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Synopsys SNPS delivered better-than-expected first-quarter fiscal 2025 results. The company reported non-GAAP earnings of $3.03 per share for the first quarter, surpassing the Zacks Consensus Estimate of $2.81 and the guided range of $2.77-$2.82. However, the bottom line decreased 10.4% due to a year-over-year decline in revenues.
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Synopsys’ earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters and missed once, the average surprise being 3.7%.
Synopsys’ first-quarter revenues jumped 12% year over year to $1.46 billion, which marginally surpassed the Zacks Consensus Estimate of $1.45 billion. The top line primarily declined due to a fall in revenues of the Upfront Product and Maintenance and Service businesses.
The stronger-than-expected first-quarter performance has pushed upward the share price of SNPS by more than 3% during Wednesday’s extended trading session. Strong guidance released by the company might help SNPS shares to recover, which have already plunged 18% in the past year, underperforming the Computer - Software industry’s growth of 2.4%.
Synopsys, Inc. Price, Consensus and EPS Surprise
Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote
Synopsys’ Q1 Details
In the license-type revenue group, Time-Based Product revenues (56.9% of the total revenues) of $828.2 million were up 2.9% year over year. Upfront Product revenues (25.3%) moved downward by 16.7% to $368.1 million. Maintenance and Service revenues (17.8%) increased 1.7% to $259 million from the year-ago quarter’s $263.6 million.
Segment-wise, Electronic Design Automation (EDA) revenues (67.3% of revenues) were $978.7 million, up 0.8% year over year. Design IP revenues (29.9% of revenues) amounted to $435.1 million, down from the year-ago quarter’s $525.7 million. Other revenues, which were $41.5 million, represented 2.8% of the total revenues, increasing a whopping 184.2% year over year.
Geographically, Synopsys’ revenues in North America (43% of the total) and Europe (11%) were $622.6 million and $153.7 million, respectively. Revenues from Korea (17%), China (12%) and Other (18%) were $250.4 million, $173.9 million and $254.7 million, respectively.
The non-GAAP operating margin was 36.5%, down 360 basis points (bps) year over year.
Synopsys’ EDA’s adjusted operating margin showed a massive improvement of 310 bps to 39.7%. The Design IP segment’s margin reduced drastically from 46.7% to 29.1% on a year-over-year basis.
Synopsys’ Balance Sheet & Cash Flow
Synopsys had cash and short-term investments of $3.81 billion as of Jan. 31, 2025, compared with $4.05 billion as of Oct. 31, 2024.