Q3 FY2026 results
| Metric | Result | Change |
|---|---|---|
| Total Revenue | $2.477 billion | up approximately 42% |
| Non-GAAP EPS | $3.91 | beat guidance |
| Non-GAAP Operating Margin | 41.6% | Not stated |
| Design Automation Revenue | $2 billion | Not stated |
| Design IP Revenue | $474 million | up approximately 11% |
| Backlog | $10.9 billion | modestly down quarter-over-quarter |
Guidance and outlook
- Full year revenue is expected to be between $9.69 billion and $9.74 billion.
- Full year non-GAAP EPS is expected to be between $15.04 and $15.10.
- Full year non-GAAP operating margin is expected to be 41.5% at the midpoint.
- Q4 revenue is expected to be between $2.53 billion and $2.58 billion.
- Q4 non-GAAP EPS is expected to be between $4.10 and $4.16.
How management sounded
Positive (+7 on our -10 to +10 scale). Management raised full-year guidance for revenue, margin, and EPS, citing strong demand in AI and the successful integration of ANSYS. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
EDA Growth Drivers
Asked: What is driving the acceleration to double-digit growth in Q4?
Answer: Management cited the complexity of chip design, the move to advanced packaging like 3D-IC, AI tailwinds, and record hardware revenue as the primary drivers.
AI Disruption
Asked: Is AI a threat to commercial EDA tools?
Answer: Management stated that AI is a demand driver rather than a threat, as AI models require Synopsys software to provide the physics-based ground truth necessary for accurate design.
Factory II IP Model
Asked: How is the shift to the Factory II custom IP model progressing?
Answer: Synopsys is in advanced discussions with hyperscalers and custom silicon customers to move from traditional licensing to license plus royalty models.
Multiphysics Fusion
Asked: When will the joint Synopsys-ANSYS solution contribute to growth?
Answer: The solution is currently in early deployment stages with customers and is expected to contribute to EDA growth in 2027.
What to watch before the next call
- The contribution of the joint Synopsys-ANSYS multiphysics solutions to EDA growth in 2027.
- The progress of the Factory II custom IP business model shift.
- The impact of autonomous EDA workflows on software consumption and licensing models.
