The 10-second takeaway
For the quarter ended April 30 (Q2), Synopsys beat expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue improved and GAAP earnings per share dropped significantly.
Gross margins expanded, operating margins shrank, net margins contracted.
Synopsys recorded revenue of $432.6 million. The seven analysts polled by S&P Capital IQ predicted a top line of $417.3 million on the same basis. GAAP reported sales were 9.9% higher than the prior-year quarter's $393.7 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.53. The seven earnings estimates compiled by S&P Capital IQ predicted $0.55 per share. GAAP EPS of $0.14 for Q2 were 74% lower than the prior-year quarter's $0.53 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 82.2%, 30 basis points better than the prior-year quarter. Operating margin was 4.0%, 910 basis points worse than the prior-year quarter. Net margin was 4.8%, 1,580 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $444.1 million. On the bottom line, the average EPS estimate is $0.50.
Next year's average estimate for revenue is $1.75 billion. The average EPS estimate is $2.05.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 81 members out of 104 rating the stock outperform, and 23 members rating it underperform. Among 30 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 25 give Synopsys a green thumbs-up, and five give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Synopsys is outperform, with an average price target of $35.57.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.