Cadence Design Systems, a maker of electronic design automation software, late Monday edged above Wall Street's targets for the second quarter and with its outlook for the rest of the year. But CDNS stock fell in extended trading.
The San Jose, Calif.-based company earned an adjusted $1.22 a share on sales of $977 million in the June quarter. Analysts polled by FactSet had expected Cadence earnings of $1.18 a share on sales of $976 million. On a year-over-year basis, Cadence earnings rose 13% while sales increased 14%.
For the second half of 2023, Cadence predicted adjusted earnings of $2.57 a share on sales of $2.07 billion. That's based on the midpoint of its outlook. Wall Street called for earnings of $2.56 a share on sales of $2.06 billion.
"Our revenue outlook for the second half represents a year-over-year growth of approximately 15%, allowing us to raise our 2023 revenue guidance to more than 14% growth over 2022," Chief Financial Officer John Wall said in a news release.
CDNS Stock Is A Recent Breakout
In after-hours trading on the stock market today, CDNS stock fell 4.2% to 231.23. During the regular session Monday, shares dropped 0.7% to close at 241.27.
In a written statement, Chief Executive Anirudh Devgan called out generative artificial intelligence as a business driver for Cadence.
Generative AI can create content — including written articles, images, videos and music — from simple descriptive phrases. Artificial intelligence systems analyze and digest vast amounts of data to create new works.
"Our dedicated focus on AI over the past several years, combined with our computational software expertise and invaluable data that lies at the core of AI, uniquely positions us to deliver to the tremendous potential of this transformative technology," he said.
On May 25, Cadence shares broke out of a flat base at a buy point of 217.67, according to IBD MarketSmith charts. The breakout came a week after CDNS stock touched that buy point, but in below-average trading volume. It notched a record high of 248.16 on July 20.
CDNS stock is on the IBD Tech Leaders, Big Cap 20 and Long-Term Leaders stock lists.
Cadence ranks first out of 12 stocks in IBD's Computer Software-Design industry group, according to IBD Stock Checkup. CDNS stock has an IBD Composite Rating of 97 out of 99.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
