Synopsys reported third-quarter fiscal 2026 revenue of $2.477 billion, a 42% increase from the prior year and $37 million above analyst expectations. Non-GAAP earnings per share reached $3.91, compared with a $3.67 consensus estimate. The company’s acquisition of Ansys contributed $711 million to revenue in the quarter, with full-year contribution projected at $2.98 billion.
Full-year fiscal 2026 EPS guidance was raised to a range of $15.04 to $15.10, up from prior guidance. Free cash flow for the quarter totaled $746 million, while cash on hand stood at $3.6 billion. Total debt declined to roughly $10 billion, down from $14.3 billion at the close of the Ansys deal, as Synopsys continued to reduce leverage. The backlog totaled $10.9 billion, and the company’s valuation remained elevated at 77.5 times earnings.
Integration progress included cost synergies tracking toward a $400 million target by the fourth year post-Ansys acquisition. The core electronic design automation segment grew 8.5% organically, supported by record hardware-assisted verification revenue and 12 new hardware-assisted verification customers.
Design IP revenue returned to growth at 11% year-over-year, reaching $474 million. The segment reported a 95% win rate on PCIe 7.0 opportunities and maintained a 90% automotive design win rate for three consecutive quarters. AI adoption accelerated, with nearly 5,000 active users on Synopsys.AI. An autonomous design verification agent demonstrated at the DAC conference delivered a 50-fold efficiency gain in design validation.
Analysts revised price targets following the results. Baird upgraded Synopsys to Outperform with a $560 target, citing projected fiscal 2027 adjusted EPS of $18.15, implying roughly 20% growth. Mizuho maintained its Outperform rating but trimmed its target to $550 from $600. KeyBanc retained an Overweight rating with a $600 target. S&P Global upgraded its credit outlook to positive, citing significant debt reduction.
Despite beating estimates and raising guidance, Synopsys shares fell 5.1% in after-hours trading, reflecting investor concerns over integration challenges tied to the $10 billion Ansys debt load. Additional headwinds included subdued industrial demand in China and core EDA market share losses during the 2026 integration phase.
Synopsys is scheduled to hold its first full analyst day in 2.5 years on September 30, 2026. New revenue streams, including Multiphysics Fusion and Factory 2 Custom Silicon, are expected to scale meaningfully starting in 2027.
