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

Synopsys’ SNPS shares plunged 22% during yesterday’s extended trading session after it reported results for the third quarter of fiscal 2025, missing both top and bottom-line consensus estimates. The company reported non-GAAP earnings of $3.39 per share for the fiscal third quarter, missing the Zacks Consensus Estimate of $3.84 and the guided range of $3.82-$3.87. The bottom line decreased 1.2% on a year-over-year basis.Synopsys’ earnings beat the Zacks Consensus Estimate thrice and missed once in the trailing four quarters, with the average surprise being 1.9%.Synopsys’ fiscal third-quarter revenues jumped 14% year over year to $1.74 billion, missing the Zacks Consensus Estimate of $1.768 billion. The top line was primarily driven by an increase in revenues of Time-Based Product and Upfront Product businesses.Synopsys, Inc. Price, Consensus and EPS Surprise Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. QuoteSynopsys’ Q3 DetailsIn 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 FlowSynopsys 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 FY25For 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.SNPS’ Zacks Rank and Stocks to ConsiderCurrently, SNPS carries a Zacks Rank #4 (Sell).Amphenol APH, F5 FFIV and CrowdStrike CRWD are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. Amphenol, F5 and CrowdStrike sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Amphenol’s shares have gained 68.2% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings is pegged at $3.02 per share, up 4 cents over the past 30 days, indicating an increase of 59.8% from the year-ago quarter’s reported figure.F5’s shares have surged 29.4% year to date. The Zacks Consensus Estimate for F5’s full-year fiscal 2025 earnings is pegged at $15.38 per share, up 0.8% over the past 30 days, indicating a gain of 15% from the year-ago quarter’s reported figure.CrowdStrike’s shares have gained 23.8% year to date. The Zacks Consensus Estimate for CrowdStrike’s full-year 2026 earnings is pegged $3.67 per share, up 4.9% over the past 30 days, indicating a decline of 6.6% from the year-ago quarter’s reported figure.See our %%CTA_TEXT%% report – free today!7 Best Stocks for the Next 30 DaysWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amphenol Corporation (APH): Free Stock Analysis Report F5, Inc. (FFIV): Free Stock Analysis Report Synopsys, Inc. (SNPS): Free Stock Analysis Report CrowdStrike (CRWD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks