Hot Tech stock to watch: Synopsys, Inc. (NASDAQ: SNPS)

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Synopsys, Inc. (NASDAQ: SNPS) stock rose over 1.4% in the pre-market session of May 21st, 2020 (as of 7:59 pm GMT-4 ; Source: Google finance) after the company posted better than expected results for the second quarter of FY 20. The company has reported the net profit of $109.9 million, down from $118.2 million, the year earlier. The company has generated the operating cash flow of $380 million. The company has initiated a $100 million ASR, and has now completed $200 million in buybacks year-to-date from 2015. The company has ended the second quarter with a cash balance of $856 million and total debt of $236 million as the company paid down $90 million of the revolver.

Orders are driven in large part by EDA, particularly digital design. The ending backlog was $4.7 billion. Semiconductor & System Design segment generated the revenue of $773 million with strong growth in EDA software, moderated by a tough hardware comparison over a strong Q2 of last year. The company posted the total non-GAAP costs and expenses of $640 million, which resulted in a non-GAAP operating margin of 25.7%. The company is on track to generate approximately 2 percentage points of non-GAAP operating margin expansion for the year. The adjusted operating margin for the Semiconductor & System Design segment was 27.1% and for the Software Integrity segment, it is 13.3%.

SNPS in the second quarter of FY 20 has reported the adjusted earnings per share of $1.22, beating the analysts’ estimates for the adjusted earnings per share of 99 cents, according to analysts polled by FactSet. The company had reported the adjusted revenue of $861.3 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $836.5 million.

For the third quarter of 2020, the company expects revenue to be in the range of $875 million and $905 million, total non-GAAP cost and expenses to be in the range of $640 million and $650 million, and non-GAAP earnings to be in the range of $1.33 to $1.38 per share.

For fiscal year 2020, the company projects revenue to be in the range of $3.6 billion to 3.65 billion, total non-GAAP cost and expenses to be in the range of $2.63 billion and $2.66 billion resulting in a non-GAAP operating margin of approximately 27%, non-GAAP earnings to be in the range of $5.21 to $5.28 per share, cash flow from operations to be in the range of $815 million to $840 million, and capital expenditures to be of approximately $170 million.

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