It has been a few month for the reason that final earnings report for Synopsys (SNPS). Shares have misplaced about 6.2% in that time-frame, underperforming the S&P 500.
Will the latest damaging pattern proceed main as much as its subsequent earnings launch, or is Synopsys due for a breakout? Earlier than we dive into how buyers and analysts have reacted as of late, let’s take a fast have a look at its most up-to-date earnings report to be able to get a greater deal with on the vital catalysts.
Synopsys Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Synopsys reported better-than-expected earnings for the third quarter of fiscal 2024. The corporate’s fiscal third-quarter non-GAAP earnings per share (EPS) of $3.43 surpassed the Zacks Consensus Estimate of $3.28. The underside line improved 27% yr over yr, primarily pushed by larger revenues and higher price administration.
Revenues jumped 13% yr over yr to $1.53 billion and got here in keeping with the Zacks Consensus Estimate. The highest line was pushed by progress throughout a number of enterprise segments.
Synopsys’ income progress was pushed by ongoing investments from semiconductor and methods firms in its options to boost its R&D capabilities.
Synopsys revealed that it has offered the Software program Integrity enterprise as a discontinued operation in its consolidated monetary statements for all durations resulting from its ongoing divestment. Notably, the corporate has agreed to promote its Software program Integrity enterprise to Clearlake Capital and Francisco Companions in a deal value $2.1 billion.
Quarter in Element
Within the license-type income group, Time-Primarily based Product revenues (52.6% of the full revenues) of $803.1 million had been down by 2.9% yr over yr. Upfront Product revenues (29%) moved upward by 51.2% to $442.5 million. Upkeep and Service revenues (18.4%) elevated 19.5% to $280.1 million from the year-ago quarter’s $234.3 million.
Phase-wise, Digital Design Automation (“EDA”) revenues (66.9% of revenues) had been $1.02 billion, up 4.9% yr over yr. Design IP revenues (30.4% of revenues) amounted to $463.1 million. Different revenues had been $42.5 million, representing 2.7% of the full revenues.
Geographically, Synopsys’ revenues in North America (44% of the full) and Europe (9%) had been $672.6 million and $144.6 million, respectively. Revenues from Korea (13%), China (17%) and different (16%) had been $194.8 million, $266.7 million and $247 million, respectively.
The non-GAAP working margin was 40%, increasing 360 foundation factors (bps) yr over yr.
Synopsys’ EDA’s adjusted working margin rose 70 bps to 41.5%. The Design IP section’s margin confirmed an enormous enchancment to 36.7% from 23.6% within the year-ago quarter.
Steadiness Sheet & Money Circulation
Synopsys had money and short-term investments of $1.99 billion as of Jul 31, 2024, in contrast with $1.66 billion as of Apr 30, 2024.
The overall long-term debt was $15.6 million on the finish of the reported quarter, which decreased from $17 million reported within the earlier quarter.
The corporate’s money circulation from working actions, together with discontinued operations, was $844.2 million within the first 9 months in contrast with the year-ago quarter’s money circulation of $1.37 billion.
Steering Replace
For fiscal 2024, SNPS expects revenues between $6.105 billion and $6.135 billion in contrast with the beforehand introduced steerage of $6.09-$6.15 billion. Non-GAAP earnings are anticipated within the vary of $13.07-$13.12 in contrast with the earlier steerage of $12.9-$12.98. Non-GAAP bills at the moment are anticipated within the vary of $3.76-$3.77 billion in contrast with the beforehand projected vary of $3.77-$3.81 billion.
For the fourth quarter of fiscal 2024, Synopsys expects revenues between $1.614 billion and $1.644 billion. Administration estimates non-GAAP EPS between $3.27 and $3.32. Non-GAAP bills are anticipated within the band of $1.027-$1.037 billion.
How Have Estimates Been Shifting Since Then?
It seems, recent estimates flatlined throughout the previous month.
The consensus estimate has shifted -5.87% resulting from these adjustments.
VGM Scores
Presently, Synopsys has a subpar Progress Rating of D, a grade with the identical rating on the momentum entrance. Following the very same course, the inventory was allotted a grade of D on the worth aspect, placing it within the backside 40% for this funding technique.
General, the inventory has an mixture VGM Rating of F. When you aren’t centered on one technique, this rating is the one you have to be occupied with.
Outlook
Synopsys has a Zacks Rank #3 (Maintain). We anticipate an in-line return from the inventory within the subsequent few months.
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Synopsys, Inc. (SNPS) : Free Stock Analysis Report
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