Synopsys shares decline as fiscal 2025 outlook falls below analyst expectations
Shares of Synopsys Inc. fell more than 6% in late trading today after the electronic design automation company’s outlook fell short of expectations despite otherwise solid results in its fiscal fourth quarter.
For the quarter that ended on Oct. 31, Synopsys reported adjusted earnings per share of $3.40, up from $3 per share in the same quarter a year prior, on revenue of $1.636 billion, up 11% year-over-year. Both figures were ahead of the $3.30 per share and revenue of $1.63 billion expected by analysts.
Electric design automation revenue includes digital and custom integrated circuit design software, verification hardware and software products, manufacturing-related design products, field-programmable gate array design software, artificial intelligence-driven EDA solutions and professional services. Synopsys reported $1.073 billion of EDA revenue, up from $931.4 million in the fourth quarter of 2023. That accounted for 65.6% of the company’s revenue, up from 63.5% a year prior.
Design IP revenue came in at $517.8 million in the quarter, up from $513.7 million, and other revenue was $45.2 million, up from $22.3 million.
Business highlights in the quarter include Synopsys’s release of the LucidShape CAA V5 Based 2024.09 software that enhances automotive lighting design with features such as advanced combination materials and new goniometer types for Candela Sensors. An update to the company’s RSoft Photonic Device Tools introduced graphics processing unit-based FDTD simulation in FullWAVE, significantly improving photonic device simulation efficiency.
Synopsys also announced the release of Seeker 2024.9.0, which features an improved user interface for sanitizer configuration and platform enhancements to bolster application security testing. Another reveal in the quarter, Code Sight 2024.10.0, now branded as Black Duck Code Sight, offers Synopsys customers enhanced capabilities for secure code development within integrated development environments.
Additionally, in September, it introduced updates to its OptoCompiler and OptSim tools, including layout-only waveguides and crossings that streamline photonic circuit design processes.
For its full fiscal year, Synopsys reported adjusted earnings per share of $13.20, up from $10.54 per share in fiscal year 2023, on revenue of $6.127 billion, up 15% year-over-year.
“Continued strong execution drove excellent Q4 results, which exceeded the midpoint of our guidance targets and capped a year of 15% revenue growth for the company,” Chief Financial Officer Shelagh Glaser said in the company’s earnings release. “The combination of our execution focus, operating discipline and the critical nature of our industry-leading technology positions us well for the future.”
“In 2025, we expect to deliver double-digit revenue growth grounded in pragmatism given continued macro uncertainties and the impact of our fiscal year calendar change,” Glaser added.
For its fiscal 2025 first quarter, Synopsys expects to see adjusted earnings per share of $2.77 to $2.82 on revenue of $1.435 billion to $1.465 billion. For the full year, the company expects adjusted earnings per share of $14.88 to $14.96 on revenue of $6.745 billion to $6.805 billion.
Notably, the full-year revenue outlook fell short of the $6.9 billion expected by analysts, enough to see Synopsys stock being sold off after hours. The lower-than-expected outlook is reportedly due to a slump in Chinese sales amid tightening U.S. control on what chip technology can be sold to the country.
Photo: Dfortuna/Wikimedia Commons
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