Analyst Note| Abhinav Davuluri, CFA |
Synopsys reported solid second-quarter results with revenue and earnings per share above the high-end of guidance. Orders were significantly greater than management’s expectations thanks to strength in digital design software. The firm maintained its full-year revenue outlook for fiscal 2020 (range of $3.60 billion-$3.65 billion) that implies 8% year-over-year growth at the midpoint. Despite ongoing geopolitical tensions (U.S.-China trade war) and the coronavirus outbreak, Synopsys continues to benefit from healthy design activity associated with key drivers such as artificial intelligence, automotive, 5G, Internet of Things, and cloud computing. Also, the firm boasts a noncancelable backlog of $4.8 billion.