«Dieser Inhalt ist nur auf Englisch verfügbar – This content is available in English only» 

Synopsys reported solid fourth quarter results with earnings and revenue surpassing estimates. Revenue improved 11% from a year ago to USD 1.28 billion, while earnings per share increased 5% YoY to USD 1.91. Both revenues and earnings per share surpassed average analyst expectations. 

Revenue growth was driven by broad-based strength across all product groups and geographies. Semiconductor & System Design revenue increased to USD 1,157 million, up 11% year-over-year, with strong growth noted in both EDA and IP. Software Integrity revenue of USD 127.1 million was up 16% year-over-year. 

Fiscal-year operating margin improved to 33% from 30% in FY21. Non-GAAP EPS of USD 1.91 was above the consensus estimate of USD 1.85. Operating cash flow increased modestly to USD 394 million from USD 371 million in the year-ago quarter.

Despite moderation in some areas of semiconductor demand, Synopsys continues to benefit from a robust design activity environment, globally. While the recent extension of technology restrictions to China remains a source of investor concern, management noted that the new rules are well understood and contemplated in the forward outlook.

We remain positive on the EDA (Electronic Design Automation) companies given our belief that EDA and adjacent technologies are well positioned to benefit from the increasing complexity of semiconductor designs and offer relative stability in a volatile environment given recurring revenue models. 

Valuation: 

Synopsys currently trades at 32.9x P/E 23E, above its 5-year historical average of 29.3x and above the MSCI USA Software Index (24.4x). On a 2023E EV/EBITDA basis, the stock is trading at 24.8x, above its 5-year average of 20.3x and above the MSCI USA Software Index (17x). On a P/S 23E basis, the stock is trading at 9x, above its 5-year average of 6.9x and above the MSCI USA Software Index (7.1x).          

Management Outlook

Synopsys provided its initial outlook for the current fiscal year with all financial expectations above current consensus expectations. Synopsys expects January quarter revenue and non-GAAP EPS of USD 1,355 million and USD 2.51 at the mid-point of guidance, above the current consensus estimates of USD 1,338 million and USD 2.29. Synopsys’s initial full-year FY23 revenue outlook of USD 5,800 million, at the midpoint of guidance, compares favorably to the current consensus estimate of USD 5,670 million while the midpoint of non-GAAP EPS guidance at USD 10.32 is above the current consensus estimate of USD 10.14. Management’s longer-term targets remain unchained with annual revenue growth targeted in the double-digit percentage range, annual non-GAAP operating margin targeted at above 100 bps and annual non-GAAP EPS growth in the mid-teens range.