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Synopsys (SNPS) Beats Q1 Earnings and Sales Estimates
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Synopsys (SNPS - Free Report) reported first-quarter fiscal 2023 non-GAAP earnings of $2.62 per share, beating the Zacks Consensus Estimate of $2.50. The bottom line improved 8.3% year over year.
Revenues jumped 7.2% year over year to $1.36 billion, driven by growth across its business segments. The top line surpassed the Zacks Consensus Estimate of $1.35 billion by 0.7%.
Synopsys benefited from the increasing demand for its products amid the rapid adoption of Big Data, faster computation and Machine Learning. Complex, connected, specialized and secure chips and systems witnessed strong momentum and drove Synopsys’ quarterly performance.
In the license-type revenues group, Time-Based Product revenues (57.5% of total revenues) of $782.3 million were up 10.6% year over year. Upfront Product revenues (24.7%) declined 8.6% to $336.7 million. Maintenance and Service revenues (17.8%) increased 24.6% year over year to $242.4 million from the year-ago quarter’s $194.5 million.
Segment-wise, Electronic Design Automation (EDA) revenues (64.2% of revenues) were $874.3 million, up 12.3% year over year. Design Intellectual Property (IP) revenues (25.2% of revenues) amounted to $343.7 million while Software Integrity revenues totaled $127.8 million, contributing approximately 9.4% to the top line in the reported quarter.
Other revenues stood at $15.5 million, representing 1.1% of total revenues.
Geographically, Synopsys’ revenues in North America (50% of the total) and Europe (10%) were $678.4 million and $135 million, respectively. Revenues from Korea (11%), China (15%) and Other (15%) were $145.8 million, $197.8 million and $204.4 million, respectively.
The non-GAAP operating margin was 35.2%, contracting 100 basis points (bps) year over year.
EDA and Software Integrity delivered adjusted operating margins of 38.9% and 12.1%, respectively, expanding 240 bps and 90 bps on a year-over-year basis. On the contrary, Design IP margin contracted 880 bps year over year to 34.2%.
Balance Sheet & Cash Flow
Synopsys had cash and short-term investments of $1.30 billion as of Jan 31, 2023 compared with $1.57 billion as of Oct 31, 2022.
Total long-term debt was $20.6 million in the reported quarter, slightly down from $20.8 million as of Oct 31, 2022.
During first-quarter fiscal 2023, operating cash flow was $115 million.
Guidance
For the second quarter of fiscal 2023, Synopsys expects revenues between $1.360 billion and $1.390 billion. Management estimates non-GAAP earnings between $1.62 and $1.72 per share. Non-GAAP expenses are anticipated in the band of $917-$927 million.
For fiscal 2023, SNPS continues to expect revenues in the $5.775-$5.825 billion range, suggesting 14-15% growth. However, it raised its non-GAAP earnings estimate for the fiscal year from the $10.28-$10.35 per share range to $10.53-$10.60 per share range, indicating 18-19% growth.
Non-GAAP expenses are still estimated in the range of $3.810-$3.840 billion. Synopsys previously predicted an operating cash flow of approximately $1.700 billion but now it expects the figure to be around $1.650 billion for fiscal 2023.
Zacks Rank & Key Picks
Currently, Synopsys carries a Zacks Rank #3 (Hold). Shares of SNPS have gained 23.7% over the past year.
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The Zacks Consensus Estimate for Fabrinet's third-quarter fiscal 2023 earnings has been revised 7 cents upward to $1.90 per share over the past seven days. For fiscal 2023, earnings estimates have moved north by 24 cents to $7.71 per share in the past seven days.
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Synopsys (SNPS) Beats Q1 Earnings and Sales Estimates
Synopsys (SNPS - Free Report) reported first-quarter fiscal 2023 non-GAAP earnings of $2.62 per share, beating the Zacks Consensus Estimate of $2.50. The bottom line improved 8.3% year over year.
Revenues jumped 7.2% year over year to $1.36 billion, driven by growth across its business segments. The top line surpassed the Zacks Consensus Estimate of $1.35 billion by 0.7%.
Synopsys benefited from the increasing demand for its products amid the rapid adoption of Big Data, faster computation and Machine Learning. Complex, connected, specialized and secure chips and systems witnessed strong momentum and drove Synopsys’ quarterly performance.
Synopsys, Inc. Price, Consensus and EPS Surprise
Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote
Quarter in Detail
In the license-type revenues group, Time-Based Product revenues (57.5% of total revenues) of $782.3 million were up 10.6% year over year. Upfront Product revenues (24.7%) declined 8.6% to $336.7 million. Maintenance and Service revenues (17.8%) increased 24.6% year over year to $242.4 million from the year-ago quarter’s $194.5 million.
Segment-wise, Electronic Design Automation (EDA) revenues (64.2% of revenues) were $874.3 million, up 12.3% year over year. Design Intellectual Property (IP) revenues (25.2% of revenues) amounted to $343.7 million while Software Integrity revenues totaled $127.8 million, contributing approximately 9.4% to the top line in the reported quarter.
Other revenues stood at $15.5 million, representing 1.1% of total revenues.
Geographically, Synopsys’ revenues in North America (50% of the total) and Europe (10%) were $678.4 million and $135 million, respectively. Revenues from Korea (11%), China (15%) and Other (15%) were $145.8 million, $197.8 million and $204.4 million, respectively.
The non-GAAP operating margin was 35.2%, contracting 100 basis points (bps) year over year.
EDA and Software Integrity delivered adjusted operating margins of 38.9% and 12.1%, respectively, expanding 240 bps and 90 bps on a year-over-year basis. On the contrary, Design IP margin contracted 880 bps year over year to 34.2%.
Balance Sheet & Cash Flow
Synopsys had cash and short-term investments of $1.30 billion as of Jan 31, 2023 compared with $1.57 billion as of Oct 31, 2022.
Total long-term debt was $20.6 million in the reported quarter, slightly down from $20.8 million as of Oct 31, 2022.
During first-quarter fiscal 2023, operating cash flow was $115 million.
Guidance
For the second quarter of fiscal 2023, Synopsys expects revenues between $1.360 billion and $1.390 billion. Management estimates non-GAAP earnings between $1.62 and $1.72 per share. Non-GAAP expenses are anticipated in the band of $917-$927 million.
For fiscal 2023, SNPS continues to expect revenues in the $5.775-$5.825 billion range, suggesting 14-15% growth. However, it raised its non-GAAP earnings estimate for the fiscal year from the $10.28-$10.35 per share range to $10.53-$10.60 per share range, indicating 18-19% growth.
Non-GAAP expenses are still estimated in the range of $3.810-$3.840 billion. Synopsys previously predicted an operating cash flow of approximately $1.700 billion but now it expects the figure to be around $1.650 billion for fiscal 2023.
Zacks Rank & Key Picks
Currently, Synopsys carries a Zacks Rank #3 (Hold). Shares of SNPS have gained 23.7% over the past year.
Some top-ranked stocks from the broader Computer and Technology sector are Baidu (BIDU - Free Report) , Fabrinet (FN - Free Report) and Bandwidth (BAND - Free Report) . While Baidu and Fabrinet sport a Zacks Rank #1 (Strong Buy), Bandwidth carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Baidu’s fourth-quarter 2022 earnings has been revised 49 cents southward to $2.14 per share over the past 30 days. For 2022, earnings estimates have dropped by 3.4% to $8.64 per share over the past 30 days.
BIDU’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 50.2%. Shares of the company have lost 9.2% in the past year.
The Zacks Consensus Estimate for Fabrinet's third-quarter fiscal 2023 earnings has been revised 7 cents upward to $1.90 per share over the past seven days. For fiscal 2023, earnings estimates have moved north by 24 cents to $7.71 per share in the past seven days.
FN’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 5.1%. Shares of the company have jumped 19.3% in the past year.
The Zacks Consensus Estimate for Bandwidth’s fourth-quarter 2022 earnings has been revised by a penny to 4 cents per share over the past 90 days. For 2022, earnings estimates have moved north by 5 cents to 37 cents per share in the past 90 days.
BAND's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 301.8%. Shares of the company have declined 55.5% in the past year.