Cadence Design Systems (CDNS) Stock Drops on Weak Financial Outlook

Cadence Design Systems Inc (NASDAQ:CDNS) in its current form is a result of a merger between Solomon Design Automation (SDA) and ECAD in 1988. Cadence specializes in electronic design automation (EDA). The company uses its intelligent system design to provide hardware and software to transform design models into reality.

The California-based computational software company recently announced its financial results for the first quarter. Cadence reported earnings of 67 cents per share for the three months ended April 3, significantly higher than 44 cents per share in the comparable period of 2020.

Excluding items, the company reported adjusted earnings of 83 cents per share, easily beating the consensus forecast of 75 cents per share. Revenue for the quarter jumped nearly 19 percent on a year-over-year basis to $736.03 million. Analysts on average were looking for revenue of $718.6 million.

Speaking on the results, CEO Lip-Bu Tan said in a statement, “Cadence delivered excellent financial results for the first quarter driven by strong execution and ongoing momentum in our core business and accelerating growth in our systems businesses.”

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Cadence also issued its financial outlook for the second quarter and full year. The company is anticipating adjusted earnings in the range of 74 cents per share to 78 cents per share and revenue between $705 million and $725 million for the current quarter. For the full year, it expects to report adjusted earnings in the range of $2.99 per share to $3.07 per share and revenue between $2.88 billion to $2.93 billion.

Cadence shares fell nearly 7 percent in the mid-day trading Tuesday apparently due to a weak financial outlook. Overall, the stock has not gained any value so far in 2021. Cadence stock is down nearly 2 percent on a year-to-date basis.