The Zhitong Finance App learned that although chip automation design (EDA) giant Synopsys (SNPS.US) announced better-than-expected results for the third fiscal quarter and raised its full-year performance guidelines, the stock price still fell after the financial report was announced, indicating that it may not have met investors' higher expectations. Synopsys US stocks fell more than 6% after the market on Wednesday. As of press time, the decline had narrowed to less than 1%.
According to financial reports, Synopsys' third-fiscal quarter revenue increased 42% year over year to US$2.48 billion, better than analysts' average forecast of US$2.44 billion; adjusted net profit was US$750 million, up 37% from US$550 million in the same period last year; and adjusted earnings per share were US$3.91, better than analysts' average expectation of US$3.67.
Synopsys is benefiting from the multi-trillion-dollar expansion of artificial intelligence (AI) infrastructure, which is driving demand for complex AI chips and growing demand for advanced design tools. As chip makers increase their investment in more advanced chip systems, the demand for AI-related chip design has increased dramatically. Meanwhile, tech giants including Amazon and Google are also speeding up the pace of developing their own chips.
By business segment, design automation business revenue was US$2.03 billion, up 53% year on year; design IP business revenue was US$474 million, recovering year-on-year growth, with an increase of 11%. According to reports, the design automation business includes advanced silicon chip design, verification products and services, Ansys products, system integration products and services, digital, customized, and field programmable gate array (FPGA) integrated circuit design software, verification software and hardware products, manufacturing software products, and other businesses; design IP services include logic libraries, embedded memory, wired interface IP, memory interface IP, and security IP.
Synopsys Chief Financial Officer Shelagh Glaser said, “The real foundation of this growth is the strong design environment we are seeing, and AI is the main driver of this growth.” “Customers are building increasingly complex chips, and development cycles are getting shorter. And we've provided the tools to help them reduce this complexity.” The company expects the design IP business to achieve further month-on-month growth in the fourth fiscal quarter.
“AI is driving unprecedented complexity and increasing demand for silicon IP and engineering solutions that are critical to delivering the next generation of AI computing, infrastructure, and physical AI systems,” said Sassine Ghazi, president and CEO of Synopsys. One year after completing this transformative acquisition of Ansys, we are focusing on implementing our strategy to further strengthen our leadership position and continue to build growth momentum.”
Looking ahead, Synopsys expects revenue for the fourth fiscal quarter to be $2.53 billion to $2.58 billion, with a median forecast range of $2,555 billion, which is basically in line with analysts' average expectations; the adjusted earnings per share are estimated to be $4.10 to $4.16, and the median forecast range is $4.13, which is better than analysts' average forecast of $4.0.
Additionally, Synopsys raised its full-year results guidance due to continued strong AI-driven demand. The company raised its full-year revenue guidance to US$9.69 billion to US$9.74 billion (previously, the guidance was US$9.625 billion to US$9.705 billion), better than the average analysts' estimate of US$9.68 billion; the adjusted annual earnings per share guide was US$15.04 to US$15.10 (previously US$14.72 to US$14.80), which was better than the analysts' average expectation of US$14.78 billion.