Synopsys Inc (NASDAQ:SNPS, ETR:SYP) shares plummeted after the electronic design automation software and semiconductor silicon intellectual property (IP) firm posted a revenue and profit miss for the fiscal third quarter, as well as issuing cautious guidance.
Revenue was up 14% year-over-year at $1.74 billion for Q3, below Wall Street estimates of $1.77 billion.
Net income fell to $242.5 million, or $1.50 per share, down from $425.9 million, or $2.73 per share, in Q3 2024.
Adjusted income was $548.9 million, or $3.39 per share, compared to $535.5 million, or $3.43 per share, in the year-ago period.
This missed the consensus estimate for adjusted earnings per share of $3.75.
Driving the earnings miss was underperformance in Synopsys’ design IP business segment, as deals were impacted by US export restrictions, which disrupted design starts in China.
“While I'm proud of how our team navigated external challenges in the quarter, our IP business underperformed expectations,” Synopsys CEO Sassine Ghazi said in a statement.
“We are taking action to enhance our competitive advantage and drive resilient, long-term growth."
Synopsys chief financial officer Shelagh Glaser added that the company is taking a “more conservative” view of fiscal Q4, while still guiding another consecutive year of profitable growth.
For Q4, the company expects adjusted earnings per share of $2.76 to $2.80, below estimates of $4.14.
Revenue is projected to be between $2.23 billion and $2.26 billion, also missing estimates of $2.59 billion.
For the full year, the company sees revenue in the range of $7.03 billion and $7.06 billion.
Shares of Synopsys traded down 33.8% at about $400 on Wednesday morning.