By Stephen Nellis and Zaheer Kachwala
(Reuters) – Chip design software company Synopsys on Wednesday forecast fiscal 2025 revenue below Wall Street expectations, partly thanks to a slump in sales in China as the U.S. tightens controls on what chip technology can be sold to the country.
Shares of the Sunnyvale, California-based company fell 6.6% in extended trading after the forecast. Synopsys Chief Financial Officer Shelagh Glaser told Reuters the company still expects to close the $35 billion deal to acquire engineering software company Ansys in the first half of 2025.
Synopsys forecast fiscal 2025 revenue between $6.75 billion and $6.8 billion, with the entire range below estimates of $6.91 billion, according to LSEG data.
Glaser said a change in Synopsys’ fiscal calendar to make it easier to merge its financial reporting with Ansys lowered full-year revenue guidance by about $80 million. But the bigger driver of sales was a continued decline in sales in China, where the US imposed new limits on chip technology exports earlier this week.
Glaser said the list of companies Synopsys can no longer sell to in China has grown, and some of the Chinese customers that remain are hesitant to make plans for new chips due to uncertainty about whether or not they can get the chips produced.
“It’s kind of a cumulative impact of restrictions,” Glaser said.
Glaser said the election of Donald Trump as US president, who has promised to impose new tariffs on Chinese imports, has not changed Synopsys’ prospects for closing the Ansys deal.
“We certainly expect each jurisdiction to have its own criteria and assessments,” Glaser said. “But that was basically the case from the beginning, and there would always be elections.”
Synopsys expects full-year adjusted earnings per share to be between $14.88 and $14.96 per share, while analysts expected $14.88 per share.
The company expects first-quarter revenue of between $1.44 billion and $1.47 billion, compared to estimates of 1.64 billion.
It expects first-quarter adjusted earnings per share to be between $2.77 and $2.82 per share, compared with 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, above the estimate of $3.30 per share.
(Reporting by Zaheer Kachwala in Bengaluru and Stephen Nellis in San Francisco; Editing by Krishna Chandra Eluri and Stephen Coates)
