Shares of Synopsys fell Wednesday in after-hours trading even though the chip-design software and hardware firm reported better-than-expected results.
Adjusted earnings per share came in at $3.35 for the company’s fiscal second quarter ended in April, above analyst estimates of $3.15 per share.
Revenue, meanwhile, hit $2.28 billion. Wall Street analysts were expecting $2.25 billion.
Synopsys also raised its full-year revenue guidance to a midpoint of $9.67 billion, up from previous guidance of $9.6 billion.
Shares fell 1.9% to $510 in after-hours trading. They are up about 12% for the year.
The company has continued to make the case that its chip-design software and hardware are essential to the progress of artificial intelligence. But the near-term focus is on the integration of a big acquisition from last year.
Because of its $35 billion acquisition of physics-simulation-software maker Ansys last year, comparisons to the previous year don’t hold much weight. Ansys had about half a billion dollars in sales in its final quarter as an independent company.
Like competitor Cadence Design Systems, Synopsys makes software that automates the very complex process of designing chips, and it also makes hardware that tests the designs before they get shipped to the manufacturer. AI chip leader Nvidia is a customer and a shareholder, with a 2.5% stake in Synopsys.
But the spread of chip design for the AI era hasn’t yet been a big boon to Synopsys, with organic sales still not growing as quickly as they did during its previous boom period, in 2022.
The Ansys integration is the topic of the day. There was a logical connection in the horizontal merger, and the two companies had overlapping customers. In March, Synopsys announced the first fruit of the merger, called Multiphysics Fusion. It expands the simulation in Synopsys’ chip design software to include electrical, thermal, electromagnetic, and mechanical effects, shortening the chip design pipeline for the increasingly complex architectures coming from AI chip makers.
Along with the merger came the inevitable layoffs, eliminating about 10% of the combined workforce of the two companies and costing about $325 million in total restructuring charges. Synopsys had about 28,000 postmerger employees, according to FactSet.
