Keysight Technologies' Earnings Look Better Than They Seem: Free Cash Flow Outperforms Statutory Profit

Keysight Technologies' recent earnings may appear weak, but upon closer inspection, they are actually stronger than they seem. The company's free cash flow is significantly higher than its statutory profit, and its accrual ratio is negative, indicating a positive trend. Despite a decrease in earnings per share, Keysight's performance is considered satisfactory, and its future profitability is expected to improve. However, investors should also consider the risks facing the company.

Synopsys, Inc. (Nasdaq: SNPS) reported robust financial results for the third quarter of fiscal year 2025, marking a significant milestone in the company's transformation journey. The company's revenue for the quarter reached $1.740 billion, a 14% year-over-year (YoY) increase, driven by the successful acquisition of Ansys Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025^[1].

The quarter's GAAP earnings per diluted share (EPS) were $1.50, while non-GAAP EPS stood at $3.39, reflecting the inclusion of the Ansys acquisition in the consolidated financial statements. The company's operating results for Ansys were not material to its financial performance for the period Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025^[1].

Sassine Ghazi, president and CEO of Synopsys, highlighted the transformational impact of the Ansys acquisition, stating, "Q3 was a transformational quarter. Against a challenging geo-political backdrop, we closed the Ansys acquisition – expanding our portfolio, customer base and opportunity. Now more than ever, Synopsys is the mission-critical partner technology R&D needs to design and deliver AI-powered products" Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025^[1].

Shelagh Glaser, CFO of Synopsys, noted that while the Design Automation segment performed well, the Design IP segment underperformed expectations. The company is taking action to enhance its competitive advantage and drive resilient, long-term growth Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025^[1].

Synopsys expects full-year 2025 revenue to be between $7.03 and $7.06 billion, with GAAP expenses projected between $6,079 and $6,103 million. The company also expects non-GAAP EPS to range between $12.76 and $12.80 Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025^[1].

Despite the challenges faced in the Design IP segment, Synopsys' performance remains strong, with a focus on maintaining profitability and driving growth through strategic acquisitions and operational enhancements. Investors should closely monitor the company's progress in the coming quarters to assess its ability to navigate the current challenges and capitalize on future opportunities.

References:
Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025^[1] Synopsys, Inc. (2025). Synopsys Posts Financial Results for Third Quarter Fiscal Year 2025. PR Newswire. Retrieved from https://www.prnewswire.com/news-releases/synopsys-posts-financial-results-for-third-quarter-fiscal-year-2025-302551316.html