Synopsys beats Wall Street earnings projections in FQ2

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Synopsys beats Wall Street earnings projections in FQ3.
Image: Synopsys

Synopsys, Inc. beat market analyst expectations on revenue and earnings per share (EPS) in the fiscal second quarter. The chip designer also topped its FQ2 2019 financial results and offered an FQ3 forecast that indicates significant year-over-year growth.

Despite the impact of COVID-19, the company believes it will grow its full-year sales by 7 to 8 percent.

Synopsys’ Robust FQ2 Results

In the period ending April 30, Synopsys brought in $861.3 million against adjusted net income of $188.3 million, or $1.22 EPS. Zacks Equity Research underestimated the company and pegged its sales and EPS at $836.32 million and $0.94, respectively. In addition, the firm also topped its prior-year fiscal second-quarter revenue by $25.83 million and its adjusted net income by $10.1 million.

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Synopsys improved its semiconductor and system design intake from $753 million in FQ2 2019 to $773 million last period. The Mountain View, California-based corporation also increased its quarterly software integrity sales by $5.31 million yearly.

In an earnings call, CEO Trac Pham said his company’s success is due to its technological leadership and diverse customer base. The executive also noted that while COVID-19 did impact the efficiency of its supply chain, its manufacturing partners being declared essential businesses minimized operational disruption.

Pham also mentioned Synopsys paid down $90 million of its credit revolver and brought its cash and equivalents to $856.4 million, up from $728.5 million in the fiscal first quarter.

Synopsys’ FQ3 Outlook

The corporation’s fiscal third-quarter outlook reflects a belief in continued growth through the June period. The chip designer predicts revenue of between $875 million and $905 million with adjusted EPS of $1.33 to $1.38. Depending on its final results, the firm will improve its quarterly sales and earnings by $22 million to $52 million and $0.15 to $0.20, respectively.

Synopsys expects to finish 2020 with full-year sales of $3.60 billion to $3.65 billion and adjusted EPS $5.21 to $5.28. If the corporation hits its targets, it will top its 2019 gross income by $24 million to $29 million and its net earnings by $0.65 to $0.72.

Although the coronavirus pandemic prompted a decline in semiconductor demand, Synopsys looks to avoid the worst of its effects. Indeed, the company’s chief executive told an analyst none of its customers have asked to renegotiate terms. As such, the chip designer should have no problems executing its plan to achieve year-over-year growth.

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