By Jaspreet Singh and Stephen Nellis
(Reuters) - Synopsys (NASDAQ:SNPS) forecast second-quarter revenue and profit above Wall Street estimates on Wednesday, anticipating a surge in demand for its software to design complex and artificial intelligence-compatible chips.
The Sunnyvale, California-based company's shares were up more than 3% in extended trading.
The outlook comes more than a month after Synopsys, the largest maker of software used in the chip designing process, said it would buy Ansys (NASDAQ:ANSS) in a $35 billion cash-and-stock deal.
In an interview, Synopsys CEO Sassine Ghazi said the company has started filing for regulatory approvals and so far has encountered "no surprises - there is nothing that we did not anticipate."
Ghazi also told Reuters that the company hopes to tell investors whether it will sell off its software integrity business by March 20. Synopsys said in December it was evaluating strategic alternatives for the unit.
Synopsys, which partners with chipmakers including Taiwan Semiconductor Manufacturing Co, Intel (NASDAQ:INTC), and Samsung Electronics (KS:005930), expects second-quarter revenue to be in a range of $1.56 billion to $1.59 billion, above analysts' average estimate of $1.55 billion, according to LSEG data.
The AI boom has elevated demand for companies such as Synopsys, as its electronic design automation (EDA) tools are used by chip firms for custom semiconductor design in diverse sectors such as aerospace, automotive and industrial.
Chip firms are spending heavily on research and design initiatives to make robust chips with innovative design, which is one of the industry's biggest challenges because billions of transistors - tiny on-off switches - must be precisely arranged on a piece of silicon just a few millimeters wide. That has sparked demand for software provided by Synopsys even as economic uncertainty looms.
Synopsys forecast adjusted earnings per share in a range of $3.09 to $3.14 for the second quarter ending April 30, also above analysts' average estimate of $3.02 per share.
The company reiterated its outlook for full-year revenue but raised its annual adjusted earnings per share forecast to a range of $13.47 to $13.55, from $13.33 to $13.41.
Revenue in the first quarter ended Jan. 31 rose about 21% to $1.65 billion, in line with estimates. Excluding certain items, it earned $3.56 per share, beating the estimate of $3.43.