Synopsys shares gain on stronger-than-expect second quarter earnings forecast – News

Shares of Synopsys Inc. were up over 2% in late trading today after the electronic design automation company forecasted stronger-than-expected fiscal 2025 second-quarter earnings growth off the back of increasing demand for its software used to design chips.

For the quarter that ended on Jan. 31, Synopsis reported adjusted earnings per share of $3.03, down from $3.38 per share in the first quarter of fiscal year 2024, on revenue of $1.455 billion, down 3.71% year-over-year. The adjusted earnings per share figure came in ahead of the $2.79 expected by analysts, while revenue was just ahead of an expected $1.45 billion.

Across its verticals, Salesforce saw electronic design automation revenue of $978.7 million in the quarter, up from $970.7 million in the same quarter of the previous year, design revenue of $435.1 million, down from $525.7 million and other revenue of $41.5 million, up from $14.6 million.

The company’s 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.

Business highlights in the quarter included several significant product announcements by Synopsys. In December, the company unveiled the industry’s first Ultra Ethernet and UALink IP solutions, designed to connect massive AI accelerator clusters. The solutions provide up to 1.6 Tbps of bandwidth and address the growing demand for high-speed data transfer in AI applications.

In collaboration with SiMa.ai, Synopsys announced a strategic partnership to accelerate the development of automotive edge artificial intelligence solutions. The joint effort focuses on expediting system-on-chip development for next-generation Advanced Driver Assistance Systems and In-Vehicle Infotainment applications, enhancing the capabilities of modern vehicles.

The quarter also saw Synopsis move closer to gaining approval to acquire Ansys Corp. in a $35 billion cash-and-stock deal. The deal, announced in January 2024, requires regulatory approval, with a report in December suggesting that the European Union was set to sign off on the deal, be it that some two months later, approval is yet to be forthcoming.

“In Q1, Synopsys’ relentless focus on execution and innovation was evident across the business,” said Sassine Ghazi, president and chief executive officer of Synopsys, in the company’s earnings release. “We launched industry-leading silicon IP and hardware-assisted verification solutions while expanding generative AI capabilities in EDA.”

“We are continuing to see strong design activity at advanced nodes, fueled by the AI-driven reinvention of compute,” Ghazi added. “As the pace and complexity of technology innovation increases, new silicon-to-systems design paradigms are essential and Synopsys is well-positioned to deliver.”

For its fiscal 2025 second quarter, Synopsis expects adjusted earnings per share of $3.37 to $3.42 on revenue of $1.585 billion to $1.615 billion. The revenue outlook was in line with expectations, while earnings were ahead of an expected $3.35.

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. Analysts were expecting $6.78 billion and $14.91 per share.

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