Synopsys — 2026Q3 earnings
reported 2026-08-26
EPS $3.91 vs $3.67 est — beat
next session +13.4% (close 2026-08-26 → 2026-08-27)
Source
Press release ↗Summary
Synopsys cleared the top of its own guidance on both lines and raised the full year. The number to read carefully is the growth rate: the CFO put roughly $711 million of Ansys revenue inside the 42% headline, and the release says the full-year target carries $2.98 billion of expected Ansys revenue. The engine underneath is the 8.5% EDA growth the CFO reported and the CEO called organic on the call, with Design IP returned to year-over-year growth. The $3.91 shown on this page is the non-GAAP figure; the same release reports GAAP EPS of $2.84 for the quarter.
Earnings call
Earnings call webcast ↗Review
From the report
Revenue of $2.477 billion and non-GAAP EPS of $3.91 both cleared the high end of prior guidance, and full-year revenue and non-GAAP EPS targets were raised alongside them.
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Revenue for the quarter was $2.477 billion against $1.740 billion in the same quarter a year earlier. show quote
“Revenue for the third quarter of fiscal year 2026 was $2.477 billion, compared to $1.740 billion for the third quarter of fiscal year 2025.”
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The release carries two earnings-per-share figures for the quarter — GAAP $2.84 and non-GAAP $3.91 — and appends "exceeding high-end of prior guidance" to the pair without separating them. The $3.91 carried on this page is the non-GAAP figure. show quote
“Quarterly GAAP earnings per diluted share (EPS) of $2.84, and non-GAAP EPS of $3.91, exceeding high-end of prior guidance”
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On a non-GAAP basis, net income was $752.5 million, or $3.91 per diluted share, against $548.9 million and $3.39 per diluted share a year earlier. show quote
“net income for the third quarter of fiscal year 2026 was $752.5 million, or $3.91 per diluted share, compared to non-GAAP net income of $548.9 million, or $3.39 per diluted share, for the third quarter of fiscal year 2025.”
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Full-year guidance was raised to $9.715 billion of revenue and $15.07 of non-GAAP EPS at the midpoints; the release's stated reason is continued AI-driven demand strength. show quote
“Raising expectations for full-year total revenue to $9.715 billion at the midpoint and full-year non-GAAP EPS guidance to $15.07 at the midpoint on continued AI-driven demand strength”
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CFO Shelagh Glaser named the drivers in the release: EDA in the lead, a strong Ansys quarter, and a Design IP business back to year-over-year growth. show quote
“Synopsys delivered an outstanding third quarter, with revenue and earnings per share exceeding the high end of our guidance range. Results were driven by broad-based strength across the business, led by EDA, a strong quarter from Ansys, and our design IP business returned to year-over-year growth”
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Glaser tied the guidance raise to the quarter's performance and to an expectation of double-digit EDA growth, and said the raise covers revenue, non-GAAP operating margin, EPS and cash flow. show quote
“Given our strong performance and expectations for double-digit growth in EDA, we are raising our full year revenue, non-GAAP operating margin, EPS and cash flow guidance.”
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CEO Sassine Ghazi framed the demand in the release as coming from AI-driven design complexity. show quote
“AI is driving unprecedented complexity and increasing demand for the silicon IP and engineering solutions necessary to deliver next-generation AI compute, infrastructure and physical AI systems”
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The full-year revenue target is not a like-for-like base: the release says it includes $2.98 billion of expected Ansys revenue and reflects the impact of approximately $110 million of the divested Optical Solutions Group and PowerArtist RTL businesses and $40 million related to the recently completed divestiture of the Processor IP Solutions business. show quote
“Fiscal year 2026 revenue includes $2.98 billion of expected Ansys revenue, and reflects the impact of approximately $110 million of the divested Optical Solutions Group and PowerArtist RTL businesses, and $40 million related to the recently completed divestiture of the Processor IP Solutions business.”
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From the call
Management separated the acquisition from the engine on the call: the 42% headline includes roughly $711 million of Ansys revenue, while EDA grew 8.5% — a figure the CEO called organic — and Design IP returned to growth.
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CFO Shelagh Glaser reported EDA revenue up 8.5% year over year inside the Design Automation segment, with a record quarter for hardware-assisted verification. show quote
“Within the Design Automation segment, Q3 EDA revenue increased 8.5% year-over-year, reflecting robust EDA software performance and another record quarter for hardware-assisted verification solutions.”
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Asked what was driving the expected acceleration, CEO Sassine Ghazi stated that the EDA growth figure is organic. show quote
“So all in all, that 8-plus percent is organic growth for EDA that we're fairly excited about.”
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Glaser gave the composition of the headline growth rate: total revenue up about 42%, including roughly $711 million of Ansys revenue. show quote
“We generated total revenue of $2.477 billion, up approximately 42%, including Ansys revenue of approximately $711 million.”
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Design IP revenue was $474 million, up about 11% year on year, which Glaser described as the segment returning to growth. show quote
“The Design IP segment returned to growth with revenue of $474 million, up approximately 11% year-on-year.”
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Backlog was $10.9 billion, modestly lower quarter over quarter; Glaser attributed the decline to the processor IP solutions divestiture that closed during the quarter. show quote
“Backlog remains very strong at $10.9 billion, modestly down quarter-over-quarter due to the divestiture of the processor IP solutions business that closed in Q3.”
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Ghazi described the 'Factory 2' customized-IP model as a shift from licensing alone to licensing plus royalties. show quote
“It moves us up the value chain from licensing alone to licensing plus royalties and positions us to capture the fast-growing custom silicon opportunity.”
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Ghazi said the joint Synopsys–Ansys product launched in the quarter will not contribute much in fiscal 2026 and will contribute to EDA growth in fiscal 2027. show quote
“As we've said from the beginning, FY '26, we will not have much contribution in the joint solution. It was a year of execution, delivering to these products. As we look at FY '27, absolutely, it will contribute to our growth in EDA.”
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On demand breadth, Ghazi said non-AI design starts have stabilized over the last two quarters after a period of slowdown, rather than resumed growth. show quote
“The observation is on the non-AI, in the last 2 quarters, it has stabilized. What it means was we were observing a slowdown in design start in the non-AI segment. In the last couple of quarters, stabilization, so it's not declining anymore.”
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Glaser gave the balance-sheet position at quarter end: free cash flow of $746 million in the quarter, $3.6 billion of cash and short-term investments, and total debt of about $10 billion. show quote
“Free cash flow was $746 million in Q3, and we ended the quarter with cash and short-term investments of $3.6 billion. Total debt at the end of Q3 was approximately $10 billion.”
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Glaser said the company is ahead of its cost-synergy commitments and has repaid the term loans earlier than planned. show quote
“We are also ahead of the schedule on the cost synergy commitments we made at close and have repaid the term loans earlier than planned.”
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as of 2026-08-26