Chip design software provider Synopsys (SNPS.O) reported third-quarter revenue that fell short of Wall Street expectations, dragged down by weakness in its Design IP business, sending its stock down nearly 18.5% after hours.
Results and Outlook
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Q3 Revenue: $1.74 billion vs. $1.77 billion expected (LSEG data)
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Adjusted EPS: $3.39 vs. $3.74 expected
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Q4 Guidance: $2.23–$2.26 billion revenue (above $2.09 billion consensus)
Key Pressures
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Design IP Weakness: Includes interface, security, and embedded processor IP, plus implementation services.
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Deal Fallout: Several deals failed to close due to:
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U.S. export restrictions on China disrupting design starts
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A major foundry customer canceling projects amid market and client-related challenges
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CEO Sassine Ghazi: Said Synopsys had invested heavily in building IP for the foundry, but returns expected in 2H 2025 will now not materialize.
Strategic Moves
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Ansys Acquisition: Completed $35B cash-and-stock purchase of engineering design firm Ansys in July after global antitrust reviews, including conditional approval in China.
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Customer Base: Partners include Nvidia, Intel, and Qualcomm, among others.
Market Context
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Rival Cadence Design Systems (CDNS.O): Raised its 2025 sales and profit forecast in July, highlighting diverging performance in the EDA software sector.
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Synopsys’ miss underscores ongoing geopolitical risks and dependence on key customers in a competitive industry where regulatory headwinds are reshaping chip design markets.