Synopsys Revenue Hits $1.6B in Q4, Up 25% YoY, Beating Estimates

The News: Synopsys revenue rose to $1.6 billion in the fourth quarter (Q4) of fiscal year (FY) 2023 (FY 2023), up 25% from $1.3 billion year-over-year (YoY), as the semiconductor electronic design automation (EDA), application security, and silicon IP vendor reported its latest earnings for the period ending on October 31. Q4 revenue, which set a new company record, beat analyst consensus estimates of $1.58 billion from Investing.com. For the full FY 2023, Synopsys revenue came in at $5.8 billion, up 15% from $5.1 billion YoY. Read the full Q4 and full FY 2023 earnings press release on the Synopsys investor website.

Synopsys Revenue Hits $1.6B in Q4, Up 25% YoY, Beating Estimates

Analyst Take: It was an impressive Q4 and full FY 2023 as Synopsys revenue rose solidly as the silicon design specialist closes out the year in positive fashion. Here are the Synopsys Q4 and FY 2023 earnings results by the numbers:

• Q4 FY 2023 revenue of $1.6 billion, up 25% from $1.3 billion YoY. The Q4 revenue figure beat analyst consensus estimates from Investing.com.
• Q4 FY 2023 non-generally accepted accounting principles (non-GAAP) net income of $491 million, up 65% from $298 million YoY.
• Q4 FY 2023 non-GAAP diluted net income per share of $3.17, which is up from $1.91 per share YoY. The earnings per share (EPS) beat analyst consensus estimates of $3.04 per share from Investing.com.
• Full FY 2023 revenue of $5.8 billion, up 15% from $5.1 billion YoY.
• Full FY 2023 non-GAAP net income of $1.7 billion, up 25% from $1.4 billion YoY.
• Full FY 2023 non-GAAP diluted net income per share of $11.19, which is up from $8.90 per share YoY.

These are excellent numbers, with a healthy beat on analyst estimates and solid double-digit revenue growth by percentage. Synopsys is in a great position and sweet spot in the marketplace.

Synopsys Revenue Sales by Market Segment in Q4 and Full FY 2023

Synopsys revenue did well in Q4 and for the full FY 2023 across all three of the company’s market segments. Here are the complete breakdowns:

• For Q4, revenue for the Synopsys Design Automation unit came in at $954 million, which is up 11% from $862 million YoY.
• Q4 revenue for the Synopsys Design IP unit totaled $514 million, up 74% from $295 million YoY.
• The Synopsys Software Integrity unit brought in Q4 revenue of $132 million, up 4% from $127 million YoY.
• For the full FY 2023, revenue for the Design Automation unit came in at $3.8 billion, which is up 14% from $3.3 billion YoY.
• The Design IP unit brought in $1.5 billion in revenue for the full FY 2023, up 17% from $1.3 billion YoY.
• Meanwhile, Synopsys’ Software Integrity unit brought in $525 million in revenue in the full FY 2023, up 13% from $466 million YoY.

The Design Automation unit includes silicon design, verification software and hardware products, digital, custom and field programmable gate array (FPGA) IC design software, and more. The Design IP unit includes Design IP products. And the Software Integrity unit includes testing products for software security vulnerabilities and quality defects as well as professional and managed services.

Synopsys Revenue and Earnings Outlook for Q1 and Full FY 2024

Synopsys earnings guidance was also provided for first quarter (Q1) FY 2024 and full FY 2024 as part of its Q4 FY 2023 financial report. For Q1 FY 2024, Synopsys expects revenue between $1.63 billion and $1.66 billion, with non-GAAP EPS between $3.40 to $3.45 per share. For full FY 2024, Synopsys forecasts revenue of $6.57 billion to $6.63 billion, along with non-GAAP EPS in the range of $13.33 to $13.41 per share.

Synopsys Revenue Overview – What It Means

This announcement was quite a year-end financial report for Synopsys, which we believe is on its way to bigger and better things as 2024 approaches. This quarter, Synopsys announced a generative AI offering, Synopsys.ai Copilot, that is designed to accelerate chip design and reduce engineering bottlenecks, which we believe is truly encouraging given the existing market challenges in this area. Synopsys.ai Copilot was created through a strategic collaboration with Microsoft to integrate Azure OpenAI Service and deliver generative AI capabilities into the semiconductor design process.

We are impressed with Synopsys, which we see as one of the less covered but more exciting companies in the fast-moving and innovative semiconductor space. We are also impressed that Synopsys quietly happens to have the second largest IP core licensing business behind Arm, which is fascinating and worth more attention.

We believe that Synopsys’ ability to make all this progress in 2023 despite continuing global macroeconomic uncertainty is also notable. Much of this success is certainly due to the leadership of Aart de Geus, the chairman and CEO of Synopsys, and his executive team, which has been guiding this company in the marketplace.

In our view, Synopsys is in a good position with strong expansion and good annual and quarterly growth to finish its year. It will be interesting to watch this semiconductor EDA leader as it heads into 2024.

Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discussed Synopsys’s earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.

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Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.

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