Synopsys Q1 Profit Tops Estimates, Sees Strong AI-Fueled Chip Design Demand

Synopsys Inc (NASDAQ:SNPS) shares are trading higher premarket reported first-quarter financial results after the market close on Wednesday.

• Revenue: $1.455 billion missed the estimates of $1.466 billion.
• Adjusted EPS: $3.03 beat the street view of $2.84.

Gross profit declined to $1.185 billion from $1.232 billion a year ago quarter and the operating income declined to $251.8 million from $352.6 million in the prior year quarter.

Sassine Ghazi, president and CEO of Synopsys, said, “We launched industry-leading silicon IP and hardware-assisted verification solutions while expanding generative AI capabilities in EDA.” 

“We are continuing to see strong design activity at advanced nodes, fueled by the AI-driven reinvention of compute. As the pace and complexity of technology innovation increases, new silicon-to-systems design paradigms are essential, and Synopsys is well-positioned to deliver.”

Outlook: Synopsys expects second-quarter revenue of $1.585 billion – $1.615 billion versus estimates of $1.600 billion and adjusted EPS of $3.37 – $3.42 vs. consensus of $3.35.

For FY25, the company continues to expect revenue of $6.745 billion – $6.805 billion vs. consensus of $6.786 billion and adjusted EPS of $14.88 – $14.96 vs. street view of $14.91.

The company’s targets reflect a shift in its fiscal year to a fixed October 31 year-end, replacing the previous 52/53-week cycle. This adjustment shortens the first half of fiscal 2025 by ten days while adding two days to the second half, resulting in a net reduction of eight days compared to fiscal 2024.

Investors can gain exposure to the stock via AXS Esoterica NextG Economy ETF (BATS:WUGI) and VanEck Fabless Semiconductor ETF (NASDAQ:SMHX).

Price Action: SNPS shares are up 2.05% at $480.09 premarket at the last check Thursday.

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