Abstract

Synopsys will release its fiscal results on December 10, 2025 Post Market; investors will watch revenue growth durability, profitability mix, and EPS trajectory against robust AI-related design demand and cyclical recovery dynamics.

Market Forecast

Consensus expectations imply solid double‑digit top‑line growth and expanding operating income, while Synopsys’s own projection framework implies current‑quarter revenue of USD 2.25 billion with an estimated year‑over‑year increase of 37.81%, EBIT of USD 799.79 million with an estimated year‑over‑year increase of 33.87%, and EPS of USD 2.78 with an estimated year‑over‑year decline of 15.86%. Margin‑wise, investors look for a high‑70s to low‑80s gross profit margin, stable low‑to‑mid‑teens net profit margin, and mid‑to‑high‑single‑digit adjusted EPS growth on a sequential basis as Synopsys executes multi‑year pricing and value capture in core EDA and IP. Main business momentum is expected to remain supported by licensing demand from AI accelerators, advanced process nodes, and verification, underpinned by resilient backlog conversion and multi‑year cloud adoption. The most promising segment is licensing (Authorization Fees) with last quarter revenue of USD 1.41 billion; its secular exposure to advanced-node design, AI megaprojects, and verification complexity suggests sustained double‑digit growth potential on a year‑over‑year basis.

Last Quarter Review

Synopsys reported revenue of USD 1.74 billion, a gross profit margin of 80.79%, GAAP net profit attributable to the parent company of USD 0.24 hundred million, a net profit margin of 13.94%, and adjusted EPS of USD 3.39, with year‑over‑year revenue growth of 14.03% and adjusted EPS down 1.17%. The company’s GAAP net profit fell quarter‑on‑quarter by 29.78%, reflecting mix normalization and timing of large customer recognitions, while profitability remained supported by high‑value software content and disciplined expense control. Main business highlights: Authorization Fees contributed USD 1.41 billion and Maintenance & Services contributed USD 0.33 billion, with the core licensing engine remaining the dominant revenue driver supported by AI‑related design complexity and verification intensity.

Current Quarter Outlook

Main business: Core EDA Licensing and Verification

Synopsys’s main business centers on Authorization Fees (licensing), which generated USD 1.41 billion last quarter and reflects the company’s recurring transaction flow across design tools and verification. Into the current quarter, a continued wave of AI accelerator tape‑outs, increased design starts at 3 nm and below, and a heavier verification workload should sustain healthy seat expansions and enterprise license upsells. Management’s forecast for revenue of USD 2.25 billion and EBIT of USD 799.79 million implies robust operating leverage from higher‑value tool adoption, even as some large deals carry recognition timing that can modulate quarterly EPS prints. The gross margin profile in the high‑70s to low‑80s range is consistent with software scale benefits and cloud‑delivered workflows, while the net margin in the low‑to‑mid‑teens reflects normalized investment cadence in R&D and GTM to capture next‑gen nodes and systems design opportunities. A balanced lens on seasonality, backlog conversion, and customer acceptance milestones remains central to near‑term revenue cadence.

Most promising business: Advanced‑node and AI‑linked Design Platforms

The largest growth potential resides within advanced‑node design platforms and AI‑linked verification workloads that embed Synopsys’s tools across front‑end and back‑end flows. As leading customers ramp designs for AI accelerators, high‑bandwidth compute, and complex SoCs, tool intensity per project is rising, expanding revenue per program and stickiness. The most recent quarter’s Authorization Fees base of USD 1.41 billion offers a solid springboard; with the year‑over‑year growth in total revenue at 14.03% last quarter and a forecasted 37.81% year‑over‑year revenue increase this quarter, Synopsys is positioned to harvest both pricing and volume from next‑generation tape‑outs. A developing tailwind comes from migration to cloud and elastic compute, which improves throughput on verification regressions and can enable higher attach rates for complementary tools and IP. Execution risk concentrates around the timing of multi‑year enterprise agreements and hardware acceptance milestones that can shift revenue recognition quarter to quarter.

Stock price drivers this quarter: Mix, EPS translation, and deal timing

For share performance around this print, investors are most sensitive to three variables: the translation of strong top‑line growth into adjusted EPS, the durability of high‑70s to low‑80s gross margins, and the quarter’s large‑deal timing. The guidance framework signals a notable step‑up in EBIT to USD 799.79 million, which, if realized, underscores operating discipline and favorable product mix even as EPS is forecast at USD 2.78 with a year‑over‑year decline of 15.86%. Any upside surprise on adjusted EPS would likely come from better‑than‑modeled mix in high‑margin verification and implementation tools, faster revenue recognition from acceptance milestones, or tighter opex. Conversely, if revenue skews more to services or if certain enterprise deals shift to later periods, investors may question the near‑term EPS cadence despite robust demand signals. Commentary on AI program pipelines, backlog visibility, and customer acceptance timing will likely move the stock as investors calibrate how the strong forecast converts into earnings power through fiscal 2026.

Analyst Opinions

The majority of recent analyst and institutional previews skew bullish, citing durable AI design demand, advanced‑node cadence, and operating leverage from pricing and solution breadth. Well‑followed analysts emphasize that Synopsys’s licensing base and verification intensity support high‑teens to low‑twenties growth in core franchises, while the model’s software‑like gross margin near 80.79% provides a cushion for reinvestment and EPS translation. Several institutions highlight the potential for revenue outperformance versus plan given customer momentum in AI accelerator and complex SoC programs, though they note that quarter‑to‑quarter EPS can be shaped by deal timing and acceptance milestones. The bullish view argues that the company’s current‑quarter guidance of USD 2.25 billion revenue with 37.81% year‑over‑year growth and EBIT of USD 799.79 million already tracks a significant capacity expansion cycle in semiconductor design, and that traction in enterprise agreements, combined with cloud‑enabled workflows, can underpin margin durability. The same analysts expect the core Authorization Fees segment, which delivered USD 1.41 billion last quarter, to extend share gains as verification and physical design flows become more compute‑intensive, while services growth remains a steady complement rather than a swing factor. Investors looking through near‑term EPS volatility focus on the longer‑term earnings power implied by rising design complexity, multiphysics signoff requirements, and cross‑portfolio integration that lifts average revenue per customer.