Why Is Synopsys (SNPS) Down 6.3% Since Last Earnings Report?

Earnings Performance - Synopsys reported Q4 non-GAAP earnings of $3.40 per share, beating the Zacks Consensus Estimate of $3.29 and the guided range of $3.27-$3.32, with a 13% year-over-year increase [2] - Q4 revenues grew 12% year-over-year to $1.64 billion, slightly surpassing the Zacks Consensus Estimate of $1.63 billion [3] - Fiscal year 2024 revenues were $6.127 billion, a 15% increase from $5.32 billion in fiscal year 2023 [8] - Non-GAAP net income for fiscal year 2024 was $2.058 billion, or $13.20 per share, compared to $1.636 billion, or $10.54 per share, in fiscal year 2023 [8] Revenue Breakdown - Time-Based Product revenues (51% of total revenues) increased 6.9% year-over-year to $834.4 million [4] - Upfront Product revenues (31.8% of total revenues) grew 18% year-over-year to $520.9 million [4] - Maintenance and Service revenues (17.2% of total revenues) rose 14.5% year-over-year to $280.7 million [4] - Electronic Design Automation (EDA) revenues (65.6% of total revenues) increased 15.2% year-over-year to $1.07 billion [5] - Design IP revenues (31.7% of total revenues) were $517.8 million, slightly up from $513.7 million in the year-ago quarter [5] - Other revenues (2.7% of total revenues) surged 102.7% year-over-year to $45.2 million [5] Geographic Revenue Distribution - North America accounted for 45% of total revenues, generating $738.5 million [6] - Europe contributed 11% of total revenues, amounting to $185.2 million [6] - Korea, China, and Other regions accounted for 12%, 16%, and 15% of total revenues, generating $203.5 million, $259.9 million, and $248.9 million, respectively [6] Operating Margins - The non-GAAP operating margin for Q4 was 36.9%, contracting 40 basis points year-over-year [6] - EDA's adjusted operating margin improved by 440 basis points to 37% [7] - Design IP segment's margin decreased from 46% to 36.7% year-over-year [7] - The non-GAAP operating margin for fiscal year 2024 was 38.5%, expanding 220 basis points compared to the previous year [8] Balance Sheet & Cash Flow - Cash and short-term investments were $4.05 billion as of Oct 31, 2024, compared to $1.99 billion as of July 31, 2024 [9] - Total long-term debt was $16 million at the end of the reported quarter, slightly higher than the $15.6 million reported in the previous quarter [9] - Cash flow from operating activities for Q4 was $563 million, compared to $326 million in the year-ago quarter [10] - Cash flow from operating activities for fiscal year 2024 was $1.41 billion, lower than the previous year's $1.70 billion [10] Guidance - For fiscal 2025, Synopsys expects revenues between $6.745 billion and $6.805 billion, with non-GAAP earnings in the range of $14.88-$14.96 per share [11] - Non-GAAP expenses for fiscal 2025 are expected to be between $4.045 billion and $4.085 billion [11] - For Q1 fiscal 2025, Synopsys anticipates revenues between $1.435 billion and $1.465 billion, with non-GAAP EPS between $2.77 and $2.82 [11] - Non-GAAP expenses for Q1 fiscal 2025 are expected to be between $945 million and $955 million [11] Analyst Sentiment - Analysts did not issue any earnings estimate revisions in the last two months, leading to a consensus estimate shift of -30.26% [12] Stock Performance - Synopsys shares lost about 6.3% in the past month, underperforming the S&P 500 [1] - The stock has a subpar Growth Score of D, a Momentum Score of F, and a Value Score of F, resulting in an aggregate VGM Score of F [13] - Synopsys has a Zacks Rank 3 (Hold), with an expected in-line return in the next few months [14]