06:27 AM EDT, 09/10/2025 (MT Newswires) -- Synopsys ( SNPS ) shares fell early Wednesday as the software company lowered its full-year profit outlook, while the firm's fiscal third-quarter earnings unexpectedly declined year over year amid underperformance in its IP business.

Adjusted earnings are now set to come in between $12.76 and $12.80 per share for the 2025 fiscal year ending October, the company said late Tuesday. It previously projected adjusted EPS to be in a range of $15.11 to $15.19, while the current consensus on FactSet is for $13.72. The stock dropped 21% in the most recent premarket activity.

Revenue is pegged at $7.03 billion to $7.06 billion for the ongoing fiscal year, up from the firm's prior guidance of $6.75 billion to $6.81 billion. The Street is looking for $6.89 billion.

For the three-month period ended July, Synopsys' ( SNPS ) adjusted EPS decreased to $3.39 from $3.43 the year before, compared with the average analyst estimate for an increase to $3.80. Revenue climbed 14% to $1.74 billion, but fell short of the Street's view for $1.77 billion.

"Our results were primarily impacted by underperformance in the IP business as we had the expectation of deals that did not materialize," Chief Executive Sassine Ghazi said during an earnings call, according to a FactSet transcript.

The underperformance was impacted by the US government's export restrictions on China, disrupting design starts and "compounding weakness" in the country, while "challenges at a major foundry customer" had a "sizeable" impact on the year, according to Ghazi. The company also made "certain roadmap and resource decisions" that didn't generate the intended results, the CEO added.

Revenue in the design IP segment fell to $427.6 million from $463.1 million in the prior-year quarter. Design automation revenue advanced 23% to $1.31 billion, buoyed by "strong performance from our hardware business," Chief Financial Officer Shelagh Glaser said on the call.

"Our IP business faced several headwinds," Glaser told analysts. "In response, we are taking a more conservative view of (the fourth quarter) and we are realigning our IP resources to the highest-growth opportunities and improving our execution."

Synopsys ( SNPS ) anticipates adjusted EPS to be between $2.76 and $2.80 on a revenue range of $2.23 billion to $2.26 billion for the ongoing quarter. The market is currently estimating adjusted EPS of $3.53 and revenue of $2.21 billion.