Synopsys Net Income Plunges 78% to $65M Despite 66% Revenue Jump in Q1 FY2026
Synopsys (NASDAQ: SNPS), a semiconductor design software and IP provider, reported net income of $65 million for the three months ending January 31, down sharply from $296 million in the year-ago quarter despite strong revenue growth.
Synopsys Inc. (NASDAQ: SNPS), a semiconductor design software and intellectual property provider, reported net income of $64.96 million for the three months ending January 31, 2026, a 78% decline from $295.68 million in the same quarter a year earlier. The sharp profit drop came even as revenue surged 66% to $2.41 billion from $1.46 billion. Read more earnings reports.
The company posted diluted earnings per share of $0.34, down from $1.89 in the prior-year quarter. Operating income fell to $203.05 million from $251.84 million, representing an 8.4% operating margin versus 17.3% a year ago.
Gross profit for the quarter reached $1.77 billion, up 49% from $1.19 billion in the year-ago period. However, operating expenses jumped to $1.57 billion from $933.50 million, driven by a 29% increase in research and development spending to $714.99 million from $553.22 million.
Synopsys generated $856.83 million in cash from operations during the quarter, a sharp reversal from negative $67.46 million in the same period last year. The company used $1.58 billion for financing activities, primarily to reduce long-term debt, which fell to $10.02 billion as of January 31, 2026 from $13.46 billion three months earlier.
The company's cash and cash equivalents stood at $2.13 billion as of January 31, down from $2.89 billion at the end of October 2025. Total assets declined to $47.24 billion from $48.22 billion over the same period.
Stockholders' equity increased to $30.55 billion from $28.33 billion, with common shares outstanding rising to 191.45 million from 185.99 million. Retained earnings grew to $10.38 billion from $10.32 billion.
| Metric | Q1 FY2026 | Q1 FY2025 | Change |
|---|---|---|---|
| Revenue | $2.41 billion | $1.46 billion | +66% |
| Net Income | $64.96 million | $295.68 million | -78% |
| Operating Income | $203.05 million | $251.84 million | -19% |
| EPS (Diluted) | $0.34 | $1.89 | -82% |
| Cash from Operations | $856.83 million | ($67.46 million) | N/A |
| Operating Margin | 8.4% | 17.3% | -8.9 pts |
The Delaware-incorporated company reported cost of revenue of $637.38 million, up from $269.98 million in the prior-year quarter. Accounts receivable increased to $1.64 billion from $1.51 billion at the end of October.
Synopsys recorded an income tax expense of $14.34 million for the quarter, compared to a tax benefit of $6.29 million in the year-ago period. The weighted average diluted share count rose to 190.76 million from 156.19 million, reflecting the company's increased share base.