01—Abstract
Summary
Summary of the 10-Q filed February 25, 2026. Cited figures are marked; the original filing is the authoritative source.
Synopsys, Inc. (SNPS) reported significant revenue growth of 66% to $2.4 billiona for the quarter ended January 31, 2026, largely driven by the acquisition of Ansys, which contributed $885.6 million in revenue.
While the Design Automation segment showed overall strength, the Design IP segment experienced weakness, prompting resource reallocation to higher-growth areas. The company's financial position remains solid, with $2.2 billionb in cash, cash equivalents, and short-term investments. However, the company incurred substantial restructuring charges of $118.3 million related to a new restructuring plan, and experienced a significant increase in interest expense due to recent debt issuances to fund the Ansys acquisition.
Despite robust revenue growth, net income attributed to Synopsys decreased to $65.0 millionc from $295.7 million in the prior year's comparable quarter. This decline is primarily due to increased costs, including a substantial $242.1 million increase in amortization of acquired intangible assets stemming from the Ansys merger, along with higher employee-related costs and restructuring charges. The company is actively managing its resources and operations in light of ongoing macroeconomic uncertainties and geopolitical factors, particularly in China.
02—Key points
Key Highlights
- Revenue increased by 66% to $2.4 billion, primarily due to the Ansys acquisition contributing $885.6 million.
- Net income attributed to Synopsys decreased significantly to $65.0 million from $295.7 million year-over-year, impacted by increased costs from the Ansys acquisition and restructuring.
- The Design Automation segment performed strongly, while the Design IP segment showed weakness, leading to resource reallocation.
- The company reported $118.3 million in restructuring charges related to a new business reorganization plan.
- Total debt stands at approximately $10.0 billion, with significant interest expense increase due to Senior Notes issuance and Term Loan borrowings.
- Cash, cash equivalents, and short-term investments totaled $2.2 billion, providing a solid liquidity position.
- The company is facing multiple shareholder class-action lawsuits related to its Design IP segment performance and the Ansys acquisition.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Synopsys kept $0.03.
- Revenue$2.41B100.0%
- Cost of revenue−$637.4M26.5%
- Gross profit$1.77B73.5%
- Operating costs−$1.57B65.1%
- Operating income$203.0M8.4%
- Interest, other & tax−$138.1M5.7%
- Net income$65.0M2.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed February 25, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $2.41B$1.46B | +65.5% |
| Cost of Revenue | $637.38M$269.98M | +136.1% |
| Gross Profit | $1.77B$1.19B | +49.4% |
| R&D Expenses | $714.99M$553.22M | +29.2% |
| Operating Expenses | $1.57B$933.50M | +68.0% |
| Operating Income | $203.05M$251.84M | −19.4% |
| Net Income | $64.96M$295.68M | −78.0% |
| EPS (Basic) | $0.34$1.91 | −82.2% |
| EPS (Diluted) | $0.34$1.89 | −82.0% |
| Shares Outstanding (Basic) | 189.59M154.41M | +22.8% |
| Shares Outstanding (Diluted) | 190.76M156.19M | +22.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Synopsys' revenue growth in this quarter?
The primary driver of Synopsys' revenue growth was the acquisition of Ansys, Inc., which contributed $885.6 million to the total revenue of $2.4 billion for the quarter ended January 31, 2026. This represents a 66% increase in revenue compared to the same period in the prior year.
Why did net income attributed to Synopsys decline despite strong revenue growth?
Net income attributed to Synopsys decreased from $295.7 million to $65.0 million due to significantly higher costs. These included a $242.1 million increase in amortization of acquired intangible assets from the Ansys merger, increased employee-related costs, and $118.3 million in restructuring charges. The Ansys acquisition, while driving revenue, also brought substantial acquisition-related expenses and amortization.
What is the current status of the Design IP segment and what actions is the company taking?
The Design IP segment experienced weakness during the quarter. In response, Synopsys is taking actions to 'sharpen its execution and reallocate resources to the highest growth opportunities' within this segment, focusing on areas with greater growth potential.
What is the company's debt situation and how is it impacting financial results?
Synopsys has a substantial debt of approximately $10.0 billion, largely incurred to finance the Ansys acquisition. This has led to a significant increase in interest expense, which rose from $11.1 million to $162.7 million for the quarter. The company has a strong liquidity position with $2.2 billion in cash, cash equivalents, and short-term investments, but the debt level impacts financial flexibility and profitability.
06—Continue