Synopsys Reports Strong Q1 Earnings, Forecasts Growth Amid AI-Driven Chip Design Boom

Synopsys Q1 Profit Tops Estimates, Sees Strong AI-Fueled Chip Design Demand - Synopsys (NASDAQ:SNPS)

Synopsys Inc SNPS shares are trading higher premarket reported first-quarter financial results after the market close on Wednesday. Revenue: $1.455 billion missed the estimates of $1.466 billion. Adjusted EPS: $3.03 beat the street view of $2.84. Gross profit declined to $1.185 billion from $1.232 billion a year ago quarter and the operating income declined to $251.8 million from $352.6 million in the prior year quarter. Sassine Ghazi, president and CEO of Synopsys, said, "We launched industry-leading silicon IP and hardware-assisted verification solutions while expanding generative AI capabilities in EDA." "We are continuing to see strong design activity at advanced nodes, fueled by the AI-driven reinvention of compute. As the pace and complexity of technology innovation increases, new silicon-to-systems design paradigms are essential, and Synopsys is well-positioned to deliver." Outlook: Synopsys expects second-quarter revenue of $1.585 billion - $1.615 billion versus estimates of $1.600 billion and adjusted EPS of $3.37 - $3.42 vs. consensus of $3.35. For FY25, the company continues to expect revenue of $6.745 billion - $6.805 billion vs. consensus of $6.786 billion and adjusted EPS of $14.88 - $14.96 vs. street view of $14.91. The company's targets reflect a shift in its fiscal year to a fixed October 31 year-end, replacing the previous 52/53-week cycle. This adjustment shortens the first half of fiscal 2025 by ten days while adding two days to the second half, resulting in a net reduction of eight days compared to fiscal 2024. Investors can gain exposure to the stock via AXS Esoterica NextG Economy ETF WUGI and VanEck Fabless Semiconductor ETF SMHX. Price Action: SNPS shares are up 2.05% at $480.09 premarket at the last check Thursday. Read Next: Rocket Lab, Kratos, Archer Aviation And More Earnings This Week Could Have A Big Impact On Cathie Wood's Ark ETFs Image via Shutterstock. SNPSSynopsys Inc$480.092.05%OverviewSMHXVanEck Fabless Semiconductor ETF$28.392.27%WUGIAXS Esoterica NextG Economy ETF$74.86-%Market News and Data brought to you by Benzinga APIs

Synopsys Exceeds EPS Forecasts | The Motley Fool

Synopsys (SNPS 2.73%), a leader in electronic design automation and silicon IP, announced its earnings for Q1 of 2025 on Feb. 26. The company reported non-GAAP earnings per share (EPS) of $3.03, exceeding both the analyst estimate of $2.79 and management's guidance range of $2.77 to $2.82. Revenue for the quarter reached $1.455 billion, slightly surpassing the anticipated $1.451 billion. Despite a year-over-year revenue decline of 3.7%, attributed to a shift in product mix and the sale of its Software Integrity business, Synopsys delivered stronger-than-expected numbers. The quarter was marked by solid execution, although challenges remain, including a notable dip in Design IP segment revenue. Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in 2024-12-04 earnings report. Synopsys plays a crucial role in the tech world, providing software and IP for electronic design and testing integrated circuits and electronic systems. Its key segments include Electronic Design Automation (EDA) and a broad portfolio of semiconductor IP solutions. It leads in AI-driven technologies that improve design automation processes and speed them up, crucial for the highly competitive and fast-paced semiconductor industry. Recently, Synopsys has been focused on integrating artificial intelligence and machine learning into its product offerings, enhancing workflow efficiency across various stages of design and manufacturing. These efforts include innovation like the Synopsys.ai lineup of solutions. Ensuring seamless operations globally through a widespread customer support network further cements its position in the market. During Q1 2025, Synopsys made significant strides with its EDA segment. Revenue grew to $1.020 billion, up from $985.3 million, reflecting its strengthening presence in chip design. Though there was a 10.4% year-over-year decrease in Non-GAAP EPS from $3.38 to $3.03 due to factors like the discontinued Software Integrity operation, the company exceeded both expert and its own earnings predictions. Innovation activities remained vibrant, with launches like industry-leading IP and improvements in AI-driven EDA solutions. Yet, the Design IP segment experienced a decline in revenue to $435.1 million, from $525.7 million. This underscores potential future challenges Synopsys may face should this segment's performance not improve. Macroeconomic conditions and geopolitical risks, particularly in China, present ongoing challenges. Regulatory pressures are also factors to watch, given the semiconductor industry's exposure to such externalities. These issues were acknowledged by management as potential areas of impact going forward. Synopsys's management maintained its full-year 2025 guidance, projecting strong double-digit revenue growth. Anticipated revenue lies in the range of $6.745 billion to $6.805 billion, with a non-GAAP EPS between $14.88 and $14.96. This consistent outlook conveys a confidence in navigating unfolding market dynamics and the robustness of its strategy. For investors, tracking Synopsys's continued innovation in AI and EDA, alongside monitoring its strategic business adjustments in response to global economic trends, remains paramount. Analysts and stakeholders will be keen to see how Synopsys sustains growth in its EDA segment and addresses the challenges in the Design IP segment, especially as it endeavors toward integration synergies from its pending Ansys acquisition.

Synopsys shares gain on stronger-than-expect second quarter earnings forecast - SiliconANGLE

Synopsys shares gain on stronger-than-expect second quarter earnings forecast Shares of Synopsys Inc. were up over 2% in late trading today after the electronic design automation company forecasted stronger-than-expected fiscal 2025 second-quarter earnings growth off the back of increasing demand for its software used to design chips. For the quarter that ended on Jan. 31, Synopsis reported adjusted earnings per share of $3.03, down from $3.38 per share in the first quarter of fiscal year 2024, on revenue of $1.455 billion, down 3.71% year-over-year. The adjusted earnings per share figure came in ahead of the $2.79 expected by analysts, while revenue was just ahead of an expected $1.45 billion. Across its verticals, Salesforce saw electronic design automation revenue of $978.7 million in the quarter, up from $970.7 million in the same quarter of the previous year, design revenue of $435.1 million, down from $525.7 million and other revenue of $41.5 million, up from $14.6 million. The company's electric design automation revenue includes digital and custom integrated circuit design software, verification hardware and software products, manufacturing-related design products, field-programmable gate array design software, artificial intelligence-driven EDA solutions and professional services. Business highlights in the quarter included several significant product announcements by Synopsys. In December, the company unveiled the industry's first Ultra Ethernet and UALink IP solutions, designed to connect massive AI accelerator clusters. The solutions provide up to 1.6 Tbps of bandwidth and address the growing demand for high-speed data transfer in AI applications. In collaboration with SiMa.ai, Synopsys announced a strategic partnership to accelerate the development of automotive edge artificial intelligence solutions. The joint effort focuses on expediting system-on-chip development for next-generation Advanced Driver Assistance Systems and In-Vehicle Infotainment applications, enhancing the capabilities of modern vehicles. The quarter also saw Synopsis move closer to gaining approval to acquire Ansys Corp. in a $35 billion cash-and-stock deal. The deal, announced in January 2024, requires regulatory approval, with a report in December suggesting that the European Union was set to sign off on the deal, be it that some two months later, approval is yet to be forthcoming. "In Q1, Synopsys' relentless focus on execution and innovation was evident across the business," said Sassine Ghazi, president and chief executive officer of Synopsys, in the company's earnings release. "We launched industry-leading silicon IP and hardware-assisted verification solutions while expanding generative AI capabilities in EDA." "We are continuing to see strong design activity at advanced nodes, fueled by the AI-driven reinvention of compute," Ghazi added. "As the pace and complexity of technology innovation increases, new silicon-to-systems design paradigms are essential and Synopsys is well-positioned to deliver." For its fiscal 2025 second quarter, Synopsis expects adjusted earnings per share of $3.37 to $3.42 on revenue of $1.585 billion to $1.615 billion. The revenue outlook was in line with expectations, while earnings were ahead of an expected $3.35. For the full year, the company expects adjusted earnings per share of $14.88 to $14.96 on revenue of $6.745 billion to $6.805 billion. Analysts were expecting $6.78 billion and $14.91 per share.

Synopsys revenue forecast beats estimates on AI chip boom, shares up

Companies such as Amazon, Google and Apple are investing in designing their own chips, as are carmakers and other businesses, helping drive demand for Synopsys' software.Synopsys on Wednesday forecast second-quarter revenue above Wall Street estimates, citing growing demand for its software used in designing chips. The company's shares rose 2.45% to $482 in after-hours trading after the results were released. Companies such as Amazon, Google and Apple are investing in designing their own chips, as are carmakers and other businesses, helping drive demand for Synopsys' software. The company sees second-quarter revenue between $1.59 billion and $1.62 billion, the midpoint of which is slightly above analysts' estimates of $1.60 billion, according to data compiled by LSEG. On an adjusted basis, the company sees per-share earnings to be between $3.37 and $3.42 for the second quarter, compared with analysts' estimates of $3.35. Synopsys, which partners with chip companies such as Nvidia , Qualcomm and Intel, provides software and hardware used for designing advanced processors. Synopsys Chief Executive Sassine Ghazi told Reuters that while some sectors of the chip industry such as automotive chips remain depressed, the company is still seeing strong demand from customers designing AI chips. Ghazi said that more companies have started to design chips for inference, which is when trained AI models are put to work, such as when chatbots provide answers. "It's a good thing, because the more inference you have, the more chips you're going to have, and the more types of chips you're going to have, and we benefit from it," Ghazi said. Synopsys is also closing its $35 billion deal to acquire engineering software firm Ansys, which was approved in the EU last month. Ghazi said Synopsys has started to engage in talks with Chinese regulators about the deal. "We've had very active engagements with them in the last few weeks, since the signals came officially from Europe and the UK," Ghazi said. "The engagements at this point, I want to say that they're very collaborative. They're no different than other agencies in the type of engagements we've had with them, and we still feel positive that we're marching towards a first half (2025) close." Revenue from the company's design automation unit - its largest segment, which includes digital and custom integrated circuit design software - was $1.02 billion in the first quarter. Synopsys posted revenue of $1.46 billion, slightly below analysts' estimates of $1.47 billion for the first quarter.