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Synopsys' (SNPS) Q1 Earnings and Revenues Beat Estimates

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Synopsys (SNPS - Free Report) reported first-quarter fiscal 2022 non-GAAP earnings of $2.40 per share, beating the Zacks Consensus Estimate of $2.37, reflecting an improvement of 57.9% year over year.

Revenues surged 30.9% year over year to $1.27 billion, driven by growth across its business segments. The top line narrowly beat the Zacks Consensus Estimate of $1.26 billion.

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 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 (55.7% of total revenues) of $707.5 million were up 12.1% year over year. Upfront Product revenues (29%) soared 111.2% to $368.3 million. Maintenance and Service revenues (15.3%) increased 18.1% year over year to $194.5 million from the year-ago quarter’s $164.7 million.

Segment-wise, Semiconductor & System Design revenues (91.5% of total revenues) were $1.16 billion, up 32.4% year over year. Within the segment, Electronic Design Automation revenues (50% of revenues) were $632.3 million, while IP & Systems Integration revenues (42% of revenues) came in at $527.5 million.

Software Integrity revenues totaled $107.6 million, contributing approximately 8.5% to the top line in the reported quarter.

Geographically, Synopsys’ revenues in North America (49% of the total) and Europe (10%) were $618 million and $132.7 million, respectively. Revenues from Korea (9%), China (17%) and Other (15%) came in at $114.4 million, $212.8 million and $192.3 million, respectively.

Non-GAAP operating margin was 36.2%, expanding 660 basis points (bps) year over year.

Semiconductor & System Design delivered an adjusted operating margin of 38.5% expanding 670 bps on a year-over-year basis. Software Integrity margin expanded 260 bps year over year to 11.2%.

Balance Sheet & Cash Flow

Synopsys had cash and short-term investments of $1.27 billion as of Jan 31, 2022, compared with $1.58 billion as of Oct 31, 2021.

Total long-term debt was $24.4 million in the reported quarter, down from $25.1 million as of Oct 31, 2021.

Operating cash flow in the first quarter of fiscal 2022 was $155.7 million.

Guidance

For the second quarter of fiscal 2022, Synopsys expects revenues between $1.240 billion and $1.270 billion. Management estimates non-GAAP earnings between $2.35 and $2.40 per share. Non-GAAP expenses are anticipated in the band of $800 million to $810 million.

For fiscal 2022, Synopsys raised guidance. The company now projects revenues of $4.775-$4.825 billion compared with the prior range of $4.19-$4.22 billion.

Non-GAAP earnings for the fiscal year are now expected between $7.85 and $7.92 per share compared with the earlier guidance of $7.73 and $7.80 per share.

Non-GAAP expenses are still estimated in the range of $3.225-$3.285 billion. Synopsys forecast operating cash flow of $1.450-$1.500 billion.

Zacks Rank & Key Picks

Synopsys currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader computer and technology sector include the iPhone maker Apple (AAPL - Free Report) and Axcelis Technologies (ACLS - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), and Analog Devices (ADI - Free Report) carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Apple’s second-quarter fiscal 2022 earnings has been revised upward by 3.6% to $1.43 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 5.9% to $6.15 per share in the past 30 days.

Apple’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 20.3%. AAPL stock has appreciated 31.9% in the past year.

The Zacks Consensus Estimate for Axcelis’ first-quarter 2022 earnings has been revised upward by 2 cents to 89 cents per share over the past seven days. For 2022, earnings estimates have moved north by 10.8% to $3.99 per share in the last seven days.

Axcelis’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 30.3%. Shares of ACLS have rallied 80.8% in the past year.

The Zacks Consensus Estimate for Analog Devices’ first-quarter fiscal 2022 earnings has been revised upward by a penny to $1.79 per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 7 cents to $7.53 per share in the past 60 days.

Analog Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.1%. Shares of ADI have gained 5.4% in the past year.

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