Synopsys Posts Financial Results for Third Quarter Fiscal Year 2026

Synopsys Posts Financial Results for Third Quarter Fiscal Year 2026

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Results Summary

• Quarterly revenue of $2.477 billion; reflects broad-based strength with outperformance in Design Automation
• Quarterly GAAP earnings per diluted share (EPS) of $2.84, and non-GAAP EPS of $3.91, exceeding high-end of prior guidance
• Raising expectations for full-year total revenue to $9.715 billion at the midpoint and full-year non-GAAP EPS guidance to $15.07 at the midpoint on continued AI-driven demand strength

, /PRNewswire/ -- Synopsys, Inc. (Nasdaq: SNPS) today reported results for its third quarter of fiscal year 2026. Revenue for the third quarter of fiscal year 2026 was $2.477 billion, compared to $1.740 billion for the third quarter of fiscal year 2025.

"AI is driving unprecedented complexity and increasing demand for the silicon IP and engineering solutions necessary to deliver next-generation AI compute, infrastructure and physical AI systems," said Sassine Ghazi, president and CEO of Synopsys. "One year after the transformational acquisition of Ansys, we are executing with focus, extending our leadership and gaining momentum."

"Synopsys delivered an outstanding third quarter, with revenue and earnings per share exceeding the high end of our guidance range. Results were driven by broad-based strength across the business, led by EDA, a strong quarter from Ansys, and our design IP business returned to year-over-year growth," said Shelagh Glaser, CFO of Synopsys. "Given our strong performance and expectations for double-digit growth in EDA, we are raising our full year revenue, non-GAAP operating margin, EPS and cash flow guidance."

GAAP ResultsOn a U.S. generally accepted accounting principles (GAAP) basis, net income for the third quarter of fiscal year 2026 was $545.8 million, or $2.84 per diluted share, compared to $242.5 million, or $1.50 per diluted share, for the third quarter of fiscal year 2025.

Non-GAAP ResultsOn a non-GAAP basis, net income for the third quarter of fiscal year 2026 was $752.5 million, or $3.91 per diluted share, compared to non-GAAP net income of $548.9 million, or $3.39 per diluted share, for the third quarter of fiscal year 2025.

For a reconciliation of net income, earnings per diluted share and other measures on a GAAP and non-GAAP basis, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below.

Business Segments Synopsys reports revenue and operating income in two segments: (1) Design Automation, which includes our advanced silicon design, verification products and services, Ansys products, system integration products and services, digital, custom and field programmable gate array integrated circuit design software, verification software and hardware products, manufacturing software products and other; and (2) Design IP, which includes our logic libraries, embedded memories, wired interface IP, memory interface IP and security IP.

Financial TargetsSynopsys also provided its consolidated financial targets for the fourth quarter and full fiscal year 2026. These targets assume no further changes to export control restrictions or the current U.S. government "Entity List" restrictions. These targets constitute forward-looking statements and are based on current expectations. For a discussion of factors that could cause actual results to differ materially from these targets, see "Forward-Looking Statements" below.

Fourth Quarter and Full Fiscal Year 2026 Financial Targets

(in millions, except per share amounts)

Range for Three Months Ending

Range for Fiscal Year Ending

October 31, 2026

October 31, 2026

Low

High

Low

High

Revenue

$ 2,530

$ 2,580

$ 9,690

$ 9,740

GAAP Expenses

$ 2,225

$ 2,300

$ 8,667

$ 8,742

Non-GAAP Expenses

$ 1,450

$ 1,480

$ 5,670

$ 5,700

Non-GAAP Interest and Other Income (Expense), net

$ (119)

$ (115)

$ (485)

$ (481)

Non-GAAP Tax Rate

18 %

18 %

18 %

18 %

Outstanding Shares (fully diluted)

192

194

192

194

GAAP Operating Margin

Midpt: ~10.4%

Non-GAAP Operating Margin

Midpt: ~41.5%

GAAP EPS

$ 0.60

$ 0.85

$ 3.84

$ 4.08

Non-GAAP EPS

$ 4.10

$ 4.16

$ 15.04

$ 15.10

Operating Cash Flow

~$2,800

Free Cash Flow

~$2,600

Capital Expenditures

~$225

(1) Fiscal year 2026 revenue includes $2.98 billion of expected Ansys revenue, and reflects the impact of approximately $110 million of the divested Optical Solutions Group and PowerArtist RTL businesses, and $40 million related to the recently completed divestiture of the Processor IP Solutions business.

(2) Free cash flow is calculated as cash provided from operating activities less capital expenditures.

For a reconciliation of Synopsys' fourth quarter and fiscal year 2026 targets, including expenses, earnings per diluted share and other measures on a GAAP and non-GAAP basis, a discussion of the financial targets that we are not able to reconcile without unreasonable efforts and a discussion of why management believes such measurements provide useful information to investors, see "GAAP to Non-GAAP Reconciliation" in the accompanying tables below.

Earnings Call Open to InvestorsSynopsys will hold a conference call for financial analysts and investors today at 2:00 p.m. Pacific Time. A live webcast of the call will be available in the investor relations portion of Synopsys' corporate website at www.synopsys.com. Synopsys uses its website and social media channels as tools to disclose important information about Synopsys and to comply with its disclosure obligations under Regulation Fair Disclosure. A webcast replay will also be available on the corporate website from approximately 5:30 p.m. Pacific Time today through the time Synopsys announces its results for the fourth quarter and fiscal year 2026.

Availability of Final Financial StatementsSynopsys will include final financial statements for the third quarter of fiscal year 2026 in its quarterly report on Form 10-Q to be filed with the Securities and Exchange Commission (SEC) and available at www.sec.gov on or before September 9, 2026.

Continuing Operations On Sept. 30, 2024, Synopsys completed the sale of its Software Integrity business. Unless otherwise noted, Synopsys' Software Integrity business has been presented as a discontinued operation in Synopsys' consolidated financial statements for all periods presented herein and all financial results and targets are presented herein on a continuing operations basis.

Reconciliation of Third Quarter Fiscal Year 2026 ResultsThe following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP net income, earnings per diluted share, and tax rate for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Third Quarter Fiscal Year 2026 Results

(unaudited and in thousands, except per share amounts)

Three Months Ended

Nine Months Ended

July 31,

July 31,

2026

2025

2026

2025

GAAP net income from continuing operations attributed to Synopsys

$ 545,800

$ 242,509

$ 627,863

$ 887,424

Adjustments:

Amortization of acquired intangible assets

402,426

74,941

1,210,292

99,193

Stock-based compensation

231,604

267,723

712,631

655,725

Restructuring charges

2,164

236,340

Acquisition/divestiture related items

(402,556)

120,012

(363,315)

264,355

Loss on sale of strategic investments

1,200

3,635

Tax adjustments

(26,945)

(157,477)

(309,115)

(315,553)

Non-GAAP net income from continuing operations attributed to Synopsys

$ 752,493

$ 548,908

$ 2,114,696

$ 1,594,779

Three Months Ended

Nine Months Ended

July 31,

July 31,

2026

2025

2026

2025

GAAP net income from continuing operations per diluted share attributed to Synopsys

$ 2.84

$ 1.50

$ 3.27

$ 5.61

Adjustments:

Amortization of acquired intangible assets

2.09

0.46

6.30

0.63

Stock-based compensation

1.20

1.66

3.71

4.15

Restructuring charges

0.01

1.23

Acquisition/divestiture related items

(2.09)

0.74

(1.89)

1.67

Loss on sale of strategic investments

0.01

0.02

Tax adjustments

(0.14)

(0.98)

(1.60)

(2.00)

Non-GAAP net income from continuing operations per diluted share attributed to Synopsys

$ 3.91

$ 3.39

$ 11.02

$ 10.08

Shares used in computing net income per diluted share amounts:

192,319

161,682

191,981

158,176

GAAP to Non-GAAP Operating Margin Reconciliation

(unaudited)

Three Months Ended

July 31, 2026

GAAP operating margin

14.4 %

Amortization of acquired intangible assets

16.2 %

Stock-based compensation

9.4 %

Restructuring charges

0.1 %

Acquisition/divestiture related items

0.9 %

Non-qualified deferred compensation plan

0.6 %

Non-GAAP operating margin

41.6 %

GAAP to Non-GAAP Tax Rate Reconciliation

(unaudited)

Three Months Ended

Nine Months Ended

July 31, 2026

July 31, 2026

GAAP effective tax rate

20.2 %

19.8 %

Stock-based compensation

(5.0) %

(4.6) %

Restructuring charges

(3.3) %

(3.3) %

Income tax adjustments

6.1 %

6.1 %

Non-GAAP effective tax rate

18.0 %

18.0 %

(1) The income tax adjustments are primarily due to differences in the tax rate effect of certain deductions, such as the deduction for foreign-derived intangible income and credits.

Reconciliation of 2026 TargetsThe following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP targets for the periods indicated below.

GAAP to Non-GAAP Reconciliation of Fourth Quarter Fiscal Year 2026 Targets

(in thousands, except per share amounts)

Range for Three Months Ending

October 31, 2026

Low

High

Target GAAP expenses

$ 2,225,000

$ 2,300,000

Adjustments:

Amortization of acquired intangible assets

(400,000)

(405,000)

Stock-based compensation

(230,000)

(240,000)

Restructuring charges

(145,000)

(175,000)

Target non-GAAP expenses

$ 1,450,000

$ 1,480,000

Range for Three Months Ending

October 31, 2026

Low

High

Target GAAP earnings per diluted share attributed to Synopsys

$ 0.60

$ 0.85

Adjustments:

Amortization of acquired intangible assets

2.10

2.07

Stock-based compensation

1.24

1.19

Restructuring charges

0.91

0.75

Tax adjustments

(0.75)

(0.70)

Target non-GAAP earnings per diluted share attributed to Synopsys

$ 4.10

$ 4.16

Shares used in non-GAAP calculation (midpoint of target range)

193,000

193,000

GAAP to Non-GAAP Reconciliation of Full Fiscal Year 2026 Targets

(in thousands, except per share amounts)

Range for Fiscal Year Ending

October 31, 2026

Low

High

Target GAAP expenses

$ 8,667,091

$ 8,742,091

Adjustments:

Amortization of acquired intangible assets

(1,610,000)

(1,615,000)

Stock-based compensation

(945,000)

(955,000)

Restructuring charges

(380,000)

(410,000)

Acquisition/divestiture related items

(62,091)

(62,091)

Target non-GAAP expenses

$ 5,670,000

$ 5,700,000

Range for Fiscal Year Ending

October 31, 2026

Low

High

Target GAAP earnings per diluted share attributed to Synopsys

$ 3.84

$ 4.08

Adjustments:

Amortization of acquired intangible assets

8.37

8.34

Stock-based compensation

4.95

4.90

Restructuring charges

2.12

1.97

Acquisition/divestiture related items

(1.88)

(1.88)

Tax adjustments

(2.36)

(2.31)

Target non-GAAP earnings per diluted share attributed to Synopsys

$ 15.04

$ 15.10

Shares used in non-GAAP calculation (midpoint of target range)

193,000

193,000

(1) Adjustments reflect actual expenses incurred by Synopsys as of July 31, 2026, and do not fully reflect all potential adjustments for future periods for the reasons set forth in "GAAP to Non-GAAP Reconciliation" below.

GAAP to Non-GAAP Reconciliation of Operating Margin at Midpoint of Full Fiscal Year 2026 Targets

Fiscal Year Ending

October 31, 2026

At midpoint of revenue and expense guidance ranges

GAAP operating margin

10.4 %

Amortization of acquired intangible assets

16.6 %

Stock-based compensation

9.8 %

Restructuring charges

4.1 %

Acquisition/divestiture related items

0.6 %

Target non-GAAP operating margin

41.5 %

(1) These numbers represent the midpoint of targets in the prepared remarks provided on August 26, 2026, and do not represent official guidance for fiscal year 2026.

(2) Adjustments reflect actual expenses incurred by Synopsys as of July 31, 2026 and do not fully reflect all potential adjustments for future periods for the reasons set forth in "GAAP to Non-GAAP Reconciliation" below.

Forward-Looking StatementsThis press release and the investor conference call contain forward-looking statements, including, but not limited to, statements concerning our short-term and long-term financial targets, expectations and objectives; our businesses, business segments, strategies, partnerships, initiatives and opportunities, including, among other things, the reallocation of resources in our Design IP segment to higher growth opportunities and planned restructuring activities; industry growth and technological trends, such as artificial intelligence, including our development and planned commercialization thereof; business and market outlook; the potential impact of the uncertain macroeconomic environment and global economic conditions on our financial results; the impact of current and future U.S. and foreign trade regulations, government actions and regulatory changes, such as export control restrictions and tariffs; the ANSYS, Inc. (Ansys) integration and its expected impact, including expected synergies and the timing thereof, our ability to create joint solutions as a combined company, and related accounting changes; planned and recently completed acquisitions or divestitures, and their anticipated timing and impact; our key customers, customer concentration, customer engagement, customer demand and market expansion; results and strategies related to our products, technology and services, including product development and our planned product releases and capabilities; the expected realization of our contracted but unsatisfied or partially unsatisfied performance obligations (backlog); planned stock repurchases; our expected tax rate; and the status, expected outcome or expected impact of litigation and/or regulatory investigations. These statements involve risks, uncertainties and other factors that could cause our actual results, time frames or achievements to differ materially from those expressed or implied in such forward-looking statements. Such risks, uncertainties and factors include, but are not limited to: macroeconomic conditions and geopolitical uncertainty in the global economy; uncertainty in the growth of the semiconductor and electronics industries; the highly competitive industry we operate in; actions by the U.S. or foreign governments, such as the imposition of additional export restrictions or tariffs; consolidation among our customers and our dependence on a relatively small number of large customers; risks and compliance obligations relating to the global nature of our operations; failure to realize the benefits expected from the transactions we complete, including the acquisition of Ansys (the Ansys Merger) or unexpected difficulties or expenditures arising therefrom; risks related to inaccuracies in, or failures to achieve, our operational and business metrics or forecasts of growth; and more. Additional information on potential risks, uncertainties and other factors that could affect Synopsys' results is included in filings we make with the SEC from time to time, including in the sections entitled "Risk Factors" in our latest Annual Report on Form 10-K and in our latest Quarterly Report on Form 10-Q. The financial information contained in this press release should be read in conjunction with the consolidated financial statements and notes thereto included in Synopsys' most recent reports on Forms 10-K and 10-Q, each as may be amended from time to time. Synopsys' financial results for its third quarter of fiscal year 2026 are not necessarily indicative of Synopsys' operating results for any future periods.

Effectiveness of InformationThe targets included in this press release, the statements made during the earnings conference call, the information contained in the financial supplement and the corporate overview presentation, each of which are available in the investor relations portion of Synopsys' corporate website at (collectively, the Earnings Materials), represent Synopsys' expectations and beliefs as of August 26, 2026. Although these Earnings Materials are expected to remain available on Synopsys' website through the time Synopsys announces its results for the fourth quarter and fiscal year 2026, their continued availability through such time does not mean that Synopsys is reaffirming or confirming their continued validity. Synopsys undertakes no duty, and does not intend, to update any forward-looking statement, including any targets, provided in the Earnings Materials, whether as a result of new information, future events or otherwise, unless required by law.

SYNOPSYS, INC.

Condensed Consolidated Statements of Income

(Unaudited, in thousands, except per share amounts)

Three Months Ended

Nine Months Ended

July 31,

July 31,

2026

2025

2026

2025

Revenue:

Time-based products

$ 1,002,792

$ 892,364

$ 2,899,957

$ 2,548,928

Upfront products

665,223

516,404

1,953,005

1,395,204

Total products revenue

1,668,015

1,408,768

4,852,962

3,944,132

Maintenance and service

808,807

330,969

2,308,643

855,186

Total revenue

2,476,822

1,739,737

7,161,605

4,799,318

Cost of revenue:

Products

275,622

230,895

750,921

615,953

Maintenance and service

156,514

103,301

451,849

290,309

Amortization of acquired intangible assets

247,252

46,368

743,850

62,624

Total cost of revenue

679,388

380,564

1,946,620

968,886

Gross margin

1,797,434

1,359,173

5,214,985

3,830,432

Operating expenses:

Research and development

719,737

625,301

2,134,849

1,732,496

Sales and marketing

385,889

259,480

1,164,262

683,700

General and administrative

176,979

280,550

532,129

584,133

Amortization of acquired intangible assets

155,174

28,573

466,442

36,569

Restructuring charges

2,164

236,340

Total operating expenses

1,439,943

1,193,904

4,534,022

3,036,898

Operating income

357,491

165,269

680,963

793,534

Interest expense

(133,234)

(146,502)

(429,313)

(251,977)

Other income (expense), net

459,665

170,543

530,601

335,061

Income before income taxes

683,922

189,310

782,251

876,618

Provision (benefit) for income taxes

138,216

(52,967)

154,961

(12,080)

Net income from continuing operations

545,706

242,277

627,290

888,698

Loss from discontinued operations, net of income taxes

(3,900)

Net income

545,706

242,277

627,290

884,798

Less: Net income (loss) attributed to non-controlling interest and redeemable non-controlling interest

(94)

(232)

(573)

1,274

Net income attributed to Synopsys

$ 545,800

$ 242,509

$ 627,863

$ 883,524

Net income (loss) attributed to Synopsys:

Continuing operations

$ 545,800

$ 242,509

$ 627,863

$ 887,424

Discontinued operations

(3,900)

Net income

$ 545,800

$ 242,509

$ 627,863

$ 883,524

Net income (loss) per share attributed to Synopsys - basic:

Continuing operations

$ 2.85

$ 1.51

$ 3.29

$ 5.67

Discontinued operations

(0.03)

Basic net income per share

$ 2.85

$ 1.51

$ 3.29

$ 5.64

Net income (loss) per share attributed to Synopsys - diluted:

Continuing operations

$ 2.84

$ 1.50

$ 3.27

$ 5.61

Discontinued operations

(0.02)

Diluted net income per share

$ 2.84

$ 1.50

$ 3.27

$ 5.59

Shares used in computing per share amounts:

Basic

191,536

160,174

190,858

156,536

Diluted

192,319

161,682

191,981

158,176

SYNOPSYS, INC.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except par value amounts)

July 31, 2026

October 31, 2025

ASSETS:

Current assets:

Cash and cash equivalents

$ 3,606,286

$ 2,888,030

Short-term investments

1,383

72,929

Total cash, cash equivalents and short-term investments

3,607,669

2,960,959

Accounts receivable, net

1,318,747

1,505,427

Inventories

479,129

365,190

Prepaid and other current assets

1,238,791

1,180,526

Total current assets

6,644,336

6,012,102

Property and equipment, net

749,598

696,693

Operating lease right-of-use assets, net

694,603

702,008

Goodwill

26,834,774

26,899,215

Intangible assets, net

11,458,656

12,679,591

Deferred income taxes

95,515

112,159

Other long-term assets

1,248,781

1,122,693

Total assets

$ 47,726,263

$ 48,224,461

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

Accounts payable and accrued liabilities

$ 1,480,598

$ 1,326,211

Operating lease liabilities

137,837

128,205

Deferred revenue

2,331,173

2,245,961

Short-term debt

1,020,247

22,117

Total current liabilities

4,969,855

3,722,494

Long-term operating lease liabilities

666,592

680,698

Long-term deferred revenue

383,936

382,557

Long-term debt

9,017,113

13,462,398

Other long-term liabilities

1,537,388

1,649,299

Total liabilities

16,574,884

19,897,446

Stockholders' equity:

Preferred stock, $0.01 par value: 2,000 shares authorized; none outstanding

Common stock, $0.01 par value: 400,000 shares authorized; 191,605 and 185,994 shares outstanding, respectively

1,916

1,860

Capital in excess of par value

20,711,069

18,640,947

Retained earnings

10,943,350

10,315,487

Treasury stock, at cost: 433 and 1,222 shares, respectively

(193,292)

(398,278)

Accumulated other comprehensive income (loss)

(310,504)

(232,414)

Total Synopsys stockholders' equity

31,152,539

28,327,602

Non-controlling interest

(1,160)

(587)

Total stockholders' equity

31,151,379

28,327,015

Total liabilities and stockholders' equity

$ 47,726,263

$ 48,224,461

SYNOPSYS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Nine Months Ended July 31,

2026

2025

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$ 627,290

$ 884,798

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization and depreciation

1,362,021

211,307

Reduction of operating lease right-of-use assets

109,254

80,789

Amortization of capitalized costs to obtain revenue contracts

70,835

38,920

Stock-based compensation

712,631

655,909

Allowance for credit losses

21,847

23,559

Loss on sale of strategic investments

3,635

Gain on sale of building

(51,385)

(Gain) loss on divestitures, net of transaction costs

(380,527)

8,299

Amortization of bridge financing costs

41,996

Amortization of debt issuance costs

21,280

6,790

Deferred income taxes

(121,720)

(326,610)

Other

(737)

Net changes in operating assets and liabilities, net of effects fromacquisitions and dispositions:

Accounts receivable

165,337

(27,989)

Inventories

(133,944)

(34,068)

Prepaid and other current assets

(70,709)

120,348

Other long-term assets

(125,304)

(427,793)

Accounts payable and accrued liabilities

90,610

31,384

Operating lease liabilities

(109,757)

(78,360)

Income taxes

(56,728)

(140,347)

Deferred revenue

116,166

(19,932)

Unrealized loss on settlement of interest rate treasury lock

(121,643)

Net cash provided by operating activities

2,298,603

878,870

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from maturities of short-term investments

20,995

53,630

Proceeds from sales of short-term investments

68,761

148,809

Purchases of short-term investments

(18,524)

(47,558)

Proceeds from sales of strategic investments

3,470

Purchases of strategic investments

(1,402)

(4,086)

Purchases of property and equipment, net

(156,089)

(134,908)

Proceeds from sale of building

74,279

Acquisitions, net of cash acquired

(16,681,257)

Proceeds from business divestiture, net of cash divested

440,022

142,546

Other

(611)

Net cash provided by (used in) investing activities

353,763

(16,445,686)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from debt, net of issuance costs

14,329,340

Repayment of debt

(3,463,726)

(2,579)

Issuances of common stock

124,585

138,101

Payments for taxes related to net share settlement of equity awards

(262,761)

(242,791)

Common stock issuance for private placement

2,000,000

Purchases of treasury stock

(300,000)

Redemption of redeemable non-controlling interest

(30,000)

Other

(463)

Net cash provided by (used in) financing activities

(1,901,902)

14,191,608

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(33,409)

8,649

Net change in cash, cash equivalents and restricted cash

717,055

(1,366,559)

Cash, cash equivalents and restricted cash, beginning of year

2,893,721

3,898,729

Cash, cash equivalents and restricted cash, end of period

$ 3,610,776

$ 2,532,170

SYNOPSYS, INC.

Business Segment Reporting

(Unaudited, in millions)

Three Months Ended July 31, 2026

Three Months Ended July 31, 2025

Nine Months Ended July 31, 2026

Nine Months Ended July 31, 2025

Revenue by segment

- Design Automation

$ 2,003.0

$ 1,312.1

$ 5,826.6

$ 3,454.6

% of Total

80.9 %

75.4 %

81.4 %

72.0 %

- Design IP

$ 473.8

$ 427.6

$ 1,335.0

$ 1,344.7

% of Total

19.1 %

24.6 %

18.6 %

28.0 %

Adjusted operating income by segment

- Design Automation

$ 905.0

$ 583.8

$ 2,641.6

$ 1,447.2

- Design IP

$ 125.4

$ 86.0

$ 302.2

$ 363.1

Adjusted operating margin by segment

- Design Automation

45.2 %

44.5 %

45.3 %

41.9 %

- Design IP

26.5 %

20.1 %

22.6 %

27.0 %

Total Adjusted Segment Operating Income Reconciliation

(Unaudited, in millions)

$ 357.5

2.2