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Factors to Note Ahead of Cadence's (CDNS) Q1 Earnings Release
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Cadence Design Systems (CDNS - Free Report) is scheduled to release first-quarter 2024 results on Apr 22.
For the first quarter, Cadence expects total revenues in the range of $990 million-$1.01 billion. The Zacks Consensus Estimate is currently pegged at $1.01 billion, suggesting a decline of 0.8% from a year ago.
Management projects non-GAAP earnings per share (EPS) in the range of $1.10-$1.14. The Zacks Consensus Estimate is pegged at $1.13, indicating a decline of 12.4% from the prior-year quarter’s reported figure.
The company has a trailing four-quarter earnings surprise of 3.4%, on average. Shares of Cadence have rallied 40.7% in the past year compared with the sub-industry’s growth of 37.7%.
Image Source: Zacks Investment Research
Factors to Note
The top-line performance is likely to have benefited from continued strength across all segments, driven by higher customer demand.
Design activity continues to be robust owing to transformative generational trends such as artificial intelligence (AI), hyperscale computing, 5G and autonomous driving. Customers are significantly increasing their R&D budget in AI-driven automation. This bodes well for Cadence.
Momentum in 3D-IC and chiplet designs is likely to have acted as a tailwind.
The System Design and Analysis division is likely to have gained from its growing presence in industries like 5G, aerospace & defense, wireless and communications. Our estimate for revenues from System Design and Analysis is pegged at $123.8 million.
Strong uptake of the company’s solutions like Palladium Z2 and Protium X2 systems as well as increasing system design complexity is likely to have driven verification business performance. Our estimate for revenues from the Functional Verification, including the Emulation and Prototyping Hardware segment, is pegged at $315 million.
Cadence’s digital IC business performance is expected to have been driven by steady adoption of digital full-flow solutions. Our estimate for revenues from the Digital IC Design and Signoff segment is pegged at $247.2 million.
However, ongoing uncertainty prevailing over global macroeconomic conditions and inflation remain concerns. Increasing expenses on product development amid stiff competition in the electronic design automation space might have impeded margin expansion in the quarter to be reported.
For the first quarter, management expects up-front revenue mix of 14%. In comparison, the up-front revenue mix in the first quarter of 2023 was 20% owing to improved hardware delivery lead times at the beginning of the year.
Key Recent Developments
On Mar 18, 2024, Cadence announced an agreement with NVIDIA Corporation to drive innovation across AI, system design and analysis, digital biology and Electronic Design Automation.
On Mar 6, 2024, CDNS announced its plan to acquire a leading provider of engineering simulation solutions — BETA CAE Systems International AG. The acquisition will likely enhance the company’s Intelligent System Design strategy by broadening its range of multiphysics system analysis offerings and helping it enter into the structural analysis sector.
What Our Model Says
Our proven model predicts an earnings beat for Cadence this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Cadence has an Earnings ESP of +0.22% and carries a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are some other stocks you may consider, as our model shows that these, too, have the right combination of elements to beat on earnings this season.
The Zacks Consensus Estimate for IMAX’s to-be-reported quarter’s EPS and revenues is pegged at 10 cents and $75.8 million, respectively. Shares of IMAX have lost 17.7% in the past year.
Meta Platforms (META - Free Report) has an Earnings ESP of +3.26% and presently carries a Zacks Rank #2. META is slated to release quarterly numbers on Apr 24.
The Zacks Consensus Estimate for META’s to-be-reported quarter’s EPS and revenues is pegged at $4.31 and $36.22 billion, respectively. Shares of META have gained 129.4% in the past year.
Lam Research Corporation (LRCX - Free Report) has an Earnings ESP of +0.26% and a Zacks Rank #3. LRCX is set to report quarterly figures on Apr 24.
The Zacks Consensus Estimate for LRCX’s to-be-reported quarter’s EPS and revenues is pegged at $7.23 and $3.7 billion, respectively. Shares of LRCX have surged 94.4% in the past year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Factors to Note Ahead of Cadence's (CDNS) Q1 Earnings Release
Cadence Design Systems (CDNS - Free Report) is scheduled to release first-quarter 2024 results on Apr 22.
For the first quarter, Cadence expects total revenues in the range of $990 million-$1.01 billion. The Zacks Consensus Estimate is currently pegged at $1.01 billion, suggesting a decline of 0.8% from a year ago.
Management projects non-GAAP earnings per share (EPS) in the range of $1.10-$1.14. The Zacks Consensus Estimate is pegged at $1.13, indicating a decline of 12.4% from the prior-year quarter’s reported figure.
The company has a trailing four-quarter earnings surprise of 3.4%, on average. Shares of Cadence have rallied 40.7% in the past year compared with the sub-industry’s growth of 37.7%.
Image Source: Zacks Investment Research
Factors to Note
The top-line performance is likely to have benefited from continued strength across all segments, driven by higher customer demand.
Cadence Design Systems, Inc. Price and Consensus
Cadence Design Systems, Inc. price-consensus-chart | Cadence Design Systems, Inc. Quote
Design activity continues to be robust owing to transformative generational trends such as artificial intelligence (AI), hyperscale computing, 5G and autonomous driving. Customers are significantly increasing their R&D budget in AI-driven automation. This bodes well for Cadence.
Momentum in 3D-IC and chiplet designs is likely to have acted as a tailwind.
The System Design and Analysis division is likely to have gained from its growing presence in industries like 5G, aerospace & defense, wireless and communications. Our estimate for revenues from System Design and Analysis is pegged at $123.8 million.
Strong uptake of the company’s solutions like Palladium Z2 and Protium X2 systems as well as increasing system design complexity is likely to have driven verification business performance. Our estimate for revenues from the Functional Verification, including the Emulation and Prototyping Hardware segment, is pegged at $315 million.
Cadence’s digital IC business performance is expected to have been driven by steady adoption of digital full-flow solutions. Our estimate for revenues from the Digital IC Design and Signoff segment is pegged at $247.2 million.
However, ongoing uncertainty prevailing over global macroeconomic conditions and inflation remain concerns. Increasing expenses on product development amid stiff competition in the electronic design automation space might have impeded margin expansion in the quarter to be reported.
For the first quarter, management expects up-front revenue mix of 14%. In comparison, the up-front revenue mix in the first quarter of 2023 was 20% owing to improved hardware delivery lead times at the beginning of the year.
Key Recent Developments
On Mar 18, 2024, Cadence announced an agreement with NVIDIA Corporation to drive innovation across AI, system design and analysis, digital biology and Electronic Design Automation.
On Mar 6, 2024, CDNS announced its plan to acquire a leading provider of engineering simulation solutions — BETA CAE Systems International AG. The acquisition will likely enhance the company’s Intelligent System Design strategy by broadening its range of multiphysics system analysis offerings and helping it enter into the structural analysis sector.
What Our Model Says
Our proven model predicts an earnings beat for Cadence this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Cadence has an Earnings ESP of +0.22% and carries a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are some other stocks you may consider, as our model shows that these, too, have the right combination of elements to beat on earnings this season.
IMAX Corporation (IMAX - Free Report) has an Earnings ESP of +36.84% and currently carries a Zacks Rank #2. IMAX is scheduled to report quarterly earnings on Apr 25. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for IMAX’s to-be-reported quarter’s EPS and revenues is pegged at 10 cents and $75.8 million, respectively. Shares of IMAX have lost 17.7% in the past year.
Meta Platforms (META - Free Report) has an Earnings ESP of +3.26% and presently carries a Zacks Rank #2. META is slated to release quarterly numbers on Apr 24.
The Zacks Consensus Estimate for META’s to-be-reported quarter’s EPS and revenues is pegged at $4.31 and $36.22 billion, respectively. Shares of META have gained 129.4% in the past year.
Lam Research Corporation (LRCX - Free Report) has an Earnings ESP of +0.26% and a Zacks Rank #3. LRCX is set to report quarterly figures on Apr 24.
The Zacks Consensus Estimate for LRCX’s to-be-reported quarter’s EPS and revenues is pegged at $7.23 and $3.7 billion, respectively. Shares of LRCX have surged 94.4% in the past year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.