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Synopsys' (SNPS) Q3 Earnings and Revenues Beat Estimates
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Synopsys Inc.’s (SNPS - Free Report) third-quarter fiscal 2020 non-GAAP earnings of $1.74 per share beat the Zacks Consensus Estimate by 28.9%. Moreover, the figure improved 47.5% year over year.
Further, revenues increased 13% year over year to $964.1 million and surpassed the Zacks Consensus Estimate by 7.9% as well.
The company is benefiting from increasing global design activity and customer engagements. The rising trend of machine learning, AI, 5G, IoT, Cloud, and the proliferation of Smart Everything are boosting demand for its advanced solutions.
Time-Based Product revenues (63.5% of total revenues) of $612.1 million were up 13.9% year over year. Maintenance and Service revenues (14.6%) improved 2.4% to $141.1 million. Upfront Product revenues (21.9%) grew 18.8% to $210.9 million.
Segment wise, Semiconductor & System Design revenues (90.3% of total revenues) were $870.7 million, up 13.2% year over year. Within the same, EDA revenues (55% of revenues) were $531.8 million and IP & Systems Integration revenues (35% of revenues) came in at $335.7 million. Software Integrity revenues totaled $93.4 million, contributing approximately 10% to the top line in the reported quarter.
Geographically, Synopsys’ revenues in North America (46% of total) were $443.7 million, and $94.3 million in Europe (10%). Revenues from Japan (8%), Korea (10%) and the Asia Pacific (26%) came in at $77.8 million, $96.3 million and $251.9 million, respectively.
Non-GAAP operating margin was 33.6%, expanding 820 basis points (bps) year over year. Semiconductor & System Design delivered an adjusted operating margin of 35.4%, up 840 bps year over year, while Software Integrity margin expanded 530 bps year over year to 15.8%.
Balance Sheet & Cash Flow
Synopsys had cash and cash equivalents of $1.05 billion as of Jul 31 compared with $856.4 million as of Apr 30.
Total debt came in at $131.4 million in the reported quarter compared with the previous quarter’s $235.8 million.
Operating cash flow in the first nine months of fiscal 2020 was $789.2 million.
Guidance
For fourth-quarter fiscal 2020, the company’s revenues are expected to be $1-$1.03billion. The Zacks Consensus Estimate for revenues is currently pegged at $1.04 billion, which indicates growth of 22% from the year-ago quarter.
Management expects non-GAAP earnings between $1.51 and $1.56 per share. The consensus mark for earnings is pegged at $1.70 cents, suggesting year-over-year growth of 47.8%.
Non-GAAP expenses are anticipated to be $717-$727 million.
For fiscal 2020, management projects revenues at $3.66-$3.69 billion, up from the previous forecast of $3.60-$3.65 billion. The Zacks Consensus Estimate for fiscal 2020 revenues is pinned at $3.63 billion, calling for year-over-year growth of 7.9%.
Non-GAAP earnings for the fiscal year are now expected between $5.48 and $5.53 per share, up from the prior guided range of $5.21-$5.28. The consensus mark for fiscal 2020 earnings is pegged at $5.27, which suggests growth of 15.6% from the year-earlier quarter.
For fiscal 2020, operating cash flow is expected to be approximately $900 million, higher than the previous estimates of $815-$840 million.
Zacks Rank and Key Picks
Currently, Synopsys carries a Zacks Rank #3 (Hold).
The long-term earnings growth rate for Apple, Lam Research and Synaptics is currently pegged at 10.7%, 15.4%, and 10%, respectively.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Synopsys' (SNPS) Q3 Earnings and Revenues Beat Estimates
Synopsys Inc.’s (SNPS - Free Report) third-quarter fiscal 2020 non-GAAP earnings of $1.74 per share beat the Zacks Consensus Estimate by 28.9%. Moreover, the figure improved 47.5% year over year.
Further, revenues increased 13% year over year to $964.1 million and surpassed the Zacks Consensus Estimate by 7.9% as well.
The company is benefiting from increasing global design activity and customer engagements. The rising trend of machine learning, AI, 5G, IoT, Cloud, and the proliferation of Smart Everything are boosting demand for its advanced solutions.
Synopsys, Inc. Price, Consensus and EPS Surprise
Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote
Quarter in Detail
Time-Based Product revenues (63.5% of total revenues) of $612.1 million were up 13.9% year over year. Maintenance and Service revenues (14.6%) improved 2.4% to $141.1 million. Upfront Product revenues (21.9%) grew 18.8% to $210.9 million.
Segment wise, Semiconductor & System Design revenues (90.3% of total revenues) were $870.7 million, up 13.2% year over year. Within the same, EDA revenues (55% of revenues) were $531.8 million and IP & Systems Integration revenues (35% of revenues) came in at $335.7 million. Software Integrity revenues totaled $93.4 million, contributing approximately 10% to the top line in the reported quarter.
Geographically, Synopsys’ revenues in North America (46% of total) were $443.7 million, and $94.3 million in Europe (10%). Revenues from Japan (8%), Korea (10%) and the Asia Pacific (26%) came in at $77.8 million, $96.3 million and $251.9 million, respectively.
Non-GAAP operating margin was 33.6%, expanding 820 basis points (bps) year over year. Semiconductor & System Design delivered an adjusted operating margin of 35.4%, up 840 bps year over year, while Software Integrity margin expanded 530 bps year over year to 15.8%.
Balance Sheet & Cash Flow
Synopsys had cash and cash equivalents of $1.05 billion as of Jul 31 compared with $856.4 million as of Apr 30.
Total debt came in at $131.4 million in the reported quarter compared with the previous quarter’s $235.8 million.
Operating cash flow in the first nine months of fiscal 2020 was $789.2 million.
Guidance
For fourth-quarter fiscal 2020, the company’s revenues are expected to be $1-$1.03billion. The Zacks Consensus Estimate for revenues is currently pegged at $1.04 billion, which indicates growth of 22% from the year-ago quarter.
Management expects non-GAAP earnings between $1.51 and $1.56 per share. The consensus mark for earnings is pegged at $1.70 cents, suggesting year-over-year growth of 47.8%.
Non-GAAP expenses are anticipated to be $717-$727 million.
For fiscal 2020, management projects revenues at $3.66-$3.69 billion, up from the previous forecast of $3.60-$3.65 billion. The Zacks Consensus Estimate for fiscal 2020 revenues is pinned at $3.63 billion, calling for year-over-year growth of 7.9%.
Non-GAAP earnings for the fiscal year are now expected between $5.48 and $5.53 per share, up from the prior guided range of $5.21-$5.28. The consensus mark for fiscal 2020 earnings is pegged at $5.27, which suggests growth of 15.6% from the year-earlier quarter.
For fiscal 2020, operating cash flow is expected to be approximately $900 million, higher than the previous estimates of $815-$840 million.
Zacks Rank and Key Picks
Currently, Synopsys carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Apple (AAPL - Free Report) , Lam Research Corporation (LRCX - Free Report) and Synaptics (SYNA - Free Report) , all sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Apple, Lam Research and Synaptics is currently pegged at 10.7%, 15.4%, and 10%, respectively.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>