Synopsys (SNPS) Q3 Earnings Beat Estimates, Revenues Rise Y/Y

Core Viewpoint - Synopsys reported better-than-expected earnings for Q3 FY2024, with non-GAAP EPS of $3.43, exceeding the Zacks Consensus Estimate of $3.28, and a year-over-year increase of 27% driven by higher revenues and improved cost management [1] Financial Performance - Revenues increased by 13% year over year to $1.53 billion, aligning with the Zacks Consensus Estimate, supported by growth across multiple business segments [1] - License-type revenue breakdown: Time-Based Product revenues (52.6% of total) decreased by 2.9% to $803.1 million, Upfront Product revenues (29%) rose by 51.2% to $442.5 million, and Maintenance and Service revenues (18.4%) increased by 19.5% to $280.1 million [3] - Segment-wise, Electronic Design Automation (EDA) revenues (66.9% of total) were $1.02 billion, up 4.9% year over year, while Design IP revenues (30.4% of total) amounted to $463.1 million [4] Geographic Performance - Revenue distribution: North America (44% of total) generated $672.6 million, Europe (9%) contributed $144.6 million, Korea (13%) brought in $194.8 million, China (17%) accounted for $266.7 million, and Other regions (16%) generated $247 million [5] Profitability Metrics - Non-GAAP operating margin was 40%, expanding by 360 basis points year over year [5] - EDA's adjusted operating margin increased by 70 basis points to 41.5%, while the Design IP segment's margin improved significantly to 36.7% from 23.6% in the previous year [6] Balance Sheet & Cash Flow - As of July 31, 2024, Synopsys had cash and short-term investments of $1.99 billion, up from $1.66 billion as of April 30, 2024 [7] - Total long-term debt decreased to $15.6 million from $17 million in the previous quarter [7] - Cash flow from operating activities, including discontinued operations, was $844.2 million for the first nine months, compared to $1.37 billion in the same period last year [7] Guidance - For FY2024, Synopsys expects revenues between $6.105 billion and $6.135 billion, with non-GAAP earnings projected in the range of $13.07-$13.12 [8] - For Q4 FY2024, expected revenues are between $1.614 billion and $1.644 billion, with non-GAAP EPS estimated between $3.27 and $3.32 [9]