Synopsys, Inc. (NASDAQ: SNPS) stock rose 6.5% in the pre market session on August 23rd, 2018 (Source: Google finance) after the company reported better than expected results for the third quarter 2018 and projected the fourth-quarter above the analysts’ estimates, on the back of benefits from rising demand from semiconductor clients. However, net income fell 32 percent to $79.4 million as the company’s total operating expenses rose 23 percent. Further, the age of digital intelligence is boosting significant investments by traditional and new semiconductor and systems companies, as well as software developers across many industries. The company’s strong products and customer relationships in EDA and IP, as well as the rapid growth in software security and quality, are leading to double-digit revenue and non-GAAP earnings growth in 2018
SNPS in the third quarter of FY 18 has reported the adjusted earnings per share of 95 cents, beating the analysts’ estimates for the adjusted earnings per share of 92 cents. The company had reported the adjusted revenue growth of 12 percent to $779.7 million in the third quarter of FY 18, beating the analysts’ estimates for revenue of $773.6 million. SNPS, whose clients include Intel Corp and IBM Corp, receives more than half of its revenue from supplying electronic design automation (EDA) software to chipmakers, which they use to design and test chips. The company is also expected to get benefit from emerging technology areas such as artificial intelligence, autonomous driving and the Internet of Things (IoT)
SNPS for the fourth quarter expects revenue to be in the range of $774 million and $804 million, while analysts on average were expecting $764.05 million, according to Thomson Reuters. The company expects fourth-quarter adjusted profit to be in a range of 76 cents per share to 80 cents per share, above the average estimate of 70 cents. Further, for the fourth quarter, Non-GAAP expenses expected to be in the range of $655 million – $665 million and other income and expense is expected to be in the range of ($3) million – ($1) million
For the full year 2018, SNPS expects revenue to be in the range of $3.10 billion – $3.13 billion, Non-GAAP earnings per share is expected to be in the range of $3.89 – $3.93 and cash flow from operations is expected to be in the range of $460 million – $500 million.
SNPS has repurchased $165 million of the stock, bringing the total for the year to $400 million.