TLDR
- Synopsys reported Q4 adjusted earnings of $2.90 per share, beating the $2.78 consensus estimate
- Q4 revenue climbed 37.8% to $2.26 billion, matching Wall Street projections
- Fiscal 2025 closed with record revenue of $7.1 billion, representing 15% growth
- The company forecasts fiscal 2026 revenue of $9.6 billion with Ansys contributing $2.9 billion
- Shares climbed up to 6% after hours before settling at a 2.5% gain
Synopsys shares rallied in after-hours trading Wednesday after the company reported fourth quarter results that surpassed analyst expectations. The electronic design automation provider demonstrated continued momentum despite a challenging year for the stock.
The company delivered adjusted earnings of $2.90 per share for its fiscal fourth quarter. That topped the Street consensus of $2.78 per share. Quarterly revenue of $2.26 billion came in line with the $2.25 billion estimate while jumping 37.8% from the prior year period.
The stock initially spiked 6% following the announcement. It later trimmed gains to close after-hours trading up 2.5%. Regular session trading ended with shares up 2.1% at $475.83.
CEO Sassine Ghazi described it as a solid finish to a transformative year. The company recorded $7.1 billion in revenue for fiscal 2025. That marks a 15% increase from the $6.1 billion generated in fiscal 2024.
Per-share earnings of $2.90 represented a decline from $3.40 in last year’s fourth quarter. The drop reflects the company’s evolving business structure and recent deal activity.
Guidance Reflects Ansys Integration
CFO Shelagh Glaser pointed to the company’s $11.4 billion backlog as evidence of strong demand. She expects another record revenue year in fiscal 2026 as the Ansys integration progresses.
Synopsys projects first quarter fiscal 2026 earnings of $3.41 per share on $2.4 billion in revenue. The full year outlook targets $14 per share in earnings with revenue reaching $9.6 billion at the midpoint.
That guidance includes $2.9 billion in expected revenue from Ansys. The simulation software maker generated $667.7 million in the fourth quarter. Ansys contributed $756.6 million for the full fiscal year after the acquisition closed.
The projections account for $110 million in revenue from divested operations. Synopsys sold off its Optical Solutions Group and PowerArtist RTL businesses during the period.
Nvidia Investment Adds Strategic Value
Synopsys disclosed earlier in December that Nvidia made a $2 billion investment in the company. The stake comes with a partnership to co-develop new design tools.
Nvidia CEO Jensen Huang characterized the deal as expanding computing into design and engineering for the first time. The arrangement positions both companies to capitalize on growing demand for advanced chip development tools.
Wall Street analysts at Mizuho described the quarterly performance as better than feared. They noted the substantial backlog provides visibility into future revenue. The firm said fiscal 2026 guidance effectively meets expectations when accounting for the business divestitures.
Synopsys stock has declined approximately 2% year-to-date through Wednesday’s close. Over the trailing 12-month period, shares are down 7.1%. The company closed its fiscal fourth quarter with $2.26 billion in revenue and an $11.4 billion backlog heading into the new fiscal year.
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