Sign in Subscribe

Synopsys - $SNPS - Earnings Analysis: Strong position in EDA and IP markets.

By sagebytes in Technology —

Business Model

Synopsys generates revenue through two segments: Design Automation and Design IP. Design Automation includes advanced silicon design, verification products and services, system integration products and services, digital, custom and field programmable gate array IC design software, verification software and hardware products, manufacturing software products and other. Design IP includes interface, foundation, security, and embedded processor IP, IP subsystems, and IP implementation services.

Revenue Sources

  • Time-based products (e.g., software licenses with subscription or maintenance fees)
  • Upfront products (e.g., perpetual software licenses)
  • Maintenance and service (e.g., support and consulting)

Income Statement Analysis

  • Revenue decreased by 3.68% year-over-year, from $1,510.99 million to $1,455.32 million, primarily driven by a decrease in upfront products revenue.

Balance Sheet Analysis

  • Total assets remained relatively stable, decreasing slightly by 0.25% from $13,073.56 million to $13,041.09 million.

Cash Flow Analysis

  • Net cash used in operating activities decreased by 22.02% year-over-year, from -$87.79 million to -$67.46 million.

Capital Allocation

Synopsys is pursuing acquisition of ANSYS to expand capabilities. Synopsys' capital allocation strategy is not detailed but is likely focused on acquisitions to deliver growth in the long-term and product innovation

Management Commentary

We delivered a solid start to the year with revenue in the upper end of our guided range, non GAAP operating margin of 36.5% and non GAAP earnings above the high end of our guidance range.

As a result, we are reaffirming our full year 2025 targets for revenue, non GAAP operating margin and non GAAP EPS.

Design IP segment revenue was $435,100,000 down 17% due to timing and a tough record setting prior year compare.

Overall Sentiment: Positive, with emphasis on strong execution, reaffirming annual targets, and leadership positions.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.