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SNPS Q2 revenues jumped 41.9% year over year, fueled by Design Automation and Ansys.
Synopsys expanded non-GAAP operating margin to 39.5% as EDA segment profitability improved.
Synopsys guided fiscal 2026 revenues to be $9.625-$9.705B and non-GAAP EPS of $14.72-$14.80.
Synopsys (SNPS - Free Report) reported non-GAAP earnings of $3.35 per share for the second quarter of fiscal 2026, which beat the Zacks Consensus Estimate by 5.7%. The bottom line decreased 8.7% 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 0.9%.
Synopsys’ fiscal second-quarter revenues jumped 41.9% year over year to $2.28 billion, beating the Zacks Consensus Estimate by 1.1%. The top line was primarily driven by an increase in revenues of Time-Based Product, Upfront Product and Maintenance and Service businesses.
In the license-type revenue group, Time-Based Product revenues of $945.6 million (representing 41.5% of total revenues) increased 14.2% year over year. Upfront Product revenues (24% of total) rose 7% to $546.3 million. Maintenance and Service revenues (34.5% of total) surged to $784.1 million, up sharply from the year-ago quarter’s $265.3 million.
Segment-wise, Design Automation revenues, which include EDA, Ansys and Other, were $1.82 billion, representing 80% of total revenues and up 62.3% from the prior-year quarter. Design IP revenues were $454.2 million, representing 20% of total revenues and down from $482 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 $7 million, representing 0.3% of total revenues. Ansys contributed 28.7% of the total revenues.
Geographically, Synopsys generated $998.5 million from North America (44% of total) and $378.1 million from Europe (17%). Revenues from Korea (12%), China (10%) and Other regions (17%) were $265.4 million, $240.4 million and $393.6 million, respectively.
The non-GAAP operating margin for the quarter was 39.5%, which expanded 150 basis points from the year-ago period.
Within segments, Design Automation’s adjusted operating margin improved to 43.3%, up from 40.9% a year earlier, while the Design IP segment’s adjusted margin contracted to 24.4%, down from 31.2% last year.
Synopsys’ Balance Sheet & Cash Flow
Synopsys ended the second quarter of fiscal 2026 with $2.48 billion in cash, cash equivalents and short-term investments, up from $2.20 billion in the prior quarter. Total long-term debt was $10.01 billion.
During the second quarter of fiscal 2026, Synopsys generated $629 million in operating cash flow.
SNPS Raises Guidance for FY26
For fiscal 2026, Synopsys raised its revenue outlook to $9.625-$9.705, up from the prior guided range of $9.56-$9.66 billion. The Zacks Consensus Estimate for SNPS’ fiscal 2026 revenues is pegged at $9.63 billion, indicating year-over-year growth of 36.5%.
SNPS lifted non-GAAP EPS target to $14.72-$14.80 per share, up from the prior guidance of $14.38-$14.46. The Zacks Consensus Estimate for SNPS’ fiscal 2026 earnings is pegged at $14.45, indicating year-over-year growth of 11.9%.
For the third quarter of fiscal 2026, the company expects revenues of $2.41-$2.4 billion and non-GAAP earnings of $3.63-$3.69 per share. Management said the updated full-year framework includes the Ansys channel accounting impact and also reflects an expected reduction tied to the pending sale of the Processor IP Solutions business, which it expects to close shortly.
The Zacks Consensus Estimate for SNPS’ third-quarter fiscal 2026 revenues is pegged at $2.41 billion, indicating year-over-year growth of 38.6%.
The Zacks Consensus Estimate for SNPS’ third-quarter fiscal 2026 earnings is pegged at $3.64, indicating a year-over-year increase of 7.4%.
Shares of Applied Materials have rallied 74.4% year to date. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.02 per share, up by 8.3% over the past 30 days, indicating a year-over-year surge of 27.6%.
Shares of Celestica have gained 21% year to date. The Zacks Consensus Estimate for Celestica’s 2026 earnings is pegged at $10.16 per share, up 15.1% over the past 30 days, indicating a year-over-year jump of 67.9%.
Amphenol shares have jumped 3.8% year to date. The Zacks Consensus Estimate for APH’s 2026 earnings is pegged at $4.76 per share, up 11.4% over the past 30 days, indicating a year-over-year increase of 42.5%.
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Synopsys Q2 Earnings Surpass Estimates, Revenues Rise Y/Y
Key Takeaways
Synopsys (SNPS - Free Report) reported non-GAAP earnings of $3.35 per share for the second quarter of fiscal 2026, which beat the Zacks Consensus Estimate by 5.7%. The bottom line decreased 8.7% 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 0.9%.
Synopsys’ fiscal second-quarter revenues jumped 41.9% year over year to $2.28 billion, beating the Zacks Consensus Estimate by 1.1%. The top line was primarily driven by an increase in revenues of Time-Based Product, Upfront Product and Maintenance and Service businesses.
Synopsys, Inc. Price, Consensus and EPS Surprise
Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote
Synopsys’ Q2 Details
In the license-type revenue group, Time-Based Product revenues of $945.6 million (representing 41.5% of total revenues) increased 14.2% year over year. Upfront Product revenues (24% of total) rose 7% to $546.3 million. Maintenance and Service revenues (34.5% of total) surged to $784.1 million, up sharply from the year-ago quarter’s $265.3 million.
Segment-wise, Design Automation revenues, which include EDA, Ansys and Other, were $1.82 billion, representing 80% of total revenues and up 62.3% from the prior-year quarter. Design IP revenues were $454.2 million, representing 20% of total revenues and down from $482 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 $7 million, representing 0.3% of total revenues. Ansys contributed 28.7% of the total revenues.
Geographically, Synopsys generated $998.5 million from North America (44% of total) and $378.1 million from Europe (17%). Revenues from Korea (12%), China (10%) and Other regions (17%) were $265.4 million, $240.4 million and $393.6 million, respectively.
The non-GAAP operating margin for the quarter was 39.5%, which expanded 150 basis points from the year-ago period.
Within segments, Design Automation’s adjusted operating margin improved to 43.3%, up from 40.9% a year earlier, while the Design IP segment’s adjusted margin contracted to 24.4%, down from 31.2% last year.
Synopsys’ Balance Sheet & Cash Flow
Synopsys ended the second quarter of fiscal 2026 with $2.48 billion in cash, cash equivalents and short-term investments, up from $2.20 billion in the prior quarter. Total long-term debt was $10.01 billion.
During the second quarter of fiscal 2026, Synopsys generated $629 million in operating cash flow.
SNPS Raises Guidance for FY26
For fiscal 2026, Synopsys raised its revenue outlook to $9.625-$9.705, up from the prior guided range of $9.56-$9.66 billion. The Zacks Consensus Estimate for SNPS’ fiscal 2026 revenues is pegged at $9.63 billion, indicating year-over-year growth of 36.5%.
SNPS lifted non-GAAP EPS target to $14.72-$14.80 per share, up from the prior guidance of $14.38-$14.46. The Zacks Consensus Estimate for SNPS’ fiscal 2026 earnings is pegged at $14.45, indicating year-over-year growth of 11.9%.
For the third quarter of fiscal 2026, the company expects revenues of $2.41-$2.4 billion and non-GAAP earnings of $3.63-$3.69 per share. Management said the updated full-year framework includes the Ansys channel accounting impact and also reflects an expected reduction tied to the pending sale of the Processor IP Solutions business, which it expects to close shortly.
The Zacks Consensus Estimate for SNPS’ third-quarter fiscal 2026 revenues is pegged at $2.41 billion, indicating year-over-year growth of 38.6%.
The Zacks Consensus Estimate for SNPS’ third-quarter fiscal 2026 earnings is pegged at $3.64, indicating a year-over-year increase of 7.4%.
SNPS’ Zacks Rank and Stocks to Consider
Currently, SNPS carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Applied Materials (AMAT - Free Report) , Celestica (CLS - Free Report) and Amphenol (APH - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Applied Materials have rallied 74.4% year to date. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.02 per share, up by 8.3% over the past 30 days, indicating a year-over-year surge of 27.6%.
Shares of Celestica have gained 21% year to date. The Zacks Consensus Estimate for Celestica’s 2026 earnings is pegged at $10.16 per share, up 15.1% over the past 30 days, indicating a year-over-year jump of 67.9%.
Amphenol shares have jumped 3.8% year to date. The Zacks Consensus Estimate for APH’s 2026 earnings is pegged at $4.76 per share, up 11.4% over the past 30 days, indicating a year-over-year increase of 42.5%.