By Stephen Nellis and Zaheer Kachwala
(Reuters) - Chip design software firm Synopsys (NASDAQ:SNPS) on Wednesday forecast fiscal 2025 revenue below Wall Street expectations thanks in part to a slump in China sales 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 its $35 billion deal to acquire engineering software firm Ansys (NASDAQ:ANSS) in the first half of 2025.
Synopsys forecast fiscal 2025 revenue in the range of $6.75 billion to $6.8 billion, with the entire range below estimates of $6.91 billion, according to LSEG data.
Glaser said that a change in Synopsys fiscal calendar to make it easier to merge its financial reporting with Ansys lowered the company's full-year revenue forecast by about $80 million. But the larger driver of the revenue was a continued sales drop in China, where the U.S. earlier this week imposed new limits on chip technology exports.
Glaser said that the list of companies Synopsys can no longer sell to in China has grown, and some of those Chinese customers that remain are hesitating with plans for new chips because of uncertainty around whether they will be able to have the chips manufactured.
"It's kind of a cumulative impact of restrictions," Glaser said.
Glaser said the election as U.S. president of Donald Trump, who has promised to impose new tariffs on Chinese imports, did not change Synopsys' outlook for closing the Ansys deal.
"We certainly have expectations that each jurisdiction has its own criteria and reviews," Glaser said. "But that actually was true from the beginning, and there was always going to be an election."
Synopsys forecast adjusted earnings per share for the full year to be between $14.88 and $14.96 per share, while analysts expected $14.88 per share.
The company forecast first-quarter revenue between $1.44 billion and $1.47 billion, compared with estimates of 1.64 billion.
It expects adjusted EPS for the first quarter 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 estimates of $3.30 per share.