TLDR;
- Synopsys posted Q2 non-GAAP EPS of $3.67, beating forecasts by 8.3%.
- Revenue hit $1.6 billion, in line with expectations and up 10% year-over-year.
- Shares surged 3.24% in after-hours trading after the earnings beat.
- The company reaffirmed full-year revenue guidance and highlighted AI growth.
Synopsys Inc. (NASDAQ: SNPS) delivered a strong fiscal second-quarter 2025 performance , beating Wall Street estimates on earnings and igniting a post-market rally in its stock.
On Thursday, the electronic design automation (EDA) giant reported non-GAAP earnings per share (EPS) of $3.67, comfortably exceeding analyst expectations of $3.39, a beat of 8.3%.
Revenue for the quarter came in at $1.6 billion, precisely in line with consensus estimates, but up a solid 10% year-over-year. The market responded swiftly, with shares rising 3.24% in after-hours trading to $477.39, reversing earlier losses from the day’s session.
Design IP Growth Fuels Overall Performance
Much of Synopsys’ strength this quarter came from a booming Design IP segment, which grew 21% year-over-year to $482 million. Meanwhile, the company’s core Design Automation segment saw a more modest 6% increase, contributing $1.12 billion in revenue.
The growth in Design IP signals a rising demand for Synopsys’ advanced chip design technologies, driven in part by accelerating trends in artificial intelligence (AI) and high-performance computing. With engineering becoming increasingly complex, Synopsys appears well-positioned to provide critical tools for next-generation chip innovation.
Outlook Amid Global Challenges
Despite global economic uncertainty and regulatory concerns, particularly surrounding China, Synopsys maintained its full-year revenue guidance in the range of $6.745 billion to $6.805 billion. The company also expects continued double-digit organic revenue growth through 2025.
For the third quarter, Synopsys forecasts revenue between $1.755 billion and $1.785 billion. CEO Sassine Ghazi reinforced the company’s bullish outlook, citing the transformative role of its AgenTek AI platform. “Engineering is undergoing unprecedented transformation, and Synopsys is seizing the opportunity to reengineer engineering,” Ghazi said on the earnings call.
Solid Financials Underscore Stability
In addition to strong revenue and earnings growth, Synopsys demonstrated operational resilience. The company’s backlog expanded by $400 million to reach $8.1 billion, reflecting robust customer demand. Synopsys also continues to maintain enviable gross margins, reported at 81.35%, and received a “GOOD” financial health score from independent analytics.
Investors seem to have taken notice. While the stock had dipped over 9% in regular trading prior to the report, the after-hours rebound suggests renewed confidence. Analysts maintain a strong buy rating on SNPS, with an average upside estimate of 15% from current levels.
Navigating Risks with Strategic Innovation
Still, Synopsys isn’t without challenges. The company faces potential revenue headwinds from China, amid ongoing U.S. export restrictions and geopolitical tension. Rising semiconductor complexity and competition from rivals in the EDA space could also put pressure on margins.
However, management remains focused on leveraging AI-powered tools and advancing GPU acceleration strategies to stay ahead. During the earnings Q&A, Synopsys addressed concerns about U.S. Bureau of Industry and Security (BIS) regulations, and highlighted opportunities in AI chip design as future growth drivers.
As the tech world continues its push toward smarter, faster, and more efficient chips, Synopsys is proving it has the innovation and stability to lead the charge. Investors looking for long-term plays in AI and semiconductor design may want to keep SNPS firmly on their radar.
