Synopsys Shares Plunge 34% After Q3 Miss and Weak IP Outlook

Lead: Synopsys (NASDAQ: SNPS) shares collapsed 34% to close at $398.40 in Wednesday trading after the EDA firm missed fiscal Q3 estimates and cut full-year profit guidance following underperformance in its Design IP business

Nut Graf: The steep decline reflects investor concern over weaker-than-expected third-quarter earnings-driven by export restrictions and a key foundry setback in its IP segment-as well as a cautious outlook that trimmed revenue and EPS forecasts for Q4 and fiscal 2025.

Q3 Results Drive Sell-Off

Third-quarter revenue totaled $1.74 billion, below Wall Street’s $1.77 billion consensus, while non-GAAP EPS came in at $3.39 versus the $3.74 estimate.
The stock opened at $611.97 on Wednesday, dipped to a low of $390.20, and ended the session down 34.1% at $398.40.
Trading volume surged to 5.86 million shares, more than double the prior day’s activity.

Export Curbs Hit IP Segment

Synopsys’ Design IP division revenue fell 8% year-over-year to $428 million amid new U.S. export restrictions on chip-design tools for China and a cancelled deal with a major foundry client.
CEO Sassine Ghazi noted that export hurdles and integration costs from the July Ansys acquisition weighed on IP performance, prompting a strategic resource reallocation.

Guidance Slashed

For Q4, Synopsys now forecasts revenue of $2.23 billion-$2.26 billion and non-GAAP EPS of $2.76-$2.80, well below analyst projections of $2.09 billion and $4.61 respectively.
Fiscal 2025 revenue guidance was lowered to a range of $7.03 billion-$7.06 billion, with EPS guidance trimmed to $12.76-$12.80 from the prior $15.11-$15.19 outlook.

Cost Cuts Ahead

Management announced plans to reduce global headcount by approximately 10% through fiscal 2026 to improve operational efficiency and offset integration expenses.