SNPS -- FQ1 FY2026 Earnings Review
DOUBLE BEAT
Reported February 25, 2026 | FYE: October 31 |
FQ1 FY2026 (Nov 2025 - Jan 2026) |
CEO: Sassine Ghazi | CFO: Shelagh Glaser |
Sector: EDA / Semiconductor IP
Revenue
$2,408.8M
Beat consensus ~$2,390M by +0.8%
Non-GAAP EPS
$3.77
Beat consensus ~$3.57 by +5.6%
Non-GAAP Op Margin
42.1%
+560bps YoY | Highest in 8 quarters
Free Cash Flow
$822M
+30% vs. FQ3 FY25 | FY26 guide ~$1.9B
Quarterly metrics -- 8 quarters
| Metric | FQ2 FY24 | FQ3 FY24 | FQ4 FY24 | FQ1 FY25 | FQ2 FY25 | FQ3 FY25 | FQ4 FY25 | FQ1 FY26 | YoY |
|---|---|---|---|---|---|---|---|---|---|
| Design Automation Rev ($M) | $1,054.9 | $1,062.6 | $1,118.2 | $1,020.2 | $1,122.3 | $1,312.1 | $1,847.7 | $2,001.8 | +96.2% |
| Design Automation YoY | +13.7% | +5.8% | +17.2% | +3.5% | +6.4% | +23.5% | +65.2% | +96.2% | Accel (Ansys) |
| Design IP Rev ($M) | $399.8 | $463.1 | $517.8 | $435.1 | $482.0 | $427.6 | $407.2 | $407.0 | -6.5% |
| Design IP YoY | +19.3% | +32.2% | +0.8% | -17.2% | +20.6% | -7.7% | -21.4% | -6.5% | Improving |
| Total Revenue ($M) | $1,454.7 | $1,525.7 | $1,636.0 | $1,455.3 | $1,604.3 | $1,739.7 | $2,254.9 | $2,408.8 | +65.5% |
| Revenue YoY | +4.3% | +2.6% | +2.3% | -11.8% | +10.3% | +14.0% | +37.8% | +65.5% | Accel (Ansys) |
| GAAP Gross Margin ($M) | $1,154.3 | $1,235.1 | $1,261.0 | $1,185.3 | $1,285.9 | $1,359.2 | $1,600.2 | $1,771.4 | +49.5% |
| GAAP Gross Margin % | 79.4% | 80.9% | 77.1% | 81.4% | 80.2% | 78.1% | 70.9% | 73.5% | -790bps |
| Non-GAAP Op Margin | 37.3% | 40.0% | 36.9% | 36.5% | 38.0% | 38.5% | 36.5% | 42.1% | +560bps |
| FCF ($M) | -- | -- | -- | -- | -- | $632 | -- | $822 | +30.1% |
| Non-GAAP EPS | $3.00 | $3.43 | $3.40 | $3.03 | $3.67 | $3.39 | $2.90 | $3.77 | +24.4% |
| EPS YoY | +18.1% | +19.1% | +7.3% | -14.9% | +22.3% | -1.2% | -14.7% | +24.4% | Accel |
Note: FQ4 FY25 and FQ1 FY26 include Ansys (closed Jul 2025). GAAP gross margin % declined
from Ansys-related intangible amortization; Non-GAAP measures strip this out.
Data sourced from Daloopa. Click any value for the source citation.
Annual metrics -- 5-year (Fiscal Year)
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | CAGR |
|---|---|---|---|---|---|---|
| Total Revenue ($B) | $3.69 | $4.20 | $5.08 | $5.84 | $6.13 | 13.5% |
| Revenue YoY | -- | +14.1% | +20.9% | +15.0% | +4.9% | -- |
| GAAP Gross Margin ($B) | $2.89 | $3.34 | $4.02 | $4.62 | $4.88 | 14.0% |
| GAAP Gross Margin % | 78.4% | 79.5% | 79.1% | 79.1% | 79.7% | +130bps |
| Non-GAAP Op Margin | 28.0% | 30.5% | 33.0% | 35.1% | 38.5% | +1,050bps |
| Non-GAAP EPS | $5.55 | $6.84 | $8.90 | $11.19 | $13.20 | 24.2% |
| EPS YoY | -- | +23.2% | +30.1% | +25.7% | +18.0% | -- |
FY2025 total revenue was $7.05B (+15.1%), Non-GAAP EPS $12.91 (-2.2% YoY due to Ansys dilution). FY2026 guidance midpoint: $9.61B revenue, $14.42 Non-GAAP EPS.
Data sourced from Daloopa.
Beat / miss -- FQ1 FY2026 (reported Feb 25, 2026)
| Metric | Consensus | Actual | Surprise | Verdict |
|---|---|---|---|---|
| Revenue | ~$2,390M | $2,408.8M | +$18.8M (+0.8%) | BEAT |
| Non-GAAP EPS | ~$3.57 | $3.77 | +$0.20 (+5.6%) | BEAT |
Revenue came in at the high end of the guided range ($2,365-$2,415M). Non-GAAP EPS of $3.77 exceeded guidance ($3.52-$3.58) and consensus by $0.20, driven by lower non-GAAP expenses (at low end of guided range) and lower net interest expense.
8-quarter beat/miss history
| Quarter | Revenue vs. Consensus | EPS vs. Consensus | Verdict |
|---|---|---|---|
| FQ2 FY24 (CQ1 24) | Beat | Beat | Double Beat |
| FQ3 FY24 (CQ2 24) | Beat | Beat | Double Beat |
| FQ4 FY24 (CQ3 24) | In-line | Beat | Beat |
| FQ1 FY25 (CQ4 24) | Beat (upper end) | Beat | Double Beat |
| FQ2 FY25 (CQ1 25) | Beat | Beat | Double Beat |
| FQ3 FY25 (CQ2 25) | Miss (IP shortfall) | Miss | Double Miss |
| FQ4 FY25 (CQ3 25) | In-line | Slight Beat | Beat |
| FQ1 FY26 (CQ4 25) | Beat | Beat | Double Beat |
Revenue 6/8 (75%), EPS 7/8 (88%). The sole meaningful miss was FQ3 FY25 when the IP business underperformed sharply due to China restrictions, foundry customer weakness, and IP roadmap delays. Management proactively cut full-year guidance at that point.
Guidance -- FQ2 FY2026 (issued Feb 25, 2026)
FQ2 Revenue
$2,250M
Range: $2,225M - $2,275M | Consensus ~$2,240M
FQ2 Non-GAAP EPS
$3.14
Range: $3.11 - $3.17 | Consensus ~$3.08
FQ2 guidance midpoint is slightly above consensus on both revenue and EPS.
| Metric | Low | High | Midpoint | Consensus |
|---|---|---|---|---|
| Revenue | $2,225M | $2,275M | $2,250M | ~$2,240M |
| Non-GAAP EPS | $3.11 | $3.17 | $3.14 | ~$3.08 |
Full year FY2026 guidance (reiterated/raised Feb 25, 2026)
| Metric | Low | High | Midpoint | Consensus | vs. Prior Guide |
|---|---|---|---|---|---|
| Revenue | $9.56B | $9.66B | $9.61B | ~$9.63B | Reiterated |
| Non-GAAP EPS | $14.38 | $14.46 | $14.42 | ~$14.39 | Raised +$0.06 |
| Non-GAAP Op Margin | -- | -- | 40.5% | -- | Reiterated |
| Free Cash Flow | -- | -- | ~$1.9B | -- | Reiterated |
| Ansys Revenue | -- | -- | ~$2.9B | -- | Reiterated (double-digit growth) |
Key guidance commentary
| FY2026 EPS Guide | Raised by $0.06 from $14.32-$14.40 to $14.38-$14.46, driven by lower-than-expected net interest expense in Q1. |
| Revenue Guide | Reiterated, not raised, despite Q1 beat. Full-year midpoint ($9.61B) is slightly below consensus ($9.63B), which disappointed some investors. |
| 1H/2H Split | Revenue guided ~48/52%. EPS guided ~46/54%, with 2H benefiting from debt repayment. |
| IP Business | Muted growth for the year with sequential improvement; Q4-weighted recovery. |
Historical performance -- revenue YoY growth and acceleration
| Quarter | Revenue YoY | Seq. Change (bps) | Acceleration |
|---|---|---|---|
| FQ2 FY24 | +4.3% | -- | -- |
| FQ3 FY24 | +2.6% | -170 bps | Decel |
| FQ4 FY24 | +2.3% | -30 bps | Decel |
| FQ1 FY25 | -11.8% | -1,410 bps | Decel (extra week compare) |
| FQ2 FY25 | +10.3% | +2,210 bps | Accel |
| FQ3 FY25 | +14.0% | +370 bps | Accel |
| FQ4 FY25 | +37.8% | +2,380 bps | Accel (Ansys full Q) |
| FQ1 FY26 | +65.5% | +2,770 bps | Accel (Ansys full Q) |
Note: FQ1 FY25 had a tough compare due to an extra work week in FQ1 FY24. Organic
(ex-Ansys) growth was ~8-9% in FY2025.
Historical performance -- EPS YoY growth and acceleration
| Quarter | EPS YoY | Seq. Change (bps) | Acceleration |
|---|---|---|---|
| FQ2 FY24 | +18.1% | -- | -- |
| FQ3 FY24 | +19.1% | +100 bps | Accel |
| FQ4 FY24 | +7.3% | -1,180 bps | Decel |
| FQ1 FY25 | -14.9% | -2,220 bps | Decel |
| FQ2 FY25 | +22.3% | +3,720 bps | Accel |
| FQ3 FY25 | -1.2% | -2,350 bps | Decel (IP miss + Ansys costs) |
| FQ4 FY25 | -14.7% | -1,350 bps | Decel (acquisition dilution) |
| FQ1 FY26 | +24.4% | +3,910 bps | Accel |
Annual trend -- revenue and EPS growth
| Year | Rev YoY | EPS YoY |
|---|---|---|
| FY2021 | +14.1% | +23.2% |
| FY2022 | +20.9% | +30.1% |
| FY2023 | +15.0% | +25.7% |
| FY2024 | +4.9% | +18.0% |
| FY2025 | +15.1% | -2.2% |
| FY2026E | +36% | +11.5% |
FY2024 organic growth was depressed by the extra-week compare. FY2025 EPS declined due to Ansys acquisition dilution (shares, interest expense, integration costs), though revenue accelerated. FY2026 marks the first full year with Ansys.
Key catalysts
1. Ansys Integration and Joint Solutions
Ansys 2026 R1 launched March 2026 -- first wave of integrated Synopsys-Ansys capabilities. Links chip-level design with safety, materials, and thermal analysis into system-aware engineering. Revenue synergy target: $400M run rate by year 4. Cost synergy target: $400M run rate by year 3. Cost synergies being accelerated into FY2026 (10% workforce reduction largely complete). Sales teams already cross-trained. First joint solution monetization targeted for FY2027. Ansys contributing ~$2.9B revenue in FY2026, growing double digits. Expands TAM from ~$15B to ~$31B. Q1 Ansys revenue ~$886M (seasonally strong quarter, reflecting legacy Ansys December fiscal year-end strength).
2. AI Chip Design Demand Explosion
Every AI accelerator, GPU, TPU, and custom ASIC requires EDA tools. Hardware-assisted verification (ZeBu/HAPS) achieved record years in FY2024 and FY2025 as AI chip verification complexity surges. Synopsys.ai delivering up to 50% faster knowledge assistance, 70% faster workflow, 5x faster formal test bench generation. ~5,000 active Synopsys.ai users among tier-one semi customers. Agent Engineer technology (L1-L5 autonomy roadmap) advancing rapidly with customer engagements underway.
3. Agentic AI for EDA -- Paradigm Shift
AgentEngineer framework launched: autonomous AI agents performing complex DRC, slashing development cycles. Value-based / token-based pricing model under active consideration -- would change EDA monetization paradigm. WEF honored Synopsys/AMD for AI-accelerated chip design. NVIDIA strategic partnership ($2B investment) to accelerate EDA on GPUs and build digital twins via Omniverse.
4. Advanced Node / Multi-Die Adoption
2nm projects accelerating rapidly. Fusion Compiler and PrimeTime achieving 100% usage on critical tape-outs at 2nm and below. Multi-die/3DIC Compiler platform gaining momentum with leading semiconductor and foundry customers. PCIe 8.0 industry-first demonstration; 224G SerDes first-to-market; 40+ PCIe design wins in FQ1 alone. Standards evolution pace doubled (3-4 year to ~1.5-2 year cycles), increasing IP refresh demand.
5. Non-AI Market Recovery
Consumer electronics (PC, mobile) design activity recovering with AI-on-device use cases. Automotive and industrial showing stabilization signals, though still subdued. Physical AI (robotics, autonomous vehicles) represents long-term opportunity for combined Synopsys-Ansys portfolio.
6. Macro / Geopolitical Risk
China revenue $211M in FQ1 FY26 (~8.8% of total including Ansys). Ex-Ansys, China declined slightly YoY. Cumulative export restrictions accelerating; domestic EDA competitors gaining share with restricted customers. Tariff uncertainty and potential further BIS restrictions remain overhang.
Street Q&A -- FQ1 FY2026 earnings call (Feb 25, 2026)
Q1. Charles Shi (Needham) -- IP segment confidence for 2H pickup
Rating: B+
Asked what gives confidence in the back-half IP recovery, noting foundry-related development milestone revenues are going away.
Confidence driven by robust AI design starts, accelerated standards evolution (3-4 year to ~1.5-2 year cycles), foundry optionality demand, and schedule delivery on HPC titles expected by 2H. Shelagh added: "Q4 weighted."
Directionally helpful, but "Q4 weighted" raises execution risk. No specific dollar/title quantification.
Q2. Charles Shi follow-up -- IP resource prioritization update
Rating: B+
Asked about prior comments on not having the right resources for hyperscaler IP needs.
Clarified it was a prioritization issue, not a skills gap. Resources have been reallocated, road map progress is on track.
Reassuring but no concrete proof points or milestones disclosed.
Q3. Gary Mobley (Loop Capital) -- RPOs down sequentially, bookings seasonality
Rating: B
Asked about declining RPOs.
Backlog at $11.3B, "nothing other than give us confidence." Ebb and flow of building/consuming backlog.
Dismissive. Could have provided more color on renewal cadence or Ansys booking dynamics.
Q4. Gary Mobley follow-up -- ZeBu/HAPS-200 product cycle outlook
Rating: A-
Asked about hardware-assisted verification outlook.
EP family (hybrid emulation/prototyping) continues to lead; record years continuing; expects strong 2026 demand from complexity/verification needs.
Good confidence, though lacked numerical specificity on growth rate.
Q5. Jay Vleeschhouwer (Griffin) -- AI orchestration, data repository, traceability for EDA
Rating: A
Technical question about critical AI infrastructure ingredients.
Detailed L1-L5 agent engineer roadmap. Partnerships with NVIDIA, Microsoft for orchestration/cognitive layers. Emphasized deterministic accuracy requirement ("agents cannot hallucinate").
Excellent technical depth and strategic articulation.
Q6. Jay Vleeschhouwer follow-up -- Ansys forecastability (606 effects, renewals cohort)
Rating: B+
Asked about Ansys revenue predictability.
Broad opportunity across market segments, simulation lightly penetrated. December seasonality will realign over time to SNPS fiscal year. Harmonizing 606 accounting.
Acknowledged the issue but did not quantify the 606 variability.
Q7. Jason Celino (KeyBanc) -- ARC processor divestiture rationale
Rating: A-
Asked why divest ARC if physical AI is a big opportunity.
Customers building own processors using SNPS EDA tools. Interface IP has bigger growth opportunity. GF will be a good partner.
Logical strategic reasoning, transparent about focus.
Q8. Jason Celino follow-up -- ARC revenue included in IP guidance
Rating: B
Asked if ARC revenue is in IP guidance.
Yes, until divestiture closes. Did not size the business.
Understandable but frustrating lack of disclosure.
Q9. Liam Pharr (BofA) -- Cost/revenue synergies update since Ansys close
Rating: A-
Asked for update on synergy progress.
First wave of joint solutions at Converge conference in March. Monetization expected FY2027. Cross-selling underway. $400M revenue synergy run rate by year 4; $400M cost synergy run rate by year 3, accelerating into years 1-2.
Clear timeline and commitment. Would have liked specific revenue synergy contribution for FY2026.
Q10. Liam Pharr follow-up -- China puts and takes
Rating: A-
Asked about China dynamics.
Q1 performed in-line. Classic Synopsys China down slightly; Ansys portfolio performed fairly well. Mix effect from IP portfolio more impacted by restrictions. Domestic competitors gaining share with restricted customers.
Transparent on competitive dynamics. Honest about share loss with restricted customers.
Q11. Kelsey Chia (Citi) -- Risk of missing customer design starts due to late IP delivery
Rating: B
Asked about execution risk on IP timelines.
Depends on customer schedule alignment. Multiple title portfolio engagement. Focus on prioritization to deliver on time.
Acknowledged the risk without fully addressing it. "It depends" is not confidence-inspiring.
Q12. Kelsey Chia follow-up -- IP operating margin framework
Rating: B+
Asked about IP margin trajectory.
Muted revenue = muted margin in FY26. Long term, IP margins below corporate average but healthy. Moving toward customization/royalty business model with hyperscaler customers.
Good long-term vision, but no normalized margin target provided.
Q13. Lee Simpson (Morgan Stanley) -- Agentic AI monetization (value-based / token-based)
Rating: A
Asked about pricing model evolution.
Confirmed value-based pricing under consideration. Workflow change enables monetization adjustment. Customers receptive.
Clear confirmation of pricing paradigm shift. Good strategic signaling.
Q14. Lee Simpson follow-up -- Ansys broad customer base, risk to growth from uneven value
Rating: B+
Asked about growth distribution across Ansys customer base.
Ansys is a "force multiplier." Physical AI cannot exist without simulation. Not a one-time phenomenon.
High-level but did not address the concentration question directly.
Q15. Sitikantha Panigrahi (Mizuho) -- NVIDIA partnership update
Rating: A
Asked for specifics on NVIDIA collaboration.
Deep commitment, not just a PR partnership. Two layers: (1) GPU acceleration of EDA/Ansys products (15-20x speedup) with pricing uplift, (2) Omniverse digital twins for physical AI. Several products expected in FY2026.
Detailed, concrete, compelling roadmap.
Q16. Gianmarco Conti (Deutsche Bank) -- Agentic AI customer penetration color
Rating: N/A
Asked about customer adoption breadth.
Transcript ends mid-answer. Insufficient data to rate.
Transcript truncated.
Overall Q&A Assessment: Management was transparent on headwinds (China, IP execution) and articulate on long-term strategy (Agentic AI, Ansys integration, NVIDIA partnership). Weaknesses: lack of quantification on IP recovery milestones and limited Ansys financial granularity. Average rating: B+.
Contradictions and narrative shifts across transcripts
1. China Growth Expectations: Progressive Downgrade
FQ1 FY25 (Feb 2025): "We have assumed in our guidance that China will continue on decelerating and below the corporate average." FQ2 FY25 (May 2025): Upgraded severity: "We are taking into account that China will be declining year over year." FQ4 FY25 (Dec 2025): China ended FY2025 down 18% (ex-Ansys down 22%). FQ1 FY26 (Feb 2026): China grew 21% YoY (but only due to Ansys inclusion). Ex-Ansys, China declined slightly. Over 5 quarters, China narrative went from "around corporate average" to "below corporate average" to "declining YoY" to "down 22%." Each quarter introduced a more negative China read, even as full-year guidance was maintained -- implying consistent offsetting strength elsewhere that was not fully quantified until it materialized.
2. IP Business: From "Record" to "Transitional Year"
FQ2 FY25 (May 2025): IP revenue up 21% YoY. Strong IP momentum highlighted with no caveats. FQ3 FY25 (Aug 2025): Abrupt reversal. IP down 8% YoY. Three headwinds disclosed: China restrictions, foundry customer weakness, roadmap/resource misallocation. Sassine: "There were signals that were missed in the forecast." FQ4 FY25 (Dec 2025): IP "performed in line with our adjusted expectations." FY2026 described as "transitional year." FQ1 FY26 (Feb 2026): IP flat sequentially at $407M, down 6% YoY. The speed of the IP reversal (from +21% YoY to -8%) and the admission of "missed signals" represents a meaningful forecasting failure.
3. Organic EDA Growth vs. Long-Term 12% Target
FQ1 FY25: Sassine expressed confidence in 12% long-term Design Automation CAGR. "We have no signals at this stage to believe that will be any different." FQ4 FY25: Organic EDA growth admitted to be ~8-9% in FY2025. FQ1 FY26: No update on 12% target vs. current run rate. The 12% target was set at Investor Day (pre-China deterioration, pre-IP issues). Organic growth has been running 3-4 percentage points below target for 2+ years now. Management has not formally revisited the target, which risks credibility if not addressed.
4. Ansys Integration Speed
FQ3 FY25 (Aug 2025): "The final regulatory approval of the buyer is elongating the full integration of ANSYS." Teams kept separate pending SAMR clearance. FQ4 FY25 (Dec 2025): "Since we finalized the divestitures in October, we are full force ahead in terms of integrating the teams. Our R&D teams right now, they are one team." FQ1 FY26 (Feb 2026): "The Ansys integration is well underway." First joint solutions at Converge in March. Monetization FY2027. Not a direct contradiction but a notable acceleration from "elongated" to "full force ahead" within one quarter once regulatory clearances were obtained.
5. IP Business Model: Evolving Narrative on Royalties
FQ3 FY25: Sassine introduced subsystem/chiplet evolution and need for "something different than an NRE plus a use fee." Described it as "fairly early phase." FQ4 FY25: More concrete: "Active discussions with strategic customers" for NRE + use fee + royalty. Expected to "lock up some customers" in FY2026. FQ1 FY26: "Active conversations with a number of partners... I do expect that we will close a number of these conversations and move into actual business in FY2026." Consistent progressive disclosure, not a contradiction. But the pace of actually closing royalty deals remains uncertain and could slip.
Macro read-throughs
Semiconductor R&D Spending Accelerating
Sassine repeatedly cited semi R&D growing from 6% of sales to 9% of sales -- a structural tailwind for EDA and IP. This benefits Cadence (CDNS) equally. AI infrastructure build-out "continues unabated" as of Feb 2026. No signs of demand slowdown for AI compute chips. Verification complexity surging: hardware-assisted verification at record levels for multiple years.
Tale of Two Markets Persists
AI/HPC design starts remain "very robust." Non-AI segments (automotive, industrial) showing stabilization but not recovery. Consumer electronics (PC, mobile) recovering with AI-on-device use cases -- positive for Qualcomm (QCOM), MediaTek, Arm. Industrial/automotive "still subdued" -- cautious signal for ON Semi (ON), NXP (NXPI), Infineon (IFX).
China Semiconductor Ecosystem Fragmenting
Cumulative export restrictions driving domestic EDA adoption: "Domestic competitors gaining share with restricted customers." Customers questioning multi-year SNPS commitments due to uncertainty. China down 22% ex-Ansys in FY2025. Negative read for all US semiconductor equipment/EDA exposed to China (LRCX, KLAC, AMAT, CDNS).
Advanced Packaging / Multi-Die is Mainstream
Synopsys enabled "most complex 3D heterogeneous integrated design with over 40 chiplets" for a leading AI chipmaker. 3DIC Compiler platform seeing broad adoption. Multi-die momentum "accelerated." Positive read for advanced packaging plays: ASE Technology (ASX), Amkor (AMKR), TSMC (TSM).
Standards Cycle Accelerating
Protocol refresh cycles compressed from 3-4 years to ~1.5-2 years. PCIe 7.0/8.0, 224G SerDes, UCIe, UAL all advancing rapidly. Positive for IP-intensive companies: Arm (ARM), Alphawave Semi (AWE.L), Marvell (MRVL).
Companies mentioned on earnings calls
| Company | Context | Read-Through |
|---|---|---|
| NVIDIA (NVDA) | $2B strategic investment in Synopsys. Joint GPU acceleration of EDA tools (15-20x speedup). Omniverse digital twins. NVLink Fusion ecosystem. | Confirms NVIDIA expanding ecosystem dominance beyond GPUs into design tools. |
| AMD (AMD) | WEF honored Synopsys/AMD for AI-accelerated chip design. Customer for HAV systems. | AMD continuing advanced chip development; reliant on SNPS tools. |
| ARM (ARM) | Customer for prototyping/emulation systems. | Arm ecosystem expanding, design activity healthy. |
| Intel | Discussed as "largest customer" in FQ2 FY25. Multi-year committed agreements. Foundry customer that underperformed. | Intel foundry challenges directly impacted SNPS IP revenue. Cautious on Intel foundry ramp. |
| TSMC (TSM) | Foundry partner for IP development. 2nm projects accelerating. Silicon success on N4/N5/N6/N7. | TSMC advanced node demand robust. |
| Samsung | Silicon success for PCIe 4.05 IP on Samsung SF-8 process. | Samsung foundry ecosystem actively engaged. |
| AWS (Amazon) | Graviton 5 launch used Synopsys tools (VCS, PrimeTime, Fusion Compiler, IC Validator). | Hyperscaler custom silicon trend continuing. |
| Microsoft (MSFT) | Partnership for Agentic AI orchestration. Azure involvement in digital twin demos. | Microsoft expanding AI infrastructure partnerships. |
| Cadence (CDNS) | Not mentioned by name but referenced indirectly as "competition" losing HAV wins and sign-off displacements. | Competitive dynamics stable; SNPS gaining share in HAV and sign-off. |
| Audi | CES showcase of AI-driven simulation reducing physical prototyping. | Automotive OEMs investing in digital engineering (Ansys opportunity). |
| GlobalFoundries (GFS) | ARC processor IP divestiture buyer. | GFS expanding IP portfolio for mature/specialty nodes. |
| Empyrean/Primarius | Referenced as domestic Chinese EDA competitors gaining share. | China EDA localization accelerating. |
Verdict summary
DOUBLE BEAT
Clean beat on revenue and EPS; guidance mixed
FQ1 FY2026 delivered a double beat: revenue of $2,408.8M (+0.8% vs. consensus) and Non-GAAP EPS
of $3.77 (+5.6% vs. consensus). Non-GAAP operating margin of 42.1% was the highest in 8 quarters.
FCF of $822M supports the ~$1.9B FY2026 target. FQ2 guidance ($2,250M revenue, $3.14 EPS) came in
above consensus. FY2026 EPS guide was raised by $0.06 to $14.38-$14.46, but revenue guidance was
only reiterated (not raised) despite the Q1 beat, leaving the midpoint slightly below consensus --
a modest disappointment. Key concerns: (1) IP business remains depressed at $407M, down 6.5% YoY,
with recovery Q4-weighted; (2) organic EDA growth running 3-4pts below the 12% LT CAGR target;
(3) China ex-Ansys declining, with domestic competitors gaining share. Key positives: (1) Ansys
integration accelerating with first joint solutions launching March 2026; (2) NVIDIA $2B
partnership delivering concrete products; (3) Agentic AI / value-based pricing represents a
potential monetization paradigm shift; (4) advanced node and multi-die adoption driving record
verification demand. Beat rates remain strong at 75% revenue, 88% EPS over the trailing 8 quarters.
Data sourced from Daloopa. Transcript analysis from Synopsys earnings calls FQ1 FY25 through FQ1 FY26. Report prepared April 5, 2026.