Cadence Design Systems Beats Second-Quarter Goals, Guides Higher

Electronic design software maker Cadence Design Systems (CDNS) late Monday beat Wall Street’s targets for the second quarter and guided higher for the current quarter and full year. But CDNS stock wavered in extended trading after the company announced a leadership change.




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The San Jose, Calif.-based company earned an adjusted 86 cents a share on sales of $728 million in the June quarter. Analysts expected Cadence earnings of 76 cents a share on sales of $720 million. On a year-over-year basis, Cadence earnings rose 30% while sales climbed 14%.

“Cadence exceeded all of its key financial metrics for the second quarter and as a result we are raising our outlook for the year,” Chief Financial Officer John Wall said in a news release.

For 2021, Cadence expects to earn an adjusted $3.17 a share on sales of $2.95 billion, based on the midpoint of its outlook. That would translate to year-over-year growth of 13% in earnings and 10% in sales. Wall Street had predicted Cadence earnings of $3.05 a share on sales of $2.92 billion.

CDNS Stock Seesaws Late

In after-hours trading on the stock market today, CDNS stock alternated between modest gains and losses. During the regular session Monday, CDNS stock dipped 0.5% to 144.97.

For the third quarter, Cadence expects to earn an adjusted 75 cents a share on revenue of $740 million. That’s based on the midpoint of its guidance. Wall Street had predicted earnings of 73 cents a share on sales of $723 million in the September quarter. In the year-earlier period, Cadence earned an adjusted 70 cents a share on sales of $667 million.

In other news, the company announced a leadership transition. Current Chief Executive Lip-Bu Tan will transition to the role of executive chairman on Dec. 15. President Anirudh Devgan will assume the role of CEO at that time.

Tan, 61, has been chief executive at Cadence since January 2009. On his watch, revenue grew from less than $1 billion to almost $3 billion, operating margins expanded to more than 35%, and the stock price appreciated by more than 3,200%.

CDNS stock is in the IBD Long-Term Leaders Portfolio.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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Roy Walsh

Roy Walsh

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