Synopsys (SNPS) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 revenue was $1.46 billion, down 4% year-over-year, but exceeded the midpoint of guidance; non-GAAP EPS was $3.03, above guidance, while GAAP EPS was $1.89.

• The company reaffirmed its FY2025 guidance, targeting 10–11% revenue growth and non-GAAP EPS of $14.88–$14.96.

• The Software Integrity business was divested for $1.65 billion and is now reported as discontinued operations.

• The pending $35 billion Ansys acquisition progressed with regulatory approvals in Europe and the UK, and is expected to close in the first half of 2025.

• AI and HPC end-markets remained robust, while industrial, automotive, and China markets faced ongoing headwinds.

Financial highlights

• Q1 FY2025 total revenue was $1.46 billion; GAAP costs and expenses were $1.2 billion, non-GAAP costs and expenses were $924 million.

• Q1 GAAP net income was $295.7 million; non-GAAP net income was $473.2 million.

• Gross margin for Q1 FY2025 was 81%; operating cash flow was negative $67 million.

• Cash and short-term investments totaled $3.81 billion at quarter end.

• Free cash flow for FY2025 is projected at $1.6–$1.8 billion.

Outlook and guidance

• FY2025 revenue guidance is $6.745–$6.805 billion; non-GAAP operating margin targeted at 40%.

• FY2025 non-GAAP EPS expected at $14.88–$14.96; GAAP EPS at $10.09–$10.31.

• Q2 FY2025 revenue guidance is $1.585–$1.615 billion; non-GAAP EPS $3.37–$3.42.

• FY2025 revenue growth reiterated at 10–11%, with ~13% non-GAAP EPS growth.

• Free cash flow for FY2025 is projected at $1.6–$1.8 billion.