Synopsys Inc (SNPS) Q1 2026 Earnings Call Transcript
Bullish Software - Services 72.62B USA
Next Earnings
2026-05-26
There is no Profile data available for SYP.MU.
Synopsys posted a strong Q1 with revenue at guidance, EPS above guidance, and progressed on the Synopsys-Ansys integration, while maintaining full-year guidance and improving cash generation.
⭐ Key Highlights
Revenue and EPS outperformance
Q1 revenue at the high end of guidance and non-GAAP EPS well above guidance.
Synopsys plus Ansys integration underway
Ansys contributed to results with strong Q1 performance; integration progress with joint solutions and cross-selling underway.
Solid cash generation and balance sheet actions
Free cash flow of about $822 million; term loans repaid; new $2 billion share repurchase authorization.
Healthy backlog and visibility
Backlog remained strong at $11.3 billion, underpinning confidence in full-year guidance.
Guidance raised for non-GAAP EPS
Full-year non-GAAP EPS guidance increased despite other headwinds, reflecting disciplined execution.
✔Positive Signals
- Ansys-driven performance and joint-solution roadmap
- Backlog at $11.3 billion provides revenue visibility
- Free cash flow of $822 million and debt repayment completed
- Full-year non-GAAP EPS guidance raised
- Revenue at the high end of guidance
✖Negative Signals
- IP segment to be a transitional year with muted growth and depressed margins
- China headwinds affecting Synopsys' overall results
- IP margins expected to remain below corporate average in near term
- ARC divestiture still not closed, potential visibility gap
- Some timing risk in monetizing IP titles and Ansys cross-sell ramp
📊Financial Results
- Total revenue $2.41B in Q1, at the high end of guided range; Ansys revenue $886M.
- Non-GAAP operating margin 42.1%; GAAP EPS $0.34; Non-GAAP EPS $3.77, above expectations.
- Backlog $11.3B; free cash flow ~$822M; cash and short-term investments $2.2B; total debt $10B with term loans repaid.
- China revenue up 21% YoY due to Ansys; excluding Ansys, China was down slightly YoY.
- Design Automation and Ansys contributed to strength; IP revenue was flat to down in the quarter.
🔮Future Guidance
- Full-year revenue guidance $9.56B-$9.66B; Ansys contribution around $2.9B at the midpoint (double-digit growth).
- Full-year non-GAAP costs and expenses guidance $5.69B-$5.75B; non-GAAP operating margin around 40.5% at the midpoint.
- GAAP earnings per share guidance $2.21-$2.62; non-GAAP EPS guidance $14.38-$14.46, up by $0.06 from prior guidance due to lower net other/interest expense.
- Cash flow from operations ~ $2.2B; CapEx ~ $300M; free cash flow ~ $1.9B.
- Repurchase authority replenished up to $2B; capital allocation prioritized to invest in the business with opportunistic share repurchases.
💡Interesting Insights
- The company is pursuing an agent-engineer, AI-driven design workflow with data continuum and traceability, aiming to shift monetization toward value-based models as the workflow evolves.
Detailed Analysis
AI-generated summary of Synopsys Inc earnings call transcript.
Synopsys delivered a solid first quarter of fiscal 2026, with revenue at the high end of guidance driven by Ansys strength and near-term AI-driven design activity; non-GAAP EPS surpassed expectations as cost timing benefited the quarter. The company reaffirmed full-year targets and raised non-GAAP EPS guidance, supported by a healthy backlog of $11.3B and a strong cash position. The Ansys integration is advancing, with cross-sell momentum and planned joint solutions expected to contribute meaningfully from FY27, while IP growth remains muted this year and China headwinds persist. The guidance implies continued double-digit growth in EDA and simulation, with a disciplined capital allocation plan including share repurchases and debt repayment. Overall, the tone is cautiously optimistic about the AI-enabled engineering opportunity and the synergy between Synopsys and Ansys, despite near-term challenges in IP and macro headwinds.
Get Real-Time Earnings Call Alerts for Synopsys Inc
Create a free MarketAlerts account to add SNPS to your watchlist and receive instant AI-powered alerts when new earnings call transcripts, insider trades, and technical signals are detected.
Other MarketAlerts Features
