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Synopsys Lowered Q4 Outlook Amid Decline in Q3 Earnings
ByAinvest
Wednesday, Sep 10, 2025 6:34 am ET1min read
Synopsys (SNPS) shares fell after the software company lowered its full-year profit outlook. The company's Q3 bottom line unexpectedly declined, and its fiscal 2025 earnings forecast was reduced.
Synopsys Inc. (SNPS), a leading software company in engineering solutions, reported its third-quarter fiscal 2025 earnings on September 10, 2025. The company's shares fell after it announced a reduction in its full-year profit outlook. The Q3 bottom line unexpectedly declined, and the company lowered its fiscal 2025 earnings forecast.Synopsys reported revenue of $1.74 billion for the quarter, up 14% year-over-year. However, GAAP earnings per share (EPS) were $1.50, a 43% decline from the year-ago period. Non-GAAP EPS was $3.39, a 1.2% decline. The company attributed the decline in GAAP earnings to integration costs and expenses related to the acquisition of Ansys, which closed on July 17, 2025 [1].
The company's Design Automation segment performed strongly, growing by 23%, while the Design IP segment underperformed, declining by 8%. Synopsys updated its full-year 2025 guidance, projecting revenue between $7.03 billion and $7.06 billion, and non-GAAP EPS between $2.76 and $2.80. For Q4 2025, the company expects revenue of $2.23 billion to $2.26 billion and non-GAAP EPS of $2.76 to $2.80 [1].
The stock market reacted negatively to the earnings report. Synopsys shares declined by 0.77% during regular trading hours, closing at $609.08. However, the stock recovered slightly in aftermarket trading, gaining 0.48% to reach $612.01 [2].
Synopsys faces several challenges, including integration costs from the Ansys acquisition, underperformance in the Design IP segment, and geopolitical headwinds. The company is focusing on higher-value IP solutions and subsystem delivery to capitalize on the evolving semiconductor IP landscape. Management has also announced a strategic review, including a 10% global headcount reduction by the end of fiscal 2026 [2].
Looking ahead, Synopsys' cautious outlook reflects the challenges of integrating Ansys and addressing competitive issues in the Design IP segment. The company's projected free cash flow for fiscal 2025 is $950 million, demonstrating financial strength despite the increased debt load from the acquisition [1].
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