Synopsys (SNPS) Q2 Earnings and Revenues Miss Estimates

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]