Synopsys Q1 Earnings Beat: Will Upbeat Outlook Lift SNPS Stock?

Synopsys SNPS delivered better-than-expected first-quarter fiscal 2025 results. The company reported non-GAAP earnings of $3.03 per share for the first quarter, surpassing the Zacks Consensus Estimate of $2.81 and the guided range of $2.77-$2.82. However, the bottom line decreased 10.4% due to a year-over-year decline in revenues.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Synopsys’ earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters and missed once, the average surprise being 3.7%.Synopsys’ first-quarter revenues jumped 12% year over year to $1.46 billion, which marginally surpassed the Zacks Consensus Estimate of $1.45 billion. The top line primarily declined due to a fall in revenues of the Upfront Product and Maintenance and Service businesses.The stronger-than-expected first-quarter performance has pushed upward the share price of SNPS by more than 3% during Wednesday’s extended trading session. Strong guidance released by the company might help SNPS shares to recover, which have already plunged 18% in the past year, underperforming the Computer - Software industry’s growth of 2.4%.Synopsys, Inc. Price, Consensus and EPS Surprise Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. QuoteSynopsys’ Q1 DetailsIn the license-type revenue group, Time-Based Product revenues (56.9% of the total revenues) of $828.2 million were up 2.9% year over year. Upfront Product revenues (25.3%) moved downward by 16.7% to $368.1 million. Maintenance and Service revenues (17.8%) increased 1.7% to $259 million from the year-ago quarter’s $263.6 million.Segment-wise, Electronic Design Automation (EDA) revenues (67.3% of revenues) were $978.7 million, up 0.8% year over year. Design IP revenues (29.9% of revenues) amounted to $435.1 million, down from the year-ago quarter’s $525.7 million. Other revenues, which were $41.5 million, represented 2.8% of the total revenues, increasing a whopping 184.2% year over year.Geographically, Synopsys’ revenues in North America (43% of the total) and Europe (11%) were $622.6 million and $153.7 million, respectively. Revenues from Korea (17%), China (12%) and Other (18%) were $250.4 million, $173.9 million and $254.7 million, respectively.The non-GAAP operating margin was 36.5%, down 360 basis points (bps) year over year.Synopsys’ EDA’s adjusted operating margin showed a massive improvement of 310 bps to 39.7%. The Design IP segment’s margin reduced drastically from 46.7% to 29.1% on a year-over-year basis.Synopsys’ Balance Sheet & Cash FlowSynopsys had cash and short-term investments of $3.81 billion as of Jan. 31, 2025, compared with $4.05 billion as of Oct. 31, 2024.The total long-term debt was $14 million at the end of the reported quarter, lower than the $16 million reported in the previous quarter.SNPS posted a negative cash flow from operating activities, including discontinued operations, of $67 million for the reported quarter against the year-ago quarter’s negative cash flow of $88 million.SNPS’ Guidance for Q2 and FY25For fiscal 2025, SNPS still expects revenues between $6.745 billion and $6.805 billion. Non-GAAP earnings are still expected in the range of $14.88-$14.96. The Zacks Consensus Estimate for revenues is pegged at $6.77 billion and the consensus mark for earnings is pinned at $14.90 per share.Non-GAAP expenses are expected in the range of $4.045-$4.085 billion.For the second quarter of fiscal 2025, Synopsys expects revenues between $1.585 billion and $1.615 billion. The Zacks Consensus Estimate for revenues is pegged at $1.60 billion. Management estimates non-GAAP earnings per share between $3.37 and $3.42. The consensus mark for earnings is pegged at $3.37.Zacks Rank and Stocks to ConsiderCurrently, SNPS carries a Zacks Rank #3 (Hold).Celestica CLS, Arista Networks ANET and Pitney Bowes PBI are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. While CLS and PBI presently sport a Zacks Rank #1 (Strong Buy) each, ANET carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus mark for CLS’ 2025 earnings has been revised 31 cents upward to $5.67 per share over the past 30 days, indicating a 6.78% year-over-year increase. CLS shares have risen 251.2% in the past year.The consensus mark for ANET’s 2025 earnings has been revised upward by a penny to $2.42 per share over the past 60 days, indicating a 6.6% year-over-year increase. ANET shares have gained 60.2% in the past year.The consensus mark for PBI’s 2025 earnings has been revised nine cents downward to $1.21 per share over the past seven days, indicating a 47.6% year-over-year decline. PBI shares have gained 172.8% in the past year.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Pitney Bowes Inc. (PBI): Free Stock Analysis Report Celestica, Inc. (CLS): Free Stock Analysis Report Synopsys, Inc. (SNPS): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks