Tech stock under pressure: Synopsys, Inc. (NASDAQ: SNPS)

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Synopsys, Inc. (NASDAQ: SNPS) stock lost over 1.9% in the pre-market session of 5th December, 2019 (As of 5:23 pm GMT-5; Source: Google finance) on lower than expected guidance. For the first quarter of FY 20, the company expects earnings per share to be in the range of 0.89-0.94, as compared to the Thomson Reuters consensus earnings per share estimate of $1.20. The company expects revenue to be in the range of $805-835 million, against consensus revenue estimate of $871.21 million.

For the fourth quarter of FY 19, the company has reported on a non-GAAP basis, the net income for the fourth quarter of fiscal 2019 of $177.1 million, compared to non-GAAP net income of $119.6 million for the fourth quarter of fiscal 2018. SNPS has ended the quarter with a cash balance of $729 million and total debt of $138 million.

SNPS in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.15, beating the analysts’ estimates for the adjusted earnings per share of $1.13, according to FactSet. The company had reported the adjusted revenue growth of 35.9 percent to $851.1 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $847 million.

Meanwhile, in FY 19, Semiconductor & System Design revenue grew 7% to $3.03 billion and the Software Integrity segment generated revenue of $335 million, which represents 19% growth. The company posted the total non-GAAP costs and expenses of $2.52 billion, resulting in a non-GAAP operating margin of approximately 25%. Operating cash flow for the year 2019 was $801 million. SNPS had completed buybacks of $329 million in the year.

Synopsys expects FY 2020 adjusted earnings per share to be in the range of 5.18-5.25. For fiscal 2020, the revenue is expected to be in the range of $3.6 billion to $3.65 billion, total non-GAAP costs and expenses is expected to be in the range of $2.63 billion and $2.66 billion, resulting in a non-GAAP operating margin of approximately 27%; other income and expenses to be between minus $16 million and minus $12 million, the non-GAAP normalized tax rate to be of 16%, outstanding shares to be between 153 million and 156 million; cash flow from operations is expected to be in the range of $800 million to $825 million; and capital expenditures to be of approximately $180 million, as project timing costs some of the spending plan for 2019 to push into 2020. The company anticipates its expenditures to decline in 2021.

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