Synopsys (NASDAQ:SNPS) released third-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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Summary
Synopsys reported an outstanding Q3 2026 with revenue, non-GAAP operating margin, and EPS all exceeding guidance, driven by strength in EDA, Ansys, and IP growth.
The company raised its full-year revenue, non-GAAP operating margin, and EPS guidance, expecting accelerated EDA growth in Q4 and double-digit growth for the full year.
Notable operational highlights include the launch of Multiphysics Fusion, collaboration with Ansys, and progress in agentic AI, leading to strong customer interest and new growth opportunities.
The Ansys acquisition marked its first anniversary, with the integration creating new growth opportunities and achieving cost synergies ahead of schedule.
The Design Automation segment saw revenue of approximately $2 billion, with EDA revenue increasing by 8.5% year over year.
The Design IP segment returned to growth with revenue of $474 million, up 11% year over year, driven by demand in AI infrastructure.
Future outlook includes a revenue range of $9.69 to $9.74 billion for the full fiscal year 2026, with ANSYS expected to contribute approximately $2.98 billion.
The company remains focused on expanding its IP Factory 2 model, enhancing customer collaborations, and leveraging AI-driven design processes for future growth.
Full Transcript
OPERATOR
Welcome to the Synopsys earnings conference call for the third quarter of fiscal year 2026. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. If you would like to ask a question at that time, please press star 1 on your telephone keypad to remove yourself from the queue. It is star 1 again. If you require assistance during the call, please press star 0 and an operator will assist you. Today's call will last one hour.
As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Tushar Jain, Vice President. Please go ahead.
Tushar Jain, Vice President, Investor Relations
Good afternoon, everyone. Welcome to Synopsys' third quarter fiscal year 2026 earnings call. With us today are Sassine Ghazi, President and CEO of Synopsys, and Shelagh Glaser, CFO. Before we begin, I'd like to remind everyone that during the course of this conference call, Synopsys will discuss forecasts, targets, and other forward-looking statements regarding the company and its financial results. While these statements represent our best current judgment about future results and performance as of today, our actual results are subject to many risks and uncertainties that could cause actual results to differ materially from what we expect.
In addition to any risks that we highlight during this call, important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release. In addition, we will refer to certain non-GAAP financial measures during the discussion. Reconciliations to their most directly comparable GAAP financial measures and supplemental financial information can be found in the earnings press release, financial supplement, and 8-K that we released earlier today.
All of these items, plus the most recent investor presentation, prepared remarks, and Investor Day information, can be found on our website at www.synopsys.com. With that, I'll turn the call over to Sassine Ghazi.
Sassine Ghazi, President and CEO
Good afternoon. Synopsys delivered an outstanding third quarter, with revenue, non-GAAP operating margin, and EPS all exceeding the high end of guidance. These results reflect broad-based strength, including outperformance in EDA and Ansys and continued growth in IP. We are raising our full-year revenue, non-GAAP operating margin, and EPS guidance. In addition, we expect EDA growth to accelerate in Q4 and to deliver double-digit growth for the full year.
The key takeaway from Q3 is that the fundamentals across our portfolio are strengthening. EDA is accelerating, design IP has returned to growth, and Ansys is performing strongly while beginning to create new growth opportunities across the combined portfolio. This quarter marked one year since the Ansys acquisition closed, and in Q3 we launched our first joint Synopsys and Ansys solution, Multiphysics Fusion. I want to recognize our global team for executing with focus and agility to integrate our world-class capabilities.
The combination has strengthened our competitive position, expanded our opportunity, and enabled us to deliver differentiated solutions addressing the physics challenges of modern chip design. Industry trends are aligned to our strategy and our strengths as the leading provider of engineering solutions from silicon to systems. Unprecedented design complexity driven by the demands of AI is fueling the need for the IP and design solutions necessary to deliver next-generation AI compute infrastructure and physical AI systems.
These trends are evident in our Q3 results, starting with design automation, which achieved healthy growth in Q3, underpinned by strength in EDA, including record hardware revenue. We expect this momentum to continue, with EDA growth accelerating to double digits in Q4 and for the full year. Design activity is highest among AI and high-performance compute customers developing increasingly specialized chips with multi-die architectures, more complex packaging, and system requirements.
These are all areas where Synopsys leads. AMD's recently launched Instinct MI455X GPU is a good example. To deliver this highly sophisticated new product, AMD leveraged Synopsys 3DIC Compiler, the industry's only exploration-to-sign-off platform for multi-die and advanced package co-design and optimization. The complex software and system requirements of AI compute also drive demand for our hardware-assisted verification solutions. We secured 12 new and 66 repeat HAV customer wins in the quarter.
As I mentioned, the launch of Multiphysics Fusion was a major EDA milestone in Q3 and creates a new growth opportunity for Synopsys. Multiphysics Fusion combines Synopsys and Ansys technology in the industry's only solution with thermal analysis fully integrated into the chip design flow. Customers including Nvidia, Cisco, MediaTek, and Samsung Foundry have validated up to 10x faster design closure and 3x faster runtime. This drives greater value for our customers and also for our products.
We expect these add-on capabilities to begin contributing to EDA growth in 2027. Agentic AI is another growth vector for Synopsys, and we demonstrated strong progress in Q3. At the DAC conference with Nvidia, we showcased a fully autonomous, long-running design verification agent that can orchestrate the entire chip verification cycle and deliver up to 50x faster time to validated RTL while achieving 20% additional coverage improvement. With Microsoft and AMD, we introduced the first autonomous EDA workflows on Microsoft Discovery that can automate debug, implementation, and design closure.
Early engagements show up to 40% reduction in debug cycle time, saving weeks of engineering effort while improving design quality. We're seeing strong customer interest in our agentic AI platform, with more than 30 active customer engagements underway. Early feedback has made clear that as these agents take on more engineering work, they orchestrate our underlying EDA tools at a significantly higher rate. That allows customers to run more design and verification workloads, creating an incremental growth opportunity for Synopsys as we capture our fair share of the value that these agentic workflows and foundational tools provide for our customers.
Turning to Ansys: One year into our integration, Ansys continues to see strong demand from semis to aerospace to industrial, and more companies are embracing digital engineering across industries. Ansys simulation is accelerating innovation while reducing development risk and cost. For example, a leading automaker is using Ansys SimAI to achieve roughly 98% prediction accuracy and move crash analysis to near real time, and a leading heavy equipment manufacturer achieved more than 10x faster motor design.
We're applying AI to extend our SNA leadership and further automate the simulation of complex systems. This includes expanding our portfolio of GPU-accelerated Ansys applications, and in Q3 our largest Ansys deal was for GPU-accelerated Ansys CFD to support a company-wide digital twin at a multinational electronics component maker. Turning to design IP, which grew sequentially and year over year on broad AI infrastructure demand: As AI drives demand for higher bandwidth, faster connectivity, and more complex system architectures, our interface, memory, and die-to-die IP portfolio sits at the center of the stack, and our Q3 results showed it.
We won more than 95% of PCIe 7 opportunities, including a subsystem win at a marquee enterprise storage customer. In LPDDR6, silicon-proven across multiple nodes and foundries, we've secured 25 design wins year to date. Our die-to-die business is on pace to double year over year, and we now have more than 100 cumulative design wins. The industry continues to rely on Synopsys for silicon-proven quality and unrivaled scale. Our standards-based, build-once-sell-many IP model remains foundational to our growth strategy.
We'll continue to invest and grow this business, what I call Factory 1, which benefits from strong chip start activity and solid traction across industries. For example, in automotive we've sustained a 90%+ design win rate for three consecutive quarters as ADAS platforms refresh onto 5- and 3-nanometer. In mobile, consumer, and edge AI, our USB IP has now crossed $2 billion in lifetime bookings, with tier-one design wins already moving to the leading-edge node.
As AI extends beyond digital infrastructure into physical products, demand for silicon will continue to expand, providing a tailwind for our standards-based IP business. The higher growth opportunity in IP lies with a growing set of AI customers who are asking for deeper collaboration and IP solutions optimized to their specific workloads and architectures. To meet that demand, we are expanding into differentiated IP subsystems and enabling custom silicon solutions.
Customers ranging from hyperscalers, ASIC vendors, foundries, and classic semiconductors want to partner with Synopsys to accelerate their chip development efforts and leverage our IP and engineering expertise to build increasingly differentiated custom silicon. This is our Factory 2 model for customized IP. It moves us up the value chain from licensing alone to licensing plus royalties and positions us to capture the fast-growing custom silicon opportunity.
This is a large focus and we are making strong progress. We are in active discussions with multiple Factory 2 customers, and I look forward to sharing more at Investor Day. To summarize, I want to thank the entire Synopsys team for their continued focus, innovation, and execution. Q3 reinforced the strength of our strategy and our confidence in a strong finish to the year. AI is driving demand for advanced silicon, system-level engineering, and AI-powered design.
Our leadership portfolio positions us to capture a greater share of R&D investment across industries. We remain focused on translating our technology leadership into sustainable growth and margin expansion. Now over to Sheila.
Shelagh Glaser, Chief Financial Officer
Thank you, Sassine. We delivered an outstanding Q3 achieving revenue of $2.477 billion, non-GAAP operating margin of 41.6% and non-GAAP EPS of $3.91, all beating the high end of our guidance range with broad-based strength across the business. The revenue outperformance was driven by EDA as well as strength in the ANSYS business. Backlog remains very strong at $10.9 billion, modestly down quarter over quarter due to the divestiture of the Processor IP Solutions business that closed in Q3.
With the strength in Q3, strong cash flow generation, and continued momentum into Q4, we are raising our full-year revenue, non-GAAP operating margin, EPS, and cash flow guidance. I'll now review our third quarter results. All comparisons are year over year unless otherwise stated. We generated total revenue of $2.477 billion, up approximately 42%, including ANSYS revenue of approximately $711 million. As Sassine noted, one year into the combination, ANSYS continues to perform strongly.
We are also ahead of the schedule on the cost synergy commitments we made at close and have repaid the term loans earlier than planned. Total GAAP costs and expenses were $2.119 billion, with GAAP earnings per share of $2.84. Q3 GAAP EPS includes a gain associated with the sale of the Processor IP Solutions business that closed in the quarter. Total non-GAAP costs and expenses were $1.446 billion, on the lower end of our guided range, as we continue to improve operational efficiency and deliver ANSYS cost synergies ahead of schedule, resulting in non-GAAP operating margin of 41.6%.
Non-GAAP earnings per share were $3.91, ahead of our guidance, underscoring our strong operational execution in the quarter. Now onto our segments. Design Automation segment revenue was approximately $2 billion. As a reminder, this excludes the Optical Solutions group which was divested in Q4 '25. Within the Design Automation segment, Q3 EDA revenue increased 8.5% year over year, reflecting robust EDA software performance and another record quarter for hardware-assisted verification solutions.
Design Automation adjusted operating margin was 45.2%. The Design IP segment returned to growth, with revenue of $474 million, up approximately 11% year on year. Consistent with our outlook, this represents continued sequential growth in the IP segment as we've repositioned the portfolio to focus on the highest value opportunities. Design IP adjusted operating margin was 26.5%. Turning to cash, free cash flow was $746 million in Q3 and we ended the quarter with cash and short-term investments of $3.6 billion.
Total debt at the end of Q3 was approximately $10 billion. Now to guidance. For the full year, we are raising our total revenue guidance by $50 million at the midpoint, driven by strength in the Design Automation segment led by EDA. As Sassine stated, momentum in EDA remains strong and we expect double-digit organic EDA revenue growth in Q4 and for the full year 2026. We continue to expect the IP business to grow sequentially in Q4. This results in a revenue range of $9.69 to $9.74 billion.
Within that, ANSYS revenue contribution is expected to be approximately $2.98 billion, up $20 million versus our prior guidance. Next, expenses. Total GAAP costs and expenses are expected to be between $8.667 and $8.742 billion. This includes an increase in expected charges for fiscal year 2026 in relation to our previously announced restructuring program as we continue to accelerate our committed synergies. Total non-GAAP costs and expenses are expected to be between $5.67 and $5.70 billion and non-GAAP operating margin of 41.5% at the midpoint, a 50 basis point raise to our previous guidance.
GAAP earnings are expected to be between $3.84 to $4.08 per share. We expect non-GAAP earnings of $15.04 to $15.10 per share, a $0.31 increase at the midpoint from our prior guidance. Due to higher revenue and increased operational efficiency, we are raising our cash flow from operations guidance by $500 million to approximately $2.8 billion on strong cash collections and reducing our CapEx guidance to approximately $225 million, resulting in free cash flow of approximately $2.6 billion, an increase of $600 million versus our previous guidance.
Now to targets for the fourth quarter. Total revenue between $2.53 and $2.58 billion. Total GAAP costs and expenses between $2.225 and $2.3 billion. Total non-GAAP costs and expenses between $1.45 and $1.48 billion. GAAP earnings of $0.60 to $0.85 per share and non-GAAP earnings of $4.10 to $4.16 per share. Our press release and financial supplement include additional targets and GAAP to non-GAAP reconciliations. Thanks to our global Synopsys team for another strong quarter.
These results reflect strong execution across the business, continued demand for our technology, and disciplined operating performance as we build the foundation for the next phase of growth. We look forward to seeing many of you at our September Investor Day to discuss the compelling long-term opportunity we have as a mission-critical partner for our customers. With that, I'll turn it over to the operator for questions.
OPERATOR
Thank you. Before we begin the Q&A session, I would like to ask everyone to please limit yourself to one question and one brief follow-up to allow us to accommodate all participants. If you have additional questions, please re-enter the queue and we'll take as many as time permits. Your first question comes from the line of Jason Salino with KeyBanc Capital Markets. Your line is open. Please go ahead.
Jason Salino, Analyst at KeyBanc Capital Markets
Great, thank you. Hi, Sassine. Hi, Shelagh. Thank you for taking my question. You know, really good results here. I think what really stuck out to me was the 8% EDA growth, which was stable with last quarter despite the harder comp you mentioned. It's supposed to accelerate to double digits in Q4 and the full year. I mean, how would you describe, you know, what's driving that incremental acceleration? Is it design start activity? Is it agentic? Is it just better monetization strategies?
Just help us understand. Thanks.
Sassine Ghazi, President and CEO
Thanks, Jason, for the question. Yes, we're very excited about the overall performance in EDA and the acceleration to wrap up the year with double-digits growth, exactly what we have committed to in terms of our segment growth. What's driving the increase in confidence in our business in EDA is driven by multiple factors. The complexity of chip design, the move to advanced package 3D IC, the example I mentioned in my prepared remarks, like an AMD expansion and use of 3D IC Compiler.
And there are a number of other customers that are designing this advanced package and are using our technology. AI is definitely a tailwind as customers are rethinking how to re-engineer their chip design engineering; it's requiring different methods for that engineering. So that's driving another tailwind for us, and hardware. We had a record revenue year on hardware. So, all in all, that 8% is organic growth for EDA that we're fairly excited about.
Shelagh Glaser, Chief Financial Officer
Yeah, and I'd just point out, Jason, that the 8.5% Q3 EDA growth that you saw was against a really tough compare. Q3 '25 was 16%. And so, as Sassine said, it really just shows the strength of the business to be able to perform against that tough compare and then have the full year continue to have double digit.
Jason Salino, Analyst at KeyBanc Capital Markets
Yep, thank you. And then, Sassine, you mentioned something, you know, you talked about your customers having to re-engineer their processes. You know, we're seeing a lot of innovation happening. You know, everyone always talks about these new, you know, AI models. I think yesterday there was an example, you know, OpenAI talked about the development of their new chip. You know, they talked about using their own AI models to accelerate the design process.
Maybe can you speak to, you know, when you hear examples like this because a lot of your customers have used their own models in the past. You know, what is involved in the re-engineering of a design process? How much is supplemental or incremental or replacement of something that might be existing? I don't know if that makes sense,
Sassine Ghazi, President and CEO
But yeah, of course, of course. Yes, thank you for the question. For at least a year and a half now to two years, we've been talking about how AI is reshaping how engineering is done. The investment that Synopsys has been making and leading in delivering agent engineers to our customers, in rethinking the workflow, including AI models, that will absolutely participate and contribute to that re-engineering of engineering. In every case, the underlying requirement is more and more and more of our software, because if you're using an AI model or an agent that the customer is developing, it doesn't matter.
You still need the ground-truth physics in order for that model to be able to operate with confidence and deliver the best outcome. So the example that you mentioned, actually it's a very good example and a great opportunity for Synopsys on the EDA front—not to mention it's a huge opportunity on the IP as well because that's rethinking the whole architecture as you customize the silicon.
Jason Salino, Analyst at KeyBanc Capital Markets
Wonderful. Thank you for the explanation.
OPERATOR
Thanks, Jason. Your next question comes from the line of Joe Vruink with Baird. Your line is open. Please go ahead.
Joe Vruink, Analyst at Baird
Great. Thanks for the time today. I want to go back a few years, but at your 2024 Investor Day you had an outlook back then around how 30% of EDA software demand might end up coming from multi-die efforts by next year. I'm curious how that figure might be tracking and maybe what you see after 2027. I think we all appreciate there's been quite a lot of recent attention even this week on HBM. How might EDA content change for you when thinking about DRAM processes moving to logic, that sort of thing?
Is it actually strengthening maybe relative to what you thought a few years ago?
Sassine Ghazi, President and CEO
Yeah, Joe, actually that forecast has accelerated. As I mentioned in the prepared remark as well, the die-to-die wins that we've had in the last 12 months have doubled. And the reason for that is this whole advanced package and 3D IC architecture that drives a significant opportunity in IP. Die-to-die is one example. Then, of course, all the other interfaces that are required to stitch the system together as a final product at our customer. And on the EDA side, it's 3D IC Compiler, and this is where the emphasis of the joint solution with ANSYS is essential.
You cannot build these systems without taking into account physics—thermal, structure, fluid—into the chip design phase. So the 30% back then was a figure we thought was a stretch, but it absolutely accelerated given all the investments our customers are making to build these efficient custom silicon.
Joe Vruink, Analyst at Baird
Okay, that's great. I wanted to ask the double-digit organic growth in EDA, if you think about splitting that up between software and hardware, is the performance in your software business where you would like it to be here at year end? It seems like hardware has remained a very large and strong driver. I'm more curious about the software performance.
Sassine Ghazi, President and CEO
We're very happy with the software component—actually very, very pleased. The part that actually I'm most excited about is the delivery of our joint solution with ANSYS, and that gives us the platform to deliver to where the future of engineering challenges is heading. As we just talked about the advanced package, the need for physics into electronics gives us even the confidence to look at the trajectory and continue on delivering these double-digit growth.
OPERATOR
Your next question comes from the line of Charles Shih with Needham & Company. Your line is open, please go ahead.
Charles Shi, Analyst
Hi, thanks for taking my question. Sassine, I have a high-level, maybe a long-term question. We know that going back probably more than 10 years you played a very pivotal role in terms of infusing AI. I know back then it was not the large language model, probably more like a reinforcement learning type of AI into the Synopsys tool flows, DSO.ai, all those great products. But AI has advanced so much over the last 10 years, especially three. So the question I constantly hear from investors is about is there any risk for AI to actually disrupt the commercial EDA business?
And I think at least one school of thought was thinking could there be an end-to-end what they call AI-native chip design that bypasses all the commercial EDA tools, especially maybe with some AI models trained by the commercial EDA-generated synthetic data. Is that a real threat in your opinion to the overall EDA industry at all? Or where do you see where AI can be more substitutive or complementary to the commercial EDA business? Thanks.
Sassine Ghazi, President and CEO
Yeah, thank you Charles. I don't need to go back or go as far as 10 years ago. You're right. Around 2017 we introduced and invested and saw great results with DSO.ai centered around reinforcement learning. If you look at the last three years, the focus was around copilot generative AI, move to agents. Right now we're talking about autonomous designs. As you start looking at autonomous workflow, the most important thing is accuracy and determinism.
Customers will not invest hundreds of millions of dollars in a product without having the confidence that it's going to work. The portfolio we have with the signoff leadership is essential to building these autonomous workflows. We are participating with our customers on how to achieve an autonomous workflow. It's not like it's happening without our participation. We're proactively engaged with them to re-engineer how they're looking at the future of engineering with AI being the center of that evolution.
I am not worried at all that at some point that that model can do the end-to-end without our participation. Because you have to remember these models are not static. They're constantly changing. They constantly need to learn. So the opportunity is the opposite. It's not a threat. It's a significant demand for our software to train to inference to constantly enable that faster design to deal with the complexity and we're at the center of it.
Charles Shi, Analyst
Thanks. Maybe on the agentic AI agents opportunities and how should we think about any uplift to the overall revenue growth, especially EDA growth? And can you give us an update on changing the business model more to the subscription plus consumption, at least for the agents? Any discussion with your customers so far? Thank you.
Sassine Ghazi, President and CEO
Yes. Number of engagements actually, to the first question you had, as our customers are exploring whether to use an agent from Synopsys or an agent from Synopsys plus their own agents to keep their special sauce inside their workflow, the customer workflow or the customer agent. The need is for more licenses. We are defining with our customers multiple ways on how to engage, from a subscription of our agents, subscription of our workflow, as well as a consumption measure as these agents and the new workflow is consuming more software.
We'll highlight more of how we're thinking how to model the long-term growth with this context that I just described in a few weeks, September 30th. But absolutely we're in advanced discussions with a number of customers with different flavors of using their agents, our agents, a hybrid of both, and multiple model optionality that they're thinking about.
Charles Shi, Analyst
Thank you. I appreciate the answers. Thank you.
OPERATOR
Your next question comes from the line of Lee Simpson with Morgan Stanley. Your line is open. Please go ahead.
Lee Simpson, Analyst at Morgan Stanley
Great. Thanks for squeezing me in. Maybe just a couple of quick ones on IP. Actually maybe just preempting the analyst day, I wonder if you can maybe just give us a little bit of outline on the speed of shift to the Factory 2 opportunity you outlined with licensing and royalties. And then secondly, it's been about a year I think since we've seen the Intrinsic ID acquisition and I think at the time you talked about security IP as being a new vector of growth in IP.
Just wanted to hear if you could maybe outline the size of that opportunity, how you've seen engagements go and where in particular you think deployments will happen. Thanks.
Sassine Ghazi, President and CEO
Thank you Lee. On Factory 2, actually all you need to look at is the momentum in every hyperscaler investing and are at various stages of delivering their own custom silicon. These chips will not happen without our interface IP. These customers need our interface IP in order to build their own chips and to connect to the ecosystem, be it the memory provider or if they're investing in their XPU, but they need a networking chip from their supplier.
Connecting them together comes through our interface IP. So that's the opportunity. What we could see as well, and the reason we started talking about Factory 2, is the need to customize these standards and to accelerate the delivery of these customizations. Synopsys is in a unique position given our scale and the knowledge, the skills, the market position to deliver on that customization and acceleration. We are in advanced discussions with a number of these customers to change the business model from the traditional IP license plus some NRE to a license plus a royalty.
I look forward in a few weeks to again help you model what does that look like? But I cannot be more excited about the investment that we've made and the agility in pivoting in that direction while absolutely continuing on leading and investing in Factory 1 because that's another significant opportunity that will continue. As for security, the reason we started looking at the portfolio and we divested the processor IP is to focus on the areas of growth.
Security is one of them. As you said, we don't split it out as a separate item, but we have a great market position in security and it will only continue on becoming more and more important given you need to secure the chip not only at the software level, but as much as you can do at the hardware level. And that's where our security portfolio comes in.
Lee Simpson, Analyst at Morgan Stanley
Thank you.
Sassine Ghazi, President and CEO
Thank you, Lee.
OPERATOR
Your next question comes from the line of Josh Tilton with Wolfe Research. Your line is open. Please go ahead.
Arseni, Analyst (for Josh Tilton at Wolfe Research)
Hi, this is Arseni on for Josh. Just first, we talked about seeing strong early customer interest in multiphysics fusion following the launch, and just historically chip design and simulation often were kind of handled by different engineering teams and different workflows and tools. I guess when you're bringing thermal analysis directly into the design flow, how are customers structurally, I guess, approaching that convergence? Are you seeing those teams start to work more closely together and, you know, consolidate around more common workflows?
Or does adoption still kind of require navigating distinct engineering teams and maybe separate budgets? Thanks.
Sassine Ghazi, President and CEO
Yeah, you're absolutely right. These teams, or the skills and expertise of engineering, were separate domains. They had a different handshake as the design steps are moving from the synthesis to the physical design to signoff, et cetera. The requirements to have co-design is essential to reduce margin and deliver to these competitive products. So absolutely, leading customers are requiring to take thermal into account during the design implementation, to take structure stress as they're building these 3D IC into the architecture of the chip, not only the synthesis or the implementation of the multiple chiplets.
So yes, absolutely. And this is where we have invested, that the implementation engineers that are sitting in the upfront part of the design flow are able, without too much effort, to be able to bring in signoff accuracy early in the design flow. And that's exactly where we see the opportunity of the combined portfolio and delivering to the fusion of physics with electronics. From a budget point of view, by the way, the second part of your—I'm sorry, from the second part of your question, from a budget point of view, as we have committed, one plus one will be greater than two.
What it means, even if it's coming from an EDA budget, the joint solution will capture an upside in revenue to the existing separate point tools.
Arseni, Analyst (for Josh Tilton at Wolfe Research)
Got it. That's helpful. And then, Shelagh, just clarifying just one topic specifically on Ansys, the raise $20 million to the $2.98 billion. Last quarter you helped us with $12.5 million contribution from that accounting dynamic, and it was $60 million for the full year. Is it still $60 million for the full year? And that raise on that $20 million increase in Ansys is just core upside from good execution there.
Shelagh Glaser, Chief Financial Officer
Yeah. So last quarter we talked about the accounting change, and so we made that accounting change and we'll be making that accounting change. And the guidance that we're giving incorporates that. So we're seeing strength in the Ansys business, including the channel business.
Arseni, Analyst (for Josh Tilton at Wolfe Research)
What was it, I guess in Q3, for instance, accounting change and it's still $60 million for the full year. Is it a different number this time?
Shelagh Glaser, Chief Financial Officer
It's still in that same range for the full year.
Arseni, Analyst (for Josh Tilton at Wolfe Research)
Got it. And the quarter, it was 12 and
Shelagh Glaser, Chief Financial Officer
a half, or we didn't disclose the in-quarter.
Arseni, Analyst (for Josh Tilton at Wolfe Research)
Got it. All right, cool. Thank you very much.
Shelagh Glaser, Chief Financial Officer
Thank you.
OPERATOR
Your next question comes from the line of Joe Quatrochi with Wells Fargo. Your line is open. Please go ahead.
Joe Quatrochi, Analyst at Wells Fargo
Yeah, thanks for taking the question. You know, you talked about a tale of two markets with, you know, AI versus non-AI in EDA, and just wondering if the acceleration that you're seeing is AI becoming a larger piece and offsetting kind of the non-AI, or have you started to see, you know, also some acceleration from the non-AI part of your business as well?
Sassine Ghazi, President and CEO
Yeah, Joe, so the reason for our assertion, to begin with what we do on a quarterly basis—these are internal measures that we have—is we track chip starts. And the reason we have a good coverage on design starts is our IP portfolio. There is no customer that is planning a new chip start that we don't engage very early on through our IP portfolio. And of course EDA will follow. The observation is on the non-AI in the last two quarters it has stabilized.
What it means was we were observing a slowdown in design start in the non-AI segment; in the last couple quarters, stabilization, so it's not declining anymore. Now on the flip side for AI, where we have been seeing and continue on seeing an acceleration in design start, which is a great balance for the opportunity that we have,
Joe Quatrochi, Analyst at Wells Fargo
that's helpful. And then maybe as a follow up, just wondering if you could give any puts and takes on the RPO. You know, down a touch this quarter. Was there any impact from the divestiture and, you know, did it come in as expected with your plan?
Shelagh Glaser, Chief Financial Officer
Yeah, it came in as expected and as I said in our prepared marks, the modest change is really due to the divestiture of the processor IP business that happened inside the quarter. As you recall, we were close to closing the deal when we did last earnings. It closed a few days after we did the earnings. So that's why you're seeing it this quarter.
Joe Quatrochi, Analyst at Wells Fargo
Yep. Thank you.
Shelagh Glaser, Chief Financial Officer
Thanks for the question.
OPERATOR
Your next question comes from the line of Sidi Pedgrahi with Mizuho. Your line is open. Please go ahead.
Sidi Pedgrahi, Analyst at Mizuho
Thanks for taking my question. Sassine, it's really a good quarter. Congratulations. Going back to the Ansys and Synopsys integrated products that you launched, I think you talked about that multiphysics fusion is not expected to contribute to EDA growth until 2027. So can you talk about the adoption or pipeline trajectory that we should expect from now and then, and is that 2027 contribution more likely to show up
Sassine Ghazi, President and CEO
Yes. So from a value to the customer, the 10x faster design closure or a 3x faster SPICE-accurate multiphysics timing — that is a significant value to customers. What does it mean for the customer? Less iteration, better design, faster. Our customers in these early engagements have validated and they're in early stages of deployment. The moment we move to production, which those customers will move to production, we'll start seeing the revenue upside.
As we've said from the beginning, FY26 we will not have much contribution in the joint solution. It was a year of execution, delivering to these products. As we look at FY27, absolutely, it will contribute to our growth in EDA. We are absolutely committed as well to the $400 million synergy in year four. So as we meet in September, we'll be able to start talking about '27 and the longer-term contribution of this differentiated solution. Yeah. Mike has been doing a great job in leveraging what the organization does incredibly well and the areas that we need to increase our investment from portfolio, go-to-market point of view, etc. The priority as we look at FY27 and beyond is how to engage the customers in the areas of differentiation and ensure we have the right investment with the customer. We're enabling the customer successfully so we capture the monetization opportunity. So Mike has been spending a lot of energy internally with the team to prepare the organization for IP Factory 2, for the AI monetization, for the joint solutions.
All this is significant time where Mike is spending as we look at '27 and beyond. He is. We're happy having him.
OPERATOR
Your next question comes from the line of Jay Fleishauer with Griffin Securities. Your line is open. Please go ahead.
Jay Fleishauer, Analyst at Griffin Securities
Thank you. Good evening. Sassine, for you first. This may be an imperfect analogy, but how would you compare the prospective migration or adoption benefit of the new multiphysics cohort and the cohorts to follow — might compare with the ICC to Fusion Compiler transition that obviously didn't include an Ansys component at the time. But that was your last big architectural or generational change in your stack. So how would you think this one, now that it's underway, might compare to that?
And then a follow-up?
Sassine Ghazi, President and CEO
Yeah, Jay, thank you. Actually, very good question. What we've done with Fusion was bringing our signoff capability and strength into the design physical implementation phase, because the customers at the time were having to iterate late stage to correlate or to sign off the chip. It's exactly the same here, but you're including physics now — the RedHawk, the HFSS, the rest of the portfolio of Ansys. How do you bring not only approximation into the design phase, how do you bring the actual engines into the design phase so you reduce iteration, you have a convergent flow, etc. The investment we made in the Fusion platform — because remember, Fusion platform is not about bringing tools together with a common interface or a user interface. We made a significant investment at the data model level so our R&D team can write code optimized on the same exact infrastructure and data model. And that's where Shankar and team have been investing quite heavily from day one of the integration start to deliver to exactly the same value that we were able to build on with Fusion.
Jay Fleishauer, Analyst at Griffin Securities
Okay. Secondly, the re-engineering of engineering concept that you've talked about now since Converge last year remains a very interesting concept and prospect for you and your customers. The question is, what are the ingredients that customers need to make that work? Is it a set of variables or changes they need to make? Is there a single magic bullet that they can implement to make that happen? The demos that you did jointly, for example at DAC with AMD and Microsoft around Discovery seemed quite interesting as perhaps a catalyst for some of those changes.
So maybe talk about what actually has to happen for the whole re-engineering thing to really happen.
Sassine Ghazi, President and CEO
Yeah, we talked about Fusion as an essential part to have the entire complete set from spec all the way to signoff. So that's an essential component that Synopsys has — that complete set of assets. Now, bringing together a workflow that leverages the AI speed from a copilot, generative AI all the way to autonomy is where we're putting significant investment and racing. The two demos we've done — and thank you for mentioning the Microsoft/AMD, which was a demonstration of a full autonomous EDA workflow on the Microsoft Discovery — think how powerful that is, where you can start from a spec and you have a cognitive layer that can orchestrate multiple tasks/agents in order to deliver to the outcome of the spec. At the same time, what we've done at DAC actually is a demonstration with NVIDIA on an autonomous long-running agent capability. So that's an essential part of re-engineering the workflow. What I'm most excited about, as you double-click into what I just described, is not only the assets that we have. The consumption of these assets is exponential in order to allow for an autonomous flow to deliver to the promise that the customer is looking for, which is an efficient design — better power, better performance, better cost.
And that's exactly what we're doing.
Jay Fleishauer, Analyst at Griffin Securities
Thank you.
Sassine Ghazi, President and CEO
Thank you.
OPERATOR
Your next question comes from the line of Gary Mobley with StoneX. Your line is open. Please go ahead.
Gary Mobley, Analyst at StoneX
Good afternoon, everybody. Thanks so much for fitting in my question. Shelagh, you mentioned in your prepared remarks the largest deal in the quarter for Ansys was a GPU-based digital twin. Was that a large deal because it is accelerated compute — runs in accelerated compute versus CPU-based compute? I'm asking because I'm just trying to get a sense of whether the efficiency from accelerated compute digital twin system accrues to NVIDIA or accrues to you as well.
Sassine Ghazi, President and CEO
Thank you, Gary, for the question. So simulation is a perfect application for GPU acceleration because these are jobs you can, for the most part, not only parallelize — you can achieve a significant speed-up. So the speed-up does not stop or have limitation at 10 or 15x. In CFD we're seeing 40, 50, 60x speed-up. The bottleneck for our customers is the time to results — the time to accurate results. And the investment actually started with the GPU acceleration even before the acquisition of Ansys by Synopsys.
After the acquisition, we just accelerated even further — the commitment, the investment — and of course the NVIDIA investment and alignment towards this opportunity only helped. In terms of who gets the value: we sell, and we capture the entire value and uplift. With the GPU — NVIDIA, of course, in the back end you need GPU to run. From the traditional CPU to GPU, they benefit that way. So the large deal is large because of the benefit to the customer and the speed-up we were able to deliver to the customer.
Gary Mobley, Analyst at StoneX
Thank you. My follow-up: I want to ask about Korea. Revenue generated from Korea appears to be trending up close to 20% this year. That's a standout for sure. Is that a reflection of the strength of the memory market? Is it a reflection of maybe, I guess, you retaining more market share at Samsung than what many have speculated? Maybe you can just give some color there.
Sassine Ghazi, President and CEO
I'm not sure about the speculation. One thing I can tell you is our relationship with Samsung, with SK Hynix, with the broad market in Korea has been a great collaboration in an area and a region that are leading with a very essential part of the AI infrastructure. And we are leading with those customers — and not limited to those two — in the broader region itself across the portfolio. So you need to think of it from IP, with our custom HBM and HBM engagements with the lead customers, to EDA and to Ansys.
So very pleased with the performance that we have.
Gary Mobley, Analyst at StoneX
Thank you.
OPERATOR
Thank you. Gary, your next question comes from the line of Kelsey Chia with Citi. Your line is open. Please go ahead.
Kelsey Chia, Analyst at Citi
Hi, Shelagh. Great to see the IP business getting back on track. I believe the team outlined a long-term growth of about mid-teens for the IP business several years ago. I mean, since then we have seen significant acceleration in the chip design activity, particularly among hyperscalers, and it seems that the non-AI portion of the business is also stabilizing. Given that backdrop, is it unreasonable to think that IP business could achieve a much stronger growth than the mid-teens laid out over the next couple of quarters?
And if so, are there any factors that could prevent that growth algorithm from being reset higher?
Sassine Ghazi, President and CEO
Kelsey, thank you for the question. Your assumptions are good ones, which is more chip starts, a huge opportunity with custom chips — which I refer to as Factory 2 — as Factory 1 continues on delivering and expanding. And for now the mid-teens is our long-term guide. We'll look forward for September where we can share more and provide any updates as necessary.
OPERATOR
Thank you. We have reached the end of the Q&A session. I will now turn the call back to Sassine Ghazi for closing remarks.
Sassine Ghazi, President and CEO
Thank you for all the questions. One year after the transformational acquisition of Ansys, we're executing with focus, gaining momentum, and extending our leadership from silicon to systems. I look forward to seeing many of you at Investor Day in September. Thank you very much.
OPERATOR
This concludes today's call. Thank you for attending. You may now disconnect.
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