Synopsys NASDAQ: SNPS reported third-quarter fiscal 2026 results above the high end of its guidance, citing broad-based strength in electronic design automation, its Ansys business and design IP. The company raised its full-year revenue, non-GAAP operating margin, earnings and cash-flow outlook.
Revenue for the quarter rose about 42% year over year to $2.477 billion, including approximately $711 million from Ansys. Non-GAAP operating margin was 41.6%, while non-GAAP earnings per share reached $3.91. GAAP earnings per share were $2.84, including a gain tied to the sale of the Processor IP Solutions business, which closed during the quarter.
“The key takeaway from Q3 is that the fundamentals across our portfolio are strengthening,” President and CEO Sassine Ghazi said. “EDA is accelerating, design IP has returned to growth, and Ansys is performing strongly while beginning to create new growth opportunities across the combined portfolio.”
EDA Growth, Record Hardware Revenue
The design automation segment generated about $2 billion in revenue and posted a 45.2% adjusted operating margin. Within the segment, EDA revenue increased 8.5% year over year, supported by software demand and a record quarter for hardware-assisted verification solutions.
Ghazi said the company expects EDA growth to accelerate to double digits in the fourth quarter and for the full fiscal year. He attributed the outlook to increasingly complex chip designs, advanced packaging and 3D integrated-circuit architectures, AI-related chip development, and demand for hardware-assisted verification.
The company said it secured 12 new and 66 repeat customer wins for hardware-assisted verification during the quarter. Ghazi also highlighted AMD’s use of Synopsys 3DIC Compiler for the recently launched Instinct MI455X GPU series.
Management said activity has remained strongest among AI and high-performance-computing customers. Ghazi told analysts that chip-start activity in non-AI markets has stabilized after slowing, while AI-related chip starts continue to accelerate.
Ansys Integration and Multiphysics Products
The quarter marked one year since Synopsys completed its acquisition of Ansys. CFO Shelagh Glaser said Ansys continued to perform strongly, while Synopsys was ahead of schedule on cost-synergy commitments and had repaid term loans earlier than planned.
Synopsys launched Multiphysics Fusion during the quarter, combining Synopsys and Ansys technologies to integrate thermal analysis into chip-design workflows. Ghazi said customers including NVIDIA, Cisco, MediaTek and Samsung Foundry validated up to 10 times faster design closure and three times faster runtime.
However, management does not expect the offering to make a meaningful contribution to EDA growth until fiscal 2027. Ghazi said customers are in early deployment stages and revenue should begin to increase as they move the technology into production.
In the Ansys portfolio, the company also cited demand for GPU-accelerated simulation. Its largest Ansys deal during the quarter involved GPU-accelerated computational fluid dynamics software supporting a company-wide digital twin at a multinational electronics-component manufacturer. Ghazi said simulation workloads can achieve substantial acceleration on GPUs, and that Synopsys captures the value associated with the GPU-based software offering.
IP Business Returns to Growth
Design IP revenue increased about 11% year over year to $474 million, returning the segment to growth. The segment’s adjusted operating margin was 26.5%.
Ghazi said the performance reflected demand from AI infrastructure customers for higher bandwidth, faster connectivity and more complex system architectures. The company said it won more than 95% of PCIe 7.0 opportunities during the quarter and has secured 25 LPDDR6 design wins year to date. Its die-to-die business is on pace to double year over year and has surpassed 100 cumulative design wins, according to management.
Synopsys also discussed two IP business models. Its established “Factory One” strategy centers on standards-based IP that can be developed once and licensed broadly. Ghazi said the company has maintained a design-win rate above 90% in automotive for three consecutive quarters as advanced driver-assistance systems move to 5- and 3-nanometer nodes. He added that USB IP has exceeded $2 billion in lifetime bookings.
The company is also pursuing a “Factory Two” model for customized IP subsystems and custom-silicon engagements. Ghazi said Synopsys is in advanced discussions with multiple customers about arrangements that could shift from traditional licensing and non-recurring engineering fees toward licensing plus royalties.
Raised Full-Year Outlook
Synopsys ended the quarter with $10.9 billion in backlog, modestly lower sequentially because of the Processor IP Solutions divestiture. Free cash flow was $746 million, cash and short-term investments totaled $3.6 billion, and total debt was about $10 billion.
For fiscal 2026, Synopsys raised its revenue outlook to a range of $9.69 billion to $9.74 billion, including an expected Ansys contribution of approximately $2.98 billion. The company expects non-GAAP operating margin of 41.5% at the midpoint and non-GAAP EPS of $15.04 to $15.10.
- Fourth-quarter revenue is projected at $2.53 billion to $2.58 billion.
- Fourth-quarter GAAP EPS is expected to be $0.60 to $0.85.
- Fourth-quarter non-GAAP EPS is forecast at $4.10 to $4.16.
- Full-year operating cash flow guidance was raised by $500 million to approximately $2.8 billion.
- Full-year free cash flow is now expected to be approximately $2.6 billion, up $600 million from prior guidance.
Ghazi said Synopsys has more than 30 active customer engagements involving its agentic AI platform. He said the company is considering subscription and consumption-based models for AI agents and workflows, while emphasizing that such systems require Synopsys’ underlying EDA tools, sign-off technology and physics-based data.
About Synopsys (NASDAQ:SNPS)
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.
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