Synopsys, Inc.

Q2 performance beat (strong execution + AI-driven demand) - Revenue: $2.276B; Non-GAAP op margin 39.5%; Non-GAAP EPS $3.35 — all exceeded guidance. - Drivers cited: continued AI supply-chain demand, including increased design/simulation/system validation complexity. - Segment momentum: - EDA/design automation: revenue ~+8% YoY; Hardware-assisted verification a key growth driver (notably hyperscalers; system wins across ZS5, Xebu, HAPS-200). - ANSYS: strong demand across industries (semis, aerospace/defense, automotive) and simulation use cases (e.g., physics-based synthetic data, safety-critical workflows).

Major accounting item & integration changes: ANSYS channel revenue is the “surprising” noise - Q2 revenue included an ANSYS channel accounting impact of +$12.5M revenue and +$12.5M expense (gross-basis recognition due to deeper pricing visibility/oversight of channel partners). - Management said it’s neutral to EPS and cash flow, but investors should adjust their understanding of “organic” growth quarter-to-quarter. - Full-year guidance will reflect this accounting impact (see next bullet).

Raised FY26 guidance across revenue, margins, EPS, and free cash flow - Updated FY26 revenue range: $9.625B to $9.705B (midpoint raised +$35M vs prior, due to strong first-half performance), plus two structural/accounting items: - ANSYS channel accounting: + $60M revenue with equivalent expense impact. - Processor IP Solutions business divestiture: expected to close soon, reducing revenue by ~$40M for the remainder of FY26. - Operating margin / EPS: - Non-GAAP op margin ~41% at midpoint (up 50 bps). - Non-GAAP EPS guidance: $14.72–$14.80 (midpoint +$0.34 increase). - GAAP EPS: $2.49–$2.91. - Cash flow: - Cash flow from operations raised to ~ $2.3B. - CapEx ~ $300M unchanged → Free cash flow ~ $2.0B (up +$100M vs prior). - Q3 targets (directional expectation): total revenue $2.41B–$2.46B; Non-GAAP EPS $3.63–$3.69.