Synopsys (SNPS) Stock Falls Despite Q2 Earnings and Revenue Beat – Time to Buy?

TLDR

• Synopsys Q2 adjusted EPS came in at $3.35, beating estimates of $3.15, with revenue of $2.28B topping the $2.25B consensus
• The stock fell roughly 2.6% in premarket trading to $512.22 despite the beat
• Full-year revenue guidance was raised to a midpoint of $9.67B, up from $9.6B
• Elliott Investment Management struck a cooperation agreement with Synopsys, with Jesse Cohn joining the board
• The Ansys integration resulted in roughly 10% workforce cuts and $325M in restructuring charges

Synopsys (SNPS) reported a solid fiscal Q2 on Tuesday, beating on both earnings and revenue — and the market shrugged.

The chip-design software maker posted adjusted EPS of $3.35, clearing the $3.15 analyst estimate by $0.20. Revenue hit $2.28 billion, ahead of the $2.25 billion consensus.

The stock was trading at $524.15 at close before dropping 2.6% in premarket Thursday to $512.22. It’s still up around 13% over the past 12 months and has gained about 26.6% over the last three months.

Synopsys, Inc., SNPS

Synopsys also raised its full-year revenue guidance to a range of $9.63B–$9.71B, with a midpoint of $9.67B. Full-year EPS guidance came in at $14.72–$14.80, above the analyst consensus of $14.45.

In the same announcement, the company said it reached a cooperation agreement with activist investor Elliott Investment Management. As part of the deal, Elliott’s Jesse Cohn will join the Synopsys board. Elliott has been an active presence across the tech sector recently.

Ansys Integration Takes Center Stage

The bigger story here isn’t the quarterly beat — it’s the ongoing work to absorb Ansys, the physics-simulation software company Synopsys bought for $35 billion last year.

Because Ansys was generating around half a billion dollars in quarterly revenue as an independent company, year-over-year comparisons for Synopsys are now essentially meaningless without adjusting for the acquisition.

The integration brought a round of layoffs, cutting roughly 10% of the combined workforce. That translated to about $325 million in total restructuring charges. The post-merger headcount stood at around 28,000, according to FactSet.

In March, Synopsys unveiled the first concrete product from the merger: Multiphysics Fusion. It adds electrical, thermal, electromagnetic, and mechanical simulation directly into the chip design workflow — a useful step for chip makers dealing with increasingly complex AI architectures.

AI Ties Are There, But Growth Is Measured

Synopsys has been making its AI case clearly: its software and hardware sit at the core of chip design, and without it, building AI chips gets a lot harder.

Nvidia holds a 2.5% stake in the company and is a customer. Competitor Cadence Design Systems (CDNS) operates in the same space.

But organic sales growth hasn’t yet matched the pace seen during Synopsys’ 2022 boom. The AI tailwind is present, just not yet blowing at full speed.

The company saw 14 positive EPS revisions in the last 90 days versus just 3 negative ones, pointing to broad analyst confidence heading into the print.

Synopsys’ next move will likely hinge on how smoothly the Ansys integration continues and whether Multiphysics Fusion gains traction with AI chip customers.

The post Synopsys (SNPS) Stock Falls Despite Q2 Earnings and Revenue Beat – Time to Buy? appeared first on CoinCentral.