Chip design software provider Synopsys (SNPS.US) reported strong fiscal fourth-quarter results, with revenue reaching $2.26 billion, up 38% year-over-year and surpassing the expected $2.24 billion. Adjusted earnings per share (EPS) came in at $2.90, beating the consensus estimate of $2.88. The design automation segment contributed $1.85 billion, while the design intellectual property business added $407 million. Adjusted operating profit rose 36% to $822.6 million, exceeding the projected $803 million.
Looking ahead, the company provided optimistic guidance, forecasting fiscal 2026 revenue between $9.56 billion and $9.66 billion, compared to analysts' estimate of $9.63 billion. For the first quarter, Synopsys expects revenue of $2.37 billion to $2.42 billion, above the consensus of $2.36 billion, with adjusted EPS projected at $3.52–$3.58, also higher than the anticipated $3.46.
For fiscal 2025, the California-based electronic design automation (EDA) and semiconductor IP leader achieved record revenue of $7.1 billion, a 15% increase from $6.1 billion in fiscal 2024. CFO Shelagh Glaser highlighted a year-end backlog of $11.4 billion, stating, "We anticipate setting another revenue record in 2026 while fully integrating Ansys, improving operational efficiency, and capitalizing on expanding opportunities."
Synopsys, whose software aids semiconductor firms in chip design and verification, has benefited from surging investments in AI and advanced computing, which demand increasingly complex chip architectures. The company also leverages partnerships with NVIDIA (NVDA.US), Intel (INTC.US), and Qualcomm (QCOM.US). Earlier this month, NVIDIA invested $2 billion in Synopsys to jointly develop product development tools. NVIDIA CEO Jensen Huang remarked on December 1, "This will extend computing into design and engineering for the first time."
Last month, Synopsys announced plans to cut about 10% of its workforce to reinvest in growth areas like AI-driven design and system-level solutions. The company also completed its acquisition of simulation software maker Ansys in July, contributing $667.7 million to Q4 revenue. The deal, announced early last year, faced rigorous antitrust scrutiny in multiple markets, including the UK.
Competing with Cadence Design Systems and Siemens in the EDA market, Synopsys expects growth as chipmakers race to develop AI and high-performance computing processors.
Following the earnings release, Mizuho Securities described Synopsys' fiscal Q4 performance as "better than expected," noting that its fiscal 2026 guidance aligns with consensus estimates. Mizuho suggested that market expectations may already factor in potential divestitures, implying underlying guidance could surpass projections. The firm emphasized Synopsys' "strong $11.4 billion backlog" as a positive indicator. Meanwhile, Goldman Sachs reiterated a "Buy" rating with a $560 price target.
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