Synopsys Inc. (NASDAQ: SNPS) filed for a securities‑fraud class action on November 6, 2025, in the U.S. District Court for the Northern District of California. The suit, brought by Bronstein, Gewirtz & Grossman, LLC, names the company as defendant in the case caption Kim v. Synopsys, Inc., No. 25‑cv‑09410 and targets investors who purchased shares between December 4, 2024 and September 9, 2025.
The complaint alleges that Synopsys failed to disclose that its intensified focus on artificial‑intelligence (AI) customers was eroding the economics of its Design IP business. It also claims that certain roadmap and resource decisions were unlikely to deliver the intended results, and that these factors materially harmed the company’s financial results. The plaintiffs argue that Synopsys’ positive statements about its business were misleading and lacked a reasonable basis.
Synopsys’ Q3 2025 earnings, released on September 9, 2025, provide context for the lawsuit’s claims. Total revenue rose 14% year‑over‑year to $1.740 billion, driven largely by a 23% increase in Design Automation revenue. In contrast, Design IP revenue fell 7.7% YoY to $1.210 billion, and its adjusted operating margin contracted 45.2% from 36.7% to 20.1%. The company missed its prior guidance for the quarter—$1.755 billion to $1.785 billion—and issued a more conservative outlook for Q4 and the full year, citing headwinds in the Design IP segment.
Management’s comments underscore the challenges highlighted in the lawsuit. CEO Sassine Ghazi said the company was “taking a more conservative view of Q4” because Design IP customers were demanding “more and more customization,” which “takes longer” and requires “more resources.” CFO Shelagh Glaser noted that the company’s focus on AI customers was “taking longer” and “requires more resources,” reinforcing the narrative that the AI‑driven shift was straining the Design IP business. These statements, made in the earnings call, are the same themes the plaintiffs allege were omitted from Synopsys’ public disclosures.
The market reacted sharply to the Q3 earnings and the subsequent lawsuit announcement. After the earnings release, the stock fell nearly 36% in a single day, reflecting investor concern over the Design IP decline and the missed guidance. The announcement of the class action on November 6 added further pressure, as investors weighed the potential legal and reputational risks. The reaction was driven by the underperformance of the Design IP segment, the company’s admission of a more conservative outlook, and the legal scrutiny over possible misstatements about the impact of AI customers on the business.
The lawsuit raises significant implications for Synopsys’ future trajectory. The Design IP segment’s erosion threatens the company’s long‑term revenue mix, especially as it seeks to capitalize on AI opportunities. Meanwhile, Synopsys is integrating the July 17, 2025 acquisition of Ansys, a move that adds complexity and could divert resources from the already strained Design IP business. The legal action also signals potential reputational damage and the possibility of substantial recoveries for investors, which could influence future capital‑raising and strategic decisions.
Investors who suffered losses during the class period have until December 30, 2025 to file a lead plaintiff motion. The outcome of the lawsuit could reshape Synopsys’ financial disclosures and affect shareholder value, making it a critical event for stakeholders to monitor.
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