Synopsys raises annual outlook after strong third quarter
Synopsys reported adjusted third-quarter EPS of $3.91 and revenue of $2.48 billion, both above analyst estimates, then lifted fiscal 2026 EPS and revenue guidance.
On Wednesday, Synopsys, Inc. (NASDAQ: SNPS ) reported strong third-quarter results and raised outlook.
During the call, CEO Sassine Ghazi said AI is creating unprecedented complexity and driving stronger demand for the silicon IP and engineering solutions needed to build next-generation AI computing, infrastructure and physical AI systems.
The company reported adjusted EPS of $3.91, beating the analyst consensus estimate of $3.67, according to Pro data.
Revenue rose 42% year over year to $2.48 billion, topping the $2.44 billion Street estimate.
The company cited broad-based strength across EDA, Ansys and design IP.
Free cash flow was $746 million, with $3.6 billion in cash and short-term investments against about $10 billion of debt.
Read Also: EXCLUSIVE: Synopsys Says the AI Assistant Era Is Already Ending Business Performance Ansys contributed about $711 million in revenue, and management said the business continued to perform strongly a year after the acquisition.
EDA revenue grew 8.5% year over year, driven by strong software performance and a record quarter for hardware-assisted verification, with double-digit growth expected in the fourth quarter and full-year 2026.
Also, Design IP revenue grew 11% to $474 million, with a 26.5% adjusted operating margin.
The business won more than 95% of PCIe 7 opportunities and secured 25 LPDDR6 design wins year to date.
Die-to-die IP revenue is on track to double year over year, with more than 100 design wins, while Synopsys maintained a 90%+ automotive design win rate for three straight quarters as ADAS platforms transition to 5nm and 3nm technologies.
USB IP Lifetime Bookings Crossed $2 Billion Synopsys’ USB IP bookings surpassed $2 billion, with tier-one wins advancing to leading-edge nodes.
Its new Multiphysics Fusion solution delivered up to 10x faster design closure and 3x faster runtime in customer validation, with revenue contributions expected from 2027.
The third quarter backlog stood at $10.9 billion.
The company has over 30 agentic AI engagements, with its verification agent achieving up to 50x faster validated RTL, 20% better coverage and up to 40% shorter debug cycles.
Synopsys added 12 new and 66 repeat hardware-assisted verification customers in the third quarter.
Guidance Boost Synopsys expects fourth quarter adjusted EPS of $4.10-$4.16 and revenue of $2.53 billion-$2.58 billion, compared with estimates of $4.00 and $2.552 billion, respectively.
The company raised its fiscal year 2026 adjusted EPS guidance to $15.04-$15.10 from $14.72-$14.80 and revenue guidance to $9.69 billion-$9.74 billion from $9.625 billion-$9.705 billion, versus estimates of $14.76 and $9.68 billion.
Synopsys projects Ansys revenue contribution of $2.98 billion in the full year.
SNPS Price Action: Synopsys shares were up 0.24% at $411.00 during premarket trading on Thursday, according to Pro data.
Photo via Shutterstock