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Synopsys, Inc. is a global leader in electronic design automation (EDA) software, providing products and services that enable the design and testing of integrated circuits (ICs) and electronic systems . The company offers a comprehensive portfolio of semiconductor intellectual property (IP) products, as well as software tools and services aimed at improving software security and quality . Synopsys' business is organized into three main segments: Design Automation, Design IP, and Software Integrity, each contributing to its record revenue of $5.8 billion in fiscal 2023 .
- Design Automation - Provides EDA solutions including digital, custom, and FPGA IC design software, verification software and hardware products, and system integration products and services .
- Design IP - Offers a broad portfolio of pre-designed circuits used as components in larger chip designs, significantly contributing to the company's revenue .
- Software Integrity - Focuses on solutions that test software code for security vulnerabilities and quality defects, along with professional and managed services .
- Given the significant second-half weighting in your fiscal '25 revenue guidance, what specific factors give you confidence in achieving these targets, especially considering potential customer delays in hardware installations and IP pull-downs?
- How might the recent updates from the Department of Commerce on U.S. semiconductor and EDA software export restrictions impact your fiscal '25 outlook, particularly with customers added to the entity list, and what measures are you taking to mitigate potential revenue risks?
- Your operating margin guidance of 40% for fiscal '25 suggests higher profitability despite a slowdown in projected revenue growth; is this primarily driven by cost-cutting measures, reduced M&A activity, or other factors, and how sustainable are these margin improvements long term?
- With an ending backlog of $8.1 billion, flat year-over-year, and considering geopolitical uncertainties and potential delays in foundry investments, how do you plan to drive revenue growth in fiscal '25 without significantly drawing down backlog, and what risks do you foresee to backlog progression?
- Given the rapid expansion of AI and hyperscaler investments as growth drivers, how might capacity constraints like space and power limitations for hardware installations affect your hardware business growth in fiscal '25, and what strategies are you employing to address these challenges?
Competitors mentioned in the company's latest 10K filing.
- Cadence Design Systems, Inc. - Competitor in both the Design Automation and Design IP segments .
- Siemens EDA - Competitor in the Design Automation segment .
- Checkmarx Ltd. - Competitor in the Software Integrity segment, named in the Gartner Magic Quadrant for Application Security Testing .
- Veracode, Inc. - Competitor in the Software Integrity segment, named in the Gartner Magic Quadrant for Application Security Testing .
- Open Text Corporation - Competitor in the Software Integrity segment, named in the Gartner Magic Quadrant for Application Security Testing .
- GitHub, Inc. - Competitor in the Software Integrity segment, named in the Gartner Magic Quadrant for Application Security Testing .
- Snyk Ltd. - Competitor in the Software Integrity segment, named in the Gartner Magic Quadrant for Application Security Testing .
Recent developments and announcements about SNPS.
Financial Reporting
- Record quarterly revenue of $1.636 billion, marking an 11% increase year-over-year (YoY), which exceeded the mid-point of their guidance .
- Quarterly GAAP earnings per diluted share (EPS) were $1.79, while non-GAAP EPS was $3.40, reflecting a 13% YoY increase and surpassing guidance .
- Full-year 2024 revenue reached a record $6.127 billion, up approximately 15% from the previous year, with a 25% growth in non-GAAP EPS .
- Synopsys anticipates double-digit revenue growth in 2025 and is preparing for the acquisition of Ansys, expected to close in the first half of 2025 .
Earnings Call
Synopsys recently released its earnings call transcript, highlighting several key points about its financial performance and strategic initiatives. The company reported a record revenue of $6.13 billion for fiscal year 2024, marking a 15% year-over-year increase. This growth was driven by strong performance across all product segments and geographies, with notable strength in the Design Automation and Design IP segments .
For fiscal year 2025, Synopsys expects to achieve double-digit revenue growth between 10.1% and 11.1%, or 11.5% to 12.5% when excluding the impact of an extra week in 2024. The company also anticipates expanding its non-GAAP operating margin by approximately 150 basis points and achieving non-GAAP EPS growth of about 13% .
Management provided forward guidance, expecting revenue between $6.745 billion and $6.805 billion for 2025, with a non-GAAP operating margin of 40% at the midpoint. The company is also preparing for its largest acquisition in history, the pending acquisition of Ansys, which is expected to close in the first half of 2025 .
During the earnings call, Synopsys executives discussed the company's strategic focus on AI and high-performance computing (HPC) chip design, which are seen as significant growth drivers. The company is also investing in its silicon-to-systems strategy and expanding into new areas through the acquisition of Ansys .
Analysts raised questions about the company's revenue split between the first and second halves of 2025, expressing skepticism about the heavier second-half weighting. Management attributed this to fewer days in the first half due to a fiscal calendar change and the timing of customer pull-downs for IP and hardware .
Regarding market conditions, Synopsys acknowledged macroeconomic uncertainties, particularly in China, where growth is expected to align with the corporate average due to ongoing restrictions and economic deceleration .
Overall, Synopsys remains confident in its business model and growth prospects, supported by a strong backlog and continued investment in technology innovation .
Earnings Report
Synopsys, Inc. has released its financial results for the fourth quarter and fiscal year 2024, ending October 31, 2024. Key highlights include:
The company has also completed the sale of its Software Integrity business, which is now presented as a discontinued operation in their financial statements . The strong performance in Q4 and throughout 2024 is attributed to strategic moves such as the sale of the Software Integrity business and the pending acquisition of Ansys, which aligns with their focus on AI-driven technology advancements .
Looking forward, Synopsys expects continued growth despite macroeconomic uncertainties, supported by their robust technology offerings and strategic acquisitions .