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Cadence Raises 2026 Revenue Outlook Following First-Quarter Beat

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-- Cadence Design Systems (CDNS) lifted its full-year revenue outlook as the computational software company reported better-than-expected first-quarter results.

The firm now anticipates revenue to come in between $6.13 billion and $6.23 billion for 2026, it said late Monday, up from its prior forecast of $5.9 billion to $6 billion. The current consensus on FactSet is for $6.17 billion. The stock edged up 0.5% in Tuesday's most recent premarket activity.

"With robust design activity and solid execution, we are raising our 2026 revenue outlook to 17% year-over-year growth," Chief Financial Officer John Wall said in a statement.

Adjusted earnings are pegged to be in a range of $7.85 to $7.95 per share for the current year, down from the company's previous projections of $8.05 to $8.15. The Street is looking for non-GAAP EPS of $7.92.

The revised earnings guidance includes the "acquired cost base, the financing impact, the acquisition-related integration costs and kind of near-term dilution," associated with the company's acquisition of Hexagon's design and engineering business, Wall told analysts during an earnings call, according to a FactSet transcript. The deal was completed in February.

The company "paid 30% of the acquisition price in shares and 70% in cash," according to Wall. The lost interest income on cash causes a "lot of the dilution impact in the short-term," but the firm anticipates the transaction to be accretive in 2027, the CFO added.

For the quarter ended March, the company's adjusted EPS climbed to $1.96 from $1.57 the year before, topping the average analyst estimate of $1.89. Revenue advanced to $1.47 billion from $1.24 billion, ahead of the Street's view for $1.45 billion.

Product and maintenance revenue grew to $1.35 billion from about $1.11 billion in the prior-year quarter, while services declined to $125.3 million from $131.5 million.

"Cadence had a strong start to 2026, delivering a solid (first quarter) with accelerating (artificial intelligence) demand and record backlog, reflecting strong customer commitment to our AI-driven portfolio," Chief Executive Anirudh Devgan said. The company's backlog stood at $8 billion, while remaining performance obligations were $4 billion.

For the ongoing three-month period, Cadence expects adjusted EPS of $2.02 to $2.08 on revenue of $1.56 billion to $1.6 billion. The Street is looking for non-GAAP EPS of $1.98 and sales of $1.55 billion for the second quarter.

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