EDA growth to accelerate to double digits in Q4 and full year
Synopsys reported a strong Q3 with all metrics beating guidance, driven by robust EDA and ANSYS performance. Management raised full-year guidance, citing accelerating EDA demand and a structural shift towards custom silicon (Factory 2 model) with hyperscaler partners. Raised FY2026 revenue, operating margin, EPS, and free cash flow guidance.
Вывод BuzzbergEDA growth to accelerate to double digits in Q4 and full yearSynopsys reported a strong Q3 with all metrics beating guidance, driven by robust EDA and ANSYS performance. Management raised full-year guidance, citing accelerating EDA demand and a structural shift towards custom silicon (Factory 2 model) with hyperscaler partners. Raised FY2026 revenue, operating margin, EPS, and free cash flow guidance.Читать полный анализСвернуть анализ
Synopsys reported a strong Q3 with all metrics beating guidance, driven by robust EDA and ANSYS performance. Management raised full-year guidance, citing accelerating EDA demand and a structural shift towards custom silicon (Factory 2 model) with hyperscaler partners. Raised FY2026 revenue, operating margin, EPS, and free cash flow guidance.
EDA growth is expected to accelerate to double digits in Q4, driven by AI complexity and multi-die designs.
New Multiphysics Fusion tool, co-developed with ANSYS, validated by NVIDIA, Cisco, MediaTek, and Samsung.
Design IP business returned to growth, driven by strong demand for interface IP (PCIe, LPDDR, die-to-die) and a shift to custom silicon partnerships with royalties.
DESIGN_IP revenue$0.474B
reported
EDA rev growth8.5%
reported
Revenue$2.477B
+9% QoQ
Op margin41.6%
reported
Что изменилось в этом квартале
01
Guidance
EDA growth to accelerate to double digits in Q4 and full year
Guidance · revenue to $2.555B
02
Product Innovation
Multiphysics Fusion solution launched, validated by major customers
Agentic AI workflows delivering 40% debug cycle reduction
Management highlighted AI as a tailwind driving design complexity, demand for advanced silicon, and new growth vectors such as agentic AI workflows and custom silicon. They noted early engagements showing significant productivity gains and expect AI-driven monetization to…
04
IP
Die-to-die IP business on pace to double this year
New Multiphysics Fusion tool, co-developed with ANSYS, validated by NVIDIA, Cisco, MediaTek, and Samsung.
AI, капзатраты и спрос
AI
Платформа и монетизация
Management highlighted AI as a tailwind driving design complexity, demand for advanced silicon, and new growth vectors such as agentic AI workflows and custom silicon. They noted early engagements showing significant productivity gains and expect AI-driven monetization to contribute to future growth.
Спрос
Заказы и конверсия
Broad-based strength across EDA, IP, and ANSYS, with EDA growth accelerating to double digits in Q4. Backlog remains strong at $10.9 billion, and design activity is highest among AI/HPC customers. Non-AI design starts have stabilized.
Капзатраты
Инвестиции и мощности
No direct commentary on capex; management raised free cash flow guidance and reduced capex guidance for the year, but provided no specifics on capacity or infrastructure investment.
Тон · Confident
Management expressed confidence in the business's momentum, raising guidance and highlighting strong execution across all segments.
Ограничения
Manufacturing capacity
The bottleneck for our customers is the time to results, the time to accurate results.
“The bottleneck for our customers is the time to results, the time to accurate results.”
Hyperscalers are moving from licensing standard IP (Factory 1) to custom silicon (Factory 2) with royalties, a major business model shift for Synopsys that drives higher revenue per customer.
Multiphysics Fusion, integrating thermal analysis into chip design, was validated by major customers and is expected to contribute to EDA growth starting in 2027, creating an add-on attachment opportunity for existing EDA seats.
… of AI compute also drive demand for our hardware-assisted verification solutions. We secured 12 new and 66 repeat HAV customer wins in the quarter. As I mentioned, the launch of Multiphysics Fusion was a major EDA milestone in Q3 and creates a new growth opportunity for Synopsys. Multiphysics Fusion combines Synopsys and ANSYS technology in the industry's only solution with thermal analysis fully integrated into the chip design flow. Customers including NVIDIA, Cisco, MediaTek, and Samsung Foundry have validated up to 10x faster design closure and 3x faster runtime. This drives greater value for our customers and also for our products. We expect these add-on capabilities to begin contributing to EDA growth in 2027. Egentic AI is another growth vector for Synopsys, and we demonstrated strong progress in Q3. At the DAC conference with NVIDIA, we showcase the fully autonomous, long-running design verification agent that can orchestrate the entire chip verification cycle and deliver up to 50x faster time-to-validated RTL while achieving 20% additional coverage improvement. With Microsoft and AMD, we introduced the first autonomous EDA workflows on Microsoft Discovery that can …
Management's comments highlight close collaboration with memory makers on HBM design, critical for AI infrastructure.
“Our relationship with Samsung, with SK Hynix, with the broad market in Korea has been a great collaboration in an area and a region that are leading with a very essential part of the AI infrastructure.”
I'm not sure about the speculation. One thing I can tell you is our relationship with Samsung, with SK Hynix, with the broad market in Korea has been a great collaboration in an area and a region that are leading with a very essential part of the AI infrastructure. and we are leading with those customers and not limited to those two in the broader region itself across the portfolio. So you need to think of it from IP with our custom HBM and HBM engagements with the lead customers to EDA and to ANSYS. So very pleased with the performance that we have. Thank you, Safiq. Thank you, Katie.
Multiphysics Fusion, integrating thermal analysis into chip design, was validated by major customers and is expected to contribute to EDA growth starting in 2027, creating an add-on attachment opportunity for existing EDA seats. — This new tool addresses the physical challenge of multi-die design, creating a new, high-value spending category for AI chipmakers.
“AMD's recently launched Instinct MI455X GPU is a good example. To deliver this highly sophisticated new product series, AMD leveraged Synopsys' 3D IC compiler”
… growth in Q3, underpinned by strength in EDA, including record hardware revenue. We expect this momentum to continue, with EDA growth accelerating to double digits in Q4 and for the full year. Design activity is highest among AI and high-performance compute customers, developing increasingly specialized chips with multi-die architectures, more complex packaging and system requirements. These are all areas where Synopsys leads. AMD's recently launched Instinct MI455X GPU is a good example. To deliver this highly sophisticated new product series, AMD leveraged Synopsys' 3D IC compiler, the industry's only exploration-to-sign-off platform for multi-die and advanced package co-design and optimization. The complex software and system requirements of AI compute also drive demand for our hardware-assisted verification solutions. We secured 12 new and 66 repeat HAV customer wins in the quarter. As I mentioned, the launch of Multiphysics Fusion was a major EDA milestone in Q3 and creates a new growth opportunity for Synopsys. Multiphysics Fusion combines Synopsys and ANSYS technology in the industry's only solution with thermal analysis fully integrated into the chip design flow. …
Multiphysics Fusion, integrating thermal analysis into chip design, was validated by major customers and is expected to contribute to EDA growth starting in 2027, creating an add-on attachment opportunity for existing EDA seats. — This new tool addresses the physical challenge of multi-die design, creating a new, high-value spending category for AI chipmakers.
… of AI compute also drive demand for our hardware-assisted verification solutions. We secured 12 new and 66 repeat HAV customer wins in the quarter. As I mentioned, the launch of Multiphysics Fusion was a major EDA milestone in Q3 and creates a new growth opportunity for Synopsys. Multiphysics Fusion combines Synopsys and ANSYS technology in the industry's only solution with thermal analysis fully integrated into the chip design flow. Customers including NVIDIA, Cisco, MediaTek, and Samsung Foundry have validated up to 10x faster design closure and 3x faster runtime. This drives greater value for our customers and also for our products. We expect these add-on capabilities to begin contributing to EDA growth in 2027. Egentic AI is another growth vector for Synopsys, and we demonstrated strong progress in Q3. At the DAC conference with NVIDIA, we showcase the fully autonomous, long-running design verification agent that can orchestrate the entire chip verification cycle and deliver up to 50x faster time-to-validated RTL while achieving 20% additional coverage improvement. With Microsoft and AMD, we introduced the first autonomous EDA workflows on Microsoft Discovery that can …
Microsoft is a key partner in delivering AI-native EDA workflows, potentially driving more cloud compute consumption.
“With Microsoft and AMD, we introduced the first autonomous EDA workflows on Microsoft Discovery that can automate debug, implementation, and design closure.”
… these add-on capabilities to begin contributing to EDA growth in 2027. Egentic AI is another growth vector for Synopsys, and we demonstrated strong progress in Q3. At the DAC conference with NVIDIA, we showcase the fully autonomous, long-running design verification agent that can orchestrate the entire chip verification cycle and deliver up to 50x faster time-to-validated RTL while achieving 20% additional coverage improvement. With Microsoft and AMD, we introduced the first autonomous EDA workflows on Microsoft Discovery that can automate debug, implementation, and design closure. Early engagements show up to 40% reduction in debug cycle time, saving weeks of engineering effort while improving design quality. Thank you very much. They orchestrate our underlying EDA tools at a significantly higher rate. That allows customers to run more design and verification workloads, creating an incremental growth opportunity for Synopsys, as we capture our fair share of the value that these agentic workflows and foundational tools provide for our customers. Turning to ANSYS. One year into our integration, ANSYS continues to see strong demand. From semis to aerospace to industrial and …
Hyperscalers are moving from licensing standard IP (Factory 1) to custom silicon (Factory 2) with royalties, a major business model shift for Synopsys that drives higher revenue per customer. — This shifts Synopsys from a cyclical tool provider to a recurring royalty owner in the custom silicon boom, directly impacting long-term growth.
… and IP solutions optimized to their specific workloads and architectures. To meet that demand, we are expanding into differentiated IP subsystems and enabling custom silicon solutions. Customers ranging from hyperscalers, ASIC vendors, foundries, and classic semiconductors want to partner with Synopsys to accelerate their chip development efforts and leverage our IP and engineering expertise to build increasingly differentiated custom silicon. This is our Factory 2 model for customized IP. It moves us up the value chain from licensing alone to licensing plus royalties and positions us to capture the fast-growing custom silicon opportunity. This is a large focus and we are making strong progress. We are in active discussions with multiple Factory 2 customers and I look forward to sharing more at Investor Day. To summarize, I want to thank the entire Synopsys team for their continued focus, innovation and execution. Q3 reinforced the strength of our strategy and our confidence in a strong finish to the year. AI is driving demand for advanced silicon, system-level engineering, and AI-powered design. Our leadership portfolio positions us to capture a greater share of R&D investment …
Synopsys' Q3 EDA revenue growth was 8.5% against a 16% growth in the prior year quarter, indicating strong momentum in a tough compare. — Outperformance against a high base highlights robust demand, potentially a leading indicator for competitor Cadence.
Great. Thank you. Hi, Sassine. Hi, Sheila. Thank you for taking my question. You know, really good results here. I think what really stuck out to me was the 8% EDA growth, which was stable with last quarter despite the harder comp. You mentioned it's supposed to accelerate to double digits in Q4 and the full year. I mean, how would you describe, you know, what's driving that incremental acceleration? Is it design start activity? Is it agentic? Is it just better monetization strategies? Just help us understand. Thanks.
Yeah, and I just point out, Jason, that the 8.5 Q3 EDA growth that you saw was against a really tough compare. Q3 25 was 16%. And so, as Sassine said, it really just shows the strength of the business to be able to perform against that tough compare and then have the full year continue to have double digits.
Multiphysics Fusion, integrating thermal analysis into chip design, was validated by major customers and is expected to contribute to EDA growth starting in 2027, creating an add-on attachment opportunity for existing EDA seats. — This new tool addresses the physical challenge of multi-die design, creating a new, high-value spending category for AI chipmakers.
… of AI compute also drive demand for our hardware-assisted verification solutions. We secured 12 new and 66 repeat HAV customer wins in the quarter. As I mentioned, the launch of Multiphysics Fusion was a major EDA milestone in Q3 and creates a new growth opportunity for Synopsys. Multiphysics Fusion combines Synopsys and ANSYS technology in the industry's only solution with thermal analysis fully integrated into the chip design flow. Customers including NVIDIA, Cisco, MediaTek, and Samsung Foundry have validated up to 10x faster design closure and 3x faster runtime. This drives greater value for our customers and also for our products. We expect these add-on capabilities to begin contributing to EDA growth in 2027. Egentic AI is another growth vector for Synopsys, and we demonstrated strong progress in Q3. At the DAC conference with NVIDIA, we showcase the fully autonomous, long-running design verification agent that can orchestrate the entire chip verification cycle and deliver up to 50x faster time-to-validated RTL while achieving 20% additional coverage improvement. With Microsoft and AMD, we introduced the first autonomous EDA workflows on Microsoft Discovery that can …
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