Synopsys Inc
Q3 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +0.12%.
Did SNPS Beat Earnings? Q3 2025 Results
Synopsys delivered a disappointing third quarter, missing on both the top and bottom lines as its landmark acquisition of Ansys reshaped nearly every corner of its financial statements. Non-GAAP EPS came in at $3.39, falling 9.48% short of the $3.75 consensus estimate, while revenue of $1.74 billion trailed expectations by 1.54% — though it still represented a solid 14.2% year-over-year gain. The primary culprit behind the earnings pressure was a sharp deterioration in the Design IP segment, where revenue declined to $427.60 million from $463.10 million a year ago and adjusted operating margin collapsed to 20.1% from 36.7%, tied in part to weakness with a major foundry customer. Meanwhile, the Ansys deal, which closed July 17, sent long-term debt soaring to $14.32 billion and interest expense jumping to $146.50 million for the quarter. The stock suffered one of its worst single-day selloffs on record following the results. Looking ahead, Synopsys guided Q4 revenue of $2.23–$2.26 billion with non-GAAP EPS of $2.76–$2.80, while cautioning that GAAP EPS will remain negative due to heavy Ansys-related amortization charges.
- Strength in Design Automation segment offset by weakness in Design IP
- Closing of Ansys acquisition expanded portfolio, customer base and market opportunity
- 14% year-over-year revenue growth driven by Design Automation
- Time-based products revenue grew to $892.4 million from $803.1 million YoY
- Upfront products revenue grew to $516.4 million from $442.5 million YoY
“Q3 was a transformational quarter. Against a challenging geo-political backdrop, we closed the Ansys acquisition – expanding our portfolio, customer base and opportunity. Now more than ever, Synopsys is the mission-critical partner technology R&D needs to design and deliver AI-powered products.”
Synopsys CEO, on the earnings call
Forward Guidance & Outlook
Synopsys guided Q4 FY2025 revenue of $2.23 billion to $2.26 billion, with non-GAAP EPS of $2.76 to $2.80 and GAAP EPS of ($0.27) to ($0.16). Full fiscal year 2025 revenue is targeted at $7.03 billion to $7.06 billion, with non-GAAP EPS of $12.76 to $12.80 and GAAP EPS of $5.03 to $5.16. The company expects approximately $1.13 billion in full-year operating cash flow, approximately $950 million in free cash flow, and approximately $180 million in capital expenditures. Management is taking a more conservative view of Q4, while guiding another consecutive year of profitable growth. The company plans to reallocate resources in its Design IP segment to higher growth opportunities and harness AI efficiencies, with actions that will impact its workforce. Targets assume no further changes to export control restrictions or the current U.S. government Entity List restrictions.
SNPS YoY Financials
SNPS Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.