Synopsys (NASDAQ:SNPS) Posts Earnings Results

Key Points

• Q1 beat and upgraded outlook: Synopsys reported non‑GAAP EPS of $3.77 and $2.41B revenue, topped estimates, raised FY26 EPS guidance to $14.38–$14.46, and authorized up to $2B in share repurchases while generating roughly $822M in free cash flow and an $11.3B backlog.
• Ansys acquisition driving near‑term revenue and later monetization: Ansys contributed about $886M in Q1, with cross‑selling underway and Synopsys targeting joint solution monetization in FY27 plus ~$400M run‑rate revenue and $400M run‑rate cost synergies over time.
• Notable risks: Design IP is described as transitional with muted growth and timing delays, China export restrictions and domestic competition are pressuring demand, and higher post‑deal leverage raises execution sensitivity.

Synopsys (NASDAQ:SNPS - Get Free Report) released its earnings results on Wednesday. The semiconductor company reported $3.77 EPS for the quarter, beating the consensus estimate of $3.56 by $0.21, FiscalAI reports. Synopsys had a return on equity of 7.89% and a net margin of 18.89%.The company had revenue of $2.41 billion during the quarter, compared to analysts' expectations of $2.39 billion. During the same period in the prior year, the business posted $3.03 EPS. The business's revenue was up 65.6% on a year-over-year basis. Synopsys updated its FY 2026 guidance to 14.380-14.460 EPS and its Q2 2026 guidance to 3.110-3.170 EPS.

Here are the key takeaways from Synopsys' conference call:

• Q1 outperformance: Revenue of $2.41B came in at the high end of guidance, non-GAAP EPS was $3.77 (above expectations), non-GAAP operating margin was 42.1%, backlog ended at $11.3B, and free cash flow was ~$822M — signaling strong execution and cash generation.
• Reiterated FY26 guidance with slight EPS raise and share buyback: Management reiterated full-year revenue and margin targets, raised non-GAAP EPS guidance by $0.06 to $14.38–$14.46, and the board authorized up to $2B in share repurchases while prioritizing investment and opportunistic buybacks.
• Ansys integration progressing: Ansys contributed ~$886M in Q1, cross-selling is underway, first wave of joint Synopsys+Ansys solutions is rolling out in H1 with monetization expected in FY27, and management is pursuing $400M run-rate revenue and $400M run-rate cost synergies over the coming years.
• Design IP is a transitional area with timing risk: Design IP revenue was $407M (down ~6% YoY), FY26 is described as transitional with muted growth and compressed IP margins, and management acknowledges schedule prioritization issues that pushed some IP delivery and monetization into the back half/Q4.
• China remains a headwind: While China grew ~21% overall due to Ansys inclusion, Synopsys-excluding-Ansys showed slight China revenue decline and management cited ongoing geopolitical/technology restrictions and increased domestic competition as pressures on demand and IP monetization in China.

Synopsys Stock Performance

SNPS stock opened at $449.17 on Thursday. The company has a debt-to-equity ratio of 0.48, a quick ratio of 1.52 and a current ratio of 1.62. The stock has a market capitalization of $86.04 billion, a price-to-earnings ratio of 56.22, a PEG ratio of 3.67 and a beta of 1.12. Synopsys has a 1 year low of $365.74 and a 1 year high of $651.73. The stock's fifty day moving average is $472.85 and its two-hundred day moving average is $479.02.

Insider Activity

In other Synopsys news, CFO Shelagh Glaser sold 3,657 shares of the company's stock in a transaction dated Friday, December 19th. The shares were sold at an average price of $460.77, for a total value of $1,685,035.89. Following the completion of the transaction, the chief financial officer owned 17,842 shares in the company, valued at approximately $8,221,058.34. This represents a 17.01% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Also, insider Janet Lee sold 250 shares of Synopsys stock in a transaction that occurred on Monday, January 12th. The shares were sold at an average price of $530.00, for a total value of $132,500.00. Following the sale, the insider directly owned 11,959 shares in the company, valued at approximately $6,338,270. This trade represents a 2.05% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders have sold 4,157 shares of company stock valued at $1,945,036 in the last 90 days. Insiders own 0.62% of the company's stock.

Institutional Trading of Synopsys

A number of hedge funds and other institutional investors have recently made changes to their positions in SNPS. Caitong International Asset Management Co. Ltd acquired a new stake in shares of Synopsys during the 4th quarter valued at $28,000. Atlas Capital Advisors Inc. acquired a new stake in shares of Synopsys during the fourth quarter worth $32,000. Kemnay Advisory Services Inc. purchased a new stake in shares of Synopsys during the fourth quarter valued at $35,000. Greenline Wealth Management LLC purchased a new stake in shares of Synopsys during the fourth quarter valued at $37,000. Finally, WealthCollab LLC boosted its position in shares of Synopsys by 110.8% in the 3rd quarter. WealthCollab LLC now owns 78 shares of the semiconductor company's stock valued at $38,000 after purchasing an additional 41 shares during the period. 85.47% of the stock is currently owned by institutional investors.

Analyst Upgrades and Downgrades

SNPS has been the topic of several research analyst reports. JPMorgan Chase & Co. increased their price target on shares of Synopsys from $600.00 to $650.00 and gave the stock an "overweight" rating in a research report on Thursday, December 11th. Needham & Company LLC increased their target price on Synopsys from $550.00 to $580.00 and gave the stock a "buy" rating in a report on Thursday, December 11th. Bank of America upgraded Synopsys from an "underperform" rating to a "neutral" rating and lowered their price target for the company from $525.00 to $500.00 in a report on Monday, December 8th. The Goldman Sachs Group set a $600.00 price target on Synopsys and gave the company a "buy" rating in a research report on Wednesday. Finally, HSBC downgraded shares of Synopsys from a "buy" rating to a "hold" rating and set a $455.00 price objective for the company. in a report on Friday, February 20th. Nine investment analysts have rated the stock with a Buy rating, seven have assigned a Hold rating and one has assigned a Sell rating to the company. According to data from MarketBeat.com, the stock currently has a consensus rating of "Hold" and an average price target of $547.00.

Key Synopsys News

Here are the key news stories impacting Synopsys this week:

• Positive Sentiment: Q1 beat and strong results — Synopsys reported non‑GAAP EPS of $3.77 and revenue of $2.409B, topping estimates and showing strong year‑over‑year growth; the quarter came at the high end of prior guidance. PR Newswire: Q1 Results
• Positive Sentiment: Very bullish guidance — management raised FY26 EPS guidance to $14.38–$14.46 and Q2 EPS guidance to $3.11–$3.17, well above Street estimates, which is driving optimism about near‑term earnings power. Guidance/Press Release
• Positive Sentiment: Capital return boost — the board authorized up to $2.0B in additional share repurchases, which supports EPS and signals confidence from management. Buyback Announcement
• Positive Sentiment: Analyst and market interest — Morgan Stanley reiterated a Buy and noted strong earnings quality and IP trajectory; unusual call‑option buying also points to bullish trader positioning. TipRanks: Morgan Stanley Buy
• Neutral Sentiment: Mixed near‑term revenue signal — while EPS guidance was raised, quarterly revenue guidance landed roughly in line with expectations, suggesting upside is currently EPS‑driven rather than revenue surprise. Guidance Details
• Negative Sentiment: China export restrictions and muted next‑quarter outlook — Reuters flagged Synopsys forecasting a more muted quarter amid China export limits and macro uncertainty, which pressured the stock earlier and could cap upside if geopolitical risk persists. Reuters: China Export Restrictions
• Negative Sentiment: Leverage concerns from M&A — commentators note Synopsys carries large incremental debt (post‑deal) that investors are watching closely; higher leverage raises sensitivity to execution and could limit valuation expansion. 24/7 Wall St.: Debt Concerns

About Synopsys

Synopsys, Inc is a leading provider of electronic design automation (EDA) software and semiconductor intellectual property (IP) used to design, verify and manufacture integrated circuits and complex systems-on-chip (SoCs). Its product portfolio spans tools and technologies for front‑end design and synthesis, simulation and verification, physical implementation and signoff, and design-for-manufacturability, enabling chip designers to move from architecture through tape‑out.

In addition to core EDA offerings, Synopsys supplies a broad set of semiconductor IP building blocks — such as interface, memory and analog/mixed-signal cores — that customers integrate into SoCs to accelerate development.