Executive Summary

Q4 FY24 revenue was $1.636B (+11% YoY) with non-GAAP EPS $3.40 (+13% YoY), both above the midpoints of company guidance; GAAP EPS was $1.79 as non-GAAP excludes stock comp, amortization and M&A/divestiture items .
Management guided FY25 to double‑digit revenue growth ($6.745–$6.805B) and ~40% non‑GAAP operating margin, with 1H/2H revenue split ~45/55 due to an eight‑day calendar headwind in 1H and timing of IP/hardware deliveries; Q1 FY25 revenue is $1.435–$1.465B and non‑GAAP EPS $2.77–$2.82 .
Strategic catalysts: Ansys acquisition remains on track for 1H25; HSR waiting period expired and Synopsys is working with the FTC staff on remedies; customers are “overwhelmingly supportive” of the pro-competitive deal .
Demand drivers: AI/HPC design starts, multi‑die architectures, and hardware‑assisted verification underpin robust Design Automation growth; DSO.ai has now optimized 700+ cumulative tape‑outs, and hardware logged record activity with 50+ repeat HAPS customers and 8 new ZeBu EP customers in Q4 .
Estimates context: Wall Street consensus (S&P Global) was unavailable; we benchmark to prior guidance and reported results. Q4 actuals landed within/above company Q4 guidance midpoints; FY25 initial guidance embeds conservative China and export‑control assumptions .

What Went Well and What Went Wrong

What Went Well
- Delivered record Q4 revenue ($1.636B) and non‑GAAP EPS ($3.40), capping FY24 with 15% revenue growth and ~25% non‑GAAP EPS growth; CEO: “AI‑driven reinvention of compute…expands our opportunity” .
- Design Automation up 17% YoY in Q4; strong Fusion Compiler wins (TSMC N2/N4) and accelerating Synopsys.ai adoption with 30–60% faster time to results across 11 EDA products .
- Hardware and IP strength: 50+ repeat HAPS customers and 8 new ZeBu EP in Q4; 7 PCIe 6 wins and more than 20 die‑to‑die design wins; TSMC 2024 Partner of the Year for Interface IP .
What Went Wrong
- Q1 FY25 guide is sequentially down due to 8 fewer days (~$80M) and a low IP pull‑down quarter; management flagged more second‑half weighting for IP and hardware .
- China/export controls: New BIS rules added customers to the entity list and restricted some technologies; FY25 outlook fully incorporates these headwinds and broader China macro pragmatism .
- Segment margin mix: Design IP margin compressed vs prior year in Q4 (36.7% vs 46.0% in Q4’23) on mix and timing, even as full‑year IP margin expanded 500 bps; DA segment margin also eased vs Q3 on mix .

Financial Results

Revenue and EPS by Quarter

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($B)	$1.455	$1.526	$1.636
GAAP EPS ($)	$1.92	$2.73	$1.79
Non-GAAP EPS ($)	$3.00	$3.43	$3.40

Segment Revenue and Margins

Metric	Q2 2024	Q3 2024	Q4 2024
Design Automation Revenue ($M)	$1,054.9	$1,062.6	$1,118.2
Design IP Revenue ($M)	$399.8	$463.1	$517.8
Design Automation Adjusted Op Margin (%)	39.6%	41.5%	37.0%
Design IP Adjusted Op Margin (%)	31.2%	36.7%	36.7%

Selected P&L Line Items (Q4 FY24)

Metric	Q4 2024
Gross Margin ($M)	$1,260.963
Operating Income ($M)	$310.802
Net Income from Continuing Ops ($M)	$279.281
Diluted Shares (M)	155.991

KPIs and Operating Metrics

KPI	Q4 2024
Non‑cancelable backlog	$8.1B (FY-end, flat YoY on continuing ops basis)
DSO.ai adoption	700+ cumulative tape‑outs; up to 90% of SoC blocks on some chips
HAPS hardware	50+ repeat customers; >10 new customers in Q4
ZeBu EP hardware	7 repeat and 8 new customers in Q4

Actual vs Prior Guidance (Q4 FY24)

Metric	Prior Guide (Q3 release)	Actual Q4 2024	Outcome
Revenue ($B)	$1.614–$1.644	$1.636	At high end/above midpoint
Non‑GAAP EPS ($)	$3.27–$3.32	$3.40	Above range
GAAP EPS ($)	$2.25–$2.39	$1.79	Below guide on GAAP due to non‑GAAP add‑backs (see reconciliation)

Note: GAAP vs non‑GAAP differs primarily by stock‑based compensation, amortization of intangibles, and acquisition/divestiture‑related items .

Guidance Changes

New FY25 and Q1 FY25 Guidance (initial issuance)

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q1 FY25	N/A	$1,435–$1,465	Initiated
Revenue ($M)	FY25	N/A	$6,745–$6,805	Initiated
GAAP Expenses ($M)	Q1/FY25	N/A	$1,142–$1,162 / $4,926–$4,983	Initiated
Non‑GAAP Expenses ($M)	Q1/FY25	N/A	$945–$955 / $4,045–$4,085	Initiated
Non‑GAAP I&O ($M)	Q1/FY25	N/A	$20–$22 / $94–$98	Initiated
Non‑GAAP Tax Rate	Q1/FY25	N/A	16% / 16%	Initiated
GAAP EPS ($)	Q1/FY25	N/A	$1.81–$1.95 / $10.42–$10.63	Initiated
Non‑GAAP EPS ($)	Q1/FY25	N/A	$2.77–$2.82 / $14.88–$14.96	Initiated
Operating Cash Flow ($M)	FY25	N/A	~ $1,800	Initiated
Free Cash Flow ($M)	FY25	N/A	~ $1,600	Initiated
Capex ($M)	FY25	N/A	~ $170	Initiated
1H/2H Revenue Split	FY25	N/A	~~45% / 55%; 10 fewer days in 1H (-~~$100M)	Initiated

Management also expects non‑GAAP operating margin ~40% for FY25 at the midpoint .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 FY24)	Current Period (Q4 FY24)	Trend
AI/EDA monetization	DSO.ai ~20% uplift on renewals; VSO/ASO early; AI seen lifting core EDA growth toward 12–14% over time	DSO.ai across 700+ tape‑outs; 30–60% faster results via knowledge assistants on 11 products	Accelerating adoption
Multi‑die & advanced nodes	3D IC Compiler momentum; N2/N3 validations; die‑to‑die (UCIe) ~50 lifetime wins by Q2	End‑to‑end multi‑die solution with TSMC test chip; >20 die‑to‑die wins; 40‑Gb UCIe IP wins	Broadening
Hardware‑assisted verification	Strong Q2/Q3 demand; ZeBu EP traction; HAPS for multi‑die	Record year; 50+ repeat HAPS customers; 8 new ZeBu EP in Q4; building ZeBu Cloud to bridge capacity	Strong and capacity‑constrained near term
China/macro & export controls	Cautious stance; growth still expected in FY24	New BIS rules incorporated; China expected at/below corporate growth; pragmatic outlook	Persistent headwind
Backlog/visibility	$7.9B in Q2; $7.9B in Q3 on continuing ops	$8.1B FY-end, flat YoY on continuing ops; supports guidance	Stable/high visibility
Ansys acquisition	On track 1H25; customer support; separate operations	HSR waiting period expired; working with FTC on remedies; closure expected 1H25	Advancing regulatory path
Segment mix & margins	IP “lumpy”; strong Q2/Q3 IP growth; DA double-digit TTM	Q1 FY25 low IP pull‑down; FY25 margin expansion +150 bps guided; 40% OM target	Near‑term lumpiness, medium‑term leverage

Management Commentary

Strategy and AI tailwinds: “The AI-driven reinvention of compute is accelerating the pace, scale and systemic complexity of technology R&D, which in turn expands our opportunity” — CEO, Sassine Ghazi .
FY25 setup and discipline: “We expect to deliver double-digit revenue growth and 40% operating margin… balancing our guidance with pragmatism given… largest acquisition in our history and… macro uncertainties” — CEO .
Visibility: “Resilient and stable business model with noncancelable backlog of $8.1 billion” — CFO, Shelagh Glaser .
Second-half weighting rationale: “10 fewer days in the first half of 2025… ~ $100 million;… timing of IP and hardware deliveries” — CFO .
Regulatory progress: “HSR waiting period has expired… working cooperatively with FTC staff to conclude the investigation and… review of proposed remedies” — CEO .

Q&A Highlights

Guide context and conservatism: FY25 outlook reflects “tale of two markets” (AI infra strong vs. other end-markets slower), China macro and new restrictions, and Ansys integration readiness; hence pragmatic 11.5–12.5% underlying growth view .
Q1 sequential downtick: About $80M from eight fewer days; Q1 a “low” IP pull‑down quarter; stronger 2H as customers time IP/hardware intake .
Export controls: New BIS restrictions and entity list additions fully incorporated into FY25 guide .
Hardware capacity: Customer space/power constraints push some hardware deliveries to 2H; ZeBu Cloud offered as bridge but limited in scale .
Pricing/leverage: Operating margin expansion is multiyear and broad-based (AI in internal workflows, digital transformation); +150 bps guided for FY25 .

Estimates Context

S&P Global consensus estimates for Q4 FY24 revenue and EPS were unavailable at time of analysis; therefore, we benchmark performance to prior company guidance and reported results. Values from S&P Global could not be retrieved due to request limits and are not included here (consensus unavailable). The quarter’s revenue and non‑GAAP EPS came in within/above the company’s Q4 guidance bands and above the guidance midpoint .

Key Takeaways for Investors

AI/multi‑die remain powerful secular drivers for Synopsys across EDA, IP, and hardware; Q4 delivered broad‑based execution with strong AI product traction (DSO.ai, VSO/ASO, knowledge assistants) and multi‑die/IP wins .
FY25 set-up is second‑half weighted (calendar headwind, IP/hardware timing); near‑term quarterly lumpiness should not distract from targeted ~40% non‑GAAP operating margin and double‑digit top‑line growth .
Hardware capacity (customer space/power) and export restrictions (especially China) are non‑trivial near‑term headwinds but are explicitly embedded in guidance, de‑risking the outlook .
Ansys remains a strategic catalyst; HSR waiting period expiration and ongoing FTC dialogue are positives; closing in 1H25 would expand TAM and enable electronics‑physics co‑design leverage .
Segment watch: IP remains lumpy but structurally strong; Design Automation demand robust with advanced node and AI design starts; track segment margins (DA/IP) as product mix shifts .
KPI/Visibility: $8.1B non‑cancelable backlog and recurring EDA contracts underpin high visibility; continue to monitor renewal/pricing and AI uplift in ACV over time .
Trading setup: Expect softer Q1 seasonally and by calendar effect, with a more constructive 2H ramp; catalysts include regulatory milestones on Ansys and continued AI/hardware/IP wins .

Appendix: Additional Q4 Product/Portfolio Updates

Post‑quarter, Synopsys announced industry‑first Ultra Ethernet and UALink IP to connect massive AI accelerator clusters (up to 1.6Tbps bandwidth, up to 200Gbps/lane) with collaborations from AMD, Astera, Juniper, Tenstorrent, XConn — reinforcing AI data‑center interconnect leadership heading into 2025 .

SYNOPSYS INC (SNPS)·Q4 2024 Earnings Summary