Synopsys Inc (NASDAQ:SNPS) stock plunges 35.36% (As on September 10, 11:22:47 AM UTC-4, Source: Google Finance) after the company reported third-quarter results that fell short of analysts’ forecasts and soft earnings guidance as U.S. restrictions on chipmaking equipment to China weighed on demand. On a non-GAAP basis, net income for the third quarter of fiscal year 2025 was $548.9 million compared to non-GAAP net income of $535.5 million for the third quarter of fiscal year 2024. Growth in design automation remained strong, up 23% year-on-year, supported by electronic design automation tools and a $77 million contribution from Ansys. However, the IP segment declined 8% from last year due to U.S. export restrictions on China, lower-than-expected fees at a large customer, and internal resource allocation issues. Management said these challenges are likely to persist in the near term as the company works to align its roadmap and investments with market demand. During the quarter, Synopsys faced U.S. restrictions on sales of chipmaking equipment to China in late May, though the ban on these restrictions was rescinded on Jul. 2. On September 30, 2024, Synopsys completed the sale of its Software Integrity business.
Moreover, in Q3 the company achieved multiple competitive wins with leading hyperscalers and shipped Record Zebu Server 5 and HAPS 200 Zebu 200 units. In Q3 the company had released ANSYS 2025 R2, providing customers access to groundbreaking advancements in AI driven simulation, GPU acceleration, system level modeling and cloud computing. These newly released products extend Synopsys AI leadership into simulation and analysis to help customers more efficiently develop and deliver their innovations.
SNPS in the third quarter of FY 25 has reported the adjusted earnings per share of $3.39, missing the analysts’ estimates for the adjusted earnings per share of $3.8. The company had reported the adjusted revenue growth of 14 percent to $1.74 billion in the third quarter of FY 25, missing the analysts’ estimates for revenue of $1.77 billion.
For Q4, the company guided adjusted EPS in a range of $2.76 to $2.80 and revenue of $2.23B to $2.26B, compared with expectations for $4.14 and $2.59B respectively.
For fiscal year 2025, the company guided adjusted EPS to be in a range of $12.76 to $12.80 and revenue expected to be in the range of $7.03B to $7.06B, compared with expectations for $14.58 and $7.45B respectively.