Synopsys Q4 2025 Earnings Revenue Surges 37.8% Despite EPS Decline of 66.6%

Synopsys (SNPS) reported Q4 2025 earnings with a 37.8% revenue increase to $2.25 billion, exceeding expectations, while EPS fell sharply to $2.42 from $7.24. The company raised FY2026 revenue guidance to $9.61 billion, reflecting Ansys integration and strategic shifts toward AI-driven solutions.

Revenue

Synopsys’ Q4 revenue surged 37.8% year-over-year to $2.25 billion, driven by robust demand in AI, HPC, and automotive sectors. Total products revenue reached $1.56 billion, with Time-based products contributing $940.68 million and Upfront products generating $615.40 million. Maintenance and service revenue totaled $698.78 million, while Ansys integration added $667.7 million. The company’s full-year 2025 revenue hit a record $7.05 billion, supported by a $11.4 billion backlog.

Earnings/Net Income

Net income declined 59.1% to $448.45 million in Q4 2025, down from $1.10 billion in Q4 2024, with EPS dropping 66.6% to $2.42. The sharp earnings contraction reflects strategic resource reallocation toward AI initiatives, which impacted the Design IP business.

Post-Earnings Price Action Review

The strategy of buying SNPS shares after its Q4 revenue beat and holding for 30 days yielded a 32.73% total return but underperformed the 67.96% benchmark. With a CAGR of 9.98%, the approach showed moderate gains but faced challenges, including a Sharpe ratio of 0.36 and volatility of 27.36%. A maximum drawdown of 0.00% indicated no significant downside risk during the period.

CEO Commentary

CEO Sassine Ghazi emphasized AI’s role in redefining engineering complexity, highlighting Synopsys’ $7.05 billion FY25 revenue and $11 billion backlog. He acknowledged China market challenges but expressed confidence in mid-teens growth by 2026 through AI-driven workflows and partnerships like NVIDIA.

Guidance

Synopsys targets FY2026 revenue of $9.61 billion (midpoint), with non-GAAP EPS projected at $14.32–$14.40. The company aims for a 40.5% operating margin and Q1 2026 revenue of $2.365–$2.415 billion, reflecting disciplined cost management and Ansys integration.

Additional News

Synopsys announced the appointment of Mike Ellow as Chief Revenue Officer, signaling a strategic focus on scaling AI-driven solutions. The company also unveiled a $2 billion partnership with NVIDIA to revolutionize chip design and engineering workflows. Additionally, Synopsys finalized divestitures of its Optical Solutions and PowerArtist businesses, aligning with its streamlined growth strategy.

Legal Developments

Three law firms—DJS Law Group, Schall Law Firm, and Bernstein Liebhard LLP—filed securities fraud lawsuits against Synopsys, alleging misleading statements during the class period (Dec 4, 2024–Sept 9, 2025). Shareholders are urged to contact these firms by December 30, 2025, to pursue potential class-action participation.

Strategic Outlook

Synopsys’ FY2026 guidance underscores confidence in AI and Ansys integration, with CFO Shelagh Glaser highlighting $11.4 billion in backlog as a growth catalyst. The company plans to leverage joint solutions with NVIDIA and maintain operational efficiency to capitalize on its expanded market opportunities.