Semiconductor design software maker Synopsys Inc. today delivered fiscal second-quarter results and guidance for the next period that came out ahead of Wall Street’s forecasts, sending its stock higher in extended trading.

The company reported a net profit of $294.8 million, with earnings before certain costs such as stock compensation coming to $2.50 per share. Revenue for the quarter rose 25% from a year ago, to $1.28 billion.

The results were better than expected, with Wall Street modeling earnings of $2.37 per share on sales of $1.25 billion. Synopsys’ stock consequently rose almost 5% in extended trading, erasing a decline of more than 3% earlier on a big down day for stocks.

Synopsys sells software tools used by computer chip designers such as Intel Corp. and Qualcomm Inc. to automate the semiconductor design process. Chip design involves many stages, including design, verification, signoff, physical verification and more, and Synopsys’ software can aid in each of these steps. Virtually every computer chip in the world has been designed using software from Synopsys or its rival Cadence Design Systems Inc.

Synopsys Chairman and Chief Executive Aart de Geus (pictured) hailed the company’s “outstanding” performance in the quarter, which he said was driven by robust demand resulting from trends such as the adoption of big data and machine learning.

Synopsys derives its revenue from three business segments. It said time-based products drove $723.8 million in sale, up 12% from a year ago, while upfront products added another $336.6 million, up more than 60%. Maintenance and service generated $218.7 million in sales, up 31% from a year earlier.

During the quarter, Synopsys made a key acquisition, buying the application security provider WhiteHat Security from Nippon Telegraph and Telephone Corp. for $330 million. The company said at the time it was buying significant software-as-a-service capabilities and market-leading dynamic application security testing technology that would help to boost its own portfolio of security testing tools.

Holger Mueller of Constellation Research Inc. said Synopsys delivered impressive results in the quarter, with revenue driven by the technology industry’s need to produce, design and secure more computer chips than are currently available. “With revenue up by more than 20% and its per share earnings up over 50%, things are clearly looking up for Synopsys, especially since there is zero indication of a slowdown in chip demand for the foreseeable future,” he said.

De Geus said that based on the company’s strong first-half execution and its confidence in its business, it is raising its fiscal 2022 targets “substantially.”

“Notwithstanding macroeconomic choppiness in an uncertain geopolitical environment, our customers continue to prioritize investments to enable the new ‘smart everything’ era,” he said.

For the next quarter, Synopsys is looking for earnings of between $2.01 and $2.06 per share, well ahead of Wall Street’s forecast of $1.54 per share in earnings. It offered similarly confident guidance in terms of revenue, saying it’s looking for sales of $1.21 billion to $1.24 billion, versus the $1.12 billion analyst consensus.

The revised forecast for fiscal 2022 calls for earnings of $8.63 to $8.70 per share on revenue of $5 billion to $5.05 billion. Wall Street is looking for full-year earnings of $7.90 per share on sales of $4.81 billion.

“For fiscal 2022 we expect to grow annual revenue approximately 20% and pass the $5 billion milestone, drive further operating margin expansion, grow earnings per share by more than 25% and generate approximately $1.6 billion in operating cash flow,” De Geus said.

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