Synopsys Q3 Earnings and Revenues Miss Estimates, Stock Plunges 22%

Synopsys, Inc. Price, Consensus and EPS Surprise

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

Synopsys’ Q3 Details

In the license-type revenue group, Time-Based Product revenues (51.3% of the total) of $892.4 million were up 11.1% year over year. Upfront Product revenues (29.7%) increased 16.7% to $516.4 million. Maintenance and Service revenues (19%) increased 18.2% to $331 million from the year-ago quarter’s $280.1 million.

Segment-wise, Electronic Design Automation (“EDA”) revenues (68.6% of the total) were $1.19 billion, up 17% year over year. Design IP revenues (24.6%) amounted to $427.6 million, down from the year-ago quarter’s $463.1 million. Revenues from Simulation and Analysis were $77.7 million, representing 4.5% of total revenues. Simulation and Analysis segment was added to the segment after the acquisition of Ansys. Other revenues were $40.6 million, which represented 2.3% of the total revenues and decreased 4.5% year over year.

Geographically, Synopsys’ revenues in North America (47% of the total) and Europe (10%) were $824.7 million and $178.6 million, respectively. Revenues from Korea (12%), China (14%) and Other (16%) were $202.1 million, $247.3 million and $287 million, respectively.

The non-GAAP operating margin was 38.5%, down 150 basis points (bps) year over year.

EDA’s adjusted operating margin showed improvement of 300 bps to 44.5%. The Design IP segment’s margin contracted 1660 bps to 20.1% on a year-over-year basis.

Synopsys’ Balance Sheet & Cash Flow

Synopsys had cash and short-term investments of $2.59 billion as of July 31, 2025, compared with $14.26 billion as of April 30, 2025.

The total long-term debt was $14.32 billion at the end of the reported quarter, up from $10.03 billion reported in the previous quarter.

During the fiscal third quarter, Synopsys generated operating cash flow of $671 million. In the first three quarters of fiscal 2025, it generated operating cash flow of $879 million.

SNPS’ Guidance for Q4 and FY25

For fiscal 2025, SNPS now expects revenues between $7.03-$7.06 billion, up from $6.745 billion to $6.805 billion. Non-GAAP earnings are now expected in the range of $12.76-$12.80, down from $15.11-$15.19. The Zacks Consensus Estimate for revenues is pegged at $6.77 billion and the same for earnings is pinned at $15.13 per share.

Non-GAAP expenses are expected in the range of $4.43-$4.44 billion, up from $4.045-$4.085 billion.

For the fourth quarter of fiscal 2025, Synopsys expects revenues between $2.23 billion and $2.26 billion. The Zacks Consensus Estimate for revenues is pegged at $1.94 billion. Management estimates non-GAAP earnings per share between $2.76 and $2.80. The consensus mark for earnings is pegged at $4.61 per share.