Shares of Cadence Design Systems (CDNS -2.76%) surged on Thursday following the company's fourth-quarter report. Cadence beat analyst estimates for earnings and provided first-quarter guidance calling for continued growth. At 11 a.m. EST, the stock was up about 10.5%.
Cadence reported fourth-quarter revenue of $469 million, up 6.3% year over year and in line with the average analyst estimate. CEO Lip-Bu Tan pointed to 9% growth in the digital IC and signoff business, driven by strong customer adoption, as one factor behind the company's performance.
Non-GAAP earnings per share came in at $0.34, up from $0.31 in the prior-year period and $0.01 better than analysts were expecting. GAAP EPS slumped 46% to $0.14, largely due to restructuring charges. Share buybacks lowered the share count and provided a boost to per-share numbers, with Cadence spending $240 million on buybacks during the fourth quarter.
Tan pointed to the success of its Palladium Z1 enterprise emulation system, and talked about the company's expansion into new markets:
"... in System Integration, Palladium Z1 had a phenomenal year with hardware revenue surging to a record high. SDE is expanding our reach with systems companies and into segments like automotive, aerospace and defense, where we had key wins with important customers in 2016."
Cadence expects to produce first-quarter revenue in the range of $470 million to $480 million, up from $448 million during the prior-year period. GAAP EPS is expected between $0.19 and $0.21, while non-GAAP EPS is expected between $0.30 and $0.32.
For 2017, Cadence expects revenue between $1.90 billion and $1.95 billion, up from $1.82 billion during 2016. GAAP EPS should be between $0.89 and $0.99, with non-GAAP EPS between $1.32 and $1.42. Cadence authorized a $525 million share repurchase program on Jan. 30, which will help the company hit these targets.