4 key takeaways from Cadence Design Systems’ quarterly earnings report

Cadence Design Systems Inc (NASDAQ: CDNS) reported its financial results for the fiscal first quarter on Monday that beat Wall Street estimates. The computer software company, however, gave weaker than expected guidance for the second quarter.

1. Financial performance

Cadence said that its net income in the first quarter came in at £134.65 million that translates to 48.20 pence per share. In the same quarter last year, its net income was capped at a lower £89.20 million, or 31.65 pence per share.

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On an adjusted basis, the American multinational earned 59.71 pence per share in Q1. Cadence generated £529.46 million of sales in the recent quarter that represents a 19% annualised growth. In comparison, experts had called for £516.37 million of sales in the first quarter. Their estimate for adjusted per-share earnings stood at a lower 53.95 pence.

In separate news from the United States, grocery company Albertsons said it swung to a loss in the fiscal fourth quarter due to COVID-19 restrictions.

2. Q2 and full-year guidance

For Q2, Cadence now forecasts £514.36 million of revenue and 54.67 pence of adjusted EPS. Analysts, on the other hand, are predicting a higher £519.90 million of revenue and 54.67 pence adjusted EPS.

The software firm expects £2.09 billion of sales for the full financial year and £2.18 per share of adjusted EPS that roughly matched the Wall Street estimates. In the prior quarter (Q4), Cadence had reported £540.49 million of revenue.

3. Chief Executive Lip-Bu Tan’s comments

CEO Lip-Bu Tan commented on the earnings report on Monday and said:

 â€œInnovation is foundational to our Intelligent System Design strategy, and since the start of 2021, we introduced several exciting new products, including the Palladium Z2 emulation platform, Protium X2 prototyping platform and next-generation Sigrity X for systems analysis. We broadened our systems analysis portfolio with the successful completion of the NUMECA and Pointwise acquisitions, enabling us to provide more capabilities and value to our customers while increasing our TAM.”

4. Impact on the share price

Cadence Design Systems shares that you can conveniently trade online via a range of user-friendly apps were reported about 3.5% down in extended trading on Monday. Including the price action, the San Jose-based company is now close to 3% up year-to-date in the stock market.

At the time of writing, Cadence Design Systems is valued at £28.96 billion and has a price to earnings ratio of 68.29.