Synopsys Reports $1.46 Billion Revenue, Down 4% Amid Strategic Acquisition Plans

Synopsys, Inc. reported a total revenue of $1.46 billion for the fiscal quarter ending January 31, 2025, reflecting a decrease of 4% compared to $1.51 billion in the same period last year. The decline was attributed primarily to the impact of an extra week in the first quarter of fiscal 2024, which contributed approximately $63.2 million to that period's revenue, as well as a decrease in revenue from upfront products, which fell by 17% to $368.1 million. Time-based product revenue, however, increased by 3% to $828.2 million, indicating a shift in customer spending patterns.

The company's operating income for the quarter was $251.8 million, down 29% from $352.6 million a year earlier. This decline was driven by a 4% increase in total costs and operating expenses, which rose to $933.5 million, largely due to higher legal and consulting fees associated with the pending acquisition of Ansys, as well as increased employee-related costs from headcount growth. Net income attributed to Synopsys was $295.7 million, down from $449.1 million in the prior year, resulting in diluted earnings per share of $1.89 compared to $2.89.

In terms of strategic developments, Synopsys is in the process of acquiring Ansys, a deal valued at approximately $35 billion, which is expected to close in the first half of 2025. The acquisition is anticipated to significantly expand Synopsys' operations and market presence. Additionally, the company completed the divestiture of its Software Integrity business in September 2024 for $1.65 billion, which has allowed it to reduce its debt commitments and streamline operations.

Operationally, Synopsys reported a backlog of approximately $7.7 billion as of January 31, 2025, with 42% expected to be recognized as revenue over the next 12 months. The company also noted a decrease in revenue from its Design IP segment, which fell by 17% to $435.1 million, reflecting the timing of customer spending. The total employee headcount increased as part of the company's growth strategy, although specific numbers were not disclosed.

Looking ahead, Synopsys anticipates continued growth despite current macroeconomic challenges, including inflation and geopolitical tensions, particularly in China. The company remains focused on integrating its operations with Ansys and leveraging its expanded capabilities to drive innovation in the semiconductor and electronics industries. Synopsys expects that its existing cash reserves, along with committed debt financing, will be sufficient to meet its liquidity needs in the near term.