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Synopsys (SNPS - Free Report) delivered better-than-expected fourth-quarter fiscal 2024 results. The company reported non-GAAP earnings of $3.40 per share for the fourth quarter, exceeding the Zacks Consensus Estimate of $3.29 and the guided range of $3.27-$3.32. Furthermore, the bottom line increased by 13%, driven by higher revenues and effective cost management.
In each of the trailing four quarters, Synopsys’ earnings beat the Zacks Consensus Estimate thrice and missed once with the average surprise being 2.7%.
Synopsys’ fourth-quarter revenues jumped 12% year over year to $1.64 billion, which marginally surpassed the Zacks Consensus Estimate of $1.63 billion. The top line was driven by notable growth across multiple business segments.
Despite the stronger-than-expected fourth-quarter performance, shares of Synopsys declined more than 7% during Wednesday’s extended trading session as the company’s revenue guidance for the first quarter and fiscal 2025 fell short of the Zacks Consensus Estimate.
On a year-to-date basis, shares of SNPS have returned 6.9%, underperforming the Computer - Software industry’s gain of 18.9%.
In the license-type revenue group, Time-Based Product revenues (51% of the total revenues) of $834.4 million were up by 6.9% year over year. Upfront Product revenues (31.8%) moved upward by 18% to $520.9 million. Maintenance and Service revenues (17.2%) increased 14.5% to $280.7 million from the year-ago quarter’s $245.2 million.
Segment-wise, Electronic Design Automation (EDA) revenues (65.6% of revenues) were $1.07 billion, up 15.2% year over year. Design IP revenues (31.7% of revenues) amounted to $517.8 million, slightly up from the year-ago quarter’s $513.7 million. Other revenues, which were $45.2 million, represented 2.7% of the total revenues, increasing a whopping 102.7% year over year.
Geographically, Synopsys’ revenues in North America (45% of the total) and Europe (11%) were $738.5 million and $185.2 million, respectively. Revenues from Korea (12%), China (16%) and Other (15%) were $203.5 million, $259.9 million and $248.9 million, respectively.
The non-GAAP operating margin was 36.9%, contracting 40 basis points (bps) year over year.
Synopsys’ EDA’s adjusted operating margin showed a massive improvement of 440 bps to 37%. The Design IP segment’s margin reduced drastically from 46% to 36.7% on a year-over-year basis.
Synopsys’ FY 2024 Performance in Brief
Revenues for fiscal year 2024 were $6.127 billion, an increase of approximately 15% from $5.32 billion in fiscal year 2023.
The non-GAAP operating margin was 38.5% for fiscal year 2024, expanding 220 compared to the previous year’s reported figure.
Non-GAAP net income for fiscal year 2024 was $2.058 billion, or $13.20 per share, compared to non-GAAP net income of $1.636 billion, or $10.54 per share, for fiscal year 2023.
Synopsys’ Balance Sheet & Cash Flow
Synopsys had cash and short-term investments of $4.05 billion as of Oct. 31, 2024, compared with $1.99 billion as of July 31, 2024.
The total long-term debt was $16 million at the end of the reported quarter, marginally higher than the $15.6 million reported in the previous quarter.
The company’s cash flow from operating activities, including discontinued operations, was $563 million for the reported quarter compared with the year-ago quarter’s cash flow of $326 million.
The company’s cash flow from operating activities, including discontinued operations, was $1.41 billion for the fiscal year 2024, lower than the previous year’s cash flow of $1.70 billion.
SNPS Initiates Guidance for Q1 and FY 2025
For fiscal 2025, SNPS expects revenues between $6.745 billion and $6.805 billion. Non-GAAP earnings are expected in the range of $14.88-$14.96. The Zacks Consensus Estimate for revenues is pegged at $6.87 billion and the consensus mark for earnings is pinned at $14.81 per share, up by a couple of cents over the past 60 days.
Non-GAAP expenses are expected in the range of $4.045-$4.085 billion.
For the first quarter of fiscal 2025, Synopsys expects revenues between $1.435 billion and $1.465 billion. The Zacks Consensus Estimate for revenues is pegged at $1.65 billion. Management estimates non-GAAP EPS between $2.77 and $2.82. The consensus mark for earnings is pegged at $3.51 per share, up by a couple of cents over the past 60 days.
Non-GAAP expenses are anticipated in the band of $945-$955 million.
APH shares have rallied 50.8% year to date. The Zacks Consensus Estimate for APH’s full-year 2024 earnings is pegged at $1.84 per share, up by a couple of cents over the past 60 days and suggesting an increase of 21.9% from the year-ago quarter’s reported figure.
AGYS shares have surged 57.3% year to date. The Zacks Consensus Estimate for AGYS’ full-year fiscal 2025 earnings is pegged at $1.31 per share, up by 9.2% over the past 60 days and indicating a rise of 19.1% from the year-ago quarter’s reported figure.
AEYE shares have skyrocketed 339.3% year to date. The Zacks Consensus Estimate for AEYE’s full-year 2024 earnings is pegged at 52 cents per share, up by a couple of cents over the past 60 days and implying a rise of 376% from the year-ago quarter’s reported figure.
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Synopsys Q4 Earnings Beat Estimates, Stock Dips 7% on Weak Guidance
Synopsys (SNPS - Free Report) delivered better-than-expected fourth-quarter fiscal 2024 results. The company reported non-GAAP earnings of $3.40 per share for the fourth quarter, exceeding the Zacks Consensus Estimate of $3.29 and the guided range of $3.27-$3.32. Furthermore, the bottom line increased by 13%, driven by higher revenues and effective cost management.
In each of the trailing four quarters, Synopsys’ earnings beat the Zacks Consensus Estimate thrice and missed once with the average surprise being 2.7%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Synopsys’ fourth-quarter revenues jumped 12% year over year to $1.64 billion, which marginally surpassed the Zacks Consensus Estimate of $1.63 billion. The top line was driven by notable growth across multiple business segments.
Despite the stronger-than-expected fourth-quarter performance, shares of Synopsys declined more than 7% during Wednesday’s extended trading session as the company’s revenue guidance for the first quarter and fiscal 2025 fell short of the Zacks Consensus Estimate.
On a year-to-date basis, shares of SNPS have returned 6.9%, underperforming the Computer - Software industry’s gain of 18.9%.
Synopsys, Inc. Price, Consensus and EPS Surprise
Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote
Synopsys’ Fourth-Quarter Details
In the license-type revenue group, Time-Based Product revenues (51% of the total revenues) of $834.4 million were up by 6.9% year over year. Upfront Product revenues (31.8%) moved upward by 18% to $520.9 million. Maintenance and Service revenues (17.2%) increased 14.5% to $280.7 million from the year-ago quarter’s $245.2 million.
Segment-wise, Electronic Design Automation (EDA) revenues (65.6% of revenues) were $1.07 billion, up 15.2% year over year. Design IP revenues (31.7% of revenues) amounted to $517.8 million, slightly up from the year-ago quarter’s $513.7 million. Other revenues, which were $45.2 million, represented 2.7% of the total revenues, increasing a whopping 102.7% year over year.
Geographically, Synopsys’ revenues in North America (45% of the total) and Europe (11%) were $738.5 million and $185.2 million, respectively. Revenues from Korea (12%), China (16%) and Other (15%) were $203.5 million, $259.9 million and $248.9 million, respectively.
The non-GAAP operating margin was 36.9%, contracting 40 basis points (bps) year over year.
Synopsys’ EDA’s adjusted operating margin showed a massive improvement of 440 bps to 37%. The Design IP segment’s margin reduced drastically from 46% to 36.7% on a year-over-year basis.
Synopsys’ FY 2024 Performance in Brief
Revenues for fiscal year 2024 were $6.127 billion, an increase of approximately 15% from $5.32 billion in fiscal year 2023.
The non-GAAP operating margin was 38.5% for fiscal year 2024, expanding 220 compared to the previous year’s reported figure.
Non-GAAP net income for fiscal year 2024 was $2.058 billion, or $13.20 per share, compared to non-GAAP net income of $1.636 billion, or $10.54 per share, for fiscal year 2023.
Synopsys’ Balance Sheet & Cash Flow
Synopsys had cash and short-term investments of $4.05 billion as of Oct. 31, 2024, compared with $1.99 billion as of July 31, 2024.
The total long-term debt was $16 million at the end of the reported quarter, marginally higher than the $15.6 million reported in the previous quarter.
The company’s cash flow from operating activities, including discontinued operations, was $563 million for the reported quarter compared with the year-ago quarter’s cash flow of $326 million.
The company’s cash flow from operating activities, including discontinued operations, was $1.41 billion for the fiscal year 2024, lower than the previous year’s cash flow of $1.70 billion.
SNPS Initiates Guidance for Q1 and FY 2025
For fiscal 2025, SNPS expects revenues between $6.745 billion and $6.805 billion. Non-GAAP earnings are expected in the range of $14.88-$14.96. The Zacks Consensus Estimate for revenues is pegged at $6.87 billion and the consensus mark for earnings is pinned at $14.81 per share, up by a couple of cents over the past 60 days.
Non-GAAP expenses are expected in the range of $4.045-$4.085 billion.
For the first quarter of fiscal 2025, Synopsys expects revenues between $1.435 billion and $1.465 billion. The Zacks Consensus Estimate for revenues is pegged at $1.65 billion. Management estimates non-GAAP EPS between $2.77 and $2.82. The consensus mark for earnings is pegged at $3.51 per share, up by a couple of cents over the past 60 days.
Non-GAAP expenses are anticipated in the band of $945-$955 million.
Zacks Rank & Stocks to Consider
Currently, SNPS carries a Zacks Rank #3 (Hold).
Amphenol (APH - Free Report) , Agilysys (AGYS - Free Report) and AudioEye (AEYE - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. APH, AGYS and AEYE carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
APH shares have rallied 50.8% year to date. The Zacks Consensus Estimate for APH’s full-year 2024 earnings is pegged at $1.84 per share, up by a couple of cents over the past 60 days and suggesting an increase of 21.9% from the year-ago quarter’s reported figure.
AGYS shares have surged 57.3% year to date. The Zacks Consensus Estimate for AGYS’ full-year fiscal 2025 earnings is pegged at $1.31 per share, up by 9.2% over the past 60 days and indicating a rise of 19.1% from the year-ago quarter’s reported figure.
AEYE shares have skyrocketed 339.3% year to date. The Zacks Consensus Estimate for AEYE’s full-year 2024 earnings is pegged at 52 cents per share, up by a couple of cents over the past 60 days and implying a rise of 376% from the year-ago quarter’s reported figure.