Financial Data and Key Metrics Changes - The company achieved record annual revenue of $7.05 billion, up approximately 15% year-over-year, with Q4 revenue of $2.25 billion, at the high end of guidance [5][14]. - The total backlog increased to $11.4 billion, up from $10.1 billion in the previous quarter [13]. - Non-GAAP operating margin for FY25 was 37.3%, with Q4 non-GAAP operating margin at 36.5% [14][15]. - GAAP earnings per share for Q4 and FY25 were $2.39 and $8.07 respectively, while non-GAAP earnings per share were $2.90 and $12.91, exceeding guidance [14][15]. Business Line Data and Key Metrics Changes - The design automation segment revenue, including EDA and Ansys, was $5.3 billion, up 26%, while excluding Ansys, it grew approximately 8% [15]. - The design IP segment revenue was $1.75 billion, down 8% due to challenges in the second half of the year [15]. - The hardware-assisted verification (HAV) business saw a record year with 12 competitive wins in Q4 [8]. Market Data and Key Metrics Changes - China faced significant challenges, with revenue down 18% for FY25, and down 22% excluding Ansys [14]. - The company noted stronger semiconductor demand in mobile and automotive sectors, while industrial markets remained subdued [6]. Company Strategy and Development Direction - The integration of Ansys is a key focus, with the company aiming to deliver joint solutions in the first half of 2026 [11][62]. - The company is targeting double-digit growth for Ansys revenue in FY26, driven by increased R&D investments in various industries [60]. - A strategic partnership with NVIDIA is expected to enhance design and engineering capabilities with AI and accelerated computing [7]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth potential despite current challenges, particularly in the IP business [41][76]. - The company is adopting a pragmatic approach to forecasting, particularly regarding the ongoing challenges in China [76]. - Management emphasized the importance of AI in driving future demand for engineering solutions, indicating a shift in how engineering is approached [6][48]. Other Important Information - The company plans to prepay $2.55 billion of its term loans in the first half of 2026, which is expected to be accretive to EPS [16][19]. - The guidance for FY26 includes total revenue of $9.56-$9.66 billion, with Ansys contributing approximately $2.9 billion at the midpoint [17]. Q&A Session Summary Question: What is the embedded organic growth rate in the 2026 guide? - Management indicated it is around 8%, factoring in the divestitures and muted growth expectations for the IP business [22][23]. Question: What are the expectations for EDA and IP growth in the guidance? - Management acknowledged that EDA growth is impacted by the China environment and a muted roadmap for certain customers, while IP is expected to have a transitional year [31][32]. Question: Can the IP business achieve mid-teens growth in FY27? - Management expressed confidence in the IP portfolio and ongoing customer engagements, indicating that growth could return to mid-teens in the future [82]. Question: What is the rationale behind the NVIDIA investment? - The investment was made to accelerate computational capabilities and modernize engineering solutions, leveraging the strengths of both companies [44][45]. Question: How is the integration of Ansys progressing? - Integration efforts are underway, with R&D teams working together to deliver joint solutions, while maintaining separate go-to-market strategies for different customer segments [61][62].

Financial Data and Key Metrics Changes - Synopsys achieved record annual revenue of $7.05 billion in FY25, up approximately 15% year-over-year, with Q4 revenue of $2.25 billion, aligning with guidance [12][13] - The company ended FY25 with a backlog of $11.4 billion, up from $10.1 billion in the previous quarter [12] - Non-GAAP operating margin for FY25 was 37.3%, with Q4 non-GAAP operating margin at 36.5% [14] - GAAP earnings per share for FY25 were $8.07, while non-GAAP EPS was $12.91, exceeding guidance due to lower expenses [14][15] Business Line Data and Key Metrics Changes - The design automation segment, including EDA and Ansys, generated $5.3 billion in revenue for FY25, up 26%, while excluding Ansys, it grew approximately 8% [15] - The design IP segment revenue was $1.75 billion, down 8% due to challenges in the second half of the year [15] - Ansys contributed $757 million to total revenue in FY25, with Q4 revenue of $668 million [13][14] Market Data and Key Metrics Changes - China faced significant challenges, with revenue down 18% in FY25, and excluding Ansys, down 22% [13][14] - The semiconductor demand is strong in mobile and automotive sectors, while industrial markets remain subdued [5][12] Company Strategy and Development Direction - Synopsys aims to leverage the Ansys acquisition to enhance its engineering solutions from silicon to systems, focusing on AI-driven design and multi-domain integration [4][6] - The company plans to deliver its first joint solutions with Ansys in the first half of 2026, targeting double-digit growth for Ansys revenue [11][56] - Strategic partnerships, such as with NVIDIA, are expected to enhance design and engineering capabilities [6][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the AI infrastructure build-out driving semiconductor demand, despite challenges in certain markets like China [5][12] - The company anticipates a transitional year for the IP business in FY26, with muted growth expected due to ongoing adjustments and market conditions [10][36] - Management emphasized a focus on operational excellence and financial discipline to drive sustainable growth and margin expansion [11][19] Other Important Information - Synopsys plans to prepay $2.55 billion of its term loans in the first half of 2026, which is expected to be accretive to EPS [16][18] - The company is adopting a normalized non-GAAP tax rate of 18% projected through 2028 [17] Q&A Session Summary Question: What is the embedded organic growth rate in the 2026 guide? - Management indicated that the organic growth rate is around 8%, factoring in the divestitures and muted growth for the IP business [22][23] Question: What are the growth expectations for EDA and IP in the guidance? - Management confirmed that EDA growth is impacted by the China environment and ongoing market dynamics, with IP expected to grow modestly [28][29] Question: Can you provide an update on the IP business and headwinds? - Management acknowledged challenges in the IP business but expressed confidence in long-term growth, emphasizing ongoing customer engagement and portfolio strength [35][36] Question: What is the rationale behind the NVIDIA investment? - The investment was driven by the potential for accelerated computational capabilities and modernization of engineering solutions, enhancing market reach [40][41] Question: How does the company plan to address the monetization challenges in EDA? - Management recognized the need for better monetization strategies and highlighted the importance of joint solutions with Ansys to capture value [78][80]

Chip design software provider Synopsys beat analysts estimates for fourth-quarter revenue on Wednesday, driven by strong demand for its chip design tools, sending its shares up 5% in extended trading. ...

Corporate Overview for Investors December 2025 Forward-Looking Statements This presentation contains forward-looking statements, including, but not limited to, statements regarding Synopsys, Inc.'s (Synopsys, we or our) short-term and long-term financial targets, expectations and objectives; our businesses, business segments, strategies, partnerships, initiatives and opportunities, including, among other things, the reallocation of resources in our Design IP segment to higher growth opportunities and planne ...

Core Viewpoint - Synopsys, Inc. reported strong fourth-quarter earnings, surpassing both revenue and earnings expectations, leading to a significant increase in stock price during extended trading hours [1][2]. Financial Performance - Quarterly earnings per share (EPS) were reported at $2.90, exceeding the analyst expectation of $2.78 [2]. - Quarterly revenue reached $2.26 billion, slightly above the analyst estimate of $2.25 billion [2]. Management Commentary - CEO Sassine Ghazi highlighted the company's strong performance and commitment to sustainable growth and margin expansion through innovation and disciplined execution as they enter fiscal year 2026 [3]. Future Outlook - For fiscal year 2026, Synopsys projects adjusted EPS between $14.32 and $14.40, significantly higher than the analyst estimate of $12.85 [4]. - The company anticipates fiscal revenue in the range of $9.56 billion to $9.66 billion, compared to the analyst estimate of $7.04 billion [4]. Stock Performance - Following the earnings report, Synopsys stock increased by 5.68%, reaching a price of $502.88 in extended trading [4].

Revenue Performance - Fourth quarter revenue for fiscal year 2025 was $2.255 billion, a 38% increase from $1.636 billion in the same quarter of fiscal year 2024[2] - Full-year revenue for fiscal year 2025 reached $7.054 billion, reflecting a 15% increase from $6.127 billion in fiscal year 2024[2] - Total revenue for the twelve months ended October 31, 2025, increased to $7,054,178, up from $6,127,436 in the previous year, representing a growth of approximately 15.1%[33] - Revenue from the Design Automation segment for the twelve months ended October 31, 2025, was $5,302.4 million, up 25.6% from $4,221.1 million in 2024[44] - The Design IP segment revenue decreased to $1,751.8 million in 2025, down 8.1% from $1,906.3 million in 2024[44] Income and Earnings - Non-GAAP net income for the fourth quarter of fiscal year 2025 was $543.1 million, or $2.90 per diluted share, compared to $529.9 million, or $3.40 per diluted share, in the fourth quarter of fiscal year 2024[6] - GAAP net income for fiscal year 2025 was $1.336 billion, or $8.07 per diluted share, down from $1.442 billion, or $9.25 per diluted share, in fiscal year 2024[5] - Non-GAAP earnings per diluted share for fiscal year 2025 was $12.91, compared to $13.20 in fiscal year 2024[6] - Net income attributed to Synopsys for the twelve months ended October 31, 2025, was $1,332,220, compared to $2,263,380 in the previous year, indicating a decrease of about 41.2%[34] - Net income for the twelve months ended October 31, 2025, was $1,333,251, a decrease of 40.4% compared to $2,235,810 in 2024[40] Backlog and Future Expectations - The company reported a record backlog of $11.4 billion, indicating strong business resilience[3] - The company expects fiscal year 2026 revenue to be approximately $9.610 billion, including $2.9 billion from Ansys[4] - The anticipated impact of divested businesses is approximately $110 million on revenue for fiscal year 2026[4] Expenses and Costs - Research and development expenses for the twelve months ended October 31, 2025, were $2,479,338, an increase from $2,082,360 in the previous year, reflecting a growth of approximately 19.1%[33] - Total current assets decreased to $6,012,102 as of October 31, 2025, from $6,469,666 a year earlier, a decline of about 7.1%[36] - Total liabilities increased to $19,897,446 as of October 31, 2025, compared to $4,050,355 in the previous year, showing a significant rise[36] - The company reported a gross margin of $5,430,629 for the twelve months ended October 31, 2025, compared to $4,882,147 in the previous year, representing an increase of approximately 11.2%[33] Strategic Initiatives - The company plans to integrate Ansys fully and drive operational efficiency in fiscal year 2026[3] - The company plans to reallocate resources in its Design IP segment to focus on higher growth opportunities, indicating a strategic shift[30] - Synopsys expects to realize synergies from the integration of Ansys, which is anticipated to impact future performance positively[30] - The company has planned stock repurchases as part of its capital allocation strategy, reflecting confidence in its financial position[30] Cash Flow and Financing - Cash flows from operating activities increased to $1,518,608 in 2025 from $1,407,029 in 2024, reflecting a growth of 7.9%[40] - Cash, cash equivalents, and restricted cash at the end of the period were $2,893,721, down from $3,898,729 at the beginning of the year, reflecting a decrease of 25.7%[41] - The company reported a net cash used in investing activities of $(15,881,269) in 2025, compared to a net cash provided of $1,223,013 in 2024[40] - Proceeds from debt in financing activities amounted to $14,329,340 in 2025, with a significant increase compared to no proceeds in 2024[40] Operating Margins - Adjusted operating income for the Design Automation segment increased to $2,213.5 million in 2025, a rise of 35.6% from $1,631.9 million in 2024[44] - Total adjusted segment operating income for the twelve months ended October 31, 2025, was $2,632.9 million, compared to $2,362.1 million in 2024, marking an increase of 11.4%[46] - The adjusted operating margin for the Design Automation segment improved to 41.7% in 2025 from 38.7% in 2024[44] Tax and Restructuring - Synopsys will transition to a three-year normalized non-GAAP tax rate starting in fiscal year 2026, enhancing consistency across reporting periods[60] - The projected annual non-GAAP tax rate is influenced by the acquisition of Ansys in Q3 of fiscal year 2025 and the enactment of the One Big Beautiful Bill Act, affecting taxable income from fiscal year 2026[60] - Restructuring activities are initiated to align costs with operating plans, including severance and facility closures, which are not considered part of core operations[58] Core Business Assessment - Gains and losses from the sale of equity investments in privately held companies are excluded from core business assessments[59] - Changes in the fair value of non-qualified deferred compensation plans are not used to assess core profitability[59] Company Overview - Synopsys is a leader in engineering solutions, focusing on silicon design, IP, simulation, and analysis solutions[62] - The company partners with customers across various industries to enhance R&D capabilities and productivity[62]

Core Insights - Synopsys, Inc. reported a strong financial performance for the fourth quarter and fiscal year 2025, with fourth-quarter revenue reaching $2.255 billion, a significant increase from $1.636 billion in the same quarter of the previous year [2][9] - The company achieved a full-year revenue of $7.054 billion, marking a 15% increase from $6.127 billion in fiscal year 2024 [2][9] - The integration of Ansys is expected to drive further operational efficiency and revenue growth, with a projected revenue of $9.610 billion for fiscal year 2026 [3][9] Financial Performance - For the fourth quarter of fiscal year 2025, GAAP net income was $448.7 million, or $2.39 per diluted share, compared to $279.3 million, or $1.79 per diluted share, in the fourth quarter of fiscal year 2024 [4][5] - Non-GAAP net income for the fourth quarter was $543.1 million, or $2.90 per diluted share, slightly down from $529.9 million, or $3.40 per diluted share, in the same quarter of the previous year [5][4] - Full-year GAAP net income for 2025 was $1.336 billion, or $8.07 per diluted share, compared to $1.442 billion, or $9.25 per diluted share, in fiscal year 2024 [4][5] Business Segments - Synopsys operates in two main segments: Design Automation and Design IP. In the fourth quarter, Design Automation generated $1.847 billion in revenue, while Design IP contributed $407.2 million [7][32] - For the full fiscal year 2025, Design Automation accounted for approximately 75.2% of total revenue, while Design IP represented 24.8% [32] Future Outlook - The company anticipates setting another revenue record in 2026, with a strong backlog of $11.4 billion, indicating robust demand for its products and services [3][9] - Synopsys expects fiscal year 2026 revenue to be in the range of $9.560 billion to $9.660 billion, including $2.9 billion from Ansys [10][11]

Core Viewpoint - Recent dealmaking in the AI sector has intensified concerns regarding an AI bubble, reflecting a growing skepticism among some investors [1] Group 1 - The current wave of dealmaking in the AI industry is characterized as circular, indicating a potential lack of genuine innovation and value creation [1] - The fears surrounding the AI bubble have escalated, suggesting that investors are increasingly wary of overvaluation in the sector [1]

Core Viewpoint - A class action lawsuit has been filed against Synopsys, Inc. for securities fraud following a significant stock drop attributed to potential violations of federal securities laws [1][3]. Company Overview - Synopsys, Inc. specializes in design automation software products used for designing and testing integrated circuits [4]. - The Design IP segment, which provides pre-designed silicon components, has been the fastest-growing segment, increasing from 25% of revenue in 2022 to 31% in 2024 [4]. Allegations and Financial Performance - The lawsuit claims that Synopsys misled investors about the performance and stability of its Design IP business, stating that customers were satisfied and that the company was experiencing growth in certain regions [5]. - In reality, customers began requiring more customization for IP components, negatively impacting the economics of the Design IP business and threatening the business model [5]. - Following the release of Q3 2025 financial results, which showed a 7.7% year-over-year decline in Design IP revenue to $425.9 million and a 43% year-over-year decline in net income to $242.5 million, the stock price fell nearly 36% from $604.37 to $387.78 per share [6].

Group 1 - Israel's stock market has outperformed the U.S. market since October 7, 2023, with significant gains in U.S.-traded companies such as Teva Pharmaceutical, Elbit Systems, and Tower Semiconductor [4] - The price of Bitcoin has surged above $92,000, driven by the trading debut of Twenty One Capital on the NYSE, which has backing from Tether and Bitfinex [5] - IBM has made an $11 billion acquisition of Confluent, which is expected to enhance its artificial intelligence initiatives [7] Group 2 - The stock market is experiencing volatility, with indexes ending lower, and specific stocks like Moderna facing declines due to FDA memos, while others like Synopsys and Nvidia are seeing gains [9] - Strategy's interest costs are anticipated to rise, and MSTR stock is facing challenges as Bitcoin prices decline [9] - The Nasdaq 100 is undergoing changes, with notable companies like Walmart, Strategy, and Lululemon being evaluated for their positions [9]