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Cadence (CDNS) Q3 Earnings Beat Estimates, Revenues Lag
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Shares of Cadence Design Systems Inc. (CDNS - Free Report) dropped almost 1.5% in the last four sessions following its third-quarter 2016 results. Earnings of 23 cents per share comfortably beat the Zacks Consensus Estimate by a nickel but decreased 12.8% on a year-over-year basis.
Revenues also increased 2.9% year over year to $446.2 million. However, it missed the Zacks Consensus Estimate of $448 million.
Quarter Details
Cadence has two reportable segments – Product & Maintenance and Services.
Product & Maintenance generated revenues to the tune of $415.4 million, which accounted for 93.1% of total revenue and was up 4.7% on a year-over-year basis.
The growth was primarily driven by the company’s progress on its System Design Enablement strategy. Cadence’s digital and signoff solutions continued to gain traction. The Palladium Z1 emulation platform was adopted by five new systems customers that includes a major aerospace company. Cadence also forayed into the field of automotive functional safety verification during the last quarter.
On the other hand, Services generated revenues of $30.9 million, which accounted for 6.9% of total revenue and was down16.4% on a year-over-year basis.
Non-GAAP gross margin was 19.3%, which contracted roughly 540 basis points (bps) on a year-over-year basis.
Non-GAAP operating loss was $6.3 million as against a profit of approximately $5 million in the year-ago quarter.
Reported operating expenses were $322.8 million or 72.3% of revenues. Notably, it decreased 9.3% on a year-over-year basis.
However, research and development witnessed increased spending to the tune of $191.5 million (which accounted for 42.9% of total revenues), up 23.9% compared with the year-ago quarter.
Balance Sheet
Cadence exited the third-quarter of 2016 with cash, cash equivalents and short term investments of $532.8 million that decreased 24.3% on a year-over-year basis.
The company’s long term debt was $643.3 million.
Guidance
Cadence management expects total revenue to be in the range of $463 million to $473 million in the fourth quarter of 2016 and non-GAAP earnings in the range of 32 cents to 34 cents per share.
For the full year, the company expects revenues of $1.81 billion to $1.82 billion and non-GAAP earnings of $1.19 to $1.21 per share.
Notably, the consensus estimate for Autodesk’s current year has narrowed down to a loss of $1.30 over the last 30 days.
Similarly, the consensus estimate for Exa has narrowed down to a loss of 23 cents over the last 30 days.
Lastly, the consensus estimate for Infoblox has been revised upward from a loss of 28 cents to a gain of 10 cents over the last 30 days.
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Cadence (CDNS) Q3 Earnings Beat Estimates, Revenues Lag
Shares of Cadence Design Systems Inc. (CDNS - Free Report) dropped almost 1.5% in the last four sessions following its third-quarter 2016 results. Earnings of 23 cents per share comfortably beat the Zacks Consensus Estimate by a nickel but decreased 12.8% on a year-over-year basis.
Revenues also increased 2.9% year over year to $446.2 million. However, it missed the Zacks Consensus Estimate of $448 million.
Quarter Details
Cadence has two reportable segments – Product & Maintenance and Services.
Product & Maintenance generated revenues to the tune of $415.4 million, which accounted for 93.1% of total revenue and was up 4.7% on a year-over-year basis.
The growth was primarily driven by the company’s progress on its System Design Enablement strategy. Cadence’s digital and signoff solutions continued to gain traction. The Palladium Z1 emulation platform was adopted by five new systems customers that includes a major aerospace company. Cadence also forayed into the field of automotive functional safety verification during the last quarter.
On the other hand, Services generated revenues of $30.9 million, which accounted for 6.9% of total revenue and was down16.4% on a year-over-year basis.
Non-GAAP gross margin was 19.3%, which contracted roughly 540 basis points (bps) on a year-over-year basis.
Non-GAAP operating loss was $6.3 million as against a profit of approximately $5 million in the year-ago quarter.
Reported operating expenses were $322.8 million or 72.3% of revenues. Notably, it decreased 9.3% on a year-over-year basis.
However, research and development witnessed increased spending to the tune of $191.5 million (which accounted for 42.9% of total revenues), up 23.9% compared with the year-ago quarter.
Balance Sheet
Cadence exited the third-quarter of 2016 with cash, cash equivalents and short term investments of $532.8 million that decreased 24.3% on a year-over-year basis.
The company’s long term debt was $643.3 million.
Guidance
Cadence management expects total revenue to be in the range of $463 million to $473 million in the fourth quarter of 2016 and non-GAAP earnings in the range of 32 cents to 34 cents per share.
For the full year, the company expects revenues of $1.81 billion to $1.82 billion and non-GAAP earnings of $1.19 to $1.21 per share.
CADENCE DESIGN Price, Consensus and EPS Surprise
CADENCE DESIGN Price, Consensus and EPS Surprise | CADENCE DESIGN Quote
Zacks Rank & Key Picks
Cadence has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Autodesk, Inc. (ADSK - Free Report) , Exa Corporation and Infoblox Inc. , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, the consensus estimate for Autodesk’s current year has narrowed down to a loss of $1.30 over the last 30 days.
Similarly, the consensus estimate for Exa has narrowed down to a loss of 23 cents over the last 30 days.
Lastly, the consensus estimate for Infoblox has been revised upward from a loss of 28 cents to a gain of 10 cents over the last 30 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>