About a month has gone by since the last earnings report for Cadence Design Systems, Inc. CDNS. Shares have added about 6.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Cadence reported earnings of 35 cents per share in third-quarter 2017, beating the Zacks Consensus Estimate by a penny. The figure surged 17% on a year-over-year basis and was in line with the upper end of the guided range of 33–35 cents per share.
Revenues increased 9% year over year to $485 million, beating the Zacks Consensus Estimate of $482 million. The top line also met the high end of management’s expectation.
Notably, huge adoption of the company’s digital and signoff, custom-analog and IP solutions and an expanding customer base backed its impressive year-over-year growth.
Quarter Details
Product wise, revenues from Digital and signoff grew 15% year over year, with deeper market penetration and increasing customer base. IP revenues grew 14% year over year as the company’s new refined strategy gained momentum. Custom and analog design solutions grew 12% year over year driven by increasing requirement of the company’s advanced node custom design and simulation solutions.
Management noted that Quantenna Communications adopted the company’s flagship products Genus Synthesis, Innovus Implementation and Tempus during the quarter. The company expanded its association with a prominent memory chip maker in Asia for LPDDR4, PCI Express Gen4, NAND flash PHYs and Tensilica DSPs.
Notably, the company’s newly launched Protium S1 FPGA-based prototyping system found 17 takers during the quarter with nine repeat orders. Additionally, Cadence’s well-known emulator, Palladium Z1 won an investment from Marvell for extending emulation of its engineering products.
Moreover, the company’s audio signal processor, Tensilica added 10 customers during the quarter, which included five from China. Of these Chinese customers, four were new additions. The company’s parallel logic simulator, Xcelium witnessed the addition of 15 new customers in mobile, communication, storage and memory segments.
Based on the capabilities of the company’s mixed signal solutions, it signed agreements with Dialog Semiconductor, becoming the latter’s electronic design automation (EDA) partner. Cadence also extended its partnership with Hitachi and the InvenSense unit of TDK during the third quarter.