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Cadence Design Systems’ Stock Falls 6% On Weak Guidance

Cadence Design Systems (CDNS) stock is down 6% after the maker of semiconductor-design software issued forward guidance that fell short of Wall Street forecasts.

Despite the disappointing guidance, Cadence Design managed to beat consensus estimates with its first-quarter financial results.

The company reported earnings per share (EPS) of $1.17 U.S., which was better than the $1.13 U.S. expected among analysts.

Revenue during the quarter totaled $1 billion U.S., which was inline with Wall Street forecasts. Sales were down 1% from a year earlier.

Cadence Design said that it ended Q1 with a record backlog of about $6 billion U.S. of orders.

However, despite the earnings beat and record orders, management provided guidance below analysts’ expectations, sending the stock lower.

Cadence Design projects revenue of $1.03 billion U.S. to $1.05 billion U.S. for the current second quarter of the year, with earnings of $1.20 U.S. to $1.24 U.S. per share.

Analysts had been looking for Q2 revenue of $1.10 billion U.S. and $1.43 U.S. a share in earnings.

For all of 2024, Cadence Design forecasts revenue of $4.56 billion U.S. to $4.62 billion U.S., a slight increase at both ends of the range.

Full year profits are expected to be $5.88 U.S. to $5.98 U.S. per share, up slightly from a previous forecast of $5.87 U.S. to $5.98 U.S.

The company also maintained its forecast for full year operating margins of 42% to 43% a share.

Management at Cadence Design said they will continue to dedicate more than 50% of free cash flow to share repurchases, with plans to buyback $125 million U.S. of stock in the current quarter.

Prior to today (April 23), the stock of Cadence Design Systems had risen 34% in the last 12 months to trade at $285.02 U.S. per share.