Synopsys Q4 Earnings Surpass Estimates, Revenues Rise Y/Y

Synopsys SNPS reported non-GAAP earnings of $2.90 per share for the fourth quarter of fiscal 2025, which beat the Zacks Consensus Estimate by 3.94%. The bottom line decreased 14.7% on a year-over-year basis.

Synopsys’ earnings beat the Zacks Consensus Estimate thrice and missed once in the trailing four quarters, with the average surprise being 2.1%.

Synopsys’ fiscal fourth-quarter revenues jumped 37.8% year over year to $2.25 billion, beating the Zacks Consensus Estimate by 0.17%. The top line was primarily driven by an increase in revenues of Time-Based Product and Upfront Product businesses.

Synopsys’ Q4 Details

In the license-type revenue group, Time-Based Product revenues of $940.7 million (representing 41.7% of total revenues) increased 12.7% year over year. Upfront Product revenues (27.3% of total) rose 18.1% to $615.4 million. Maintenance and Service revenues (31.0% of total) surged to $698.8 million, up sharply from the year-ago quarter’s $280.1 million.

Synopsys, Inc. Price, Consensus and EPS Surprise

Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote

Segment-wise, Design Automation revenues, which include EDA, Ansys and Other, were $1.85 billion, representing 81.9% of total revenues and up 65.2% from the prior-year quarter. Design IP revenues were $407.2 million, down from $517.8 million a year ago. With the addition of Ansys, the Simulation & Analysis group is now incorporated into the EDA segment, beginning the third quarter of fiscal 2025. Other revenues were $44.7 million, representing 2.0% of total revenues. Ansys contributed 29.6% of the total revenues.

Geographically, Synopsys generated $1.05 billion from North America (46% of total) and $361.4 million from Europe (16%). Revenues from Korea (11%), China (10%) and Other regions (17%) were $236.9 million, $235.6 million, and $373.7 million, respectively.

The non-GAAP operating margin for the quarter was 36.5%, down from 40 basis points from the year-ago period.

Within segments, Design Automation’s adjusted operating margin improved to 41.5%, up from 37% a year earlier, while the Design IP segment’s adjusted margin contracted to 13.8%, down from 36.7% last year.

Synopsys’ Balance Sheet & Cash Flow

Synopsys ended the fourth quarter of fiscal 2025 with $2.96 billion in cash, cash equivalents and short-term investments, up from $2.59 billion in the prior quarter. Total long-term debt was $13.46 billion.

During the fourth quarter of fiscal 2025, Synopsys generated $640 million in operating cash flow. In fiscal 2025, SNPS generated $1.52 billion in operating cash flow.

SNPS’ Guidance for FY26

For fiscal 2026, Synopsys expects revenues in the range of $9.56-$9.66 billion, including $2.9 billion of expected Ansys revenues. The Zacks Consensus Estimate for SNPS’ fiscal 2026 revenues is pegged at $9.73 billion, indicating year-over-year growth of 38%.

Non-GAAP EPS is expected between $14.32 and $14.40. Non-GAAP expenses are projected to be in the range of $5.69-$5.75 billion. The Zacks Consensus Estimate for SNPS’ fiscal 2026 earnings is pegged at $14.01, indicating year-over-year growth of 8.5%.

For the first quarter of fiscal 2026, Synopsys expects revenues between $2.365 billion and $2.415 billion. The Zacks Consensus Estimate for SNPS’ first-quarter fiscal 2026 revenues is pegged at $2.38 billion, indicating year-over-year growth of 63.8%.

Management expects non-GAAP EPS between $3.52 and $3.58. The Zacks Consensus Estimate for SNPS’ first-quarter fiscal 2026 earnings is pegged at $3.36, indicating a year-over-year rise of 10.9%.

SNPS’ Zacks Rank and Other Stocks to Consider

Currently, SNPS carries a Zacks Rank #2 (Buy).

Amphenol APH, NVIDIA NVDA and CommScope COMM are some other top-ranked stocks in the broader Zacks Computer & Technology sector.

Amphenol, NVIDIA and CommScope sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amphenol’s shares have appreciated 88.4% in the trailing 12 months. The Zacks Consensus Estimate for Amphenol’s 2025 earnings is pegged at $3.29 per share, up 7 cents over the past 30 days, indicating an increase of 74.07% year over year.

NVIDIA shares have appreciated 33.8% in the trailing 12 months. The Zacks Consensus Estimate for NVIDIA’s 2025 earnings is pegged at $4.62 per share, up 16 cents over the past 30 days, indicating an increase of 54.52% year over year.

CommScope shares have appreciated 250.2% in the trailing 12 months. The Zacks Consensus Estimate for CommScope’s 2025 earnings is pegged at $1.64 per share, unchanged over the past 30 days, indicating an increase of 5566.67% year over year.

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