On September 10, 2025, Synopsys Inc. shares dropped over 34% following a disappointing financial report for Q3 of fiscal 2025. This decline represents one of the most significant drops in the company's history.
Q3 2025 Earnings Overview
Synopsys reported Q3 2025 revenue of $1.74 billion, a 14% year-over-year increase but below analyst expectations of $1.77 billion. The EPS came in at $3.39, well below Wall Street's consensus estimate of $3.74-$3.80.
Weakness in IP Business and China Export Restrictions
The primary issue behind the disappointing results was significant weakness in the Design IP business, which fell 8% year-over-year to $428 million in Q3. The company missed roughly $140 million of expected IP revenue due to U.S. export restrictions affecting operations in China and challenges with a major foundry customer.
Stock Decline and Analyst Opinions
As of 10:35 AM EDT on September 10, 2025, Synopsys shares traded at $398.43, down $205.94 or 34.08% from the previous close. This sell-off resulted in a significant loss in market capitalization. Bank of America downgraded the stock from Buy to Underperform, noting increased uncertainty and integration costs following the Ansys acquisition.
The situation surrounding Synopsys reveals numerous challenges, including weaknesses in the IP business and the impact of external factors on financial results, leaving investors anxious amid the company's new forecasts.
