01—Abstract
Summary
Summary of the 8-K filed May 27, 2026. Cited figures are marked; the original filing is the authoritative source.
Synopsys reported second-quarter fiscal 2026 results (quarter ended April 30, 2026) with revenue of $2.276 billiona, up roughly 42% from $1.604 billion a year earlier, largely reflecting the Ansys acquisition.
GAAP net income attributable to Synopsys fell sharply to $17.1 millionb, or $0.09 per diluted share, from $349.2 million ($2.24) a year ago, weighed down by $403.6 million of acquired-intangible amortization, $222.3 million of stock-based compensation, and $115.9 million of restructuring charges. On a non-GAAP basis, EPS was $3.35 versus $3.67 last year, with non-GAAP net income of $643.7 million. Revenue and non-GAAP EPS both exceeded company guidance.
Management raised full-year fiscal 2026 revenue guidance to a midpoint of $9.665 billionc (from $9.610 billion) and non-GAAP EPS guidance to a midpoint of $14.76 (range $14.72 to $14.80). The revenue raise combines $35 million of business performance and $60 million from an EPS-neutral Ansys channel accounting impact, partly offset by a $40 million reduction tied to the pending divestiture of the Processor IP Solutions business. Management also raised targets for operating margin, free cash flow (now about $2.0 billion), and operating cash flow (about $2.3 billion).
Balance sheet activity was significant: long-term debt fell to $10.01 billiond from $13.46 billion at October 31, 2025, following $3.46 billion of debt repayments in the first half, funded partly by a $2.0 billion private placement of common stock. Shares outstanding rose to 191.4 million from 186.0 million. Investors should note that the Design IP segment's adjusted operating margin contracted to 24.4% in the quarter from 31.2% a year earlier, and that the company plans an Investor Day on September 30, 2026 to outline long-term financial targets.
02—Key points
Key Highlights
- Q2 FY2026 revenue of $2.276 billion, up about 42% year over year from $1.604 billion, above prior guidance, with Design Automation at 80% of revenue.
- GAAP diluted EPS of $0.09 versus $2.24 a year ago, driven by $403.6M of intangible amortization, $115.9M of restructuring charges, and $222.3M of stock-based compensation; non-GAAP EPS was $3.35 versus $3.67.
- Full-year FY2026 revenue guidance raised to a $9.665B midpoint (from $9.610B), including a $60M EPS-neutral Ansys channel accounting impact and a $40M reduction from the pending Processor IP Solutions divestiture.
- Full-year non-GAAP EPS guidance raised to a $14.76 midpoint ($14.72–$14.80), with operating margin, free cash flow (~$2.0B), and operating cash flow (~$2.3B) targets also raised.
- Long-term debt reduced to $10.01B from $13.46B at fiscal year-end, following $3.46B of repayments in the first half, partly funded by a $2.0B private placement of common stock.
- Design IP segment adjusted operating margin declined to 24.4% from 31.2% year over year on lower revenue ($454.2M vs. $482.0M), while Design Automation adjusted margin improved to 43.3% from 40.9%.
- Management plans an Investor Day on September 30, 2026 to provide updated long-term financial targets and strategy.
03—Questions
Frequently Asked Questions
Why was GAAP EPS so much lower than non-GAAP EPS this quarter?
GAAP diluted EPS of $0.09 includes large non-cash and one-time charges that non-GAAP results exclude: $2.10 per share of amortization of acquired intangibles, $1.16 of stock-based compensation, and $0.60 of restructuring charges, partly offset by a $0.72 tax adjustment. Much of the gap stems from the Ansys acquisition, which added substantial intangible amortization.
Did Synopsys change its full-year outlook?
Yes, modestly upward. Revenue guidance midpoint rose to $9.665 billion from $9.610 billion, and non-GAAP EPS midpoint rose to $14.76. GAAP EPS guidance of $2.49 to $2.91 is well below non-GAAP, reflecting the same acquisition-related and stock compensation adjustments.
What is the Processor IP Solutions divestiture and how does it affect results?
Synopsys expects to complete the sale of its Processor IP Solutions business, which is classified as held for sale. Management's revenue guidance already reflects a $40 million reduction in fiscal 2026 revenue from this divestiture. The company did not disclose the buyer or purchase price in this release.
How did the company's debt and capital structure change?
Long-term debt declined to $10.01 billion from $13.46 billion at October 31, 2025, after $3.46 billion of repayments in the first half. The company also issued $2.0 billion of common stock in a private placement and repurchased $262.5 million of treasury stock, with shares outstanding rising to 191.4 million.
What should investors watch for next?
Key items include the third-quarter fiscal 2026 results and targets (revenue guidance of $2.41 to $2.46 billion and non-GAAP EPS of $3.63 to $3.69), completion of the Processor IP Solutions sale, the Q2 Form 10-Q due by June 9, 2026, and the September 30 Investor Day where long-term targets will be discussed.
04—Continue