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Synopsys (SNPS) Up 7.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Synopsys (SNPS - Free Report) . Shares have added about 7.8% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Synopsys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Synopsys Q4 Earnings and Revenues Beat Estimates
Synopsys reported non-GAAP earnings of $2.90 per share for the fourth quarter of fiscal 2025, which beat the Zacks Consensus Estimate by 3.94%. The bottom line decreased 14.7% on a year-over-year basis.
Synopsys’ earnings beat the Zacks Consensus Estimate thrice and missed once in the trailing four quarters, with the average surprise being 2.1%.
Synopsys’ fiscal fourth-quarter revenues jumped 37.8% year over year to $2.25 billion, beating the Zacks Consensus Estimate by 0.17%. The top line was primarily driven by an increase in revenues of Time-Based Product and Upfront Product businesses.
Synopsys’ Q4 Details
In the license-type revenue group, Time-Based Product revenues of $940.7 million (representing 41.7% of total revenues) increased 12.7% year over year. Upfront Product revenues (27.3% of total) rose 18.1% to $615.4 million. Maintenance and Service revenues (31.0% of total) surged to $698.8 million, up sharply from the year-ago quarter’s $280.1 million.
Segment-wise, Design Automation revenues, which include EDA, Ansys and Other, were $1.85 billion, representing 81.9% of total revenues and up 65.2% from the prior-year quarter. Design IP revenues were $407.2 million, down from $517.8 million a year ago. With the addition of Ansys, the Simulation & Analysis group is now incorporated into the EDA segment, beginning the third quarter of fiscal 2025. Other revenues were $44.7 million, representing 2.0% of total revenues. Ansys contributed 29.6% of the total revenues.
Geographically, Synopsys generated $1.05 billion from North America (46% of total) and $361.4 million from Europe (16%). Revenues from Korea (11%), China (10%) and Other regions (17%) were $236.9 million, $235.6 million, and $373.7 million, respectively.
The non-GAAP operating margin for the quarter was 36.5%, down from 40 basis points from the year-ago period.
Within segments, Design Automation’s adjusted operating margin improved to 41.5%, up from 37% a year earlier, while the Design IP segment’s adjusted margin contracted to 13.8%, down from 36.7% last year.
Synopsys’ Balance Sheet & Cash Flow
Synopsys ended the fourth quarter of fiscal 2025 with $2.96 billion in cash, cash equivalents and short-term investments, up from $2.59 billion in the prior quarter. Total long-term debt was $13.46 billion.
During the fourth quarter of fiscal 2025, Synopsys generated $640 million in operating cash flow. In fiscal 2025, SNPS generated $1.52 billion in operating cash flow.
SNPS’ Guidance for FY26
For fiscal 2026, Synopsys expects revenues in the range of $9.56-$9.66 billion, including $2.9 billion of expected Ansys revenues. Non-GAAP EPS is expected between $14.32 and $14.40. Non-GAAP expenses are projected to be in the range of $5.69-$5.75 billion.
For the first quarter of fiscal 2026, Synopsys expects revenues between $2.365 billion and $2.415 billion. Management expects non-GAAP EPS between $3.52 and $3.58.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 12.17% due to these changes.
VGM Scores
At this time, Synopsys has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock has a score of F on the value side, putting it in the bottom 20% quintile for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Synopsys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Synopsys (SNPS) Up 7.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Synopsys (SNPS - Free Report) . Shares have added about 7.8% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Synopsys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Synopsys Q4 Earnings and Revenues Beat Estimates
Synopsys reported non-GAAP earnings of $2.90 per share for the fourth quarter of fiscal 2025, which beat the Zacks Consensus Estimate by 3.94%. The bottom line decreased 14.7% on a year-over-year basis.
Synopsys’ earnings beat the Zacks Consensus Estimate thrice and missed once in the trailing four quarters, with the average surprise being 2.1%.
Synopsys’ fiscal fourth-quarter revenues jumped 37.8% year over year to $2.25 billion, beating the Zacks Consensus Estimate by 0.17%. The top line was primarily driven by an increase in revenues of Time-Based Product and Upfront Product businesses.
Synopsys’ Q4 Details
In the license-type revenue group, Time-Based Product revenues of $940.7 million (representing 41.7% of total revenues) increased 12.7% year over year. Upfront Product revenues (27.3% of total) rose 18.1% to $615.4 million. Maintenance and Service revenues (31.0% of total) surged to $698.8 million, up sharply from the year-ago quarter’s $280.1 million.
Segment-wise, Design Automation revenues, which include EDA, Ansys and Other, were $1.85 billion, representing 81.9% of total revenues and up 65.2% from the prior-year quarter. Design IP revenues were $407.2 million, down from $517.8 million a year ago. With the addition of Ansys, the Simulation & Analysis group is now incorporated into the EDA segment, beginning the third quarter of fiscal 2025. Other revenues were $44.7 million, representing 2.0% of total revenues. Ansys contributed 29.6% of the total revenues.
Geographically, Synopsys generated $1.05 billion from North America (46% of total) and $361.4 million from Europe (16%). Revenues from Korea (11%), China (10%) and Other regions (17%) were $236.9 million, $235.6 million, and $373.7 million, respectively.
The non-GAAP operating margin for the quarter was 36.5%, down from 40 basis points from the year-ago period.
Within segments, Design Automation’s adjusted operating margin improved to 41.5%, up from 37% a year earlier, while the Design IP segment’s adjusted margin contracted to 13.8%, down from 36.7% last year.
Synopsys’ Balance Sheet & Cash Flow
Synopsys ended the fourth quarter of fiscal 2025 with $2.96 billion in cash, cash equivalents and short-term investments, up from $2.59 billion in the prior quarter. Total long-term debt was $13.46 billion.
During the fourth quarter of fiscal 2025, Synopsys generated $640 million in operating cash flow. In fiscal 2025, SNPS generated $1.52 billion in operating cash flow.
SNPS’ Guidance for FY26
For fiscal 2026, Synopsys expects revenues in the range of $9.56-$9.66 billion, including $2.9 billion of expected Ansys revenues. Non-GAAP EPS is expected between $14.32 and $14.40. Non-GAAP expenses are projected to be in the range of $5.69-$5.75 billion.
For the first quarter of fiscal 2026, Synopsys expects revenues between $2.365 billion and $2.415 billion. Management expects non-GAAP EPS between $3.52 and $3.58.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 12.17% due to these changes.
VGM Scores
At this time, Synopsys has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock has a score of F on the value side, putting it in the bottom 20% quintile for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Synopsys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.