PresentationOkay. Good afternoon, everybody. Welcome to the Goldman Sachs Communacopia and Technology Conference. My name is Jim Schneider. I'm the semiconductor analyst here at Goldman Sachs. It's my pleasure to welcome Synopsys and CEO, Sassine Ghazi, with us today. Thank you very much from Sassine for being here, straight from your earnings report last night.James SchneiderSenior Research Analyst Before we get started, I need to read the disclosure. Today's discussion may contain forward-looking statemen ...

Group 1 - The Goldman Sachs Communacopia and Technology Conference featured Synopsys and its CEO, Sassine Ghazi, who presented immediately following the company's earnings report [1] - The discussion included forward-looking statements regarding Synopsys' current outlook, expectations, and beliefs, which are subject to risks and uncertainties [2]

Core Insights - Oracle's shares surged 36% following its fiscal first-quarter results and an optimistic outlook for its cloud infrastructure business, driven by strong AI demand [4][9] - The S&P 500 index reached a record close for the second consecutive day, reflecting mixed performances across major U.S. equities [3][9] - Other AI-related stocks also experienced gains, indicating a broader market response to Oracle's positive outlook [5][6] Company Performance - Oracle's fiscal first-quarter sales and profits were below consensus forecasts, yet the company raised its guidance for cloud infrastructure, anticipating significant customer additions [4][9] - Synopsys shares fell 36% after missing quarterly sales and profit estimates, along with a reduction in its earnings guidance [7][9] - The Trade Desk's shares dropped 12% following a downgrade from Morgan Stanley, which cited challenges in its connected TV business [10] Industry Trends - The unexpected decline in wholesale inflation, as indicated by the August Producer Price Index, suggests moderating price pressures ahead of the Consumer Price Index release [2][9] - Companies like Broadcom and utilities such as Vistra and Constellation Energy saw stock increases, reflecting the growing demand for AI-related infrastructure and energy [5][6]

Summary of Synopsys Conference Call Company Overview - **Company**: Synopsys - **Event**: Goldman Sachs Communication and Technology Conference - **Speaker**: CEO Sassine Ghazi Key Points Industry Context - The semiconductor industry is facing challenges, particularly in the IP (Intellectual Property) business due to external factors such as restrictions in China and issues with a major foundry customer [3][6][10]. Financial Performance - Synopsys reported a weaker-than-expected Q3 performance, primarily driven by a decline in the IP business [3][7]. - The company anticipates muted growth for the IP segment in FY2026, while other business areas are expected to perform well [7][18]. Factors Affecting IP Business 1. **China Market Impact**: - Synopsys faced a BIS restriction that hindered sales in China for about six weeks, leading to uncertainty among customers [5][6]. - Growth in China, which had been around 20% to 25% CAGR, is expected to decline significantly [10]. - The company cannot sell to many potential customers in China due to technology restrictions [9][10]. 2. **Foundry Customer Issues**: - A significant foundry customer did not utilize the IP investment made by Synopsys, impacting revenue forecasts [6][14]. - The company has decided to de-risk its forecasts by assuming no customers for the IP built for this foundry [10][16]. Business Segments - Synopsys operates in three main areas: Design EDA (Electronic Design Automation), Design Automation, and IP [5]. - The company is pivoting towards more customized IP solutions, particularly for hyperscale and automotive markets [20][22]. AI Integration - Synopsys is leveraging AI in its products, focusing on reinforcement learning, generative AI, and agentic systems to enhance design efficiency [35][36]. - The integration of AI is expected to improve productivity and reduce time to market for customers [35]. Ansys Acquisition - The acquisition of Ansys is seen as a strategic move to enhance product offerings, particularly in physics simulation for advanced chip designs [39][41]. - Synopsys plans to report Ansys revenue separately for transparency and to highlight the health of its core business [26][46]. Cost Management - Synopsys is implementing a 10% headcount reduction by the end of FY2026 as part of a cost synergy program related to the Ansys acquisition [28][30]. - The company aims to achieve $400 million in cost synergies while reinvesting in growth opportunities [30]. Investor Communication - The CEO emphasized the importance of transparency regarding the challenges faced in the IP business and the need for investors to adjust their growth expectations for FY2026 [45][46]. - Synopsys is committed to returning to mid-teens growth for the IP segment by FY2027 [46]. Conclusion - Despite current challenges, Synopsys maintains a strong outlook for its other business segments and is focused on leveraging AI and the Ansys acquisition to drive future growth [42][46].

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Core Insights - Synopsys (SNPS) shares plummeted over 35% following a disappointing Q3 report and a lowered earnings guidance for the full year [1] - The company now projects per-share earnings (EPS) between $12.76 and $12.80, significantly down from the previous guidance of $15.15 [1] Financial Performance - Following the earnings report, Synopsys stock has declined approximately 40% from its year-to-date high reached in late July [2] - The forward price-earnings (P/E) multiple stands at about 56x, indicating that shares remain expensive even after the recent selloff [6] Challenges and Risks - Three major headwinds are identified for Synopsys in the second half of 2025: - Disrupted design starts in China due to tightened U.S. export controls, affecting customer onboarding and demand for EDA tools and IP licensing [3] - Friction with a major foundry partner, likely related to integration or pricing issues, creating uncertainty in collaborative chip development timelines [4] - Suboptimal resource allocation across the product roadmap, leading to underinvestment in high-growth areas like automotive and edge AI, raising strategic focus concerns [4] Strategic Responses - In response to challenges, Synopsys management announced a 10% workforce reduction by the end of fiscal 2026 and a strategic realignment of resources towards higher-growth opportunities [5] - Despite these proactive measures, the IP business challenges may take several quarters to resolve, and uncertainties related to China add further risk [5] Market Sentiment - The consensus rating for Synopsys stock is currently "Strong Buy," with a mean target price of approximately $662 [7]

LOS ANGELES--(BUSINESS WIRE)---- $SNPS--SNPS Investors Have Opportunity to Join Synopsys, Inc. Fraud Investigation with the Schall Law Firm. ...

Wall Street is heading for more records on Wednesday following a surprisingly encouraging report on inflation and a stunning forecast for growth from Oracle because of the artificial-intelligence boom.The S&P 500 rose 0.2% and was on track to set an all-time high for a second straight day. The Dow Jones Industrial Average was down 221 points, or 0.5%, as of 2:33 p.m. Eastern time, and the Nasdaq composite was mostly unchanged after both likewise set records the day before.Stocks have been hitting records in ...

Core Insights - Oracle shares surged after the company provided a better-than-expected outlook driven by strong demand for AI, particularly in cloud infrastructure sales [2][5] - The S&P 500 and Nasdaq reached record highs following a report indicating a surprising decline in wholesale inflation for August [2][5] - Synopsys experienced a significant drop in shares after missing earnings estimates and lowering its full-year outlook due to decreased sales of design intellectual property [4][5] Company Performance - Oracle (ORCL) saw its shares increase by more than a third, leading gains on the S&P 500 [2] - Bill (BILL) shares rose after Elliott Investment Management acquired a stake in the financial automation software company [3] - GameStop (GME) shares jumped following better-than-expected results and the announcement of holding over half a billion dollars in Bitcoin, with plans for a special dividend [3] - Synopsys (SNPS) was the worst performer in the S&P 500, with shares falling after missing earnings estimates and cutting its full-year outlook [4] Market Trends - The Dow Jones Industrial Average declined, primarily due to a drop in Apple (AAPL) shares after the launch of the iPhone 17 models [2] - Oil and gold futures advanced, while the yield on the 10-year Treasury note decreased [5] - The U.S. dollar weakened against the euro, pound, and yen, with major cryptocurrencies seeing price increases [5]

Core Viewpoint - Synopsys (SNPS.US) experienced a significant intraday drop of 35%, reaching a five-month low of $390.15 following the release of its Q3 earnings report, which fell short of market expectations [1] Financial Performance - For the third fiscal quarter ending July 31, Synopsys reported a revenue increase of 14% year-over-year to $1.74 billion, but this was below the expected $1.77 billion [1] - The adjusted earnings per share (EPS) for the quarter were $3.39, which also missed market expectations of $3.80 [1] Future Guidance - For the fourth fiscal quarter, Synopsys expects an adjusted EPS in the range of $2.76 to $2.80, significantly lower than the market expectation of $4.50 [1] - The company projects revenue for the fourth quarter to be between $2.23 billion and $2.26 billion, compared to the market expectation of $2.1 billion [1]