Synopsys, Inc.
CEO : Mr. Sassine Ghazi
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q4 | 2.3% YoY | -27.8% | 209.6% | 2024-12-04 |
Sassine Ghazi says,
Financial Performance and Revenue Growth
- Synopsys exceeded the midpoint of its Q4 guidance targets, marking another record revenue year.
- In FY 2024, revenue grew by 15% year-over-year, surpassing the $6 billion mark.
- The company achieved a 24% compounded annual growth rate (CAGR) in EPS over the last five years.
- Looking ahead to 2025, Synopsys expects to deliver double-digit revenue growth and a 40% operating margin.
Strategic Moves and Transformational Initiatives
- Synopsys divested its software integrity business to focus on growth segments.
- The company is doubling down on its silicon to systems strategy with the acquisition of Ansys, expected to close in the first half of 2025.
- The regulatory review process is proceeding well, with the expiration of the HSR waiting period.
Design Automation and AI Integration
- Design Automation revenue grew by 17% in Q4 and 12% for the full year versus 2023.
- Synopsys.ai solutions have optimized over 700 cumulative tape outs, with significant improvements in hardware utilization and turnaround time.
- Expanded coverage of copilot knowledge assistance to 11 EDA products, achieving 30% to 60% faster results.
- AI is transitioning from a discrete capability to a core component of Synopsys’ operations.
Multi-Die Designs and Semiconductor Innovations
- Multi-Die designs are expected to dominate HPC AI and PC designs by 2027, positively impacting Synopsys.
- Partnerships with leaders like TSMC enhance predictability and yield for Multi-Die designs.
- Q4 saw the completion of a TSMC Multi-Die test chip tape out using Synopsys’ unified solution.
Design IP and Manufacturing Excellence
- Design IP was flat in Q4 but grew 24% annually with an adjusted operating margin accretion of 5 points.
- Seven PCIe 6 design wins were secured, indicating robust demand among high-performance computing customers.
- Synopsys achieved the first multi-vendor 800-gig Ethernet demonstration and secured significant design wins in automotive IP.
- Recognized with TSMC’s 2024 Partner of the Year award for interface IP.
In conclusion, Synopsys is well-positioned for future growth with its strategic acquisitions, focus on AI-driven innovation, and strong performance across key business segments.
Shelagh Glaser says,
2024 Financial Overview
- Total revenue reached $6.13 billion, marking a 15% year-over-year increase.
- Non-GAAP operating margin achieved a record high of 38.5%.
- GAAP earnings per share were $9.25, while non-GAAP earnings per share were $13.20, showing a 25% increase year-over-year.
- Operating cash flow totaled $1.4 billion with free cash flow reaching $1.28 billion.
- The company ended the year with cash and short-term investments of $4.05 billion and a total debt of $15.6 million.
2025 Guidance
- Revenue is expected to grow between 10.1% to 11.1%, or 11.5% to 12.5% excluding the impact of the extra week and calendar year change.
- Non-GAAP EPS is projected to grow approximately 13%.
- Non-GAAP operating margin expected to expand by approximately 150 basis points.
- Projected revenue range for 2025 is $6.745 billion to $6.805 billion.
- GAAP earnings per share are forecasted between $10.42 to $10.63, and non-GAAP earnings per share between $14.88 to $14.96.
Segment Performance
- Design Automation segment revenue increased by 12%, totaling $4.22 billion; adjusted operating margin was 38.7%.
- Design IP segment revenue rose by 24%, reaching $1.91 billion; adjusted operating margin was 38.3%.
Fiscal Changes and Impacts
- Change from a 52-53 week period to a fiscal year ending on October 31st potentially impacts revenue by approximately $70.5 million.
- First-half revenue is expected to be lower at 45% of full year, with a stronger second half at 55%, due to fiscal calendar changes and fewer days.
- Non-GAAP EPS is also expected to follow a similar pattern, with a 40% contribution in the first half and 60% in the second half.
Q1 2025 Outlook
| Metric | Low End | High End |
|---|---|---|
| Revenue | $1.435 billion | $1.465 billion |
| GAAP Costs & Expenses | $1.14 billion | $1.16 billion |
| Non-GAAP Costs & Expenses | $945 million | $955 million |
| GAAP EPS | $1.81 | $1.95 |
| Non-GAAP EPS | $2.77 | $2.82 |
Q & A sessions,
Market Segmentation Impact
- Synopsys operates in two distinct semiconductor markets: the AI infrastructure market, demonstrating high growth, and the traditional semiconductor market, showing slower growth.
- The AI infrastructure market is significantly benefiting Synopsys due to demand for memory chips and advanced logic, contributing positively to the company’s portfolio.
- The traditional semiconductor market, covering mobile, PC, automotive, and industrial sectors, is still undergoing a refresh cycle and is not experiencing similar growth levels as the AI sector.
Macroeconomic and Geopolitical Factors
- China’s economic deceleration and expanded restrictions pose uncertainties affecting Synopsys’ growth outlook.
- The company is preparing for potential impacts arising from geopolitical tensions and regulatory changes, particularly in its Asian markets.
Guidance for Fiscal Year 2025
- The company projects an organic growth rate of 11.5% to 12.5% for FY 2025, following a 15% growth rate achieved in the previous fiscal year.
- Synopsys is taking a pragmatic approach to guidance due to market dynamics and anticipated acquisition activities.
Artificial Intelligence and Product Strategy
- Synopsys is integrating AI into its product offerings through the XSO.ai family, enhancing customer adoption and satisfaction.
- The focus is on delivering customer-specific AI capabilities that integrate into existing workflows, driving a new business model.
- Generative Agentic AI is seen as a future growth driver, reshaping Synopsys’ product delivery and business model.
Technological Advancements and Cloud Strategy
- Synopsys leverages accelerated compute to enhance EDA performance, achieving performance improvements up to 10 times.
- The company provides flexible cloud-based solutions, allowing customers to use software both on-premises and in the cloud, bolstering software usage and monetization.
| Fiscal Year | Projected Growth Rate | Key Influencing Factors |
|---|---|---|
| 2025 | 11.5% – 12.5% | AI integration, macroeconomic factors, market dynamics |
| 2024 | 15% | Strong AI infrastructure growth |
The acquisition of Ansys in the first half of 2025 is expected to be a significant strategic move for Synopsys, marking the largest acquisition in the engineering software industry.
No bad stock 