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Synopsys 8-K Report, Financial Results (Feb 26, 2025)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 26, 2025
Period End
February 26, 2025
Security
SNPS
In the record · 2016–202610-K1010-Q338-K142

SNPS filed 10 annual reports (10-K), 33 quarterly reports (10-Q) and 142 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Nov ’16Nov ’16
  2. Leadership change8-K · May ’21May ’21
  3. Leadership change8-K · Apr ’23Apr ’23
  4. Restructuring8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 8-K filed February 26, 2025. Cited figures are marked; the original filing is the authoritative source.

Synopsys (SNPS) reported first quarter fiscal 2025 results (quarter ended January 31, 2025) in an 8-K furnishing Exhibit 99.1.

Revenue was $1.455 billiona, down from $1.511 billion a year earlier, but above the midpoint of guidance and at the upper end of the guided range. GAAP net income attributable to Synopsys was $295.7 million, or $1.89 per diluted share, versus $2.82 a year earlier. Non-GAAP EPS was $3.03, down from $3.38 but ahead of guidance.

The company reaffirmed its full-year 2025 targets, including expectations for double-digit revenue growth, with revenue of $6.745b-6.805 billion and non-GAAP EPS of $14.88-14.96. The quarter showed a mixed mix shift. Design Automation revenue grew to $1,020.2 million from $985.3 million, and its adjusted operating margin rose to 39.7%.

Design IP revenue fell sharply to $435.1 millionc from $525.7 million, and its adjusted margin dropped to 29.1% from 46.7%. Total GAAP operating income fell to $251.8 million from $352.6 million, and the GAAP tax line was a benefit of $6.3 million, which lifted GAAP EPS. Cash and short-term investments declined to $3.81 billion from $4.05 billion at fiscal year-end, and operating cash flow was negative at $(67.5) million, reflecting seasonal working capital outflows.

Investors should note several contextual factors. The Software Integrity business sale closed September 30, 2024, and prior periods are presented on a continuing-operations basis. The fiscal calendar is changing to a October 31 year-end, so the second quarter ends April 30, 2025 and fiscal 2025 has eight fewer days than fiscal 2024.

The targets exclude financing effects from the pending Ansys merger, and the company noted export-control and Entity List risks. The company also said final Q1 financial statements would appear in the Form 10-Q due by March 12, 2025.

02—Key points

Key Highlights

  1. Q1 FY2025 revenue of $1.455 billion, down about 3.7% year over year from $1.511 billion, but above guidance midpoint and at the upper end of the range.
  2. GAAP diluted EPS of $1.89 versus $2.82 a year earlier; non-GAAP diluted EPS of $3.03 versus $3.38, exceeding guidance.
  3. Design IP revenue fell about 17% to $435.1 million and its adjusted operating margin dropped to 29.1% from 46.7%, while Design Automation revenue rose to $1,020.2 million with a 39.7% margin.
  4. Full-year FY2025 targets reaffirmed: revenue of $6.745-6.805 billion and non-GAAP EPS of $14.88-14.96, with management citing double-digit revenue growth expectations.
  5. Q2 FY2025 guidance calls for revenue of $1.585-1.615 billion and non-GAAP EPS of $3.37-3.42.
  6. Operating cash flow was negative at $(67.5) million in the quarter, and cash plus short-term investments declined to $3.81 billion from $4.05 billion at October 31, 2024.
  7. Fiscal calendar change to an October 31 year-end and the pending Ansys merger are key items that could affect comparability and the targets.

03—Questions

Frequently Asked Questions

  1. Did Synopsys meet its own expectations in the first quarter?

    Yes. The company said revenue landed in the upper end of its guided range and non-GAAP EPS of $3.03 exceeded guidance. Revenue and GAAP earnings nonetheless declined year over year.

  2. Why did Design IP results weaken so much?

    Design IP revenue fell to $435.1 million from $525.7 million and its adjusted operating margin fell to 29.1% from 46.7%. The filing excerpt does not give a full explanation, so investors should review the Form 10-Q and earnings call commentary for the drivers.

  3. Are the full-year targets changing?

    No. Synopsys reaffirmed its fiscal 2025 targets, including revenue of $6.745-6.805 billion and non-GAAP EPS of $14.88-14.96. The targets do not reflect financing or combined-company effects from the pending Ansys merger.

  4. How is the fiscal calendar change affecting comparisons?

    Synopsys is moving from a 52/53-week year ending near October 31 to a fixed October 31 year-end. Fiscal 2025 has eight fewer days than fiscal 2024 in aggregate, with ten fewer days in the first half and two extra days in the second half, which affects year-over-year comparisons.

  5. What were the main drivers of the GAAP and non-GAAP earnings gap?

    GAAP net income was reduced by stock-based compensation of $186.3 million and acquisition/divestiture related items of $74.8 million, partly offset by a $96.2 million tax adjustment. The Q1 GAAP tax line was a benefit of $6.3 million, which helped GAAP EPS, and the tax-rate reconciliation cites the capital loss on the OpenLight Photonics stake sale.

04—Continue

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