Cadence Design Systems, a leading chip design software maker, has forecast its annual revenue and profit below analysts’ estimates. This is a sign of soft demand for its software as clients tighten spending in a tough economy.
Shares of the San Jose-based company fell 5% in extended trading after the announcement. The company counts major customers such as Arm Holdings, Nvidia, and Tesla among its clients.
Analysts at Berenberg have predicted muted demand for Cadence’s system design and analysis products throughout 2025 due to the ongoing industry downturn. China is a significant portion of Cadence’s business, but further restrictions on semiconductor technology sales to Chinese entities could reduce its business from the country.
Rival Synopsys’ proposed buyout of engineering software firm Ansys is also threatening Cadence’s market share in the highly concentrated industry.
Cadence expects its fiscal 2025 revenue to be between $5.14 billion and $5.22 billion, below the analysts’ average estimate of $5.25 billion. The company 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.
In contrast, Cadence’s 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.
Source: https://www.reuters.com/technology/chip-design-software-maker-cadence-forecasts-annual-profit-below-estimate-shares-2025-02-18