Synopsys, Inc. (NASDAQ:SNPS) shares are trading higher premarket on Thursday after the company reported second-quarter 2025 after market close on Wednesday.
The company reported revenue of $1.60 billion, in line with the consensus estimate. The adjusted EPS of $3.67 beat the street view of $3.38.
Gross profit increased to $1.29 billion from $1.15 billion in the year-ago quarter, and the operating income rose to $376.4 million from $332.1 million in the prior year quarter.
Also Read: US Escalates Tech War With China, New Export Curbs To Hit Cadence, Synopsys As EDA Software, Chemicals And Tools Face License Requirements: Report
Sassine Ghazi, president and CEO of Synopsys, said, “The mega trends of AI, software-defined systems, and silicon proliferation continue to drive our growth. These trends are increasing design complexity and costs, while also increasing compute performance and energy demands. Synopsys is a trusted partner in addressing these challenges and a leader in applying AI to help customers innovate faster.”
“In a dynamic macro environment, Synopsys continues to execute with strong Q2 results on the top and bottom line,” said Shelagh Glaser, CFO of Synopsys. “We’re poised to deliver a solid second half, and we’re reaffirming our full-year revenue and operating margin guidance, reflecting our confidence in the business and continued healthy demand for our products.”
Synopsys increased its adjusted EPS guidance for FY25 to $15.11-$15.19, from the previous outlook of $14.88-$14.96. This new range surpasses the analyst consensus estimate of $14.89.
The company has, however, reaffirmed its FY2025 sales outlook at $6.75 billion-$6.80 billion, which aligns with the $6.77 billion analyst estimate.
Synopsys expects third-quarter revenue of $1.75 billion–$1.78 billion versus estimates of $1.76 billion and adjusted EPS of $3.82-$3.87 vs. consensus of $3.39.
These new targets reflect Synopsys’ shift in its fiscal year definition. Previously, the fiscal year concluded on the Saturday closest to October 31st, but it will now end precisely on October 31st each year.
This change results in a shorter first half of fiscal year 2025 by ten days, compensated by an extra two days in the second half, leading to a total of eight fewer days in fiscal year 2025 compared to fiscal year 2024.
The latest U.S. restrictions, designed to limit China’s access to essential technology, are anticipated to have a notable impact on major electronic design automation (EDA) software providers Cadence Design Systems, Inc. (NASDAQ:CDNS) and Synopsys, which have significant exposure.
According to Reuters, the U.S. Commerce Department has informed companies about expanded controls affecting EDA software, butane and ethane chemicals, machine tools, and aviation equipment.
Addressing these reports, Synopsys CEO Sassine Ghazi told analysts that the company has not received a notice from the Commerce Department’s Bureau of Industry and Security (BIS).
Investors can gain exposure to the stock via AXS Esoterica NextG Economy ETF (BATS:WUGI) and VanEck Fabless Semiconductor ETF (NASDAQ:SMHX).
Price Action: SNPS shares are trading higher by 2.07% to $472 premarket at last check Thursday.
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