Synopsys Q1 Profit Tops Estimates, Sees Strong AI-Fueled Chip Design Demand

Synopsys Inc SNPS shares are trading higher premarket reported first-quarter financial results after the market close on Wednesday.

• Revenue: $1.455 billion missed the estimates of $1.466 billion.
• Adjusted EPS: $3.03 beat the street view of $2.84.

Gross profit declined to $1.185 billion from $1.232 billion a year ago quarter and the operating income declined to $251.8 million from $352.6 million in the prior year quarter.

Sassine Ghazi, president and CEO of Synopsys, said, “We launched industry-leading silicon IP and hardware-assisted verification solutions while expanding generative AI capabilities in EDA.” 

“We are continuing to see strong design activity at advanced nodes, fueled by the AI-driven reinvention of compute. As the pace and complexity of technology innovation increases, new silicon-to-systems design paradigms are essential, and Synopsys is well-positioned to deliver.”

Outlook: Synopsys expects second-quarter revenue of $1.585 billion – $1.615 billion versus estimates of $1.600 billion and adjusted EPS of $3.37 – $3.42 vs. consensus of $3.35.

For FY25, the company continues to expect revenue of $6.745 billion – $6.805 billion vs. consensus of $6.786 billion and adjusted EPS of $14.88 – $14.96 vs. street view of $14.91.

The company’s targets reflect a shift in its fiscal year to a fixed October 31 year-end, replacing the previous 52/53-week cycle. This adjustment shortens the first half of fiscal 2025 by ten days while adding two days to the second half, resulting in a net reduction of eight days compared to fiscal 2024.

Investors can gain exposure to the stock via AXS Esoterica NextG Economy ETF WUGI and VanEck Fabless Semiconductor ETF SMHX.

Price Action: SNPS shares are up 2.05% at $480.09 premarket at the last check Thursday.

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