Synopsys Targets 15% Annual Revenue Growth and 50% Operating Margin by 2030
Key Facts
At its investor day on September 30, Synopsys announced long-term financial targets spanning estimated fiscal 2026 through estimated 2030, setting compound annual revenue growth of about 15% and a non-GAAP operating margin of about 50% in fiscal 2030. The updated framework maps a path combining revenue growth with improved profitability, with separate targets for earnings per share and cash flow. Chief Financial Officer Shelagh Glaser said the framework reflects the company’s confidence in its growth trajectory and its ability to scale efficiently and convert growth into higher margins and strong free cash flow. The targets come as the company links demand for its tools to the growing complexity of chip design and artificial intelligence applications. The company also issued nearer-term financial guidance for fiscal 2027, allowing a direct comparison with analyst estimates.
Under its financial model, Synopsys expects both non-GAAP earnings per share and free cash flow to grow at a compound annual rate in the mid-20s from FY26E to FY30E. This accompanies targeted revenue growth of about 15%, while the operating margin target approaches 50% in FY2030. By segment, the company is targeting compound annual growth of at least 13% in electronic design automation, 10% in sales and management, and 17% in design IP. These targets put design IP at the top of the disclosed segment growth rates, followed by electronic design automation and then sales and management. The company said AI’s expansion is driving demand for computing capacity and increasing system complexity, two factors supporting the need for more integrated design tools.
Chief Executive Sassin Ghazi said the acceleration of AI is creating unprecedented demand for computing capacity and increasing system complexity. The company added that physical AI applications and agentic workflows are driving deeper integration of engineering tools. In the area of IP designed for specific applications, Synopsys announced an agreement with Amazon to provide enhanced IP, and said its new model had attracted several customers in computing, ASIC and AI connectivity. It also announced a partnership with OpenAI to develop a specialized chip design model that combines OpenAI models with Synopsys tools and chip design expertise. The company is thus linking the expansion of its design tools and IP to the range of AI-related workloads.
FY2027 guidance provides a nearer-term marker for progress toward the 2030 margin target, with the company targeting a non-GAAP operating margin of about 44% at the midpoint of its outlook. It also set non-GAAP earnings per share at between $19.04 and $19.12. Synopsys expects operating cash flow of about $3.6 billion and free cash flow of about $3.1 billion in the same fiscal year. Reuters said the FY2027 revenue outlook exceeded the average analyst estimate of $10.81 billion, and the earnings-per-share outlook topped the estimate of $17.81. The gap between the targeted 44% margin in 2027 and about 50% in 2030 places the profitability expansion path among the company’s announced targets.
Synopsys said it intends to repurchase about $1 billion of shares in the coming months, subject to market conditions, and that it aims to return up to 50% of free cash flow to shareholders through buybacks. In an initial reaction to the FY2027 outlook and the agreements with OpenAI and Amazon, the stock jumped 10% on October 1, Reuters reported. The agency said 22 of the 24 analysts covering the stock rated it “buy” or higher, while two rated it “hold,” based on LSEG data cited in its report. These figures provide context for the market’s reaction to the outlook and commercial announcements, while the announced buybacks remain subject to market conditions. Synopsys revenue was $7.054 billion in FY2025, up about 15% from $6.127 billion in FY2024.