Synopsys Inc. shares declined 2% in premarket trading on Thursday after the chip design software company reported third-quarter results that exceeded analyst expectations but provided a cautious full-year outlook.
The company posted adjusted earnings per share of $3.91, surpassing the $3.67 consensus estimate from Wall Street. Revenue rose 42.4% year-over-year to $2.477 billion, topping the $2.44 billion forecast and up from $1.740 billion in the same period last year. Bank of America analysts noted the company’s core growth is improving ahead of its September 30 investor day, though they highlighted muted backlog support as a limiting factor.
For the fourth quarter, Synopsys guided adjusted EPS to a range of $4.10 to $4.16, above the $3.99 consensus. Revenue is forecast between $2.53 billion and $2.58 billion, bracketing the $2.552 billion estimate. The full-year fiscal 2026 outlook was raised, with adjusted EPS now projected at $15.04 to $15.10, compared with the $14.77 estimate, while revenue is expected to reach $9.69 billion to $9.74 billion, versus the $9.677 billion consensus.
Growth drivers included broad-based strength in Design Automation, a strong quarter from Ansys, and a return to year-over-year growth for Design IP. The company noted accelerating artificial intelligence adoption is increasing chip-design complexity, which is driving demand for engineering and silicon IP products. Synopsys’ updated targets assume no further changes to U.S. export controls or current Entity List restrictions.
Bank of America analysts described the September 30 investor day as a key catalyst that could drive higher confidence and potential multiple recovery for the stock.
