Synopsys Stock Gains After Q2 Results Tops Estimates, Raised FY22 Guidance

Synopsys, Inc. SNPS reported second-quarter revenue growth of 25% year-over-year to $1.28 billion, beating the consensus of $1.26 billion.

The gross margin expanded by 113 bps to 80.2%. The operating income improved by 87.3% Y/Y to $363.7 million, and the margin expanded by 950 bps to 28.4%. The adjusted segment operating margin for Q2 was 36.8%, up from 31% in 2Q21.

Synopsys generated cash from operating activities year-to-date of $905.7 million, compared to $700.29 million a year ago.

Adjusted EPS improved to $2.50 from $1.70 in 2Q21, beating the consensus of $2.37.

"Our financial momentum builds on three drivers: an unmatched product portfolio with groundbreaking new innovations, robust semiconductor, and electronics market demand, and excellent operational execution. Notwithstanding macroeconomic choppiness in an uncertain geopolitical environment, our customers continue to prioritize investments to enable the new "smart everything" era," commented Aart de Geus, chairman and CEO.

3Q22 Outlook: Synopsys expects revenue of $1.21 billion to $1.24 billion (vs. consensus of $1.14 billion), GAAP EPS of $1.32 to $1.44, and Adjusted EPS of $2.01 to $2.06 (much higher vs. consensus of $1.61).

FY22 Outlook: Synopsys sees revenue of $5 billion to $5.05 billion (vs. consensus of $4.81 billion), up from a prior expectation of $4.775 billion to $4.825 billion, GAAP EPS of $6.22 to $6.40, and Adjusted EPS of $8.63 to $8.70 (vs. consensus of $7.90), up from a prior expectation of $7.85 to $7.92. It expects Operating Cash Flow for FY22 of $1.55 billion to $1.6 billion.

Price Action: SNPS shares are trading higher by 4.90% at $283.98 during the post-market session on Wednesday.

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