Tech & AI
Cadence jumps after hours on earnings beat and higher outlook
Cadence Design Systems shares rose 2.3% after hours on Monday when the chip-design software maker beat quarterly estimates and raised its full-year outlook.
Quick Read
- Cadence Design Systems shares rose 2.3% after hours on Monday following its quarterly report.
- Third-quarter revenue and adjusted profit beat analyst estimates, and the company raised its full-year guidance above expectations.
- After-hours moves can shrink or reverse once regular trading opens on Tuesday.
How much did Cadence shares move?
Cadence Design Systems (Nasdaq: CDNS) shares rose 2.3% in after-hours trading on Monday, reaching $329.74. After-hours trading takes place once the regular session has closed, when far fewer buyers and sellers are active.
Why it matters: The stock had already risen 1.8% during the regular session, closing at $322.17. The company is valued at about $89 billion.
What did Cadence report?
Cadence makes software that companies use to design semiconductors. Its third-quarter revenue and adjusted profit per share both came in above analyst estimates, the company said. Adjusted profit leaves out some one-time items.
The company said sales grew across all of its product categories, helped by demand tied to artificial intelligence chip designs. It also ended the quarter with a record backlog, meaning signed orders it has not yet delivered.
Cadence bought back its own stock during the quarter, and its board approved more repurchases. Buybacks reduce the number of shares outstanding.
In the company's earnings report, chief executive Anirudh Devgan said, "Cadence delivered an outstanding third quarter."
Why does the higher outlook matter?
Cadence raised its full-year guidance, which is its own forecast for sales and profit. Both new ranges sit above what analysts had expected, according to the company's report.
Investors often weigh guidance more heavily than the quarter just ended, because it describes the months ahead. A raised forecast is usually read as a sign of management confidence.
Even after Monday's gains, the shares trade 22.6% below their high of the past year, $416.39.
What comes next?
What’s next: After-hours gains often shrink or reverse once the full market opens, because thin trading can exaggerate moves. Tuesday's regular session may show whether the gain holds.
Beyond the company, the Federal Reserve announces its interest-rate decision on Wednesday, Oct. 28. Rate news can move software stocks along with the wider market.
For readers
What it could mean for you: People who own Cadence shares directly feel the company's results in full, with no other holdings to offset them. The raised outlook may matter more to them than the quarter itself, since it sets expectations for the rest of the year. If the after-hours gain holds in regular trading, their holdings could reflect it. If it fades, the gain might shrink.
Questions and answers
Why did Cadence stock go up after hours?
Cadence reported third-quarter revenue and adjusted profit above analyst estimates and raised its full-year sales and profit forecasts. The shares rose 2.3% in after-hours trading.
What does Cadence Design Systems do?
Cadence makes software that companies use to design semiconductors. The company said demand tied to artificial intelligence chip designs helped its growth.
Did Cadence raise its guidance?
Yes. The company raised its full-year revenue and adjusted earnings forecasts, and both new ranges sit above analyst estimates, according to its report.
The numbers
| Cadence Design Systems (CDNS) price | $322.17 |
|---|---|
| Cadence Design Systems (CDNS) change | +1.79% |
| Cadence Design Systems (CDNS) market value | $89 billion |
| Cadence Design Systems (CDNS) 52-week high | $416.39 |
| S&P 500 change | +0.70% |
| 10-year Treasury yield | 5.00% |
Monday’s close
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