Synopsys Earnings Call Transcripts
Fiscal Year 2026
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The meeting covered board elections, approval of executive compensation, and an amended equity plan. All board nominees and management proposals passed, while the shareholder proposal on written consent was not approved. Voting results are preliminary and will be finalized in a Form 8-K.
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The event marked a new era of convergence in engineering, unveiling strategic investments in co-design, digital twin, and agentic AI to address rising complexity. Key innovations include Multi-Physics Fusion, AI-driven automation, and open digital twin platforms, all supported by deep industry partnerships and customer success stories.
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FY26 will be the first year of the combined Ansys and Synopsys, expanding solutions from silicon to systems engineering, with a focus on AI, workflow transformation, and IP customization. Strong financial performance, accelerated synergies, and evolving business models position the company for growth despite China headwinds.
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Q1 FY2026 delivered revenue and non-GAAP EPS at the high end of guidance, driven by strong execution, robust Ansys performance, and continued AI and digital twin momentum. The company raised full-year non-GAAP EPS guidance and remains focused on sustainable growth and margin expansion.
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Significant headwinds in the IP business led to a cautious outlook, with persistent China uncertainty and resource shifts to HPC. Ansys is outperforming, with integration progressing and joint solutions expected in 2026. Focus is on high-value IP, evolving monetization, and leveraging unmatched portfolios for growth.
Fiscal Year 2025
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Record FY25 revenue of $7.05B and $11.4B backlog reflect strong execution and Ansys integration. FY26 guidance targets $9.6B revenue, 40.5% non-GAAP margin, and $1.9B free cash flow, with muted IP growth and China headwinds offset by AI-driven demand and NVIDIA partnership.
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NVIDIA and Synopsys announced a multi-year, non-exclusive partnership to integrate accelerated computing and AI into engineering and design, targeting a major industry shift from CPU to GPU-based workflows. The collaboration includes a $2 billion investment, aims for significant speed-ups, and expects broad adoption by 2026.
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Recent disruptions in China and a foundry customer led to muted IP growth guidance for 2026, while other segments remain strong. The business is accelerating cost synergies and investing in AI and Ansys integration, with IP growth expected to rebound in 2027.
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Q3 saw revenue rise 14% to $1.74B, driven by design automation strength and the Ansys acquisition, but offset by an 8% decline in IP revenue due to China and foundry headwinds. FY2025 guidance was lowered, and a 10% headcount reduction is planned to drive efficiency.
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Recent regulatory action halted China sales, prompting guidance withdrawal and industry-wide collaboration to clarify restrictions. AI-driven product innovation continues, with Agentic AI expected to transform efficiency and business models. The Ansys acquisition advances amid strong customer support and ongoing margin improvements.
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Q2 revenue rose 10% year-over-year to $1.6B, with non-GAAP EPS above guidance and strong growth in design IP. Full-year guidance is reiterated despite a projected China revenue decline, supported by robust demand in AI, HPC, and stabilization in industrial and automotive markets.
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The meeting confirmed a quorum, re-elected all board members, and approved amendments to equity and stock purchase plans, executive compensation, and auditor ratification. A stockholder proposal on executive severance ('Golden Parachutes') was presented but not approved.
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The conference marked 35 years of industry collaboration, highlighting the rapid rise of AI-driven intelligent systems and the need for re-engineering workflows to manage complexity. Keynotes emphasized partnerships, digital twin technology, and a roadmap toward agentic AI, aiming to transform engineering productivity and innovation.
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Q1 2025 revenue and non-GAAP EPS exceeded guidance, driven by robust AI and HPC demand, while industrial, automotive, and China markets remained weak. FY 2025 guidance is reaffirmed, with strong hardware launches and AI-driven EDA adoption offsetting China headwinds.
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Fiscal 2025 guidance projects 10.1%-11.1% growth, with revenue weighted to the second half due to customer schedules and product cycles. AI-driven demand remains strong, while China and non-AI verticals face headwinds. The Ansys acquisition is on track for first half 2025 close, with a focus on margin expansion and rapid deleveraging.
Fiscal Year 2024
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Record FY 2024 revenue grew 15% to $6.13B, with strong double-digit growth in both design automation and IP. FY 2025 guidance targets 10–12% revenue growth, 40% non-GAAP operating margin, and continued investment in AI and multi-die solutions, while factoring in macro and China risks.
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Record Q3 revenue and EPS growth driven by strong demand in AI, IP, and hardware-assisted verification. FY2024 guidance raised, with double-digit growth expected and robust backlog. Continued investment in R&D and efficiency, with Ansys acquisition and Software Integrity sale progressing.
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AI-driven solutions have rapidly expanded from digital design to verification, test, and analog, delivering significant productivity gains and new revenue streams. Generative AI is being piloted internally and externally, with a focus on leveraging proprietary data and maintaining a leadership position as competition intensifies.