Synopsys Inc. (SNPS) swung to a profit in the first quarter from a loss last year, helped by a benefit for income taxes as well as an increase in orders from electronics clients. The results exceeded analysts’ expectations. The company guided second-quarter earnings and revenue above consensus estimates.
Net income was $153.5 million or $1.01 per share compared to a loss of $3.7 million or $0.02 per share in the previous year quarter. Adjusted earnings declined by 1.8% to $1.08 per share.
Revenue rose by 6.6% to $820.4 million. The results were benefited from the strength across two product groups and all geographies. The top line benefited from rising demand from electronics clients along with emerging technology areas such as artificial intelligence, autonomous driving and the Internet of Things (IoT).
Despite weakness in the global markets, electronics companies continue to invest in the critical chip and system designs, as well as substantially growing amounts of sophisticated software. The company remained well on-track towards its long-term growth and margin expansion targets backed by both of its operating segments semiconductor and system design as well as software integrity.
Looking ahead into the second quarter of fiscal 2019, the company expects revenue in the range of $810 million to $850 million and earnings in the range of $0.71 to $0.79 per share. Adjusted earnings are anticipated to be in the range of $1.07 to $1.12 per share. Expenses are predicted to be $682 million to $708 million.
For fiscal 2019, Synopsys predicts revenue in the range of $3.29 billion to $3.34 billion. Earnings are projected to be in the range of $3.19 to $3.32 per share on a GAAP basis and $4.20 to $4.27 per share on an adjusted basis. Expenses are now anticipated to be in the range of $2.758 billion to $2.788 billion. Operating cash flow is expected to be about $700 million.
Effective in the fiscal year 2019, Synopsys realigned its business to evaluate the results of its Software Integrity business separate from Synopsys’ traditional electronic design automation (EDA) and semiconductor IP business. Therefore, Synopsys began reporting revenue and operating income in two segments: Semiconductor & System Design, and Software Integrity.
Shares of Synopsys ended Wednesday’s regular session up 1.10% at $102.98 on the Nasdaq. The stock has risen over 14% in the past year and over 20% in the past three months.