Synopsys (SNPS) Q3 2025 earnings summary

Executive summary

• Q3 FY2025 revenue reached $1.74 billion, a 14% year-over-year increase, driven by strong Design Automation performance but offset by underperformance in Design IP due to China export controls and foundry customer challenges.

• The $34.9 billion Ansys acquisition closed in July 2025, expanding simulation and analysis capabilities and funded by $17.6 billion in cash and $17.1 billion in stock, with $14.3 billion in new debt issued.

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

• Announced pending sales of the Optical Solutions Group and Ansys PowerArtist RTL business to Keysight Technologies.

• Announced a planned 10% global headcount reduction by end of FY26 to drive scale and efficiency.

Financial highlights

• Q3 revenue: $1.74 billion (up 14% YoY); Q3 GAAP net income: $242.5 million; non-GAAP net income: $548.9 million; non-GAAP EPS: $3.39.

• FY24 revenue was $6.127 billion; FY25 revenue guidance is $7.03–$7.06 billion.

• Non-GAAP operating margin for Q3 was 38.5%; FY25 target is ~37%.

• Free cash flow for FY2025 expected to be ~$950 million; cash and short-term investments at quarter-end: $2.59 billion; debt at $14.34 billion.

• Backlog reached $10.1 billion, including Ansys.

Outlook and guidance

• FY2025 revenue guidance: $7.03–$7.06 billion; non-GAAP EPS: $12.76–$12.80; free cash flow about $950 million.

• Q4 revenue guidance: $2.23–$2.26 billion; non-GAAP EPS: $2.76–$2.80.

• FY2025 non-GAAP operating margin target: ~37%; GAAP operating margin target: ~13.5%.

• Long-term objectives include double-digit revenue growth in Design Automation and mid-teens in Design IP.

• Stock repurchase program suspended until debt levels are reduced post-acquisition.