Synopsys reported fiscal third-quarter 2026 earnings that exceeded analyst expectations, with non-GAAP EPS of $3.91 versus a $3.67 consensus. Revenue rose 42% year-over-year to $2.477 billion, topping the $2.44 billion estimate. GAAP EPS came in at $2.84, including gains from the sale of its Processor IP Solutions business.
The company’s Design Automation segment generated $2.0 billion in revenue, up 8.5% year-over-year, while the Design IP segment posted $474 million, an 11% increase. Adjusted operating margin reached 41.6%, with free cash flow totaling $746 million. Cash and short-term investments stood at $3.6 billion, while total debt remained near $10 billion. Backlog decreased modestly to $10.9 billion following the divestiture.
Synopsys raised its full-year 2026 revenue guidance to a range of $9.69 billion to $9.74 billion, up $50 million at the midpoint. Non-GAAP operating margin was increased to 41.5%, and non-GAAP EPS guidance was raised to $15.04–$15.10. Cash flow from operations is now projected at $2.8 billion, with free cash flow expected to reach $2.6 billion. Capital expenditures were lowered to $225 million.
For the fourth quarter, Synopsys guided revenue to $2.53 billion–$2.58 billion and non-GAAP EPS to $4.10–$4.16. The company noted accelerating double-digit growth in its EDA segment as AI-driven demand strengthens. Ansys contributed $711 million in revenue for the quarter, with full-year contribution now expected at $2.98 billion.
Shares ended regular trading up 0.3% at $410 but fell 1.4% in after-hours trade to $404.25. The stock has traded between $366 and $615.79 over the past 52 weeks.
CEO Sassine Ghazi highlighted strengthening fundamentals across the portfolio, citing accelerating EDA growth and renewed momentum in design IP. CFO Shelagh Glaser described the quarter as outstanding, with revenue, margin, and EPS all beating the high end of guidance.
