Synopsys (SNPS) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 revenue reached $1.604 billion, up 10% year-over-year, surpassing guidance midpoint and driven by growth across most products and geographies.

• GAAP EPS was $2.24 and non-GAAP EPS was $3.67, both exceeding guidance, with non-GAAP EPS including a $0.28 benefit from a building sale and $0.06 net charges from a $10B bond issuance.

• Full-year 2025 revenue and non-GAAP operating margin guidance reaffirmed, reflecting business resilience and strong execution despite China headwinds.

• The company is progressing toward closing the $35 billion Ansys acquisition, with regulatory clearance in all but China and closure anticipated in H1 2025.

• Sale of Software Integrity business completed for $1.65 billion, with results now presented on a continuing operations basis.

Financial highlights

• Q2 revenue was $1.6 billion, up 10% year-over-year, with strong growth in design IP and gross margin of $1.29 billion.

• Q2 GAAP net income: $349.2M ($2.24/diluted share); non-GAAP net income: $572.7M ($3.67/diluted share).

• Non-GAAP operating margin reached 38%; Q2 operating income was $376.4 million, up 13% year-over-year.

• Backlog increased to $8.1 billion, up $400 million sequentially.

• Cash and short-term investments at quarter-end: $14.3 billion; debt: $10.1 billion.

Outlook and guidance

• FY2025 revenue guidance: $6.745–$6.805 billion; non-GAAP EPS: $15.11–$15.19; non-GAAP operating margin target: ~40%.

• Q3 FY2025 revenue expected between $1.755–$1.785 billion; non-GAAP EPS $3.82–$3.87.

• Free cash flow guidance for FY2025 lowered to ~$1.3 billion due to financing and acquisition costs; capital expenditures at ~$170M.

• Long-term objectives post-Ansys acquisition include double-digit revenue growth and non-GAAP operating margins in the mid-40s.