre-tax income, interpretations of applicable tax laws and the potential outcomes of audits. The following table presents the provision for income taxes and the effective tax rates: Three Months Ended January 31, 2026 2025 (in thousands) Income before income taxes $ 79,053 $ 291,117 Provision (benefit) for income taxes $ 14,337 $ (6,294) Effective tax rate 18.1 % (2.2) % Our effective tax rate increased in the three months ended January 31, 2026, as compared to the same period 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. Our effective tax rate for the three months ended January 31, 2026, is lower than the statutory federal corporate tax rate of 21% primarily due to U.S. federal research tax credits, foreign-derived intangible income deduction, and U.S. foreign tax credits, partially offset by the effect of non-deductible stock-based compensation. The timing of the resolution of income tax examinations, and the amounts and timing of various tax payments that are part of the settlement process, are highly uncertain. Variations in such amounts and/or timing could cause large fluctuations in t …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases We have operating lease arrangements for office space, data center, equipment and other corporate assets. These leases have various expiration dates through December 31, 2042, some of which include options to extend the leases for up to 15 years. We consider the lease renewal options in determining the lease term and include associated potential option payments in lease payments when it is reasonably certain that the renewal options will be exercised. The components of our lease expense during the period presented are as follows: Three Months Ended January 31, 2026 2025 (in thousands) Operating lease expense (1) $ 37,206 $ 25,052 Variable lease expense (2) 10,517 6,760 Total lease expense $ 47,723 $ 31,812 (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: Three Months Ended January 31, 2026 2025 (in thousands) Cash paid for amounts included in the measurement of operating lease liabilities $ 34,010 $ 24,925 ROU assets obtained in exchange for operating lease liabilities $ 49,323 $ 8,848 Lease term and discount rate information related to our operating leases as of the end of the period presented are as follows: As …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. The ASU is effective for our annual reports beginning in fiscal 2026 with early adoption permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income-Expense Disaggregation (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires the disclosure of additional information related to certain costs and expenses, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income statement line item. The ASU also requires disclosure of the total amount of selling expenses and our definition of selling expenses. The ASU will be effective for our annual reports beginning in fiscal 2028, and interim period reports beginning in fiscal 2029 either on a prospective or retrospective basis. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures. In July 2025, the FASB issued ASU 2025-05, Financial Instruments Credit Losses (Topic …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Restructuring Charges In the fourth quarter of fiscal 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 and $350.0 million, and consist primarily of severance costs and other one-time termination benefits. The 2026 Plan is anticipated to be completed by the end of fiscal 2027, with majority of the workforce reduction in fiscal 2026. During the first quarter of fiscal 2026, we recorded restructuring charges of $118.3 million, and made payments of $86.1 million under the 2026 Plan. As of January 31, 2026, the outstanding restructuring related liabilities were $32.2 million and recorded in accounts payable and accrued liabilities in the condensed consolidated balance sheets.

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Revenue Disaggregated Revenue The following table shows the percentage of revenue by product groups: Three Months Ended January 31, 2026 2025 EDA 45.6 % 67.3 % Design IP 16.9 % 29.9 % Ansys 36.8 % % Other 0.7 % 2.8 % Total 100.0 % 100.0 % Contract Balances The timing of revenue recognition may differ from the timing of invoicing customers, resulting in receivables, contract assets, or contract liabilities (deferred revenue) in our condensed consolidated balance sheets. For specific software, hardware, and IP agreements with payment plans, we record an unbilled receivable associated with revenue recognized upon transfer of control, as it holds an unconditional right to invoice and receive payment in the future for those transferred products or services. Unbilled receivables are presented as accounts receivable, net, in the condensed consolidated balance sheets. A contract asset is recorded when revenue is recognized before we have the unconditional right to invoice or retain performance risk concerning that performance obligation. These contract assets transition to receivables when the rights become unconditional, generally upon the completion of a milestone. The contract assets listed below are included in prepaid and other current assets and other long-term assets in the condensed consolidated balance sheets. Contract balances are as follows: As of January 31, 2026 October 31, 2025 (in thousands) Contract assets, net $ 1,141,522 $ 1,222,029 Unbilled receivables $ 43,124 $ 4 …

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Segment Disclosure Segment reporting is based upon the management approach, i.e., how management organizes our operating segments for which separate financial information is (1) available and (2) evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance. Our CODM is our CEO. We have two reportable segments: (1) Design Automation, which includes our advanced silicon design, verification products and services, Ansys products, system integration products and services, digital, custom and field programmable gate array (FPGA) IC design software, verification software and hardware products, manufacturing software products and other; and (2) Design IP, which includes our logic libraries, embedded memories, wired interface IP, memory interface IP, security IP, and embedded processors. The financial information provided to and used by the CODM to assist in making operational decisions, allocating resources, and assessing performance includes consolidated financial information as well as revenue, adjusted operating income, and adjusted operating margin information for the Design Automation and Design IP segments, accompanied by disaggregated information relating to revenue by geographic region. Information by reportable segment is as follows: Three Months Ended January 31, 2026 2025 (in thousands) Total Segments: Revenue $ 2,408,798 $ 1,455,315 Cost of revenue and operating expenses 1,395,146 924,098 Adjusted operating income 1,013,652 531,217 A …

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Summary of Significant Accounting Policies and Basis of Presentation We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The condensed consolidated financial statements are unaudited but, in managements opinion, we have made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary for a fair presentation of our quarterly results. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. These financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025 as filed with the SEC on December 22, 2025 (our Annual Report). Use of Estimates. To prepare financial statements in conformity with U.S. GAAP, management must make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates and could ha …

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