Synopsys (SNPS) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 revenue reached $1.604 billion, up 10% year-over-year, surpassing guidance midpoint, with 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 $10 billion bond issuance.

• Full-year 2025 revenue and non-GAAP operating margin guidance reaffirmed, reflecting strong product demand, business resilience, and robust execution.

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

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

Financial highlights

• Q2 revenue: $1.604 billion, up 10% year-over-year; six-month revenue: $3.1 billion (+3% YoY, impacted by an extra week in Q1 FY2024).

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

• Q2 gross margin: $1.29 billion, up from $1.15 billion year-over-year; gross margin for Q2: 80% of revenue.

• Backlog reached $8.1 billion, up $400 million sequentially.

• Cash, cash equivalents, 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 operating margin targeted at ~40%.

• FY2025 non-GAAP EPS: $15.11–$15.19; GAAP EPS: $10.14–$10.34.

• FY2025 free cash flow expected at ~$1.3 billion, lower than prior guide due to financing and acquisition costs; capital expenditures at ~$170 million.

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

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