Synopsys (SNPS) Q3 2026 earnings summary

Executive summary

• Q3 FY2026 revenue grew 42% year-over-year to $2.48 billion, driven by strong EDA, Ansys, and IP performance, with Ansys contributing $622 million and marking its first year of integration.

• Net income from continuing operations was $545.8 million, more than doubling from the prior year; GAAP EPS was $2.84 and non-GAAP EPS was $3.91, both exceeding guidance.

• The company raised full-year revenue, non-GAAP operating margin, and EPS guidance, citing continued AI-driven demand and successful Ansys integration.

• Initiated a restructuring plan with expected charges between $425 million and $500 million, primarily for workforce reduction and site closures.

• Completed major divestitures, including Processor IP and Software Integrity businesses, impacting revenue and segment focus.

Financial highlights

• Q3 FY2026 revenue was $2.477 billion, up from $1.740 billion year-over-year; nine-month revenue reached $7.16 billion, up 49%.

• Q3 net income was $545.8 million; non-GAAP net income was $752.5 million; diluted EPS from continuing operations was $2.84; non-GAAP EPS was $3.91.

• Gross margin for Q3 FY2026 was $1.797 billion; operating income was $357.5 million.

• Cash and short-term investments at quarter-end totaled $3.61 billion; total debt was $10 billion.

• Free cash flow for Q3 was $746 million; operating cash flow for nine months was $2.3 billion.

Outlook and guidance

• Full-year FY2026 revenue guidance is $9.69–$9.74 billion, with Ansys contributing $2.98 billion.

• Full-year non-GAAP operating margin guidance is ~41.5%; GAAP operating margin at ~10.4%.

• Full-year non-GAAP EPS guidance is $15.04–$15.10; GAAP EPS guidance is $3.84–$4.08.

• Q4 FY2026 revenue expected between $2.53–$2.58 billion; Q4 non-GAAP EPS expected at $4.10–$4.16.

• Operating cash flow for FY2026 projected at ~$2.8 billion; free cash flow at ~$2.6 billion.