Electronic design automation software specialist Synopsys (SNPS 0.27%)reported strong fiscal 2024 fourth-quarter results on Wednesday, Dec. 4. The company posted a non-GAAP earnings per share (EPS) of $3.40, outperforming both analyst consensus estimates of $3.30 and management's guidance range of $3.27 to $3.32. Revenue increased to $1.64 billion, slightly beating both management guidance (range $1.614 billion to $1.644 billion) and the analyst prediction of $1.63 billion.
The quarter highlights Synopsys’ growth trajectory in crucial technology sectors, maintaining a solid financial performance.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $3.40 | $3.30 | $3.00 | 13.3% |
| Revenue | $1.64 billion | $1.63 billion | $1.47 billion | 11.5% |
| Adj. net income | $529.9 million | N/A | $464.1 million | 14.2% |
| Adj. operating margin | 36.9% | N/A | 37.3% | (0.4 pps) |
Source: Synopsys. Note: Analyst estimates provided by FactSet. Management expectations based on guidance provided on Aug. 21, 2024.
About Synopsys
Synopsys is an influential player in electronic design automation (EDA), essential for technology sectors reliant on sophisticated chip designs. Its software helps engineers design complex integrated circuits. Leading innovation, Synopsys has expanded capabilities into critical areas like artificial intelligence (AI) and cloud, optimizing design processes and reducing errors. Its recent investment in the Synopsys.ai suite emphasizes this technology integration, ensuring its competitive advantage.
A crucial focus for Synopsys has been on optimizing its Semiconductor Intellectual Property (IP) portfolio, delivering improved chip functionality and compatibility. The growth here allows the company to meet sector demands efficiently, aligning development with emerging tech trends. Successfully leveraging AI insights within its EDA tools also remains pivotal to Synopsys's strategy in meeting industry design challenges head-on.
NASDAQ: SNPS
Key Data Points
Key Developments in the Fourth Quarter
For the full-year fiscal 2024, non-GAAP EPS of $13.20 was up 25%, outperforming the predicted range. Full-year revenue of $6.13 billion also topped guidance. These statistics underscore a strategic success and operational efficiency improvement, achieving a two-percentage-point hike in annual operating margins.
Synopsys’s Design Automation (EDA) segment remained a strong contributor, boasting a heightened operating margin of 37% this quarter. Despite a slight dip in the Design IP segment, its contributions aided in reaching overall strategic goals. The divestiture of its Software Integrity business and a focus on AI-backed cloud solutions illustrate ongoing strategic shifts.
On the operational front, the forthcoming Ansys acquisition showcases a decisive expansion, with anticipated regulatory proceedings continuing into mid-2025. Meanwhile, geopolitical tensions, especially in China, were acknowledged as potential sources of regulatory and market uncertainties.
The geopolitical scenario, notably with China, presents market unpredictabilities. Despite these challenges, Synopsys navigates continued risks while maintaining an optimistic growth perspective. The company cited macroeconomic conditions as possible deterrents but also said it relies on its operational prowess to mitigate such effects.
Looking Ahead
For fiscal 2025, Synopsys management guided for double-digit revenue growth ranging from $6.75 billion to $6.81 billion, and adjusted EPS between $14.88 and $14.96. The analysts' consensus from FactSet expected $6.9 billion in revenue and $14.89 a share in adjusted earnings. The continuation of double-digit revenue expansions and strategic ventures, particularly leveraging growth domains, is anticipated. The forward momentum in AI and system design remains a top priority as Synopsys invests in future market competitiveness.
Investors should monitor how well these strategic expansions are executed as the economic landscape evolves. They should also keep track of when and if the Ansys acquisition finalizes in mid-2025.
