Key Takeaways:
Synopsys reported fiscal second-quarter revenue of $2.28 billion, beating the $2.25 billion consensus estimate, as demand for chip design software from companies building artificial intelligence hardware continued to accelerate.
"AI is scaling semiconductor demand, architectural diversity and complexity of chips and the systems they power — driving demand across our portfolio," Chief Executive Officer Sassine Ghazi said.
Adjusted earnings came in at $3.35 per share, topping analyst forecasts of $3.15. Revenue rose 42 percent from $1.6 billion a year earlier, boosted by the inclusion of about $652 million from Ansys, the simulation software company Synopsys acquired. Backlog stood at $11 billion at quarter-end.
The results underscore Synopsys' position as a key beneficiary of the AI infrastructure buildout. Chipmakers and hyperscalers are investing in more complex semiconductor designs, driving demand for electronic design automation tools, intellectual property and multiphysics simulation software — capabilities Ghazi described as "essential in the AI supply chain."
Design Automation revenue, including Ansys, reached $1.82 billion in the quarter, accounting for roughly 80 percent of total sales. Within that segment, EDA revenue grew slightly more than 8 percent year over year, led by hardware-assisted verification as hyperscaler and semiconductor customers scaled emulation and prototyping for complex AI designs. Synopsys recorded more than 30 full-flow technical wins in advanced nodes during the period.
Design IP revenue totaled $454 million, down 6 percent from a year earlier but up 12 percent sequentially. Ghazi said the segment bottomed in the fiscal first quarter and expects sequential improvements through the second half. The company reported a win rate above 90 percent for PCIe 7.0 IP with 18 new licenses and cumulative lifetime UCIe design wins exceeding 150.
On a GAAP basis, net income fell to $17.1 million from higher amortization expenses, stock-based compensation, restructuring costs and acquisition-related charges tied to the Ansys deal. GAAP earnings per share were $0.09.
Synopsys raised its full-year guidance. It now expects fiscal 2026 revenue of $9.63 billion to $9.71 billion, up from a prior range of $9.56 billion to $9.66 billion. Adjusted profit is forecast at $14.72 to $14.80 per share, compared with the previous outlook of $14.38 to $14.46. The company also lifted its operating cash flow forecast to about $2.3 billion and free cash flow to roughly $2 billion.
For the fiscal third quarter, Synopsys guided for revenue of $2.41 billion to $2.46 billion, bracketing the $2.41 billion consensus, and adjusted earnings of $3.63 to $3.69 per share.
The company separately announced a cooperation agreement with activist investor Elliott Investment Management, appointing Jesse Cohn to its board as an independent director effective June 1. Synopsys plans to host an investor day on Sept. 30 to discuss its long-term strategy, including opportunities in IP, EDA, Ansys-related offerings and agentic AI.
Shares slipped about 1 percent in after-hours trading following the results.
The guidance raise signals management expects AI-driven demand to sustain through the fiscal year. Investors will watch the Sept. 30 investor day for updated margin targets and the company's strategy to increase value capture across its portfolio.
This article is for informational purposes only and does not constitute investment advice.
