Synopsys Inc. (NASDAQ:SNPS)

Goodwill and intangible assets experienced significant fluctuations over the analyzed period. Initially, a pattern of growth is observed, followed by a substantial increase in the final two periods presented. A detailed examination of the components reveals varying trends within the intangible asset portfolio.

Goodwill

Goodwill exhibited a consistent increase from 2020 to 2023, rising from US$3,365,114 thousand to US$4,070,336 thousand. However, a notable decrease occurred in 2024, falling to US$3,448,850 thousand. This was followed by an extraordinary surge in 2025, reaching US$26,899,215 thousand, indicating a potentially significant acquisition or revaluation event.

Core/Developed Technology

Core/developed technology showed steady growth between 2020 and 2023, increasing from US$827,232 thousand to US$1,135,347 thousand. A decline was then observed in 2024 to US$904,347 thousand, followed by a substantial increase in 2025 to US$7,309,753 thousand, mirroring the trend observed in goodwill.

Customer Relationships

Customer relationships demonstrated incremental growth from 2020 to 2023, moving from US$380,838 thousand to US$463,371 thousand. A decrease was noted in 2024 to US$314,140 thousand, and a dramatic increase occurred in 2025, reaching US$5,415,558 thousand.

Contract Rights Intangible

Contract rights intangible assets remained relatively stable between 2020 and 2023, fluctuating around US$190,000 thousand. A slight decrease occurred in 2024 to US$176,382 thousand, followed by a significant increase in 2025 to US$614,358 thousand.

Trademarks and Trade Names

Trademarks and trade names experienced modest growth from 2020 to 2022, increasing from US$43,096 thousand to US$52,795 thousand. A decrease was observed in 2024 to US$12,925 thousand, and a substantial increase occurred in 2025, reaching US$962,925 thousand.

Other Intangible Assets

In-process research and development (IPR&D) was only present in 2020 at US$1,214 thousand and subsequently disappeared from the reporting. Capitalized software development costs showed consistent growth from 2020 to 2023, increasing from US$44,122 thousand to US$50,795 thousand, with no values reported for 2024 or 2025.

The gross carrying amount of intangible assets generally increased from 2020 to 2023, reaching US$1,897,268 thousand, before decreasing to US$1,407,794 thousand in 2024. A substantial increase was then observed in 2025, reaching US$14,302,594 thousand. Accumulated amortization and impairment followed a similar pattern, increasing consistently from 2020 to 2023 and then showing a slight decrease in 2024, followed by a substantial increase in 2025. Consequently, the net amount of intangible assets mirrored these trends, with a significant increase in 2025 to US$12,679,591 thousand.

The combined value of goodwill and intangible assets increased steadily from US$3,619,436 thousand in 2020 to US$4,444,530 thousand in 2023. A decrease was observed in 2024 to US$3,644,014 thousand, followed by a dramatic increase in 2025 to US$39,578,806 thousand. The significant increases observed in 2025 across multiple intangible asset categories, alongside the substantial rise in goodwill, suggest a major corporate event, such as a large acquisition, occurred during that period.

The information presents a comparison of reported and adjusted financial figures for total assets and total stockholders’ equity over a six-year period. The adjustments appear to relate to the removal of goodwill and intangible assets, resulting in significantly lower adjusted values. A substantial increase in both reported total assets and stockholders’ equity is evident in the later years, particularly between 2023 and 2025, while the adjusted figures show a different trajectory.

Total Assets – Reported vs. Adjusted

Reported total assets demonstrate a consistent upward trend from 2020 through 2024, increasing from US$8,030,062 thousand to US$13,073,561 thousand. A dramatic increase is then observed in 2025, reaching US$48,224,461 thousand. In contrast, adjusted total assets exhibit a more moderate increase from 2020 to 2024, moving from US$4,664,948 thousand to US$9,624,711 thousand. The adjusted total assets then increase significantly in 2025, but to a lesser extent than the reported figures, reaching US$21,325,246 thousand. The difference between reported and adjusted total assets widens considerably over time, indicating a growing proportion of assets represented by goodwill or intangible items.

Stockholders’ Equity – Reported vs. Adjusted

Reported total stockholders’ equity follows a similar pattern to total assets, with steady growth from 2020 to 2024, rising from US$4,907,404 thousand to US$8,990,702 thousand, followed by a substantial increase to US$28,327,602 thousand in 2025. Adjusted total stockholders’ equity shows a less pronounced increase from 2020 to 2024, progressing from US$1,542,290 thousand to US$5,541,852 thousand. A notable decrease is then observed in 2025, with adjusted stockholders’ equity falling to US$1,428,387 thousand. This decline suggests a significant impact from the removal of goodwill and intangible assets on the equity position in the final year presented.

Impact of Adjustments

The divergence between reported and adjusted figures highlights the substantial presence of goodwill and intangible assets on the balance sheet. The adjustments effectively remove these items, providing a view of the company’s financial position based solely on tangible assets and equity not derived from acquisitions or internally generated intangibles. The large increase in reported assets and equity in 2025, coupled with the comparatively smaller increase in adjusted figures, suggests a major acquisition or accounting change occurred during that period that significantly impacted goodwill and intangible asset balances.

The trend indicates that the company’s reported financial position is increasingly influenced by non-tangible assets. The adjustments provide a more conservative view of the company’s financial health, focusing on assets and equity that are not subject to potential impairment or accounting adjustments related to goodwill and intangibles.

The financial metrics demonstrate a significant impact from adjusting for goodwill. Reported ratios generally show more moderate changes compared to their adjusted counterparts, particularly in later periods. A consistent pattern emerges where removing goodwill from asset calculations results in substantially altered financial performance indicators.

Total Asset Turnover

Reported total asset turnover exhibited an increasing trend from 0.46 in 2020 to 0.57 in 2023, followed by a sharp decline to 0.15 in 2025. The adjusted total asset turnover consistently remained higher, ranging from 0.79 to 0.93 between 2020 and 2023, and then decreasing to 0.33 in 2025. The difference between reported and adjusted values widened over time, indicating a growing proportion of assets tied up in goodwill.

Financial Leverage

Reported financial leverage remained relatively stable between 1.64 and 1.71 from 2020 to 2023, with a slight decrease to 1.45 in 2024 and an increase to 1.70 in 2025. Adjusted financial leverage showed a more dramatic pattern, increasing from 3.02 in 2020 to 3.33 in 2022, decreasing to 1.74 in 2024, and then experiencing a substantial surge to 14.93 in 2025. This suggests that the company’s debt levels appear considerably higher when goodwill is excluded from the asset base.

Return on Equity (ROE)

Reported ROE steadily increased from 13.54% in 2020 to 20.01% in 2023, peaking at 25.17% in 2024 before falling sharply to 4.70% in 2025. Adjusted ROE demonstrated a much larger magnitude of change, rising from 43.08% in 2020 to 59.22% in 2023, decreasing to 40.84% in 2024, and then increasing dramatically to 93.27% in 2025. The substantial difference highlights the significant impact of goodwill on reported equity.

Return on Assets (ROA)

Reported ROA followed an upward trend from 8.27% in 2020 to 11.90% in 2023, peaking at 17.31% in 2024, and then declining to 2.76% in 2025. Adjusted ROA also increased from 14.24% in 2020 to 19.64% in 2023, peaking at 23.52% in 2024, and then decreasing to 6.25% in 2025. Similar to ROE, the adjusted ROA values are consistently higher, indicating that the company’s asset utilization appears more efficient when goodwill is excluded.

The pronounced differences between reported and adjusted ratios, particularly in 2025, suggest that goodwill represents a substantial portion of the company’s assets. The adjustments reveal a potentially different financial profile, with higher leverage and returns when goodwill is not considered. The significant increase in adjusted financial leverage and ROE in 2025 warrants further investigation.

An examination of the financial information reveals trends in both reported and adjusted total assets, alongside their respective turnover ratios, over a six-year period. Reported total assets demonstrate a consistent increase from 2020 to 2023, with a substantial jump occurring between 2023 and 2024, followed by a significant increase from 2024 to 2025. Adjusted total assets follow a similar pattern of growth, though the magnitude of the increase between 2024 and 2025 is proportionally larger than that observed in reported total assets.

Reported Total Asset Turnover

The reported total asset turnover ratio exhibits an increasing trend from 0.46 in 2020 to 0.57 in 2022. This indicates improving efficiency in generating revenue relative to reported assets. However, the ratio declines to 0.47 in 2024 and experiences a substantial decrease to 0.15 in 2025. This suggests a significant reduction in the efficiency of asset utilization in the final year of the observed period.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio generally increases from 0.79 in 2020 to 0.93 in 2022, indicating improved revenue generation relative to adjusted assets. A decrease to 0.64 is observed in 2024, followed by a considerable decline to 0.33 in 2025. This mirrors the trend in the reported ratio, but the magnitude of the decrease is less pronounced when considering adjusted assets. The consistently higher adjusted turnover ratio compared to the reported ratio suggests that the exclusion of certain asset components in the adjusted calculation results in a more favorable efficiency metric.

The divergence between the reported and adjusted asset turnover ratios widens in the later years, particularly in 2025. This suggests that the difference between reported and adjusted assets is becoming a more significant factor in assessing the company’s asset utilization efficiency. The substantial declines in both ratios in 2025 warrant further investigation to determine the underlying causes, such as changes in revenue, asset composition, or accounting practices.

The considerable growth in total assets, particularly in 2025, coupled with the declining turnover ratios, suggests a potential issue with effectively deploying assets to generate revenue. Further analysis is needed to understand the nature of these asset increases and their impact on overall financial performance.

An examination of the financial information reveals notable trends in both reported and adjusted financial leverage over the six-year period. Reported total assets demonstrate consistent growth through 2024, with a substantial increase in 2025. A similar pattern is observed in reported total stockholders’ equity, though the increase in 2025 is even more pronounced. However, the adjusted figures present a different picture, particularly concerning stockholders’ equity and the resulting leverage.

Reported Financial Leverage

Reported financial leverage remains relatively stable between 1.64 and 1.71 from 2020 to 2023, experiencing a slight decrease to 1.45 in 2024 before returning to 1.70 in 2025. This suggests a consistent capital structure from a reported perspective, with a minor improvement in 2024 followed by a reversion to prior levels.

Adjusted Financial Leverage

Adjusted financial leverage exhibits a more volatile pattern. It increases from 3.02 in 2020 to 3.33 in 2022, indicating a growing reliance on debt or other financing relative to adjusted equity. A decrease to 1.74 is seen in 2024, but this is followed by a dramatic surge to 14.93 in 2025. This substantial increase warrants further investigation, as it suggests a significant shift in the company’s capital structure or a re-evaluation of intangible asset values.

Adjusted Total Assets & Equity

Adjusted total assets follow a growth trajectory similar to reported assets, but the increase in 2025 is proportionally larger. Conversely, adjusted total stockholders’ equity shows a more erratic pattern. While increasing from 2020 to 2024, it experiences a significant decline in 2025. This decrease in adjusted equity, coupled with the substantial rise in adjusted assets, is the primary driver of the dramatic increase in adjusted financial leverage in 2025.

The divergence between reported and adjusted financial leverage is particularly noteworthy. The adjustments made to total assets and stockholders’ equity appear to have a substantial impact on the calculated leverage ratios, especially in the later years. The significant increase in adjusted financial leverage in 2025, driven by a decrease in adjusted equity and a large increase in adjusted assets, suggests that the adjustments are revealing a different financial risk profile than what is presented in the reported figures. Further analysis is needed to understand the nature of these adjustments and their implications for the company’s financial health.

Analysis reveals significant fluctuations in both reported and adjusted stockholders’ equity, impacting corresponding return on equity (ROE) metrics over the observed period. Reported stockholders’ equity demonstrates a consistent increase through 2023, followed by substantial growth in 2024 and an exceptionally large increase in 2025. Conversely, adjusted stockholders’ equity exhibits a more volatile pattern, peaking in 2022, declining in 2023, increasing significantly in 2024, and then experiencing a dramatic decrease in 2025.

Reported Stockholders’ Equity and ROE

Reported stockholders’ equity increased steadily from US$4,907,404 thousand in 2020 to US$6,147,308 thousand in 2023, representing a cumulative growth of approximately 25%. This growth accelerated considerably in 2024, reaching US$8,990,702 thousand, and then experienced a substantial surge in 2025, reaching US$28,327,602 thousand. Correspondingly, reported ROE increased from 13.54% in 2020 to 20.01% in 2023, and further to 25.17% in 2024, before declining sharply to 4.70% in 2025. The decline in ROE in 2025, despite the significant increase in equity, suggests a substantial increase in net income denominator.

Adjusted Stockholders’ Equity and ROE

Adjusted stockholders’ equity began at US$1,542,290 thousand in 2020, increased to US$1,719,352 thousand in 2021, and then decreased to US$1,673,491 thousand in 2022. A subsequent increase was observed in 2023, reaching US$2,076,972 thousand, followed by a substantial rise to US$5,541,852 thousand in 2024. However, adjusted stockholders’ equity experienced a significant decline in 2025, falling to US$1,428,387 thousand. Adjusted ROE demonstrates a markedly different trend, starting at 43.08% in 2020 and increasing to 44.06% in 2021, then rising sharply to 58.83% in 2022 and 59.22% in 2023. It decreased to 40.84% in 2024, and then increased dramatically to 93.27% in 2025. The large fluctuation in adjusted ROE, particularly the increase in 2025, warrants further investigation into the adjustments made to stockholders’ equity.

The divergence between reported and adjusted ROE suggests that the adjustments to stockholders’ equity have a considerable impact on the overall profitability picture. The substantial increase in reported stockholders’ equity in 2024 and 2025, coupled with the decrease in reported ROE in 2025, indicates a potential dilution of equity or a significant increase in net income denominator. The volatility in adjusted stockholders’ equity, particularly the sharp decline in 2025, and the corresponding increase in adjusted ROE, suggest that the nature of these adjustments is critical to understanding the company’s underlying financial performance.

The analysis reveals a significant evolution in reported and adjusted return on assets over the observed period. Reported total assets demonstrate consistent growth from 2020 to 2023, with a substantial increase between 2023 and 2024, followed by an exceptionally large increase in 2025. Adjusted total assets follow a similar growth pattern, though the magnitude of the increase in 2025 is proportionally larger than that observed for reported total assets.

Reported Return on Assets (ROA)

Reported ROA exhibits a steady upward trend from 8.27% in 2020 to 11.90% in 2023. This positive trajectory continues into 2024, reaching a peak of 17.31%. However, a substantial decline is observed in 2025, with reported ROA falling to 2.76%. This decrease coincides with the largest increase in reported total assets, suggesting a potential dilution of returns.

Adjusted Return on Assets (ROA)

Adjusted ROA also demonstrates an increasing trend from 2020 to 2024, moving from 14.24% to 23.52%. This indicates that when considering adjustments to total assets, the underlying profitability relative to those adjusted assets is improving. Similar to the reported ROA, a significant decrease is observed in 2025, with adjusted ROA declining to 6.25%. The magnitude of the decline in adjusted ROA is less pronounced than that of the reported ROA, indicating that the adjustments to total assets partially mitigate the impact of the asset increase on profitability.

The divergence between reported and adjusted ROA suggests the presence of significant goodwill or intangible assets impacting the reported figures. The substantial growth in total assets in 2024 and 2025, particularly the latter, appears to be driving the decline in both reported and adjusted ROA. Further investigation into the nature of these asset increases and the adjustments made to calculate adjusted total assets is warranted to understand the underlying drivers of these trends.

Asset Growth and ROA Correlation

A clear inverse relationship emerges between the rate of asset growth and ROA in 2025. While both reported and adjusted ROA decline, the larger increase in reported total assets results in a more substantial decrease in reported ROA. This suggests that the newly acquired or recognized assets in 2025 may not be generating returns commensurate with their value, at least in the short term.

The consistent difference between reported and adjusted ROA throughout the period highlights the importance of considering asset adjustments when evaluating the company’s performance. The significant drop in ROA in 2025 warrants further scrutiny to determine the sustainability of the asset growth and its impact on future profitability.