Shares gained in late trading on Wednesday, after the chip design software provider reported better-than-expected results for the quarter and provided upbeat guidance.
As announced by the company Founder and CEO Art De Geos will step down from his current position and become CEO at the end of 2023, to be replaced by current President and COO Sassine Ghazi.
For the third fiscal quarter ended July 31, Synopsys (stock ticker: SNPS) reported revenue of $1.49 billion, up 19% from a year ago and just ahead of the Street consensus of $1.48 billion. On an adjusted basis, the company earned $2.88 a share, beating consensus by 14 cents. Under GAAP, the company earned $2.17 per share.
“We had another record quarter with semi-started design and R&D investments continuing, relentlessly, to capitalize on the AI-driven era of ‘smart everything’,” said de Geus.
For the October quarter, Synopsys expects revenue between $1.567 billion and $1.597 billion, with non-GAAP earnings of $3.01 to $3.06 per share. Street consensus estimates had called for $1.57 billion in revenue and adjusted earnings of $2.91 per share.
The company now expects revenue for the October 2023 fiscal year between $5.81 billion and $5.84 billion, with adjusted earnings of $11.04 to $11.09 per share. Previous guidance had called for revenue of $5.79 billion to $5.83 billion, with adjusted earnings of $10.77 to $10.84 per share.
In an interview with BarronGhazi noted that projected revenue growth of 15% this year comes despite what is expected to be a bear year for the chip market, with industry-wide sales likely to drop in the low double digits. Ghazi said the company’s business is tied to the chip industry’s R&D budgets, which hold steady in the face of cost-cutting in other categories, as semiconductor companies continue to invest in future products.
Shares of Synopsys are up 34% this year, helped in part by investors looking at the company — and a major competitor
Cadence Design Systems
(CDNS) – as a beneficiary of the AI trend.
Ghazi notes that there are actually two parts to the story. Synopsys, on the other hand, is getting more business as chip companies design AI-related parts to add to their offering. The other is that Synopsys is adding AI functionality to its own software, providing customers with a significant productivity boost, and in some cases making it possible for a single engineer to accomplish what previously required six or eight. The results are often better, he says, resulting in chip designs that require less power and better performance.
Ghazi has been with Synopsys since 1998, originally joining as an Applications Engineer. He was named COO in August 2020 and President in November 2021. Prior to Synopsys, Ghazi was a design engineer at Intel.
Shares of Synopsys rose 1.8% in late trading, to $435.79.
Write to Eric J. Savitz at firstname.lastname@example.org