SNPS changes
Pick any two versions below to diff them.
- About
- Synopsys makes software that engineers use to design computer chips. This software is called electronic design automation, or EDA. Chip makers pay for licenses to this software, along with pre-built circuit blocks called design IP. In added: July 2025, Synopsys bought Ansys, a maker of engineering simulation software, adding tools that test how a product performs before it is built. added: To get approval for that purchase, Synopsys sold its optical software business and the Ansys PowerArtist tool to Keysight in October 2025. In June 2026, it sold its processor IP business to GlobalFoundries.
- Thesis
- The market prices Synopsys at a discount because removed: it worries about added: of the added: debt from the $35 billion Ansys removed: deal added: purchase and removed: about US-China trade rules. added: because of US export rules for China. The removed: deal added: purchase added removed: heavy added: about $10 billion of debt, and removed: integrating added: the combination of two large engineering software companies takes removed: years added: years. In May 2025, a US export rule stopped sales of chip design software to removed: fully play out. Export rules for China removed: have already changed once in 2025, added: for about five weeks, and removed: could change again added: a rule like it can come back with little warning. added: The design IP business also missed badly in 2025 and is still the weakest part of the company. For the gap to close, Synopsys must keep removed: lowering its removed: debt. added: debt falling while it buys back stock. It must also removed: show real added: deliver the margin gains from removed: combining Synopsys and Ansys removed: tools. It added: that it promised: a non-GAAP operating margin of about 44% in fiscal 2027 and about 50% in fiscal 2030. And it must avoid removed: another sudden added: a new China export removed: shock like the one in May 2025. Synopsys raised added: shock. At its removed: full-year added: Investor Day on September 30, 2026, Synopsys gave fiscal removed: 2026 revenue added: 2027 guidance removed: again in August 2026 after a strong Q3. Wall Street firms including Wells Fargo added: above what analysts expected, and removed: Morgan Stanley raised their price targets in September added: the stock rose about 13% the next day. The next tests are the fiscal Q4 2026 removed: on AI-driven demand for design software. Synopsys is added: report, expected added: in early to removed: report fiscal Q4 added: mid December 2026 removed: results around late November 2026. That report should show whether added: with the removed: guidance raise holds added: first formal fiscal 2027 guidance, the fiscal Q1 2027 report around February 2027, and removed: whether Ansys integration savings are added: the repayment of the first $1.0 billion of notes on removed: track. added: April 1, 2027. If removed: debt keeps falling added: the margin plan holds and no new export shock hits, the discount can close over the next three to five quarters. A removed: fresh added: new China trade restriction would removed: likely delay that.
- Risks
- Synopsys carries about $10 billion in debt from the Ansys acquisition. If integration costs run higher than planned, or cost savings arrive slower than promised, planned margin expansion and debt reduction will slip. removed: In added: On May added: 29, 2025, removed: a new added: the US removed: export rule briefly barred EDA software added: Commerce Department told Synopsys to stop sales added: of chip design software to China. Synopsys removed: pulled added: suspended its guidance removed: and cut its earnings forecast before added: on the added: same day. The US lifted the rule removed: was reversed two months added: on July 2, 2025, about five weeks later. China policy can change again with little warning. The design IP part of the business can miss badly on its own. In removed: one recent quarter, added: Q3 fiscal 2025, reported on September 9, 2025, design IP revenue fell added: about 8% from a year removed: over year after added: earlier, partly because of problems at a major foundry removed: customer unexpectedly withdrew from a deal Synopsys added: customer. The stock fell about 36% the next day. In the first nine months of fiscal 2026, the Design IP segment had removed: already invested in. added: an adjusted operating margin of 22.6%. This part of the business depends on a small number of large, lumpy customer commitments.
- Balance sheet
- Cash: $3.6B Debt: $10.0B Net debt: $6.4B Interest cover: removed: 4.7× added: 4.8× Undrawn credit line: $850M, to December 2027 Debt due within 12 months: $1.0B Last debt due: 2055 Ratings: Moody's Baa1 (stable outlook), S&P BBB removed: (stable added: (positive outlook) Synopsys borrowed to buy Ansys in July 2025. removed: Goodwill added: At July 31, 2026, goodwill of $26.8 billion and intangible assets removed: from the deal are added: of $11.5 billion were larger than total equity of $31.2 billion, so the value of the balance sheet depends on Ansys earning its price. removed: All added: Almost all of removed: its remaining added: the debt is added: $10.0 billion of unsecured fixed-rate added: senior notes that the parent company issued. removed: At July 31, 2026, this was added: These are six series removed: of senior notes at 4.55% to 5.70%, added: all due removed: from added: on April removed: 2027. added: 1, from 2027 to 2055. The added: first $1.0 billion removed: due within 12 months is due on April 1, removed: 2027. added: 2027, and the next $1.0 billion on April 1, 2028. Synopsys removed: has already repaid all $4.3 billion of floating-rate term loans from the removed: deal. added: deal by the first quarter of fiscal 2026. $2.0 billion that Nvidia paid for new shares added: in December 2025 helped this. About $1.7 billion of the cash was outside the US. Interest cover is operating income plus amortization and depreciation of $2.0 billion over interest expense of $429 million, in the nine months to July 31, 2026. The removed: ratings are added: Moody's rating is from the March 2025 note issue. added: On July 23, 2026, S&P kept its BBB rating and changed its outlook to positive because debt fell quickly. On October 5, 2026, Synopsys added: started a $1 billion accelerated share repurchase, so about $1 billion of cash goes to buybacks before the April 2027 notes are due. Synopsys guides fiscal 2027 free cash flow at about $3.1 removed: billion. It plans to buy back about $1 billion removed: of stock and added: plans to return up to 50% of free cash flow. removed: Thus debt added: Debt will now fall more slowly than in the last year. As of Jul 31, 2026.
- Checkpoints
- Dec 9, 2026 (estimate): Fiscal Q4 2026 earnings: full-year result and Ansys integration. Pending. Watch: removed: Revenue added: Q4 revenue inside the removed: raised added: $2.53 to $2.58 billion guidance, so the year lands in the $9.69 to $9.74 billion removed: range added: range, and fiscal 2027 guidance kept near $11.15 billion pass; a miss or a lower 2027 outlook fails. Feb 2027 (estimate): Fiscal Q1 2027 earnings: margin progress and buyback pace. Pending. Watch: Non-GAAP operating margin moving toward the 44% fiscal 2027 target and buybacks on plan pass; margin pressure from Ansys costs fails. Apr 1, 2027: First $1.0 billion of Ansys deal notes fall due. Pending. Watch: Repayment from cash without new borrowing passes; refinancing that keeps gross debt at $10 billion fails the debt reduction test.
- Recent events
- Oct 5, 2026: Synopsys signed a $1 billion accelerated share repurchase agreement with JPMorgan Chase Bank. Synopsys receives about 1,735,000 shares at the start. Any remaining shares settle on or before January 5, 2027. This is the buyback of about $1 billion that Synopsys announced at its Investor Day. added: Oct 1, 2026: Synopsys stock rose about 13%, to $490.54, after the Investor Day. The fiscal 2027 guidance was above the consensus of Wall Street analysts: revenue of $11.10 to $11.20 billion against $10.81 billion, and non-GAAP earnings per share of $19.04 to $19.12 against $17.81. BofA raised its price target to $600 from $500, and KeyBanc raised its target to $605 from $600. Sep 30, 2026: At its Investor Day, Synopsys removed: set added: gave a fiscal 2027 added: outlook: revenue removed: guidance of removed: about $11.15 billion at the midpoint, added: $11.10 to $11.20 billion, up about removed: 15%. It added: 15%, a non-GAAP operating margin of about 44%, and free cash flow of about $3.1 billion. Its long-term model targets revenue growth of about 15% each year and a non-GAAP operating margin of about 50% in fiscal 2030. Synopsys also removed: announced plans to buy back about $1 billion of its shares and to return up to 50% of free cash flow. Sep 30, 2026: Synopsys announced a multi-year deal worth over $1 billion with Amazon Web removed: Services, which added: Services. AWS will license Synopsys removed: chip design IP and software for its custom chips. removed: It added: Synopsys also announced removed: an OpenAI added: a partnership added: with OpenAI to build an AI model for chip removed: design. added: design, called GPT-Synopsys. Sep added: 23, 2026: Synopsys and TSMC expanded their partnership. It adds agentic AI design workflows, certification of Synopsys tools for TSMC's A14 process, and support for multi-die systems. Sep 10, 2026: Wells Fargo upgraded Synopsys to Overweight from Equalweight and raised its price target to $475 from $450. added: It named the valuation gap to Cadence and the coming Investor Day. Morgan Stanley had upgraded Synopsys to Overweight on September removed: 8, with a added: 8 and kept its $500 price removed: target, both citing AI-driven demand for chip design software after Synopsys's fiscal Q3 2026 earnings beat added: target. It named the Ansys integration and removed: guidance raise. Sep 1, 2026: Synopsys expanded its collaboration with TSMC, adding agentic AI design workflows, advanced-node certification, and multi-die system support to the removed: partnership. added: recent fall in the stock price. Aug 26, 2026: Synopsys reported Q3 fiscal 2026 revenue of $2.48 billion, up about 42% from last removed: year, and added: year. Most of this growth came from Ansys, which was part of Synopsys for only part of Q3 fiscal 2025. Synopsys raised its full-year revenue guidance to removed: $9.69-$9.74 added: $9.69 to $9.74 billion. added: On the same day, it raised its estimate of restructuring charges to $425 to $500 million. Dec 1, 2025: Nvidia removed: announced a $2 billion investment in added: bought about 4.8 million new Synopsys removed: stock, added: shares at $414.79 each, for $2 billion, as part of an expanded partnership to bring AI into chip design and engineering simulation tools.