Synopsys Inc. reported a 42% year-over-year increase in quarterly revenue to $2.477 billion for Q3 FY26, exceeding analyst expectations by $37 million. Non-GAAP earnings per share rose to $3.91 from $3.67 forecast, while full-year FY26 EPS guidance was raised to a range of $15.04 to $15.10.
The company posted $746 million in free cash flow for the quarter and held $3.6 billion in cash on its balance sheet. Backlog totaled $10.9 billion, and Synopsys traded at a P/E ratio of 77.5x, with a market capitalization of approximately $68 billion. The stock closed at $454.44, up 10.84% on the day after a prior after-hours decline of 5.1%.
Following the $14.3 billion acquisition of Ansys, Synopsys has reduced its total debt to $10 billion through early repayments of term loans. Ansys contributed $711 million in Q3 revenue and is expected to generate $2.98 billion for the full fiscal year. Cost synergies from the deal are on track to reach $400 million by the fourth year post-acquisition. S&P Global upgraded Synopsys’ credit outlook to positive, citing significant debt reduction.
Segment performance showed the core electronic design automation business growing 8.5% organically, driven by record hardware-assisted verification revenue and 12 new HAV customers. Design IP revenue returned to growth at 11% year-over-year to $474 million, with a 95% win rate on PCIe 7.0 opportunities and a 90% automotive design win rate for three consecutive quarters.
Synopsys highlighted its 3DIC Compiler for advanced packaging designs, including AMD’s Instinct MI455X GPU. The company also launched its first joint multiphysics fusion product with Ansys, which has delivered 10x faster design closure for customers such as NVIDIA and Cisco.
On the AI front, Synopsys.AI has nearly 5,000 active users, and its Design Verification Agent, showcased at the DAC conference, demonstrated 50x efficiency gains in design validation.
Analysts have adjusted price targets following the results. Baird upgraded Synopsys to Outperform with a $560 target, citing projected FY27 adjusted EPS of $18.15. Mizuho maintained its Outperform rating but lowered its target from $600 to $550, while KeyBanc retained its Overweight rating with a $600 target.
Synopsys scheduled its first full analyst day in 2.5 years for September 30, 2026. The company expects multiphysics fusion revenue to contribute meaningfully to EDA growth starting in 2027, with its Factory 2 custom silicon initiative positioned as a multi-year tailwind for 2027 and beyond.
