Synopsys to Report Q3 Earnings: What's in the Cards for the Stock?

Synopsys SNPS is scheduled to report third-quarter fiscal 2025 results on Sept. 9, after market close.

Synopsys expects non-GAAP earnings per share between $3.82 and $3.87. The Zacks Consensus Estimate for fiscal third-quarter earnings is pinned at $3.84 per share, indicating an increase of approximately 12% year over year.

The company anticipates revenues between $1.755 billion and $1.785 billion for the fiscal third quarter. The Zacks Consensus Estimate is pegged at $1.77 billion, suggesting an increase of 15.9% from the year-ago period's reported figure.

In the trailing four quarters, SNPS’ earnings surpassed the Zacks Consensus Estimate  in each of the trailing four quarters, with an average surprise of 6%.

Synopsys, Inc. Price and EPS Surprise

Synopsys, Inc. price-eps-surprise | Synopsys, Inc. Quote

Factors Influencing Synopsys’ Q3 Results

Synopsys’ fiscal third-quarter performance is likely to have benefited from robust demand in the AI and high-performance computing end markets. Strong momentum around Synopsys’ hardware-assisted verification (HAV) portfolio is expected to have boosted top-line growth during the quarter to be reported. 

The launch of next-generation HAPS 200 prototyping systems and ZeBu 200 emulation systems, delivering up to 2x better performance compared to prior versions, has strengthened Synopsys’ leadership in HAV. During the second quarter, these systems witnessed early deployments at a leading HPC AI chipmaker and a top-tier Asian semiconductor customer. Additionally, major customers, including AMD, ARM, NVIDIA and SiFive, have begun deploying these technologies, and are likely to have contributed positively in the to-be-reported quarter.

The company’s advancement in agent AI is anticipated to have further supported third-quarter performance. In the second quarter, the company reported large-scale adoption of DSO.ai and VSO.ai across CPU, GPU, and AI infrastructure projects. By enabling engineers to task autonomous agents with executing complex workflows, Synopsys expects to unlock massive productivity gains across the industry. The continued adoption of Synopsys.ai across design implementation, verification, test, and analog tools is expected to have driven meaningful growth. 

Synopsys’ IP development for the global foundry ecosystem is also expected to contribute positively to the third-quarter results. In the second quarter, Synopsys secured multiple wins for its 224 gig PHY, established leadership in PCIe 7.0 with seven unique customer wins, and reported more than 20 customer engagements in UALink. Additionally, Silicon success for PCIe 4.05 IP on Samsung’s SF8 process, targeting automotive, mobile, networking, and storage applications, as well as successful deployment of one-time programmable non-volatile memory IP on TSMC’s N4, N5, N6, and N7 nodes, is likely to have supported demand, particularly in security and encryption-related solutions. 

However, tightening budgets among corporations due to ongoing macroeconomic challenges and unfavorable currency exchange rates are expected to have partially offset the positive impacts of the growth drivers.

What Our Model Says About SNPS

Our proven model does not conclusively predict an earnings beat for SNPS this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Currently, SNPS carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

The Kroger Co. KR, General Mills GIS and FactSet Research Systems FDS are some stocks that have a favorable combination.

The Kroger Co. is set to report its second-quarter 2025 results on Sept. 11. It has an Earnings ESP of +0.29% and a Zacks Rank #2 at present. The Kroger Co. shares have gained 11% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills is slated to report the first quarter of fiscal 2026 results on Sept. 17. It has an Earnings ESP of +1.33% and a Zacks Rank #3 at present. General Mills shares have lost 22.3% year to date. 

FactSet Research Systems is scheduled to report its fourth-quarter fiscal 2025 results on Sept. 18. It has an Earnings ESP of +2.07% and a Zacks Rank #3 at present. FactSet Research Systems shares have plunged 23.1% year to date. 

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This article originally published on Zacks Investment Research (zacks.com).

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