Synopsys shares fall after revenue outlook falls short of estimates

By Stephen Nellis and Zaheer Kachwala

(Reuters) – Chip design software company Synopsys forecast on Wednesday that fiscal 2025 revenue will be below Wall Street expectations, partly due to a slump in sales in China as the U.S. takes control of it tighten which chip technology can be sold to the country.

Shares of the Sunnyvale, California-based company fell 6.6% in extended trading following the forecast. Synopsys Chief Financial Officer Shelagh Glaser told Reuters the company still expects to close its $35 billion deal to acquire engineering software company Ansys in the first half of 2025.

According to LSEG data, Synopsys forecasts fiscal 2025 revenue in the range of $6.75 billion to $6.8 billion, with the entire range below estimates of $6.91 billion.

Glaser said a change in Synopsys’s fiscal calendar to facilitate merging its financial reporting with Ansys lowered the company’s full-year revenue forecast by about $80 million. But the bigger driver was a continued decline in sales in China, where the U.S. imposed new restrictions on exports of chip technology earlier this week.

Glaser said the list of companies that Synopsys can no longer sell to in China has grown, and some of its remaining Chinese customers are hesitant about plans for new chips because they are unsure whether they can have the chips manufactured.

“It’s sort of a cumulative effect of the restrictions,” Glaser said.

Glaser said the election of Donald Trump as U.S. president, who had promised to impose new tariffs on Chinese imports, had not changed Synopsys’ prospects for completing the Ansys deal.

“We certainly expect each jurisdiction to have its own criteria and reviews,” Glaser said. “But that was actually true from the beginning, and there were always elections.”

Synopsys forecast full-year adjusted earnings per share between $14.88 and $14.96 per share, while analysts expected $14.88 per share.

The company forecast first-quarter revenue between $1.44 billion and $1.47 billion, compared with estimates of $1.64 billion.

First-quarter adjusted earnings per share are expected to be between $2.77 and $2.82 per share, compared with estimates of $3.53 per share.

Revenue in the fourth quarter ended Nov. 2 was $1.63 billion, in line with estimates. On an adjusted basis, the company earned $3.40 per share, beating estimates of $3.30 per share.

(Reporting by Zaheer Kachwala in Bengaluru and Stephen Nellis in San Francisco; Editing by Krishna Chandra Eluri and Stephen Coates)