Synopsys Forecasts Fiscal 2025 Revenue Below Expectations

By Stephen Nellis and Zaheer Kachwala

(Reuters) – Chip design software firm Synopsys (NASDAQ: SNPS) on Wednesday forecast fiscal 2025 revenue below Wall Street expectations, citing a slump in sales in China due to tightening U.S. controls on chip technology sales.

Shares of the Sunnyvale, California-based company fell 6.6% in extended trading following the forecast. Synopsys Chief Financial Officer Shelagh Glaser indicated that the company still expects to finalize its $35 billion acquisition of engineering software firm Ansys (NASDAQ: ANSS) in the first half of 2025.

Synopsys predicted fiscal 2025 revenue in the range of $6.75 billion to $6.8 billion, which is below the estimates of $6.91 billion, according to LSEG data.

Glaser explained that a change in Synopsys' fiscal calendar to facilitate merging financial reporting with Ansys resulted in a lowered revenue forecast by about $80 million. The decline in revenue is primarily attributed to ongoing sales decreases in China, where new U.S. limits on chip technology exports were imposed earlier this week.

Glaser noted that the list of companies Synopsys cannot sell to in China has expanded, and some remaining customers are delaying new chip plans due to uncertainty about manufacturing capabilities. "It's kind of a cumulative impact of restrictions," Glaser mentioned.

Glaser also stated that the election of Donald Trump as U.S. president, who is expected to impose new tariffs on Chinese imports, did not alter Synopsys' outlook for completing the Ansys deal. "We certainly have expectations that each jurisdiction has its own criteria and reviews," she added.

For the full year, Synopsys projected adjusted earnings per share (EPS) between $14.88 and $14.96, in line with analysts' expectations of $14.88 per share.

Additionally, the company forecast first-quarter revenue between $1.44 billion and $1.47 billion, compared to estimates of $1.64 billion.

Adjusted EPS for the first quarter is expected to be between $2.77 and $2.82, while estimates anticipate $3.53 per share.

Revenue for the fourth quarter ended November 2 was $1.63 billion, matching estimates. On an adjusted basis, the company earned $3.40 per share, exceeding estimates of $3.30 per share.