Synopsys indicated at its third-quarter earnings call that it expects EDA growth to accelerate to double digits, while revenue and EPS exceeded market expectations. Against the backdrop of gains from the sale of its processor IP business and the integration of Ansys, it also raised its full-year and free cash flow forecasts.
Synopsys reported third-quarter revenue of $2.48 billion, up 42.37% year on year. Non-GAAP EPS was $3.91 and GAAP EPS was $2.84, with both exceeding market expectations. The substantial upside in revenue and earnings metrics was driven in part by the gain on the sale of its processor IP solutions business, which was completed during the quarter.
EBITDA was $1.08 billion, the EBITDA margin was 43.72%, and the EBIT margin was 41.60%, expanding by basis points from the prior-year quarter. Design IP and Ansys contributed to the near-term improvement in margins while absorbing the integration costs associated with the integration of Ansys. Ansys itself contributed approximately $711 million in quarterly revenue.
Design IP revenue was $474 million, up approximately 11% year on year, while Design Automation grew 8.5%, showing signs of recovery. Backlog was $10.9 billion, a slight decline, but the decrease was attributable to the processor IP unit that was sold. The full-year free cash flow forecast was raised by approximately $600 million to approximately $2.6 billion. Standalone third-quarter free cash flow was $74.6 million, cash and short-term investments totaled $3.6 billion, and total debt was approximately $10 billion.
Synopsys set a fourth-quarter revenue target of $2.53 billion to $2.58 billion and non-GAAP EPS of $4.10 to $4.16, expecting accelerating EDA growth to lead to double-digit growth for the full year. Management views the latest upward revision as part of its continuing growth.