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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                      TO
COMMISSION FILE NUMBER: 000-19807
snps-20210731_g1.jpg
SYNOPSYS, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-1546236
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification Number)
690 EAST MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA 94043
(Address of principal executive offices, including zip code)
(650) 584-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock
(par value of $0.01 per share)
SNPSNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý  Accelerated Filer 
Non-accelerated filer 
¨  
  Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ý
As of August 18, 2021, there were 152,502,754 shares of the registrant’s common stock outstanding.



SYNOPSYS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED JULY 31, 2021
TABLE OF CONTENTS
  Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 6.




PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
SYNOPSYS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value amounts)
July 31,
2021
 October 31,
2020*
ASSETS
Current assets:
Cash and cash equivalents$1,385,395 $1,235,653 
Short-term investments144,773  
      Total cash, cash equivalents and short-term investments1,530,168 1,235,653 
Accounts receivable, net577,845 780,709 
Inventories, net241,103 192,333 
Income taxes receivable and prepaid taxes35,724 32,355 
Prepaid and other current assets379,136 308,167 
Total current assets2,763,976 2,549,217 
Property and equipment, net470,129 483,818 
Operating lease right-of-use assets, net493,899 465,818 
Goodwill3,485,181 3,365,114 
Intangible assets, net249,974 254,322 
Long-term prepaid taxes10,417 8,276 
Deferred income taxes527,753 497,546 
Other long-term assets484,577 405,951 
Total assets$8,485,906 $8,030,062 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities$615,737 $623,664 
Operating lease liabilities, current79,289 73,173 
Accrued income taxes14,536 27,738 
Deferred revenue1,542,606 1,388,263 
Short-term debt82,468 27,084 
Total current liabilities2,334,636 2,139,922 
Operating lease liabilities, non-current487,574 462,411 
Long-term accrued income taxes24,600 25,178 
Long-term deferred revenue103,759 104,850 
Long-term debt24,754 100,823 
Other long-term liabilities355,447 284,511 
Total liabilities3,330,770 3,117,695 
Stockholders’ equity:
Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding
  
Common stock, $0.01 par value: 400,000 shares authorized; 152,597 and 152,618 shares outstanding, respectively
1,526 1,528 
Capital in excess of par value1,606,980 1,653,166 
Retained earnings4,348,266 3,795,397 
Treasury stock, at cost: 4,664 and 4,643 shares, respectively
(757,341)(488,613)
Accumulated other comprehensive income (loss)(48,411)(54,074)
Total Synopsys stockholders’ equity5,151,020 4,907,404 
Non-controlling interest4,116 4,963 
Total stockholders’ equity5,155,136 4,912,367 
Total liabilities and stockholders’ equity$8,485,906 $8,030,062 
*Derived from audited financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
1


SYNOPSYS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 Three Months Ended 
 July 31,
Nine Months Ended 
 July 31,
 2021202020212020
Revenue:
Time-based products$665,563 $612,065 $1,945,647 $1,758,601 
Upfront products203,301 210,931 586,798 491,417 
Maintenance and service188,266 141,138 519,329 409,824 
Total revenue1,057,130 964,134 3,051,774 2,659,842 
Cost of revenue:
Products127,592 118,478 389,677 344,469 
Maintenance and service65,604 60,812 202,210 184,940 
Amortization of intangible assets11,870 13,718 35,164 40,732 
Total cost of revenue205,066 193,008 627,051 570,141 
Gross margin852,064 771,126 2,424,723 2,089,701 
Operating expenses:
Research and development371,146 322,602 1,090,959 939,456 
Sales and marketing171,428 156,456 514,810 455,511 
General and administrative83,846 73,516 234,028 204,734 
Amortization of intangible assets8,570 9,931 25,273 29,545 
Restructuring charges15,151 (1,977)15,151 36,446 
Total operating expenses650,141 560,528 1,880,221 1,665,692 
Operating income201,923 210,598 544,502 424,009 
Other income (expense), net11,414 26,256 61,934 22,584 
Income before income taxes213,337 236,854 606,436 446,593 
Provision (benefit) for income taxes14,945 (16,057)51,214 (20,299)
Net income$198,392 $252,911 $555,222 $466,892 
Net income (loss) attributed to non-controlling interest(254) (847) 
Net income attributed to Synopsys$198,646 $252,911 $556,069 $466,892 
Net income per share attributed to Synopsys:
Basic$1.30 $1.67 $3.64 $3.10 
Diluted$1.27 $1.62 $3.54 $3.01 
Shares used in computing per share amounts:
Basic152,635 151,352 152,619 150,731 
Diluted156,907 155,973 157,158 155,074 
See accompanying notes to unaudited condensed consolidated financial statements.

2


SYNOPSYS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 Three Months Ended 
 July 31,
Nine Months Ended 
 July 31,
 2021202020212020
Net income$198,392 $252,911 $555,222 $466,892 
Other comprehensive income (loss):
Change in foreign currency translation adjustment(5,905)18,102 8,857 14,099 
Changes in unrealized gains (losses) on available-for-sale securities, net of tax of $0 for periods presented15  15  
Cash flow hedges:
Deferred gains (losses), net of tax of $(909) and $(1,876), for the three and nine months ended July 31, 2021, respectively, and of $(4,169) and $(1,823) for each of the same periods in fiscal 2020, respectively.
3,664 12,399 8,971 3,965 
Reclassification adjustment on deferred (gains) losses included in net income, net of tax of $1,460 and $3,808, for the three and nine months ended July 31, 2021, respectively, and of $(134) and $(262) for each of the same periods in fiscal 2020, respectively.
(4,830)709 (12,180)1,563 
Other comprehensive income (loss), net of tax effects(7,056)31,210 5,663 19,627 
Comprehensive income191,336 284,121 560,885 486,519 
Less: net income (loss) attributed to non-controlling interest(254) (847) 
Comprehensive income attributed to Synopsys$191,590 $284,121 $561,732 $486,519 
See accompanying notes to unaudited condensed consolidated financial statements.

3


SYNOPSYS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
 Capital in
Excess of
Par
Value
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Total 
Synopsys
Stockholders’
Equity
Non-controlling
Interest
Stockholders’
Equity
Common Stock
 SharesAmount
Balance at April 30, 2021
152,554 $1,526 $1,679,801 $4,149,620 $(701,457)$(41,355)$5,088,135 $4,370 $5,092,505 
Net income198,646 198,646 (254)198,392 
Other comprehensive income (loss), net of tax effects(7,056)(7,056)(7,056)
Purchases of treasury stock(521)(5)5 (140,000)(140,000)(140,000)
Equity forward contract(35,000)(35,000)(35,000)
Common stock issued, net of shares withheld for employee taxes564 5 (122,988)84,116 (38,867)(38,867)
Stock-based compensation85,162 85,162 85,162 
Balance at July 31, 2021
152,597 $1,526 $1,606,980 $4,348,266 $(757,341)$(48,411)$5,151,020 $4,116 $5,155,136 
Balance at October 31, 2020
152,618 $1,528 $1,653,166 $3,795,397 $(488,613)$(54,074)$4,907,404 $4,963 $4,912,367 
Net income556,069 556,069 (847)555,222 
Retained earnings adjustment due to adoption of ASC 326(1)
(3,200)(3,200)(3,200)
Other comprehensive income (loss), net of tax effects5,663 5,663 5,663 
Purchases of treasury stock(2,114)(21)21 (538,082)(538,082)(538,082)
Equity forward contract(35,000)— (35,000)(35,000)
Common stock issued, net of shares withheld for employee taxes2,093 19 (259,737)269,354 9,636 9,636 
Stock-based compensation248,530 248,530 248,530 
Balance at July 31, 2021
152,597 $1,526 $1,606,980 $4,348,266 $(757,341)$(48,411)$5,151,020 $4,116 $5,155,136 
 Capital in
Excess of
Par
Value
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income (Loss)
Total 
Synopsys
Stockholders’
Equity
Non-controlling
Interest
Stockholders’
Equity
Common Stock
 SharesAmount
Balance at April 30, 2020
150,908 $1,509 $1,655,787 $3,356,489 $(634,669)$(104,030)$4,275,086 $5,863 $4,280,949 
Net income252,911 252,911 (471)252,440 
Other comprehensive income (loss), net of tax effects31,210 31,210 31,210 
Purchases of treasury stock(149)(20,000)(20,000)(20,000)
Equity forward contract20,000 20,000 20,000 
Common stock issued, net of shares withheld for employee taxes999 10 (114,038)(11,456)100,365 (25,119)(25,119)
Stock-based compensation61,837 61,837 61,837 
Balance at July 31, 2020
151,758 $1,519 $1,623,586 $3,597,944 $(554,304)$(72,820)$4,595,925 $5,392 $4,601,317 
Balance at October 31, 2019
150,331 $1,503 $1,635,455 $3,164,144 $(625,642)$(92,447)$4,083,013 $5,863 $4,088,876 
Net income466,892 466,892 (471)466,421 
Other comprehensive income (loss), net of tax effects19,627 19,627 19,627 
Purchases of treasury stock(1,380)(12)12 (200,000)(200,000)(200,000)
Common stock issued, net of shares withheld for employee taxes2,807 28 (182,036)(33,092)271,338 56,238 56,238 
Stock-based compensation170,155 170,155 170,155 
Balance at July 31, 2020
151,758 $1,519 $1,623,586 $3,597,944 $(554,304)$(72,820)$4,595,925 $5,392 $4,601,317 
(1)In June 2016, the Financial Accounting Standards Board (FASB) issued ASC 326, "Measurement of Credit Losses on Financial Instruments", which replaces the incurred loss methodology with an expected loss methodology. The Company adopted the new standard at the beginning of fiscal 2021.
See accompanying notes to unaudited condensed consolidated financial statements.
4


SYNOPSYS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Nine Months Ended 
 July 31,
 20212020
Cash flows from operating activities:
Net income attributed to Synopsys$556,069 $466,892 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation151,274 159,156 
Reduction of operating lease right-of-use assets64,920 62,585 
Amortization of capitalized costs to obtain revenue contracts46,973 44,851 
Stock-based compensation248,530 170,155 
Allowance for doubtful accounts13,813 14,875 
Deferred income taxes(33,116)(74,374)
Other non-cash2,936 756 
Net changes in operating assets and liabilities, net of acquired assets and liabilities:
Accounts receivable188,996 (89,667)
Inventories(51,448)(20,296)
Prepaid and other current assets(62,201)(21,350)
Other long-term assets(117,922)(77,860)
Accounts payable and accrued liabilities51,991 44,313 
Operating lease liabilities(61,666)(57,968)
Income taxes(29,414)6,128 
Deferred revenue152,328 160,966 
Net cash provided by operating activities1,122,063 789,162 
Cash flows from investing activities:
Proceeds from sales and maturities of short-term investments1,128  
Purchases of short-term investments(146,082) 
Proceeds from sales of long-term investments 2,151 
Purchases of long-term investments(7,591)(2,762)
Purchases of property and equipment(66,957)(120,234)
Cash paid for acquisitions, net of cash acquired(164,053)(201,045)
Capitalization of software development costs(1,517)(3,035)
Other(800) 
Net cash used in investing activities(385,872)(324,925)
Cash flows from financing activities:
Proceeds from credit facilities  276,490 
Repayment of debt(21,637)(284,218)
Issuances of common stock113,976 123,237 
Payments for taxes related to net share settlement of equity awards(104,291)(66,985)
Purchase of equity forward contract(35,000) 
Purchases of treasury stock(538,082)(200,000)
Other(4,375) 
Net cash used in financing activities(589,409)(151,476)
Effect of exchange rate changes on cash, cash equivalents and restricted cash2,985 8,700 
Net change in cash, cash equivalents and restricted cash 149,767 321,461 
Cash, cash equivalents and restricted cash, beginning of year1,237,970 730,527 
Cash, cash equivalents and restricted cash, end of period$1,387,737 $1,051,988 
See accompanying notes to unaudited condensed consolidated financial statements.
5


SYNOPSYS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Description of Business
Synopsys, Inc. (Synopsys or the Company) provides products and services used across the entire silicon to software spectrum, from engineers creating advanced semiconductors to software developers seeking to ensure the security and quality of their code. The Company is a global leader in supplying the electronic design automation (EDA) software that engineers use to design and test integrated circuits (ICs), also known as chips. The Company also offers semiconductor intellectual property (IP) products, which are pre-designed circuits that engineers use as components of larger chip designs rather than designing those circuits themselves. The Company provides software and hardware used to validate the electronic systems that incorporate chips and the software that runs on them. To complement these offerings, the Company provides technical services and support to help its customers develop advanced chips and electronic systems. These products and services are part of the Company’s Semiconductor & System Design segment.
The Company is also a leading provider of software tools and services that improve the security, quality and compliance of software in a wide variety of industries, including electronics, financial services, automotive, medicine, energy and industrials. These tools and services are part of the Company’s Software Integrity segment.
Note 2. Summary of Significant Accounting Policies
The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present its unaudited condensed consolidated balance sheets, results of operations, comprehensive income, stockholders’ equity and cash flows. The Company’s 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 the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2020 as filed with the SEC on December 15, 2020.
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 unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates and may result in material effects on the Company’s operating results and financial position. In addition, the Company has considered the impact of the COVID-19 pandemic on the business operations and no impairments or other effects have been identified to date. Although the impact related to the COVID-19 pandemic has been limited in operating results thus far, there is substantial uncertainty in the nature and degree of its continued effects over time. This uncertainty affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions as additional events and information are known.
Principles of Consolidation. The unaudited condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany accounts and transactions have been eliminated.
Fiscal Year End. The Company’s fiscal year generally ends on the Saturday nearest to October 31 and consists of 52 weeks, with the exception that approximately every five years, the Company has a 53-week year. When a 53-week year occurs, the Company includes the additional week in the first quarter to realign fiscal quarters with calendar quarters. Fiscal 2021 and 2020 are both 52-week years. Fiscal 2021 will end on October 30, 2021. Fiscal 2020 ended on October 31, 2020. For presentation purposes, the unaudited condensed consolidated financial statements and accompanying notes refer to the closest calendar month end.
Note 3. Revenue
Disaggregated Revenue
6


The following table shows the percentage of revenue by product groups:
Three Months Ended 
 July 31,
Nine Months Ended 
 July 31,
2021202020212020
EDA55.8 %55.2 %56.2 %57.7 %
IP & System Integration34.4 %34.8 %34.2 %32.0 %
Software Integrity Products & Services9.3 %9.7 %9.3 %10.0 %
Other0.5 %0.3 %0.3 %0.3 %
Total100.0 %100.0 %100.0 %100.0 %
Contract Balances
The contract assets indicated below are presented as prepaid and other current assets in the unaudited condensed consolidated balance sheets. The contract assets are transferred to receivables when the rights to invoice and receive payment become unconditional. Unbilled receivables are presented as accounts receivable, net, in the unaudited condensed consolidated balance sheets.
Contract balances are as follows:
As of
July 31, 2021October 31, 2020
 (in thousands)
Contract assets$246,815 $214,583 
Unbilled receivables$45,855 $50,932 
Deferred revenue$1,646,365 $1,493,113 
During the three and nine months ended July 31, 2021, the Company recognized $134.9 million and $1.0 billion, respectively, of revenue that was included in the deferred revenue balance as of October 31, 2020.
Contracted but unsatisfied or partially unsatisfied performance obligations were approximately $4.7 billion as of July 31, 2021, which includes $788.8 million in non-cancellable Flexible Spending Account (FSA) commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date. The Company has elected to exclude future sales-based royalty payments from the remaining performance obligations. Approximately 50% of the contracted but unsatisfied or partially unsatisfied performance obligations as of July 31, 2021, excluding non-cancellable FSA, are expected to be recognized over the next 12 months, with the remainder recognized thereafter.
During the three and nine months ended July 31, 2021, the Company recognized $27.9 million and $88.7 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods. During the three and nine months ended July 31, 2020, the Company recognized $25.9 million and $78.0 million, respectively, from performance obligations satisfied from sales-based royalties earned during the periods.
Costs of Obtaining a Contract with Customer
The incremental costs of obtaining a contract with a customer, which consist primarily of direct sales commissions earned upon execution of the contract, are required to be capitalized under ASC 340-40 and amortized over the estimated period of which the benefit is expected to be received. As direct sales commissions paid for renewals are commensurate with the amounts paid for initial contracts, the deferred incremental costs will be recognized over the contract term. Total capitalized direct commission costs as of July 31, 2021 were $83.9 million and included in other assets in the Company’s unaudited condensed consolidated balance sheets. Amortization was $16.5 million and $47.0 million during the three and nine months ended July 31, 2021, respectively, and included in sales and marketing expense in the Company’s unaudited condensed consolidated statements of operations. Amortization was $16.6 million and $44.9 million during the three and nine months ended July 31, 2020, respectively, and included in sales and marketing expense in the Company’s unaudited condensed consolidated statements of operations.
7


Note 4. Business Combinations
During the nine months ended July 31, 2021, the Company completed several acquisitions for an aggregate consideration of $166.9 million, net of cash acquired. The Company does not consider these acquisitions to be material, individually or in the aggregate, to the Company’s unaudited condensed consolidated statements of operations. The preliminary purchase allocations are $57.7 million of identifiable intangible assets and $114.6 million in goodwill, of which $68.9 million is attributable to the Semiconductor & System Design reporting segment and $45.7 million is attributable to the Software Integrity reporting segment. The fair value of these intangible assets and goodwill are estimated using the income method.
The preliminary fair value estimates for the assets acquired and liabilities assumed for all acquisitions completed within 12 months from the applicable acquisition date are not yet finalized and may change as additional information becomes available during the respective measurement periods. The primary areas of those preliminary estimates relate to certain tangible assets and liabilities, identifiable intangible assets, and income taxes.
Note 5. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill during the nine months ended July 31, 2021 were as follows:
 (in thousands)
Balance at October 31, 2020
$3,365,114 
Additions114,628 
Effect of foreign currency translation5,439 
Balance at July 31, 2021
$3,485,181 
Intangible Assets
Intangible assets as of July 31, 2021 consisted of the following:
Gross AssetsAccumulated
Amortization
Net Assets
 (in thousands)
Core/developed technology$884,603 $736,125 $148,478 
Customer relationships381,703 300,441 81,262 
Contract rights intangible192,359 187,909 4,450 
Trademarks and trade names43,095 30,545 12,550 
Capitalized software development costs45,639 42,405 3,234 
Total$1,547,399 $1,297,425 $249,974 
Intangible assets as of October 31, 2020 consisted of the following:
Gross AssetsAccumulated
Amortization
Net Assets
 (in thousands)
Core/developed technology$827,232 $703,009 $124,223 
Customer relationships380,838 277,219 103,619 
Contract rights intangible192,812 186,763 6,049 
Trademarks and trade names43,096 28,716 14,380 
In-process research and development (IPR&D)1,214  1,214 
Capitalized software development costs44,122 39,285 4,837 
Total$1,489,314 $1,234,992 $254,322 
8


Amortization expense related to intangible assets consisted of the following:
 Three Months Ended 
 July 31,
Nine Months Ended 
 July 31,
 2021202020212020
 (in thousands)
Core/developed technology$11,431 $12,472 $33,416 $37,515 
Customer relationships7,960 8,971 23,443 26,444 
Contract rights intangible439 1,272 1,748 3,829 
Trademarks and trade names610 934 1,830 2,489 
Capitalized software development costs(1)
1,010 947 3,120 2,782 
Total$21,450 $24,596 $63,557 $73,059 
(1) Amortization of capitalized software development costs is included in cost of products revenue in the unaudited condensed consolidated statements of operations.
The following table presents the estimated future amortization of intangible assets as of July 31, 2021:
Fiscal year(in thousands)
Remainder of fiscal 2021$21,104 
202273,594 
202356,625 
202446,005 
202529,903 
2026 and thereafter22,743 
Total$249,974 
Note 6. Financial Assets and Liabilities
Cash equivalents. The Company classifies time deposits and other investments with stated maturities less than three months as cash equivalents.
Short-term investments. Debt securities and other investments with stated maturities longer than three months are classified as short-term investments and the Company may convert these investments into cash at any time to fund general operations. These debt securities and other investments generally have an effective maturity term of less than three years and are classified as available-for-sale carried at fair value, with unrealized gains and losses included in the unaudited condensed consolidated balance sheets as a component of accumulated other comprehensive income (loss). Gross unrealized gains and losses on our available-for-sale debt securities at July 31, 2021 were not significant. For available-for-sale debt securities in an unrealized loss position, the Company evaluates whether a credit loss exists based on available information relevant to the credit rating of the security. The allowance for credit loss is recorded to other income (expense), net, on the condensed consolidated statement of operations, not to exceed the amount of the unrealized loss. Any excess unrealized loss other than the credit loss is recognized in accumulated other comprehensive income or loss in the stockholders' equity section of the condensed consolidated balance sheets. The Company determined there were no credit losses related to available-for-sale securities as of July 31, 2021. The cost of securities sold is based on the specific identification method and realized gains and losses are included in other income (expense), net.
As of July 31, 2021, the stated maturities of the Company's short-term available-for-sale securities were:

Amortized CostFair Value
(in thousands)
less than 1 year$38,178 $38,169 
1-5 years99,133 99,154 
> 5 years7,447 7,450 
Total$144,758 $144,773 
9


As of July 31, 2021, the balances of the Company’s cash equivalents and short-term investments were:
CostGross
Unrealized
Gains
Gross
Unrealized
Losses Less Than 12 Continuous Months
Gross
Unrealized
Losses 12 Continuous Months or Longer
Estimated
Fair Value
(1)
 (in thousands)
Cash equivalents:
Money market funds$249,814 $ $ $