Synopsys (SNPS) Q1 2026 earnings summary

Executive summary

• Q1 FY2026 revenue reached $2.41 billion, up 66% year-over-year and at the high end of guidance, driven by the Ansys acquisition and organic growth in most product groups and geographies.

• Non-GAAP EPS was $3.77, exceeding expectations, while GAAP EPS was $0.34; net income declined due to higher costs from Ansys integration and restructuring.

• The Ansys integration is progressing well, with joint solutions expected in the first half of 2026 and monetization anticipated in FY2027.

• The company is focused on sustainable growth, margin expansion, advancing technology leadership through AI-driven engineering, and maximizing R&D productivity.

• Board authorized a $2.0 billion stock repurchase program following full repayment of $4.3 billion term loans.

Financial highlights

• Q1 FY2026 revenue was $2.41 billion, with Ansys contributing $885.6 million; non-GAAP operating margin was 42.1%.

• Non-GAAP EPS was $3.77; GAAP EPS was $0.34; free cash flow for Q1 was $822 million; cash and short-term investments ended at $2.2 billion; total debt at $10 billion.

• Gross margin for Q1 FY2026 was $1.77 billion, up from $1.19 billion year-over-year.

• Backlog stood at $11.3 billion, reflecting a resilient business model.

• Net cash provided by operating activities was $857 million; recurring revenue represented 84% of total revenue.

Outlook and guidance

• FY2026 revenue guidance is $9.56–$9.66 billion, with Ansys expected to contribute $2.9 billion at the midpoint.

• Non-GAAP operating margin guidance is 40.5% at the midpoint; non-GAAP EPS guidance raised to $14.38–$14.46.

• Cash flow from operations expected at $2.2 billion, CapEx at $300 million, and free cash flow at $1.9 billion.

• Q2 FY2026 revenue guidance is $2.225–$2.275 billion; non-GAAP EPS guidance is $3.11–$3.17.

• Long-term objectives include double-digit revenue growth, mid-40s non-GAAP operating margins, and high-teens non-GAAP EPS growth.