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Cadence Design Systems Raises Full-Year Outlook Following Second-Quarter Earnings Beat

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Cadence Design Systems Raises Full-Year Outlook Following Second-Quarter Earnings Beat

Cadence Design Systems (CDNS) shares rose early Tuesday after the computational software company lifted its full-year outlook and reported better-than-expected fiscal second-quarter earnings.

Adjusted earnings are now anticipated to come in between $8.05 and $8.15 per share for fiscal 2026, the company said late Monday, up from its previous projections of $7.85 to $7.95. Revenue is pegged at $6.26 billion to $6.34 billion, compared with the prior guidance of $6.13 billion to $6.23 billion.

The current consensus on FactSet is for non-GAAP EPS of $8.05 and sales of $6.27 billion. The stock increased 3.1% in the most recent premarket activity.

The firm is seeing growing demand for its artificial intelligence-driven offerings, with the AI boom generating "strong, broad-based performance" across its design for AI and AI for design fronts, Chief Executive Anirudh Devgan said during an earnings call, according to a FactSet transcript.

Cadence is well positioned to benefit from the expanding market for agentic AI in electronic system design, Devgan said.

Earlier this month, Cadence announced AuraStack AI Super Agent, an AI platform for printed circuit board and advanced packaging design. The company said the platform is designed to automate engineering workflows and shorten product development cycles.

For the three months through June, Cadence's adjusted EPS climbed to $2.11 from $1.65 the year before, topping the Street's view for $2.05. Revenue advanced to $1.58 billion from $1.28 billion, roughly in line with the average analyst estimate.

Product and maintenance revenue rose to $1.43 billion from about $1.17 billion last year while services moved up to $153.8 million from $104.9 million. The company's backlog stood at $8.1 billion, while remaining performance obligations were $4.2 billion.

"All product groups delivered double-digit year-over-year growth," Devgan said on the call. "Demand remains especially strong from AI and (high-performance computing) customers, including hyperscalers and leading semiconductor companies."

Cadence expects adjusted EPS to be in a range of $2.01 to $2.07 for the ongoing quarter on revenue of nearly $1.6 billion to $1.63 billion, Chief Financial Officer John Wall told analysts. The Street is looking for non-GAAP EPS of $1.99 and sales of $1.58 billion for the period.

Cadence's rival Synopsys (SNPS) is scheduled to report its quarterly results late next month.

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