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Synopsys' (SNPS) Q1 Earnings and Revenues Beat Estimates
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Synopsys Inc.’s (SNPS - Free Report) first-quarter fiscal 2021 non-GAAP earnings of $1.52 per share beat the Zacks Consensus Estimate by 4.83%. Moreover, the figure improved 50.5% year over year.
Further, revenues increased 16.3% year over year to $970.3 million and surpassed the Zacks Consensus Estimate by 1.9%, driven by significant contributions from Electronic design automation (EDA), and IP & Systems Integration business segments.
The company is benefiting from the increasing demand for its products amid the rapid adoption of Big Data, faster computation and Machine Learning.
Moreover, robust adoption of the company’s Verification Continuum Platform and Fusion Compiler product within Fusion Design Platform was a major growth driver in the first quarter.
In the license type revenue group, Time-Based Product revenues (65% of total revenues) of $631.3 million were up 13.5% year over year. Maintenance and Service revenues (17%) improved 29.5% to $164.7 million. Upfront Product revenues (18%) grew 15.7% to $174.4 million.
Segment-wise, Semiconductor & System Design revenues (90.5% of total revenues) were $878.3 million, up 17.3% year over year. Within the segment, EDA revenues (55% of revenues) were $536.2 million and IP & Systems Integration revenues (35% of revenues) came in at $339.6 million. Software Integrity revenues totaled $92 million, contributing approximately 9% to the top line in the reported quarter.
Notably, the company updated its reportable geographical segments. Geographically, Synopsys’ revenues in North America (49% of total) were $474.2 million and $105.2 million in Europe (11%). Revenues from Korea (10%), China (12%) and Other (18%) came in at $98.3 million, $115.8 million and $176.9 million, respectively.
Non-GAAP operating margin was 29.6%, expanding 720 basis points (bps) year over year. Semiconductor & System Design delivered an adjusted operating margin of 31.8%, up 790 bps year over year, while Software Integrity margin contracted 80 bps year over year to 8.6%.
Balance Sheet & Cash Flow
Synopsys had cash and cash equivalents of $1.02 billion as of Jan 31, 2021, compared with $1.24 billion as of Oct 31, 2020.
Total long-term debt came in at $25.7 million in the reported quarter compared with the previous quarter’s $100.8 million. Outstanding debt of $123 million was also higher than the previous quarter’s $128 million.
Operating cash flow in the first quarter was $174 million.
Guidance
For second-quarter fiscal 2021, the company’s revenues are expected between $970 million and $1 billion.
Management expects non-GAAP earnings between $1.50 and $1.55 per share.
Non-GAAP expenses are anticipated to be $697-$707 million.
For fiscal 2021, management projects revenues of $4-$4.05 billion.
Non-GAAP earnings for the fiscal year are expected between $6.23 and $6.30 per share.
Operating cash flow is expected between $1.2 billion and $1.3 billion.
Further, management expects strong demand for the company’s advanced solutions and cloud computing services along with growing customer acceptance for its new capabilities to drive growth for its robust product portfolio.
Zacks Rank & Stocks to Consider
Synopsys currently carries a Zacks Rank #4 (Sell).
The long-term earnings growth rate for Skyworks Solutions, NXP Semiconductors and Shopify is currently pegged at 18.98%, 10% and 32.5%, respectively.
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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Synopsys' (SNPS) Q1 Earnings and Revenues Beat Estimates
Synopsys Inc.’s (SNPS - Free Report) first-quarter fiscal 2021 non-GAAP earnings of $1.52 per share beat the Zacks Consensus Estimate by 4.83%. Moreover, the figure improved 50.5% year over year.
Further, revenues increased 16.3% year over year to $970.3 million and surpassed the Zacks Consensus Estimate by 1.9%, driven by significant contributions from Electronic design automation (EDA), and IP & Systems Integration business segments.
The company is benefiting from the increasing demand for its products amid the rapid adoption of Big Data, faster computation and Machine Learning.
Moreover, robust adoption of the company’s Verification Continuum Platform and Fusion Compiler product within Fusion Design Platform was a major growth driver in the first quarter.
Synopsys, Inc. Price, Consensus and EPS Surprise
Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote
Quarter in Detail
In the license type revenue group, Time-Based Product revenues (65% of total revenues) of $631.3 million were up 13.5% year over year. Maintenance and Service revenues (17%) improved 29.5% to $164.7 million. Upfront Product revenues (18%) grew 15.7% to $174.4 million.
Segment-wise, Semiconductor & System Design revenues (90.5% of total revenues) were $878.3 million, up 17.3% year over year. Within the segment, EDA revenues (55% of revenues) were $536.2 million and IP & Systems Integration revenues (35% of revenues) came in at $339.6 million. Software Integrity revenues totaled $92 million, contributing approximately 9% to the top line in the reported quarter.
Notably, the company updated its reportable geographical segments. Geographically, Synopsys’ revenues in North America (49% of total) were $474.2 million and $105.2 million in Europe (11%). Revenues from Korea (10%), China (12%) and Other (18%) came in at $98.3 million, $115.8 million and $176.9 million, respectively.
Non-GAAP operating margin was 29.6%, expanding 720 basis points (bps) year over year. Semiconductor & System Design delivered an adjusted operating margin of 31.8%, up 790 bps year over year, while Software Integrity margin contracted 80 bps year over year to 8.6%.
Balance Sheet & Cash Flow
Synopsys had cash and cash equivalents of $1.02 billion as of Jan 31, 2021, compared with $1.24 billion as of Oct 31, 2020.
Total long-term debt came in at $25.7 million in the reported quarter compared with the previous quarter’s $100.8 million. Outstanding debt of $123 million was also higher than the previous quarter’s $128 million.
Operating cash flow in the first quarter was $174 million.
Guidance
For second-quarter fiscal 2021, the company’s revenues are expected between $970 million and $1 billion.
Management expects non-GAAP earnings between $1.50 and $1.55 per share.
Non-GAAP expenses are anticipated to be $697-$707 million.
For fiscal 2021, management projects revenues of $4-$4.05 billion.
Non-GAAP earnings for the fiscal year are expected between $6.23 and $6.30 per share.
Operating cash flow is expected between $1.2 billion and $1.3 billion.
Further, management expects strong demand for the company’s advanced solutions and cloud computing services along with growing customer acceptance for its new capabilities to drive growth for its robust product portfolio.
Zacks Rank & Stocks to Consider
Synopsys currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader technology sector include Skyworks Solutions (SWKS - Free Report) , NXP Semiconductors (NXPI - Free Report) and Shopify Inc. (SHOP - Free Report) , all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Skyworks Solutions, NXP Semiconductors and Shopify is currently pegged at 18.98%, 10% and 32.5%, respectively.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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