Cadence Design Systems Soars 6.5% on Earnings Beat and Upgraded Outlook

SAN JOSE, California - Cadence Design Systems, Inc. (NASDAQ: CDNS) shares rose 6.5% after the company reported third-quarter earnings that surpassed analyst expectations and raised its annual outlook. The electronic design automation software producer achieved strong results with broad-based power across its portfolio.

Cadence reported a third-quarter adjusted earnings of $1.64 per share, exceeding the analyst consensus of $1.44 by $0.20. Revenue reached $1.22 billion, surpassing the expected $1.18 billion and representing a 19% increase from $1.023 billion in the same quarter last year.

The company’s president and CEO, Anirudh Devgan, attributed the exceptional results to "broad-based strength across our portfolio, particularly in IP, SD&A, and hardware systems." Devgan also emphasized the rapid adoption of Cadence.AI, stating, "Customers are achieving extraordinary results with Cadence.AI, and I am excited about the accelerating proliferation as AI becomes an integral part of the design workflow."

Looking ahead, Cadence raised its full-year guidance for 2024. The company now expects revenue between $4.61 billion and $4.65 billion, which is comparable to the analyst consensus of $4.627 billion. Adjusted earnings per share are projected to be between $5.87 and $5.93, aligning with the consensus estimate of $5.89.

CFO John Wall expressed optimism about the company’s outlook, stating, "Our fourth-quarter order pipeline looks extremely strong, and we are well-positioned to deliver a robust 2024."

Cadence's System Design and Analysis business achieved a 47% year-over-year revenue increase in the third quarter, while the IP business saw a 59% increase. The company’s Functional Verification segment also delivered strong results with a 22% year-over-year revenue increase.