01—Abstract
Summary
Summary of the 10-Q filed September 9, 2025. Cited figures are marked; the original filing is the authoritative source.
Synopsys Inc. (SNPS) reported its third-quarter fiscal year 2025 results, marked by the significant completion of the Ansys merger on July 17, 2025.
This acquisition dramatically impacts the company's financial statements, leading to a substantial increase in assets, liabilities, and goodwill. While overall revenue saw a healthy 14% increase year-over-year for the quarter to $1.74 billiona, driven primarily by the Design Automation segment, the Design IP segment experienced weakness, with revenue declining 8% due to headwinds like China export control restrictions and reduced demand from a major foundry customer. Despite the revenue growth, profitability for the quarter was impacted by increased operating expenses, including significant costs associated with the Ansys merger integration, such as legal and consulting fees, and increased amortization of acquired intangible assets.
The company's balance sheet reflects the transformative Ansys acquisition with goodwill soaring to $26.9 billionb and intangible assets increasing significantly. Concurrently, long-term debt has risen substantially to fund the merger. Investors should note the company's cautious outlook regarding the Ansys integration and ongoing macroeconomic uncertainties, particularly those affecting the Design IP segment.
02—Key points
Key Highlights
- Revenue increased 14% to $1.74 billion in Q3 FY2025, primarily driven by the Design Automation segment, which saw a 23% revenue increase.
- The acquisition of Ansys was completed on July 17, 2025, significantly increasing goodwill to $26.9 billion and intangible assets to $13.1 billion.
- Long-term debt increased substantially to $14.3 billion due to financing for the Ansys acquisition.
- The Design IP segment experienced an 8% revenue decline, attributed to China export control restrictions and weaker demand from a major foundry customer.
- Operating expenses rose 35% to $1.6 billion, impacted by merger-related costs and amortization of acquired intangible assets.
- Net income attributed to Synopsys decreased to $242.5 million from $408.1 million in the prior year's quarter, largely due to increased expenses and interest costs related to the Ansys merger.
- The company maintained a strong cash position, with $2.5 billion in cash, cash equivalents, and short-term investments as of July 31, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Synopsys kept $0.14.
- Revenue$1.74B100.0%
- Cost of revenue−$380.6M21.9%
- Gross profit$1.36B78.1%
- Operating costs−$1.19B68.6%
- Operating income$165.3M9.5%
- Interest, other & tax$77.2M4.4%
- Net income$242.5M13.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed September 9, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $1.74B$1.53B | +14.0% |
| Cost of Revenue | $380.56M$290.68M | +30.9% |
| Gross Profit | $1.36B$1.24B | +10.0% |
| R&D Expenses | $625.30M$508.87M | +22.9% |
| Operating Expenses | $1.19B$874.86M | +36.5% |
| Operating Income | $165.27M$360.21M | −54.1% |
| Net Income | $242.51M$408.06M | −40.6% |
| EPS (Basic) | $1.51$2.66 | −43.2% |
| EPS (Diluted) | $1.50$2.61 | −42.5% |
| Shares Outstanding (Basic) | 160.17M153.42M | +4.4% |
| Shares Outstanding (Diluted) | 161.68M156.13M | +3.6% |
05—Questions
Frequently Asked Questions
What is the primary impact of the Ansys acquisition on Synopsys' financial position?
The Ansys acquisition, completed on July 17, 2025, has significantly increased Synopsys' total assets, primarily through a substantial rise in goodwill to $26.9 billion and an increase in intangible assets to $13.1 billion. This also led to a significant increase in total liabilities due to the debt incurred to finance the acquisition, with long-term debt rising to $14.3 billion.
How did the Ansys acquisition affect Synopsys' profitability in the quarter?
While overall revenue grew, profitability was negatively impacted by higher operating expenses. These included increased legal, consulting, and professional fees related to the Ansys merger integration, as well as higher amortization expenses for acquired intangible assets. Additionally, increased interest expense from new debt financing contributed to the lower net income compared to the prior year.
What are the key headwinds affecting the Design IP segment?
The Design IP segment faced headwinds including China export control restrictions, particularly the Q3 2025 BIS Restrictions (though later rescinded), and weaker-than-expected demand from a major foundry customer. These factors contributed to an 8% decline in revenue for the segment.
What is Synopsys' liquidity and debt position following the Ansys merger?
Synopsys maintains a strong liquidity position with $2.5 billion in cash, cash equivalents, and short-term investments as of July 31, 2025. However, the Ansys merger significantly increased its debt load, with total debt standing at $14.3 billion. The company stated its belief that existing cash, cash equivalents, short-term investments, and debt financing will be sufficient to meet its obligations.
06—Continue