Synopsys (SNPS - Free Report) reported second-quarter fiscal 2023 non-GAAP earnings of $2.54 per share, beating the Zacks Consensus Estimate of $2.47. The bottom line improved 1.6% year over year.
Revenues jumped 9.1% year over year to $1.4 billion, driven by growth across its business segments. The top line surpassed the Zacks Consensus Estimate of $1.38 billion by 1.1%.
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.
Quarter in Detail
In the license-type revenues group, Time-Based Product revenues (57.9% of total revenues) of $808.2 million were up 11.7% year over year. Upfront Product revenues (24.8%) moved upward by 2.6% to $345.5 million. Maintenance and Service revenues (17.3%) increased 10.2% to $241.1 million from the year-ago quarter’s $218.8 million.
Segment-wise, Electronic Design Automation (EDA) revenues (64.6% of revenues) were $900.8 million, up 14.5% year over year. Design Intellectual Property (IP) revenues (24% of revenues) amounted to $335.2 million while Software Integrity revenues totaled $132.1 million, contributing approximately 9.5% to the top line in the reported quarter.
Other revenues were $26.7 million, representing 1.9% of total revenues.
Geographically, Synopsys’ revenues in North America (48% of the total) and Europe (11%) were $668.2 million and $157 million, respectively. Revenues from Korea (11%), China (14%) and Other (16%) were $156.8 million, $196.4 million and $216.4 million, respectively.
The non-GAAP operating margin was 33.3%, contracting 350 basis points (bps) year over year.
Software Integrity delivered adjusted operating margin of 13.9%, expanding 240 bps on a year-over-year basis. On the contrary, EDA and Design IP margin contracted 50 bps and 1310 bps year over year to 38.8% and 25.8%, respectively.
Balance Sheet & Cash Flow
Synopsys had cash and short-term investments of $1.7 billion as of Apr 30, 2023 compared with $1.30 billion as of Jan 31, 2023.
Total long-term debt was $20.2 million in the reported quarter, slightly down from $20.6 million as of Jan 31, 2023.
During second-quarter fiscal 2023, operating cash flow was $703 million.
Guidance
For the third quarter of fiscal 2023, Synopsys expects revenues between $1.465 billion and $1.495 billion. Management estimates non-GAAP earnings between $2.70 per share and $2.75 per share. Non-GAAP expenses are anticipated in the band of $970-$980 million.
For fiscal 2023, SNPS expects revenues in the $5.790-$5.830 billion range, suggesting 14-15% growth. Non-GAAP earnings are estimated in the $10.77-$10.84 per share range.
Non-GAAP expenses are likely to be in the range of $3.790-$3.820 billion. Synopsys previously predicted an operating cash flow of approximately $1.650 billion for fiscal 2023.
Zacks Rank & Other Key Picks
Currently, Synopsys carries a Zacks Rank #2 (Buy). Shares of SNPS have gained 38.3% over the past year.
Some other top-ranked stocks from the broader Computer and Technology sector are Meta Platforms (META - Free Report) , Momo (MOMO - Free Report) and ServiceNow (NOW - Free Report) . While Meta Platforms and Momo sport a Zacks Rank #1 (Strong Buy), ServiceNow carries a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised 14% upward to $2.79 per share over the past 30 days. For 2023, earnings estimates have moved north by 12.1% to $11.76 in the past 30 days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have gained 26.1% in the past year.
The Zacks Consensus Estimate for Momo’s first-quarter 2023 earnings has been revised southward from 36 cents to 32 cents per share over the past 30 days. For 2023, earnings estimates have moved down by 3 cents to $1.55 in the past 30 days.
MOMO's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 31.9%. Shares of the company have jumped 80.9% in the past year.
The Zacks Consensus Estimate for ServiceNow’s second-quarter 2023 earnings has been revised northward by 11 cents to $2.04 per share over the past 30 days. For 2023, earnings estimates have moved up by 39 cents to $9.54 in the past 30 days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 10.4%. Shares of the company have inched up 19.5% in the past year.
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Synopsys (SNPS - Free Report) reported second-quarter fiscal 2023 non-GAAP earnings of $2.54 per share, beating the Zacks Consensus Estimate of $2.47. The bottom line improved 1.6% year over year.
Revenues jumped 9.1% year over year to $1.4 billion, driven by growth across its business segments. The top line surpassed the Zacks Consensus Estimate of $1.38 billion by 1.1%.
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.
Quarter in Detail
In the license-type revenues group, Time-Based Product revenues (57.9% of total revenues) of $808.2 million were up 11.7% year over year. Upfront Product revenues (24.8%) moved upward by 2.6% to $345.5 million. Maintenance and Service revenues (17.3%) increased 10.2% to $241.1 million from the year-ago quarter’s $218.8 million.
Segment-wise, Electronic Design Automation (EDA) revenues (64.6% of revenues) were $900.8 million, up 14.5% year over year. Design Intellectual Property (IP) revenues (24% of revenues) amounted to $335.2 million while Software Integrity revenues totaled $132.1 million, contributing approximately 9.5% to the top line in the reported quarter.
Other revenues were $26.7 million, representing 1.9% of total revenues.
Geographically, Synopsys’ revenues in North America (48% of the total) and Europe (11%) were $668.2 million and $157 million, respectively. Revenues from Korea (11%), China (14%) and Other (16%) were $156.8 million, $196.4 million and $216.4 million, respectively.
The non-GAAP operating margin was 33.3%, contracting 350 basis points (bps) year over year.
Software Integrity delivered adjusted operating margin of 13.9%, expanding 240 bps on a year-over-year basis. On the contrary, EDA and Design IP margin contracted 50 bps and 1310 bps year over year to 38.8% and 25.8%, respectively.
Balance Sheet & Cash Flow
Synopsys had cash and short-term investments of $1.7 billion as of Apr 30, 2023 compared with $1.30 billion as of Jan 31, 2023.
Total long-term debt was $20.2 million in the reported quarter, slightly down from $20.6 million as of Jan 31, 2023.
During second-quarter fiscal 2023, operating cash flow was $703 million.
Guidance
For the third quarter of fiscal 2023, Synopsys expects revenues between $1.465 billion and $1.495 billion. Management estimates non-GAAP earnings between $2.70 per share and $2.75 per share. Non-GAAP expenses are anticipated in the band of $970-$980 million.
For fiscal 2023, SNPS expects revenues in the $5.790-$5.830 billion range, suggesting 14-15% growth. Non-GAAP earnings are estimated in the $10.77-$10.84 per share range.
Non-GAAP expenses are likely to be in the range of $3.790-$3.820 billion. Synopsys previously predicted an operating cash flow of approximately $1.650 billion for fiscal 2023.
Zacks Rank & Other Key Picks
Currently, Synopsys carries a Zacks Rank #2 (Buy). Shares of SNPS have gained 38.3% over the past year.
Some other top-ranked stocks from the broader Computer and Technology sector are Meta Platforms (META - Free Report) , Momo (MOMO - Free Report) and ServiceNow (NOW - Free Report) . While Meta Platforms and Momo sport a Zacks Rank #1 (Strong Buy), ServiceNow carries a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Meta Platforms' second-quarter 2023 earnings has been revised 14% upward to $2.79 per share over the past 30 days. For 2023, earnings estimates have moved north by 12.1% to $11.76 in the past 30 days.
META’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 15.5%. Shares of the company have gained 26.1% in the past year.
The Zacks Consensus Estimate for Momo’s first-quarter 2023 earnings has been revised southward from 36 cents to 32 cents per share over the past 30 days. For 2023, earnings estimates have moved down by 3 cents to $1.55 in the past 30 days.
MOMO's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 31.9%. Shares of the company have jumped 80.9% in the past year.
The Zacks Consensus Estimate for ServiceNow’s second-quarter 2023 earnings has been revised northward by 11 cents to $2.04 per share over the past 30 days. For 2023, earnings estimates have moved up by 39 cents to $9.54 in the past 30 days.
NOW's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 10.4%. Shares of the company have inched up 19.5% in the past year.
Zacks Reveals ChatGPT "Sleeper" Stock
One little-known company is at the heart of an especially brilliant Artificial Intelligence sector. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion.
As a service to readers, Zacks is providing a bonus report that names and explains this explosive growth stock and 4 other "must buys." Plus more.
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