Synopsys, Inc.

Synopsys reported Q3 revenue of $2.477 billion, up approximately 42% year over year, with Ansys revenue of approximately $711 million. Non-GAAP operating margin was 41.6% and non-GAAP EPS was $3.91; GAAP EPS was $2.84. EDA revenue grew 8.5% year over year, Design Automation segment revenue was approximately $2 billion, and Design IP revenue was $474 million, up approximately 11% year over year. Free cash flow was $746 million, cash and short-term investments were $3.6 billion, and total debt was approximately $10 billion. For FY2026, Synopsys raised revenue guidance to $9.69 billion to $9.74 billion, non-GAAP operating margin guidance to 41.5% at the midpoint, and non-GAAP EPS guidance to $15.04 to $15.10. Q4 guidance calls for revenue of $2.53 billion to $2.58 billion and non-GAAP EPS of $4.10 to $4.16.

Sassine Ghazi said the quarter showed that fundamentals across the portfolio are strengthening, with EDA accelerating, IP returning to growth, and Ansys creating new opportunities across the combined business. He emphasized AI-driven complexity, advanced packaging, 3DIC, and physics-aware design as the main strategic tailwinds. His tone was confident and expansionary, especially around agentic AI, custom silicon, and the Factory 2 opportunity.

Shelagh Glaser emphasized that the company beat guidance on revenue, margin, and EPS while also generating strong cash flow. She said Q3 non-GAAP costs and expenses were $1.446 billion, margins improved to 41.6%, and the company is ahead of schedule on cost synergies and term loan repayment. She also highlighted raised full-year cash flow from operations guidance to approximately $2.8 billion, reduced CapEx guidance to approximately $225 million, and free cash flow guidance of approximately $2.6 billion.

Analysts focused on what is driving the expected EDA acceleration, with management pointing to chip complexity, advanced packaging/3DIC, AI-related design activity, and a record hardware year. Several questions centered on whether AI-native design tools could disrupt commercial EDA; Ghazi argued the opposite, saying AI increases demand for Synopsys tools because models still need sign-off accuracy and physics-based ground truth. The Q&A also probed agentic AI monetization, Factory 2/custom silicon, and Multiphysics Fusion adoption, with management saying customer interest is active but meaningful revenue contribution from the joint Synopsys-Ansys solution is expected mainly in FY2027.