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Synopsys (SNPS -35%) is under heavy pressure after posting Q3 (Jul) revenue of $1.74 bln (+14% yr/yr) and EPS of $3.39. With the Ansys acquisition just closed and guidance previously withdrawn, expectations were cloudy heading into results.

• Design IP revenue fell 8% yr/yr to $428 mln, hurt by U.S. export restrictions in China, issues at a major foundry customer, and internal resource missteps.
• Design Automation revenue rose 23% yr/yr to $1.31 bln, reflecting resilient EDA demand and Ansys' contribution.
• Management highlighted strong AI-driven infrastructure/R&D spend, but end markets like industrial and auto remain subdued.
• Synopsys announced a 10% workforce reduction, reinstated FY25 guidance, and issued Q4 outlook.

Briefing.com Analyst Insight

This was a tough quarter for SNPS, with the IP segment likely facing a multi-quarter recovery rather than just a one-off Q3 disruption. Management cautioned that FY25 will be a "transitional and muted" year for IP as it looks forward to FY26. While AI-driven tailwinds in design automation and Ansys' contribution help cushion the blow, the uncertainty around China and the company's largest IP customers will remain a key overhang in the near term. Until visibility improves, investors may stay cautious despite the longer-term growth drivers in place.