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Segment Disclosure | 9 Months Ended
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Jul. 31, 2023
Segment Reporting [Abstract] |
Segment Disclosure | 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. As described in Note 2. Summary of Significant Accounting Policies and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements, effective in the first quarter of fiscal 2023, we realigned our organizational structure to evaluate the results of our Design IP business separately. Our CODM now regularly reviews disaggregated segment information, assesses performance against our key growth strategies and allocates resources based on this new organizational structure. As a result, effective in the first quarter of fiscal 2023, we changed our reportable segments from two reportable segments to the following three reportable segments: (1) Design Automation, which includes EDA tools, system integration solutions and other associated revenue categories, (2) Design IP, which includes IP products, and (3) Software Integrity, which includes a comprehensive solution for building integrity—security, quality and compliance testing—into the customers' software development lifecycle and supply chain. As such, prior period reportable segment results and related disclosures have been reclassified to reflect our current reportable segments. 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, Design IP and Software Integrity segments, accompanied by disaggregated information relating to revenue by geographic region. Information by reportable segment was as follows:
| Three Months Ended July 31, |  | Nine Months Ended July 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands)
Total Segments: |  |  |  |  |  |  |
Revenue | $ | 1,487,288 |  |  | $ | 1,247,766 |  |  | $ | 4,243,491 |  |  | $ | 3,797,250 |
Adjusted operating income | 524,750 |  |  | 392,127 |  |  | 1,468,644 |  |  | 1,321,671 |
Adjusted operating margin | 35 | % |  | 31 | % |  | 35 | % |  | 35 | %
Design Automation: |  |  |  |  |  |  |
Revenue | $ | 1,004,156 |  |  | $ | 816,393 |  |  | $ | 2,821,570 |  |  | $ | 2,438,108 |
Adjusted operating income | 415,652 |  |  | 297,241 |  |  | 1,121,751 |  |  | 911,901 |
Adjusted operating margin | 41 | % |  | 36 | % |  | 40 | % |  | 37 | %
Design IP: |  |  |  |  |  |  |
Revenue | $ | 350,234 |  |  | $ | 313,034 |  |  | $ | 1,029,061 |  |  | $ | 1,020,391 |
Adjusted operating income | 86,665 |  |  | 83,630 |  |  | 290,611 |  |  | 373,490 |
Adjusted operating margin | 25 | % |  | 27 | % |  | 28 | % |  | 37 | %
Software Integrity: |  |  |  |  |  |  |
Revenue | $ | 132,898 |  |  | $ | 118,339 |  |  | $ | 392,860 |  |  | $ | 338,751 |
Adjusted operating income | 22,433 |  |  | 11,256 |  |  | 56,282 |  |  | 36,280 |
Adjusted operating margin | 17 | % |  | 10 | % |  | 14 | % |  | 11 | %
Certain operating expenses are not allocated to the segments and are managed at a consolidated level. The unallocated expenses managed at a consolidated level, including amortization of intangible assets, stock-based compensation, changes in the fair value of deferred compensation plan, restructuring charges, and certain other operating expenses, were presented in the table below to provide a reconciliation of the total adjusted operating income from segments to our consolidated operating income:
| Three Months Ended July 31, |  | Nine Months Ended July 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands)
Total segment adjusted operating income | $ | 524,750 |  |  | $ | 392,127 |  |  | $ | 1,468,644 |  |  | $ | 1,321,671 |
Reconciling items: |  |  |  |  |  |  |
Amortization of intangible assets | (25,071) |  |  | (26,454) |  |  | (74,882) |  |  | (70,181) |
Stock-based compensation expense | (144,464) |  |  | (127,605) |  |  | (421,949) |  |  | (333,437) |
Deferred compensation plan | (21,816) |  |  | 1,092 |  |  | (44,845) |  |  | 50,001 |
Restructuring charges | (33,385) |  |  | — |  |  | (78,384) |  |  | (12,057) |
Other | (4,540) |  |  | (5,232) |  |  | (9,846) |  |  | (11,332) |
Total operating income | $ | 295,474 |  |  | $ | 233,928 |  |  | $ | 838,738 |  |  | $ | 944,665 |
The CODM does not use total assets by segment to evaluate segment performance or allocate resources. As a result, total assets by segment are not disclosed. In allocating revenue to particular geographic areas, the CODM considers where individual “seats” or licenses to our products are located. Revenue is defined as revenue from external customers. Revenue related to operations in the United States and other geographic areas were:
| Three Months Ended July 31, |  | Nine Months Ended July 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (in thousands)
Revenue: |  |  |  |  |  |  |
United States | $ | 640,147 |  |  | $ | 575,326 |  |  | $ | 1,973,342 |  |  | $ | 1,763,541 |
Europe | 145,626 |  |  | 127,288 |  |  | 437,589 |  |  | 376,195 |
China | 304,025 |  |  | 189,138 |  |  | 698,230 |  |  | 617,524 |
Korea | 163,938 |  |  | 125,307 |  |  | 466,546 |  |  | 358,871 |
Other | 233,552 |  |  | 230,707 |  |  | 667,784 |  |  | 681,119 |
Consolidated | $ | 1,487,288 |  |  | $ | 1,247,766 |  |  | $ | 4,243,491 |  |  | $ | 3,797,250 |
Geographic revenue data for multi-regional, multi-product transactions reflect internal allocations and are therefore subject to certain assumptions and to our allocation methodology.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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