Synopsys, Inc. stock research
FY2024 Q1
Synopsys (SNPS) Gross Margin — Quarter Ended Jan 31, 2024
In the current quarter, gross margin improved compared to both the prior quarter and the same quarter last year, as gross profit remained stable sequentially and increased year-over-year while cost of revenue declined relative to revenue. The relationship among revenue, gross profit, and cost of revenue shows that margin expansion was driven by a lower cost base.
Gross margin takeaway
Quarter ended Jan 31, 2024 · FY2024 Q1
In the current quarter, gross margin improved compared to both the prior quarter and the same quarter last year, as gross profit remained stable sequentially and increased year-over-year while cost of revenue declined relative to revenue. The relationship among revenue, gross profit, and cost of revenue shows that margin expansion was driven by a lower cost base.
- The strongest observable driver of the margin improvement was the reduction in cost of revenue relative to revenue, which allowed gross profit to grow faster than revenue year-over-year and to hold steady sequentially despite flat revenue.
- Compared to the immediately preceding quarter, gross margin was higher as cost of revenue decreased while revenue was unchanged. Compared to the same quarter one year earlier, gross margin was higher as revenue and gross profit increased while cost of revenue was lower.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
81.5%
Gross profit
$1.2B
Revenue
$1.5B
Cost of revenue
$279.2M
Quarter-over-quarter change
+1.0 pts
Year-over-year change
+2.4 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Apr 30, 2023 | $1.3B | $1.0B | $248.2M | 80.3% |
| Jul 31, 2023 | $1.4B | $1.1B | $260.4M | 80.8% |
| Oct 31, 2023 | $1.5B | $1.2B | $286.2M | 80.5% |
| Jan 31, 2024 | $1.5B | $1.2B | $279.2M | 81.5% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Oct 31, 2023
+1.0 pts
Year-over-year change
Jan 31, 2023
+2.4 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable driver of the margin improvement was the reduction in cost of revenue relative to revenue, which allowed gross profit to grow faster than revenue year-over-year and to hold steady sequentially despite flat revenue.
Compared to the immediately preceding quarter, gross margin was higher as cost of revenue decreased while revenue was unchanged. Compared to the same quarter one year earlier, gross margin was higher as revenue and gross profit increased while cost of revenue was lower.
Monitor the trajectory of cost of revenue, as its relative decline was the primary factor behind the margin improvement, and note that revenue recognition patterns may affect future comparability.