What was the primary driver of Synopsys' revenue growth in the second quarter of fiscal year 2026?

The primary driver of Synopsys' revenue growth was the acquisition of Ansys, which contributed $652.4 million in revenue during the second quarter of fiscal year 2026. This, combined with organic growth, led to a 42% year-over-year increase in total revenue.

Why did Synopsys' net income and earnings per share decrease significantly compared to the prior year?

The significant decrease in net income and earnings per share was primarily due to a substantial increase in the cost of revenue and operating expenses. This increase was largely driven by the amortization of acquired intangible assets from the Ansys acquisition and higher employee-related costs associated with the integration.

What is the outlook for the Design IP segment?

The Design IP segment experienced a revenue decline of 6% year-over-year. The company is actively reallocating resources within this segment to focus on higher growth opportunities, indicating a strategic shift in priorities for this business unit.

How has the Ansys acquisition impacted Synopsys' balance sheet and debt levels?

The Ansys acquisition has significantly impacted the balance sheet, contributing to a substantial increase in goodwill and intangible assets. Synopsys also incurred significant debt to finance the cash portion of the acquisition, with approximately $10 billion in Senior Notes outstanding as of April 30, 2026, increasing overall interest expense.

SNPS 10-Q Quarterly Report Q2 FY2026 — Revenue, Net Income, EPS

Summary

Synopsys, Inc. (SNPS) reported a significant increase in revenue for the second quarter of fiscal year 2026, driven primarily by the acquisition of Ansys and continued strength in its Design Automation segment. Revenue grew by 42% year-over-year, largely attributed to Ansys' substantial contribution and organic growth across its business. However, the Design IP segment experienced a decline, prompting resource reallocation to higher-growth areas. Despite revenue growth, the company saw a substantial increase in operating expenses and cost of revenue, largely due to amortization of acquired intangible assets from the Ansys acquisition and increased employee-related costs. This led to a considerable decrease in net income and diluted earnings per share compared to the prior year's strong performance. The company's liquidity remains strong with substantial cash reserves, though significant debt obligations remain following the Ansys acquisition financing. Investors should note the impact of the Ansys integration, the strategic shift in the Design IP segment, and the ongoing macroeconomic uncertainties that could influence future performance. Legal proceedings related to shareholder class actions and derivative suits have also been disclosed.

Key Highlights

1Revenue increased by 42% to $2.28 billion, primarily driven by the Ansys acquisition ($652.4 million contribution).
2Cost of revenue and operating expenses increased significantly by 76% to $2.19 billion, largely due to Ansys-related amortization and headcount.
3Net income attributed to Synopsys decreased to $17.1 million from $345.3 million year-over-year.
4Diluted EPS for continuing operations was $0.09, down from $2.24 in the prior year.
5The Design IP segment experienced a revenue decline of 6%, prompting a strategic reallocation of resources.
6Total assets stood at $46.9 billion, with significant goodwill and intangible assets resulting from acquisitions.
7The company has $11.0 billion in contracted but unsatisfied performance obligations (backlog).

SYNOPSYS INC Quarterly Report for Q2 Ended Apr 30, 2026

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