Key Highlights

● Quarterly revenue was $2.477 billion against $1.740 billion a year earlier.

● The Ansys acquisition largely explains the year-on-year revenue increase.

● Non-GAAP diluted earnings per share were $3.91 against $3.39.

● Fiscal 2026 revenue guidance is now $9.690 billion to $9.740 billion.

Guidance raised after the Ansys integration year

Synopsys, Inc. (NASDAQ:SNPS) raised its full-year fiscal 2026 guidance for revenue, non-GAAP operating margin, earnings per share and cash flow when it announced third-quarter results on 26 August 2026. The announcement came one year after the company completed its acquisition of Ansys, which now contributes materially to reported revenue and explains much of the year-on-year increase.

Business and sector

Synopsys provides electronic design automation software and semiconductor intellectual property. Its Design Automation segment, which now includes Ansys simulation and analysis tools, serves chip designers and engineers in sectors such as automotive and aerospace. Its Design IP segment sells pre-built blocks, such as interface and memory technologies, that chip designers license rather than develop themselves.

Chief executive Sassine Ghazi said that one year after the transformational acquisition of Ansys, the company is executing with focus. The sector is concentrated and closely linked to semiconductor investment, with Synopsys and Cadence (NASDAQ:CDNS) the two largest suppliers of design software.

Latest reported results

For the quarter ended 31 July 2026, revenue was $2.477 billion, compared with $1.740 billion a year earlier, an increase of about 42% calculated from the reported figures and largely reflecting the inclusion of Ansys. Design Automation contributed $2.003 billion and Design IP $473.8 million. GAAP diluted earnings per share were $2.84, against $1.50 a year earlier, and non-GAAP diluted earnings per share were $3.91, against $3.39. GAAP net income was $545.8 million and non-GAAP net income was $752.5 million.

The GAAP operating margin was 14.4%, with operating income of $357.5 million, while the non-GAAP operating margin was 41.6%. Segment adjusted margins were 45.2% for Design Automation and 26.5% for Design IP. Operating cash flow for the nine months was $2.299 billion, compared with $879 million a year earlier.

Financial performance and industry context

For fiscal 2026, Synopsys now guides to revenue of $9.690 billion to $9.740 billion, non-GAAP earnings per share of $15.04 to $15.10 and GAAP earnings per share of $3.84 to $4.08. It expects a non-GAAP operating margin of about 41.5%, operating cash flow of about $2.8 billion and free cash flow of about $2.6 billion. For the fourth quarter, it guides to revenue of $2.530 billion to $2.580 billion.

The guidance includes $2.98 billion of expected Ansys revenue and reflects roughly $110 million lost from divested Optical Solutions Group and PowerArtist businesses, plus $40 million from the completed Processor IP Solutions divestiture. The wide gap between GAAP and non-GAAP profit typically reflects items such as amortisation of acquired intangibles, acquisition-related costs and share-based compensation. Because the combined company spans chip design and engineering simulation, it is exposed to two overlapping demand cycles rather than one.

Risks and uncertainties

Integration of a large acquisition carries execution risk, including realising expected synergies, retaining staff and combining product roadmaps. Synopsys also depends on semiconductor industry investment and on a limited number of large customers, so a slowdown in chip design activity, trade restrictions or customer consolidation could affect demand.

Divestitures reduce the reported revenue base, and the company competes with Cadence, Siemens EDA and emerging AI-native design tools. The Design IP segment, with its lower margin, can be more variable than software licences because it depends on individual customer projects and the timing of royalties and licences.

Synergies and the fiscal 2027 outlook

The next scheduled marker is the fourth-quarter and full-year fiscal 2026 report, where results can be set against the guided range of $2.530 billion to $2.580 billion. Readers may follow progress on Ansys synergies, free cash flow, the shape of the GAAP to non-GAAP gap as acquisition accounting fades, demand in Design IP and early indications of the company's outlook for fiscal 2027, as well as any further portfolio changes or disposals announced.