Synopsys, Inc. Faces Securities Fraud Investigation Over Misleading Financial Guidance

Synopsys, Inc. investors who lost money may contact Law Offices of Howard G. Smith about securities fraud investigation. The company's Q3 2025 financial results missed prior guidance due to underperformance in the IP business and new export restrictions disrupting design starts in China. This led to a stock price drop of $216.59, or 35.8%, on September 10, 2025. Investors may contact the law firm to discuss their legal rights.

Synopsys, Inc. (SNPS) reported its third-quarter fiscal 2025 earnings on September 10, 2025, missing both top and bottom-line consensus estimates. The company reported non-GAAP earnings of $3.39 per share, falling short of the Zacks Consensus Estimate of $3.84 and the guided range of $3.82-$3.87. The stock price dropped by 22%, hitting a low of $216.59 during the extended trading session.

Revenues for the quarter jumped 14% year over year to $1.74 billion, but this figure missed the Zacks Consensus Estimate of $1.768 billion. The company's Time-Based Product and Upfront Product businesses drove the top-line growth. However, the Electronic Design Automation (EDA) segment, which accounts for 68.6% of total revenues, saw a 17% increase year over year, while Design IP revenues decreased by 3.5% to $427.6 million.

The non-GAAP operating margin contracted by 150 basis points (bps) to 38.5%, and the EDA's adjusted operating margin improved by 300 bps to 44.5%. The Design IP segment's margin contracted by 1660 bps to 20.1%.

Synopsys' balance sheet showed cash and short-term investments of $2.59 billion as of July 31, 2025, and total long-term debt of $14.32 billion at the end of the reported quarter. The company generated operating cash flow of $671 million during the fiscal third quarter.

For fiscal 2025, Synopsys now expects revenues between $7.03-$7.06 billion, down from its previous guidance of $6.745-$6.805 billion. Non-GAAP earnings are now expected to be in the range of $12.76-$12.80, down from $15.11-$15.19. The Zacks Consensus Estimate for revenues is pegged at $6.77 billion and for earnings at $15.13 per share.

For the fourth quarter of fiscal 2025, Synopsys expects revenues between $2.23 billion and $2.26 billion, with non-GAAP earnings per share expected between $2.76 and $2.80. The Zacks Consensus Estimate for revenues is pegged at $1.94 billion, and for earnings at $4.61 per share.

Synopsys' Zacks Rank is currently #4 (Sell), and analysts from Bank of America have downgraded the stock to Underperform, citing weak outlook for the IP business tied to Intel and China, higher costs from the acquisition of Ansys, and a surprise restructuring required in the core IP business. The firm has also cut its earnings forecasts for 2025-27 by as much as 16% and lowered its price target to $525 from $625.

Investors who lost money may contact the Law Offices of Howard G. Smith about securities fraud investigation. The company's Q3 2025 financial results missed prior guidance due to underperformance in the IP business and new export restrictions disrupting design starts in China. This led to a stock price drop of $216.59, or 35.8%, on September 10, 2025.