Revenue surges year over year
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Revenue: $2.409 billion, at the high end of guidance
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Up sharply from $1.455 billion in Q1 FY2025
The strong growth reflects rising investment in semiconductor and system level research and development, particularly driven by artificial intelligence applications.
Management said AI is accelerating innovation across industries, boosting demand for Synopsys’ tools used in chip and system design.
Earnings and profitability
GAAP results
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Net income: $65.0 million
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EPS (GAAP): $0.34, compared with $1.89 a year earlier
The decline in GAAP earnings mainly reflects acquisition related costs, amortization, restructuring charges, and stock-based compensation.
Non-GAAP results
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Non-GAAP net income: $718.5 million
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EPS (Adjusted / Non-GAAP): $3.77, up from $3.03 last year and above guidance
Adjusted earnings better reflect the company’s underlying operating performance, excluding one time items.
Management commentary: AI driving long-term demand
Management emphasized that artificial intelligence is a major growth catalyst.
CEO Sassine Ghazi said the company enters 2026 with:
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An expanded product portfolio
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Leadership positions across its markets
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A strong innovation roadmap
AI driven chip development and system design are increasing the complexity of engineering challenges, which directly benefits Synopsys’ software platforms.
The CFO added that the quarter reflected strong execution and financial discipline, positioning the company to capture a larger market opportunity as customers invest in next-generation technologies.
Capital allocation and strategic moves
Synopsys’ board approved a replenishment of its share repurchase program:
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New authorization: up to $2.0 billion in stock buybacks
The company also continues integrating major acquisitions and expanding its capabilities across silicon-to-systems design solutions.
Outlook
Synopsys reiterated its expectations for fiscal 2026:
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Full-year revenue outlook: about $9.61 billion (midpoint)
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Includes approximately $2.9 billion expected from acquired businesses
Management expects continued demand as companies increase investment in AI, data centers, autonomous systems, and advanced electronics.
Why Synopsys is benefiting from the AI boom
1) Critical position in semiconductor ecosystem
Synopsys tools are essential for designing modern chips, making the company a “picks-and-shovels” play on AI growth.
2) AI complexity drives software demand
As chips become more complex, companies rely more heavily on design automation and simulation tools.
3) Recurring revenue model
Long-term contracts and subscriptions provide stability even during industry cycles.
4) Strategic acquisitions expanding market
Recent deals broaden the company’s reach beyond chip design into full system simulation.
Bottom line
Synopsys’ Q1 FY2026 results show a company benefiting directly from the global AI investment cycle. Strong revenue growth and rising adjusted earnings highlight solid demand, even as GAAP profits were impacted by acquisition-related costs. With a reaffirmed outlook and share buyback authorization, Synopsys appears well positioned for continued growth as semiconductor innovation accelerates.
To view the company’s previous earnings and latest concall transcripts, click here to visit the Alphastreet news channel.