Synopsys delivered strong fiscal third-quarter 2026 growth as the addition of Ansys and continued demand for electronic design automation pushed Design Automation revenue above $2 billion and helped drive a substantial increase in earnings.
Total quarterly revenue reached $2.477 billion, compared with $1.740 billion in the prior-year period, representing growth of approximately 42%.
The Design Automation segment generated $2.003 billion of revenue, up from $1.312 billion a year earlier, an increase of approximately 53%.
Design Automation accounted for about 80.9% of total quarterly revenue compared with 75.4% in the prior-year period, reflecting both organic strength in Synopsys’ core electronic design automation business and the contribution from Ansys.
Design IP revenue also returned to year-over-year growth.
The segment generated $473.8 million of revenue compared with $427.6 million a year earlier, representing growth of approximately 11%.
The improvement in both major segments gave Synopsys a broader base of growth during the quarter, with Design Automation providing the largest contribution and Design IP adding incremental upside.
Synopsys’ electronic design automation tools are used by semiconductor and systems companies to design, verify and test increasingly complex chips and electronic systems.
Demand for these tools has been supported by the continued growth of artificial intelligence, advanced computing, automotive electronics, data center infrastructure and other applications requiring more sophisticated semiconductor designs.
As chips become more complex, customers generally require more advanced software for architecture, verification, simulation and optimization.
The addition of Ansys significantly expands Synopsys’ position beyond traditional chip design software.
Ansys develops engineering simulation software used to model areas such as electronics, structures, fluids, thermal performance and other physical behavior.
Combining those capabilities with Synopsys’ semiconductor design tools creates a broader platform intended to connect chip development with the simulation of entire electronic systems.
That strategy becomes increasingly relevant as customers attempt to optimize not only individual semiconductors but also the interaction between chips, packaging, power, thermal management and broader system designs.
The scale of the Ansys contribution is already becoming visible in Synopsys’ financial results.
The company now expects approximately $2.98 billion of fiscal-year 2026 revenue from Ansys.
The acquisition has therefore become a major driver of Synopsys’ overall revenue profile and is helping increase the relative size of the Design Automation segment.
Profitability also improved substantially during the quarter.
Adjusted Design Automation operating income increased to approximately $905 million from $583.8 million in the prior-year period.
The segment’s adjusted operating margin improved to 45.2% from 44.5%.
That margin expansion is notable given the scale of the Ansys integration and indicates that Synopsys is maintaining strong profitability while absorbing a much larger business.
Design IP posted an even larger margin improvement.
Adjusted operating margin for the segment increased to 26.5% from 20.1% a year earlier.
The combination of renewed revenue growth and significantly better margins allowed Design IP to make a stronger contribution to overall profitability.
Synopsys’ Design IP business provides pre-designed semiconductor building blocks that customers can integrate into chips rather than developing every component internally.
These products can help customers reduce design time and development risk, particularly as advanced chips require increasingly complex interfaces and subsystems.
Returning Design IP to year-over-year revenue growth while improving its operating margin therefore represents an important development for Synopsys after periods of uneven performance in the segment.
The company’s bottom-line results also strengthened considerably.
GAAP net income increased to $545.8 million from $242.5 million, more than doubling year-over-year.
GAAP diluted earnings per share increased to $2.84 from $1.50.
On a non-GAAP basis, net income reached $752.5 million compared with $548.9 million in the prior-year quarter.
Non-GAAP diluted EPS increased to $3.91 from $3.39.
The gap between GAAP and non-GAAP results reflects adjustments for items such as acquisition-related expenses, stock-based compensation and other costs that Synopsys excludes from its adjusted performance measures.
Even on the more conservative GAAP basis, however, earnings growth materially exceeded revenue growth.
That reflects a combination of higher revenue, margin improvement and operating leverage across the larger company.
Management responded to the strong quarter by raising several components of its fiscal 2026 outlook.
Synopsys increased expectations for full-year revenue, non-GAAP operating margin, earnings per share and cash flow.
The updated guidance calls for approximately $9.715 billion of fiscal 2026 revenue at the midpoint.
Non-GAAP EPS is expected to reach approximately $15.07 at the midpoint.
The increased outlook suggests that management expects the benefits from Ansys and continued demand across the core Synopsys portfolio to continue through the remainder of the fiscal year.
The raised operating-margin outlook is also significant because large acquisitions can initially create pressure on profitability while companies integrate employees, systems and overlapping operations.
Synopsys appears to be progressing through that process while still improving its expected profitability.
The combined platform gives the company exposure to multiple stages of electronic product development.
Its traditional electronic design automation software helps engineers create and verify semiconductors.
Design IP provides reusable technology blocks that can accelerate chip development.
Ansys adds simulation capabilities that allow engineers to test how electronic and physical systems are likely to perform before products are manufactured.
That combination is intended to address a growing challenge in advanced technology development: optimizing increasingly complicated systems in which semiconductor design, packaging, heat, power and mechanical characteristics are closely interconnected.
AI infrastructure is one area where those requirements are especially pronounced.
High-performance AI processors consume substantial amounts of power and generate significant heat, making thermal and system-level simulation increasingly important.
Advanced packaging is also becoming more complex as manufacturers combine multiple chips and memory components within the same system.
Synopsys can now address more of those design requirements through a combination of its existing EDA technologies and Ansys simulation software.
The broader portfolio could also create cross-selling opportunities.
Existing Synopsys semiconductor customers may adopt additional Ansys tools, while Ansys customers working on complex electronic systems may represent potential users of Synopsys’ design and verification technologies.
Realizing those opportunities will be an important part of the strategic rationale behind the acquisition.
The fiscal third-quarter results suggest that the combined company is beginning this integration from a position of strong demand.
Design Automation revenue surpassed $2 billion in a single quarter, and the segment’s 53% year-over-year increase substantially outpaced the company’s already strong 42% overall revenue growth.
At the same time, Design IP returned to growth and delivered significantly higher profitability.
Those trends helped push GAAP net income above $545 million and non-GAAP net income above $750 million.
Synopsys’ updated full-year guidance also implies substantial scale following the Ansys transaction.
At approximately $9.715 billion of expected annual revenue, the company is now materially larger than it was before the acquisition.
Ansys alone is expected to account for approximately $2.98 billion of fiscal 2026 revenue, making the acquired business a central part of Synopsys’ financial and strategic profile.
The challenge for Synopsys will be continuing to integrate Ansys while preserving the high margins and growth characteristics of its core EDA franchise.
The fiscal third quarter provided encouraging indications on both fronts.
Design Automation margins improved despite the rapid increase in revenue, and management raised its full-year operating-margin expectations.
Design IP also strengthened rather than being overshadowed by the larger acquisition.
With semiconductor and systems companies continuing to invest in AI, advanced computing and increasingly complex electronics, Synopsys is positioning the combined company as a broader engineering platform capable of supporting development from semiconductor architecture through system-level simulation.
The fiscal third-quarter results show the financial impact of that strategy beginning to emerge, with revenue up approximately 42%, Design Automation revenue above $2 billion, GAAP net income more than doubling and management raising its full-year expectations across revenue, profitability, earnings and cash flow.
KEY QUOTE:
“AI is driving unprecedented complexity and increasing demand for the silicon IP and engineering solutions necessary to deliver next-generation AI compute.”
Sassine Ghazi, President and Chief Executive Officer of Synopsys
