Chip design software maker Cadence forecasts annual profit below estimate, shares down
18/02/2025 21:55
Feb 18 (Reuters) - Cadence Design Systems CDNS.O
forecast its annual revenue and profit below analysts' estimates
on Tuesday, in a sign of soft demand for its chip design
software as clients tighten spending in a tough economy.
Shares of the San Jose, California-based company fell 5% in
extended trading.
The company, which counts British chip designer Arm Holdings
ARM.O , Nvidia NVDA.O and electric-vehicle maker Tesla
TSLA.O among its customers, makes software for designing
everything from chips to jet engines. It also sells computing
systems designed to run that complex software.
Analysts at Berenberg have said demand and customer budgets
for Cadence's system design and analysis products would be muted
throughout 2025 due to the ongoing industry downturn in the
automotive end market.
China accounts for a material portion of Cadence's business.
Further restrictions from the U.S. government on semiconductor
technology sales to Chinese entities could meaningfully reduce
its business from the country, they said in a note in January.
Cadence's market share in the highly concentrated industry
is also threatened by rival Synopsys' SNPS.O proposed buyout
of engineering software firm Ansys ANSS.O in a $35 billion
cash-and-stock deal.
The company expects its fiscal 2025 revenue to be between
$5.14 billion and $5.22 billion, compared with analysts' average
estimate of $5.25 billion, according to data compiled by LSEG.
Cadence forecast its annual profit, excluding items, in the
range of $6.65 to $6.75 per share, also below the estimate of
$6.83 a share.
Its revenue stood at $1.36 billion for the quarter ended
December 31, an increase of 26.8% over the year earlier.
Excluding items, the company earned $1.88 per share in the
fourth quarter, compared with the estimate of $1.82.
(Reporting by Juby Babu in Mexico City; Editing by Shilpi
Majumdar)
((Juby.Babu@thomsonreuters.com))