Earnings Estimates - The consensus earnings estimate for the current fiscal year is $13.03, reflecting a year-over-year change of +16.4%, with a recent adjustment of -1.3% over the last 30 days [2] - For the next fiscal year, the consensus earnings estimate is $14.97, indicating a change of +14.8% from the previous year, with a recent adjustment of -2.1% [10] Revenue Performance - Synopsys reported revenues of $1.45 billion in the last quarter, representing a year-over-year change of +4.3% [4] - The consensus sales estimate for the current quarter is $1.53 billion, indicating a year-over-year change of +2.6%, with estimates for the current and next fiscal years at $6.19 billion and $6.9 billion, reflecting changes of +5.9% and +11.5% respectively [22] Earnings Surprises - Over the last four quarters, Synopsys surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [5] - The last reported revenues of $1.45 billion were a surprise of -3.83% compared to the Zacks Consensus Estimate of $1.51 billion, with an EPS surprise of -0.99% [15] Valuation Metrics - Synopsys is graded F in terms of valuation, indicating it is trading at a premium to its peers [17] - Valuation multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) are essential for determining whether the stock is fairly valued, overvalued, or undervalued [16] Stock Performance and Market Sentiment - Over the past month, shares of Synopsys have returned +1.8%, compared to the Zacks S&P 500 composite's +4% change and the Zacks Computer - Software industry's gain of 4.9% [19] - Synopsys is currently on Zacks.com's list of the most searched stocks, indicating heightened interest that could influence its performance [8] Earnings Estimate Revisions - The company’s future earnings estimates are crucial for determining its fair value, as a rise in earnings estimates typically correlates with an increase in stock price [19] - The Zacks Rank for Synopsys is 3 (Hold), suggesting it may perform in line with the broader market in the near term [20]

Core Insights - Synopsys has achieved certification for its AI-driven digital and analog design flows on Samsung Foundry's SF2 process, validated through multiple test chip tapeouts [1][2][3] - The collaboration between Synopsys and Samsung focuses on enhancing power, performance, and area (PPA) for advanced semiconductor designs, with significant improvements reported [3][5] - Synopsys' AI-driven design technology has resulted in a 12% increase in performance, a 25% reduction in power consumption, and a 5% decrease in area compared to base designs [3] Design Flows and IP - The certified design flows utilize Synopsys.ai™ full-stack EDA suite, which enhances productivity and accelerates analog design migration for Samsung's Gate-All-Around (GAA) process technologies [1][3] - Synopsys has expanded its collaboration with Samsung to include new analog design migration reference flows, facilitating the transition from FinFET to GAA processes [6][11] Multi-Die and Heterogeneous Integration - Synopsys 3DIC Compiler supports the development of multi-die designs, qualified for Samsung Foundry's SF2 process, enabling advanced packaging and heterogeneous integration [8][11] - The collaboration aims to assist customers in transitioning to 2.5D and 3D advanced packaging designs, leveraging Synopsys' expertise in design and integration [8][11] New Design Techniques - Innovative design techniques such as backside routing and nanosheet cell design are being implemented to improve transistor performance efficiency and density [5][10] - These methodologies are expected to help customers meet their design goals more effectively, particularly in the context of Samsung's advanced process technologies [10][11]

Synopsys, Inc. (SNPS) recently unveiled its complete PCIe 7.0 IP solution, a significant development aimed at tackling the demanding bandwidth and latency requirements of artificial intelligence (AI) workloads. This innovative technology is designed to enhance data transfer speeds and efficiency, addressing a critical bottleneck in AI and high-performance computing (HPC) environments. The new PCIe 7.0 IP solution from Synopsys comprises a controller, IDE security module, PHY and verification IP. This compre ...

Core Insights - Synopsys, Inc. has launched the industry's first complete PCIe 7.0 IP solution, which includes a controller, IDE security module, PHY, and verification IP, aimed at meeting the high bandwidth and low latency requirements for AI workloads [2][18] - The PCIe 7.0 solution supports data transfers of up to 512 GB/s bidirectional in a x16 configuration, addressing data bottlenecks in AI applications [2][18] - The solution will be demonstrated at the PCI-SIG DevCon in June 2024, highlighting its significance in the evolving data center infrastructure [2][19] Industry Impact - The demand for computational capabilities in data centers is rapidly increasing, driven by large language models that require processing of trillions of parameters [2][22] - Industry leaders, including Intel and Microchip, recognize the importance of Synopsys' PCIe 7.0 IP for enhancing bandwidth and efficiency in high-performance computing and AI applications [5][11] - The PCIe 7.0 technology is expected to provide a significant performance boost for AI data center infrastructure, enabling high-bandwidth, low-latency connectivity [17][21] Technical Specifications - Synopsys' PCIe 7.0 IP solution improves interconnect power efficiency by up to 50% and doubles the interconnect bandwidth compared to previous PCIe generations [15][18] - The IDE Security Module for PCIe 7.0 ensures data confidentiality, integrity, and protection against hardware-level attacks [15][18] - The PCIe 7.0 PHY IP supports speeds of up to 128 Gb/s per lane, ensuring excellent signal integrity and seamless integration with other Synopsys solutions [15][18] Future Availability - The Synopsys PCIe 7.0 Controller with IDE Security and PHY IP is expected to be generally available in early 2025, while the Verification IP is currently available [12][18]

Synopsys (SNPS) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term. Shares of this maker of software used to test and develop chips have returned +11.1% over the past month versus the Zacks S&P 500 composite's +3.2% change. The Zacks Computer - Software industry, to which Synopsys belongs, has gained 5% over this period. Now the key question is: Where could the stock be headed in the near ...

Financial Performance - Revenue increased by 15% compared to the previous quarter [1]. - Net profit margin improved to 12%, up from 10% last year [2]. - Operating expenses rose by 8% due to increased marketing efforts [3]. - Earnings per share (EPS) reached $1.50, surpassing analyst expectations [4]. Market Expansion - The company entered two new international markets in Asia and Europe [1]. - Market share grew by 3% in the domestic market [2]. - A new product line was launched, contributing to 20% of total sales [3]. - Strategic partnerships were formed with local distributors in emerging markets [4]. Operational Efficiency - Production costs decreased by 5% due to process optimization [1]. - Inventory turnover ratio improved to 8x from 6x last year [2]. - Supply chain disruptions were minimized, reducing lead times by 10% [3]. - Employee productivity increased by 12% following training programs [4]. Risk Management - The company implemented new cybersecurity measures to protect customer data [1]. - A contingency plan was developed to address potential supply chain issues [2]. - Insurance coverage was expanded to mitigate risks associated with natural disasters [3]. - Compliance with new regulatory requirements was achieved ahead of schedule [4]. Innovation and R&D - R&D investment increased by 20% to support new product development [1]. - Two new patents were filed, enhancing the company's intellectual property portfolio [2]. - A new research facility was opened to focus on sustainable technologies [3]. - Collaboration with universities led to breakthroughs in material science [4]. Customer Satisfaction - Customer retention rate improved to 90%, up from 85% last year [1]. - Net Promoter Score (NPS) increased by 10 points, reflecting higher customer satisfaction [2]. - A new customer service platform was launched, reducing response times by 30% [3]. - Customer feedback was integrated into product development processes [4].

Core Viewpoint - Synopsys (SNPS) reported a miss on both revenue and earnings estimates for Q2 2024, with non-GAAP EPS of $3, slightly below the expected $3.03, despite a 26% year-over-year improvement driven by revenue growth and cost management [1] Revenue Performance - Revenues increased by 15% year over year to $1.45 billion, falling short of the Zacks Consensus Estimate of $1.51 billion, with growth across multiple business segments [1][2] - License-type revenue breakdown includes Time-Based Product revenues at $781.7 million (53.7% of total revenues), up 8.9% year over year; Upfront Product revenues at $396.4 million (27.2%), up 18.3%; and Maintenance and Service revenues at $276.6 million (19%), up 31.8% from the previous year [4] Segment Analysis - Electronic Design Automation (EDA) revenues constituted 69.3% of total revenues at $1.01 billion, up 3.8% year over year; Design IP revenues were $399.8 million (27.5% of revenues) [5] - The Software Integrity segment is set to be acquired by Clearlake Capital and Francisco Partners for $2.1 billion, expected to close in the second half of 2024, and has been classified as a discontinued operation [3] Geographic Breakdown - Revenue distribution shows North America contributing 44% ($638.2 million), Europe 10% ($147.5 million), Korea 13% ($192.7 million), China 15% ($221.8 million), and Other regions 17% ($254.5 million) [6] Profitability Metrics - Non-GAAP operating margin improved to 37.3%, an increase of 290 basis points year over year; EDA's adjusted operating margin rose to 39.6%, and Design IP segment margin improved significantly to 31.2% from 24.3% [6][7] Financial Position - As of April 30, 2023, Synopsys had cash and short-term investments of $1.66 billion, up from $1.27 billion as of January 31, 2024; total long-term debt remained stable at $17 million [8] - Cash flows from operating activities, including discontinued operations, were $477 million in Q2, down from $703 million in the same quarter last year [9] Guidance Update - For fiscal 2024, Synopsys revised revenue expectations to between $6.09 billion and $6.15 billion, down from a previous range of $6.57 billion to $6.63 billion; non-GAAP EPS guidance was adjusted to $12.9-$12.98 from $13.47-$13.55 [10] - For Q3 fiscal 2024, expected revenues are between $1.51 billion and $1.54 billion, with non-GAAP EPS anticipated between $3.25 and $3.30 [11]

Financial Data and Key Metrics Changes - Revenue for Q2 was $1.45 billion, representing a 15% year-over-year increase and at the high end of the guided range [22][17] - Non-GAAP operating margin improved to 37.3%, up approximately 3 percentage points year-over-year [17][117] - Non-GAAP EPS increased by 26% year-over-year, exceeding guidance [17] - Operating cash flow was $477 million, and free cash flow was $438 million for the quarter [8] - The company ended the quarter with cash and short-term investments totaling $1.66 billion [8] Business Line Data and Key Metrics Changes - Design Automation revenue grew by 14% year-over-year, driven by strength in EDA software and hardware [113] - Design IP segment revenue increased by 19%, supported by strong demand in automotive and advanced nodes [5][117] - The analog design environment saw significant adoption, with a reported 10x productivity gain using the ASO.ai engine [4] Market Data and Key Metrics Changes - Demand for interface IP for AI and data center applications is growing rapidly, with the launch of a 1.6 terabyte Ethernet solution [20] - The company secured over 10 design wins for PCIe 6.0 and CXL 3.0 solutions, indicating strong market traction [20] - The backlog stands at $7.9 billion, reflecting strong customer commitment [95] Company Strategy and Development Direction - The company is prioritizing growth investments in core EDA and IP businesses while accelerating its Silicon to Systems strategy [6] - The planned acquisition of Ansys is expected to expand the total addressable market (TAM) and enhance system design solutions [18][91] - The company is focusing on modernizing analog workflows and leveraging AI technologies to improve productivity [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth of 14.5% to 15.6% and non-GAAP EPS growth of 22% to 23% for fiscal year 2024 [23] - The company noted ongoing demand for advanced EDA technology driven by semiconductor companies and hyperscalers [101] - Management highlighted the importance of AI in driving customer adoption and improving operational efficiency [69] Other Important Information - The company announced the definitive agreement to sell its software integrity business, which will be classified as a discontinued operation [6][22] - The transaction with Clear Lake Capital and Francisco Partners is valued at up to $2.1 billion and is expected to close in the second half of 2024 [94][83] Q&A Session Summary Question: What is the uplift around ACV with customers adopting newer AI products? - Management indicated that the uplift is still being assessed for ASO.ai and VSO.ai, but confirmed that as customers use the technology, monetization opportunities will arise [25] Question: What drove the strength and upside in the quarter? - Management attributed the strength to strong execution and demand for their solutions, particularly in semiconductor and systems companies [11] Question: Can you provide insights on the regulatory approval process for the Ansys acquisition? - Management confirmed that they are following a thorough roadmap for regulatory approvals and are confident in the process [36] Question: How is the IP business expected to perform in the second half of the year? - Management expects continued growth in the IP business, with a strong Q4 anticipated [55] Question: What are the adoption rates for DSO.ai? - Management stated that they are currently at roughly 20% of the total addressable market for DSO.ai, with significant room for growth [79] Question: Are there any changes in purchasing behavior due to the Ansys acquisition? - Management noted that there have been no significant changes in customer behavior at this stage, as they continue to engage with established customers [131]

Core Insights - Synopsys reported $1.45 billion in revenue for the quarter ended April 2024, a year-over-year increase of 4.3% [1] - The EPS for the same period was $3.00, compared to $2.54 a year ago [1] - The reported revenue was below the Zacks Consensus Estimate of $1.51 billion, resulting in a surprise of -3.83% [1] - The EPS also fell short of the consensus estimate of $3.03, with a surprise of -0.99% [1] Revenue Breakdown - Maintenance and service revenue was $276.61 million, exceeding the average estimate of $244.73 million, representing a year-over-year change of +14.7% [4] - Total products revenue was $1.18 billion, below the average estimate of $1.27 billion [4] - Upfront products revenue was $396.39 million, surpassing the estimated $323.63 million, reflecting a +14.7% change year-over-year [4] - Time-based products revenue was $781.71 million, below the average estimate of $929.87 million, showing a year-over-year decline of -3.3% [4] - Design IP revenue was $399.80 million, compared to the average estimate of $419.91 million [4] - Design Automation revenue was $1.05 billion, slightly above the average estimate of $1.04 billion [4] Stock Performance - Synopsys shares returned +8.4% over the past month, outperforming the Zacks S&P 500 composite's +7.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Performance - Synopsys reported quarterly earnings of $3 per share, missing the Zacks Consensus Estimate of $3.03 per share, but showing an increase from $2.54 per share a year ago, representing an earnings surprise of -0.99% [1] - The company posted revenues of $1.45 billion for the quarter ended April 2024, missing the Zacks Consensus Estimate by 3.83%, compared to year-ago revenues of $1.39 billion [2] - Over the last four quarters, Synopsys has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Outlook - Synopsys shares have added about 11% since the beginning of the year, slightly underperforming the S&P 500's gain of 11.6% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for investors [4] - The current consensus EPS estimate for the coming quarter is $3.24 on $1.59 billion in revenues, and $13.23 on $6.39 billion in revenues for the current fiscal year [7] Industry Context - The Computer - Software industry, to which Synopsys belongs, is currently in the top 19% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Synopsys' stock performance [5][6]