Key Highlights

● Revenue rose to $2.477 billion in the quarter, up about 42% year on year.

● Design IP revenue returned to growth, contributing $473.8 million in the quarter.

● Non-GAAP Operating Margin reached 41.6%, versus a GAAP margin of 14.4%.

● Fiscal 2026 revenue target was raised to $9.690 billion to $9.740 billion.

Synopsys (NASDAQ:SNPS) announced its fiscal third-quarter 2026 results on 26 August 2026, reporting revenue of $2.477 billion, compared with $1.740 billion a year earlier. The company said revenue and Earnings Per Share exceeded the top of its guidance and raised its full-year targets, citing Demand linked to artificial intelligence. The increase of about 42% is our calculation, and it follows the Acquisition of Ansys, which is now part of the group.

Business and sector

Synopsys makes software used to design and verify semiconductors, and licenses ready-made blocks of chip design known as silicon intellectual property. Following the Ansys deal, it also sells simulation and analysis tools used in engineering. Its customers are chip designers and system makers, whose spending on new products drives demand. In the quarter, Design Automation contributed $2,003.0 million of revenue and Design IP contributed $473.8 million. Chief executive Sassine Ghazi said AI is driving unprecedented complexity and increasing demand for silicon IP.

The company noted that Design IP returned to year-on-year growth, a development worth noting within the intellectual property business. The release says Ansys is expected to contribute about $2.98 billion of revenue in fiscal 2026 and describes the acquisition as transformational one year on.

Financial performance

Diluted earnings per share were $2.84 on a GAAP basis, based on Net Income of $545.8 million, compared with $1.50 a year before. Non-GAAP Diluted Earnings per Share were $3.91, with non-GAAP net income of $752.5 million, against $3.39. GAAP operating margin was about 14.4%, whereas non-GAAP operating margin was 41.6%. The wide gap reflects acquisition-related and other items that the adjusted measure excludes.

Cash generation improved. Operating Cash Flow for the nine months was $2,298.6 million, up from $878.9 million a year earlier, and Capital Expenditure was $156.1 million. Cash and equivalents were $3,606.3 million at 31 July 2026. During the nine months the company completed a $2.0 billion common stock private Placement and repaid $3.46 billion of debt, while restructuring charges totalled $236.3 million.

Guidance

For fiscal 2026, Synopsys now targets revenue of $9.690 billion to $9.740 billion, GAAP earnings per share of $3.84 to $4.08 and non-GAAP earnings per share of $15.04 to $15.10. It expects operating cash flow of about $2.8 billion, free cash flow of about $2.6 billion and capital expenditure of about $225 million. Fourth-quarter non-GAAP earnings per share are guided at $4.10 to $4.16. All of these figures are expectations rather than results, and the company states that actual outcomes may differ materially because of the risks described in its filings.

Risks and uncertainties

Integration remains the central uncertainty. Combining two large software businesses, executing restructuring and realising planned efficiencies all carry delivery risk, and GAAP profitability is still well below the adjusted level. Demand depends on the Investment cycles of semiconductor and systems customers, and trade restrictions affecting chip exports could affect sales in some regions. The Design IP Business can also fluctuate with a small number of large licensing agreements, and competition from other design software suppliers is also ongoing.

Leverage and funding choices matter too. The Equity placement and Debt repayment show how the company has managed its Balance Sheet since the acquisition.

Synopsys After the Ansys Integration

The fourth-quarter report, and the first guidance for fiscal 2027, will show whether Design IP growth persists and whether the cost savings promised from the combination appear in operating margins. Free cash flow against the roughly $2.6 billion target, which compares with nine-month operating cash flow of $2.30 billion before capital expenditure, further debt reduction and any shifts in customer spending on AI chips are the other measures to monitor.