- Q1 Revenue Performance Achieved $2.41 billion revenue, aligning with the high end of guidance, driven by Ansys' $886 million contribution from simulation and analysis demand.
- Non-GAAP Earnings Strength Non-GAAP EPS exceeded guidance, with full-year non-GAAP operating margin projected at 40.5% midpoint amid $5.69–5.75 billion cost control.
- AI and Digital Twin Momentum AI-driven design automation and digital twin adoption accelerated, supported by record emulation wins and partnerships with NVIDIA/Microsoft for GPU acceleration.
- Full-Year Revenue Targets Forecast $9.56–9.66 billion total revenue, with Ansys expected to contribute $2.9 billion (midpoint), reflecting double-digit growth confidence.
- Backlog and Synergies $11.3 billion backlog provides confidence, and Ansys acquisition synergies target $400 million revenue uplift by FY2027 through cross-selling and joint R&D.
Segment Performance
The Design IP segment revenue was $407 million, down 6% year-over-year and flat sequentially. Synopsys continues to expect FY2026 to be a transitional year for the business. The company's confidence in its IP business is driven by design starts, particularly in the AI segment, where it has an advantage due to the breadth of its portfolio.
Guidance and Outlook
Synopsys provided full-year targets, expecting total revenue of $9.56 billion to $9.66 billion, with Ansys revenue contribution of $2.9 billion at the midpoint, growing double-digits. The company is confident in its ability to service multiple market segments and is working to harmonize its accounting policies with the acquisition of Ansys. For Q2, total revenue is expected to be between $2.225 billion and $2.275 billion.
Valuation and Growth Prospects
With a P/E Ratio of 61.96 and P/S Ratio of 10.18, Synopsys' valuation reflects its strong growth prospects. Analysts estimate next year's revenue growth at 10.7%. The company's focus on AI-driven design capabilities, digital twins, and joint solutions with Ansys is expected to drive long-term growth. Synopsys is targeting double-digit growth in EDA, IP, and simulation and analysis, driven by customer demand and its leadership position in the portfolio.
Operational Highlights
Synopsys is working on a road map for AI, with a focus on L1 through L5 levels of automation, and has partnered with NVIDIA and Microsoft to leverage their cognitive layers and orchestration capabilities. The company is also making progress on its joint solution with Ansys, which is expected to create new opportunities to monetize, particularly in AI and simulation and analysis.