Synopsys Stock Gives Back Post-Earnings Gains. Why Timing Is Everything.

Synopsys has a deal to jointly develop products with Nvidia. (David Paul Morris/Bloomberg)

Key Points

• Synopsys reported adjusted earnings of $2.90 a share, exceeding analyst estimates of $2.78 a share for the fiscal fourth quarter.
• Quarterly revenue increased 37.8% year-over-year to $2.26 billion, aligning with analyst expectations.
• The company projects fiscal year 2026 revenue of $9.6 billion, including $2.9 billion from the Ansys acquisition.

Timing is everything.

Synopsys investors may well be ruing the fact that the company’s earnings clashed with Oracle’s reports after the close Wednesday.

The stock surged as much as 6% at one point but was up just 0.8% ahead of Thursday’s open as pressure on the broader tech sector appeared to stifle the initial optimism after Synopsys’ earnings and guidance beat estimates.

For the fiscal fourth quarter, the California-based provider of electronic design automation software and semiconductor intellectual property products posted adjusted earnings of $2.90 a share, down from $3.40 per diluted share in the fourth quarter of fiscal 2024. Analysts tracked by FactSet estimated earnings of $2.78 a share.

Quarterly revenue of $2.26 billion increased from $1.6 billion in the year-ago quarter, and was slightly above analysts’ estimates for $2.25 billion.

For the full fiscal year 2025, Synopsys posted record revenue of $7.1 billion, up about 15% from $6.1 billion in fiscal year 2024.

“The Synopsys team delivered a solid finish to a year that redefined our company as the leader in engineering solutions from silicon to systems,” said President and CEO Sassine Ghazi.

CFO Shelagh Glaser said the company finished the year with a strong backlog of $11.4 billion, and “We expect to set another revenue record in 2026 while fully integrating Ansys, driving further operational efficiency, and capitalizing on our expanded opportunity.”

For its first quarter of fiscal 2026, Synopsys expects earnings of between $3.52 and $3.58 a share on sales of $2.4 billion.

For the full fiscal year 2026, Synopsys said it expects adjusted earnings of between $14.32 and $14.40 a share on revenue of $9.6 billion at the midpoint. That outlook includes $2.9 billion of expected revenue after it acquired Ansys, the maker of engineering simulation software. Ansys contributed $667.7 million in revenue during the quarter, and $756.6 million in revenue for the full fiscal year.

The outlook also includes the impact of $110 million of divested Optical Solutions Group and PowerArtist RTL businesses.

HSBC analysts liked what they saw, hiking their price target on the stock to $545 from $525 and maintaining a Buy rating.

“We raise our FY26 earnings per share estimates by 5% to reflect the guidance beat,” they said, adding that the strength of Ansys will offset the “lukewarm near-term outlook” for design IP.

The company’s stock closed up 2.1% in regular trading Wednesday, at $475.83. The stock is down about 2% so far this year heading into Thursday trading, and down 7.1% over the past 12 months.

Synopsys earlier this month unveiled that Nvidia had taken a $2 billion stake in it as part of an arrangement where they will jointly develop tools to develop products.

CEO Jensen Huang said of the deal to CNBC on Dec. 1 that “This is going to expand the market of computing into the world of design and engineering for the very first time.”

Write to Janet H. Cho at janet.cho@dowjones.com