Stephen Nellis and Zaheer Kachwala
(Reuters) – Chip software company Synopsys on Wednesday forecast fiscal 2025 revenue below Wall Street expectations, partly due to falling sales in China as the U.S. tightens controls on what chip technologies can be sold in the country.
Shares of the Sunnyvale, California-based company fell 6.6% in after-hours trading after the forecast. Synopsys CFO Shelagh Glazer told Reuters the company still expects to close its $35 billion deal to acquire software firm Ansys in the first half of 2025.
Synopsys is forecasting fiscal 2025 revenue in a range of $6.75 billion to $6.8 billion, with the entire range below estimates of $6.91 billion, according to LSEG.
Glazer said a change in Synopsys’ financial calendar, which made it easier to merge financial statements with Ansys, lowered the company’s full-year revenue forecast by about $80 million. But a bigger reason for the gain was a continued slump in sales in China, where the US earlier this week imposed new restrictions on microchip exports.
Glazer said the list of companies Synopsys can no longer sell to in China has grown, and some of those remaining Chinese customers are hesitant to make plans for the new chips because of uncertainty about whether they will be able to manufacture the chips.
“It’s kind of a cumulative effect of the restrictions,” Glaser said.
Glazer said the election of US President Donald Trump, who has promised to impose new tariffs on Chinese imports, has not changed Synopsys’ outlook for the Ansys deal.
“We certainly expect that each jurisdiction has its own criteria and reviews,” Glaser said. “But that’s actually been true since the beginning, and there’s always been an election.”
Synopsys forecast full-year adjusted earnings per share in the range of $14.88 to $14.96 per share, while analysts had expected $14.88 per share.
The company forecast first-quarter revenue of $1.44 billion to $1.47 billion, compared to estimates of $1.64 billion.
Adjusted earnings per share for the first quarter are expected to be between $2.77 and $2.82 per share, compared to estimates of $3.53 per share.
Revenue for the fourth quarter ended Nov. 2 was $1.63 billion, in line with estimates. On an adjusted basis, the company earned $3.40 per share, topping estimates of $3.30 per share.
(Reporting by Zaheer Kachwala in Bangalore and Stephen Nellis in San Francisco; Editing by Krishna Chandra Elluri and Stephen Coates)
