Core Viewpoint - Synopsys has shown a positive trend in its stock performance, with shares increasing by approximately 7.8% since the last earnings report, outperforming the S&P 500. Investors are curious whether this trend will continue leading up to the next earnings release [1] Earnings Performance - Synopsys reported non-GAAP earnings of $2.90 per share for Q4 fiscal 2025, exceeding the Zacks Consensus Estimate by 3.94%, although this represents a 14.7% decrease year-over-year [2] - The company's Q4 revenues surged by 37.8% year-over-year to $2.25 billion, also surpassing the Zacks Consensus Estimate by 0.17%, driven by increases in Time-Based Product and Upfront Product revenues [3] Revenue Breakdown - Time-Based Product revenues reached $940.7 million (41.7% of total revenues), marking a 12.7% year-over-year increase. Upfront Product revenues rose by 18.1% to $615.4 million (27.3% of total), while Maintenance and Service revenues skyrocketed to $698.8 million, up from $280.1 million a year ago [4] - Design Automation revenues, which include EDA, Ansys, and Other, totaled $1.85 billion (81.9% of total revenues), reflecting a 65.2% increase from the prior year. Design IP revenues fell to $407.2 million from $517.8 million a year ago [5] Geographic Revenue Distribution - North America contributed $1.05 billion (46% of total revenues), while Europe generated $361.4 million (16%). Revenues from Korea, China, and Other regions were $236.9 million, $235.6 million, and $373.7 million, respectively [6] Operating Margins - The non-GAAP operating margin for Q4 was 36.5%, a slight decrease from the previous year. Design Automation's adjusted operating margin improved to 41.5%, while the Design IP segment's adjusted margin contracted to 13.8% [6][7] Financial Position - Synopsys ended Q4 fiscal 2025 with $2.96 billion in cash and short-term investments, an increase from $2.59 billion in the prior quarter. Total long-term debt stood at $13.46 billion. The company generated $640 million in operating cash flow during Q4 and $1.52 billion for the entire fiscal year [8] Future Guidance - For fiscal 2026, Synopsys anticipates revenues between $9.56 billion and $9.66 billion, including $2.9 billion from Ansys. Non-GAAP EPS is projected to be between $14.32 and $14.40, with expenses expected to range from $5.69 billion to $5.75 billion [9] Estimate Revisions - Estimates for Synopsys have trended upward over the past month, with a consensus estimate shift of 12.17% due to these changes [10] VGM Scores - Synopsys currently holds a subpar Growth Score of D, a Momentum Score of C, and a Value Score of F, placing it in the bottom 20% quintile for value investors. The aggregate VGM Score is F [11] Market Outlook - The upward trend in estimates appears promising, and Synopsys holds a Zacks Rank 3 (Hold), indicating an expectation of in-line returns in the coming months [12]

Core Insights - Synopsys (SNPS) shares increased by 3.7% after reporting better-than-expected Q2 fiscal 2025 results, with non-GAAP earnings of $3.67 per share, exceeding the Zacks Consensus Estimate of $3.39 and the guided range of $3.37-$3.42, reflecting a 22.3% year-over-year increase in earnings due to revenue growth [1][2] Financial Performance - Q2 revenues rose by 10.3% year-over-year to $1.604 billion, slightly above the Zacks Consensus Estimate of $1.602 billion, driven by increases in Time-Based Product and Upfront Product revenues [2] - Time-Based Product revenues accounted for 51.6% of total revenues, reaching $828.3 million, a 6% increase year-over-year, while Upfront Product revenues, making up 31.8%, surged 28.7% to $510.7 million [3] - Maintenance and Service revenues decreased by 4.1% to $265.3 million [3] - Electronic Design Automation (EDA) revenues, which comprised 66.9% of total revenues, were $1.073 billion, up 6.5% year-over-year, while Design IP revenues increased to $482 million from $399.8 million in the previous year [4] Geographic Breakdown - North America contributed 41% of total revenues, amounting to $655.1 million, while Europe accounted for 12% with revenues of $194.8 million. Revenues from Korea (16%), China (10%), and Other regions (21%) were $257.6 million, $157.5 million, and $339.2 million, respectively [5] Margins and Cash Flow - The non-GAAP operating margin improved to 38%, up 70 basis points year-over-year, with EDA's adjusted operating margin increasing by 130 basis points to 40.9% [5][6] - As of April 30, 2025, Synopsys had cash and short-term investments of $14.26 billion, a significant increase from $3.81 billion as of January 31, 2025. Total long-term debt was reported at $10.03 billion [7] Guidance - For fiscal 2025, Synopsys expects revenues between $6.745 billion and $6.805 billion, with non-GAAP earnings projected in the range of $15.11-$15.19. The Zacks Consensus Estimate for revenues is $6.77 billion, and for earnings, it is $14.88 per share [8] - For Q3 fiscal 2025, expected revenues are between $1.755 billion and $1.785 billion, with non-GAAP earnings per share estimated between $3.82 and $3.87 [9]