What happened

Cadence Design Systems (NASDAQ:CDNS) stock rocketed 59.5% higher in 2019, according to data from S&P Global Market Intelligence. Shares of the provider of design solutions for integrated circuits and electronic devices have tacked on 5.8% in 2020 through Jan. 8.

For context, the S&P 500 index returned 31.5% last year, and it has returned 1.4% so far this year. 

Close-up of a circuit board.

Image source: Getty Images.

So what

We can attribute Cadence Design stock's strong 2019 performance to the technology company's solid financial results and to investor optimism about its long-term growth prospects.

In the third quarter, Cadence Design's revenue rose 8.8% year over year to $579.6 million. Earnings per share (EPS) edged up 2.9% to $0.36, and adjusted EPS grew 10.2% to $0.54, beating the Wall Street consensus estimate of $0.51. That earnings beat made for a hat trick, as the company exceeded analysts' earnings expectations in all three reported quarters of 2019.

Here's what CEO Lip-Bu Tan had to say in the earnings release:

Major industry trends led by AI [artificial intelligence] and data analytics are driving strong design activity, which coupled with innovation and outstanding execution by Cadence, again led to strong operating results, as Cadence delivered 9 percent year-over-year revenue growth. Our Intelligent System Design strategy enables us to provide more capabilities and value to our customers while also expanding our total addressable market.

Now what

Investors should be getting material news about the company next month. While Cadence Design hasn't yet announced a date, it should be releasing its fourth-quarter and full-year 2019 results about mid-February.

Thanks to its better-than-expected third-quarter results, the company increased its revenue and earnings outlook for the full year. For 2019, it guided for revenue in the range of $2.33 billion to $2.34 billion, representing growth of about 9% year over year. It expects EPS to be between $1.50 and $1.52 and adjusted EPS to be between $2.18 and $2.20, representing growth of about 17% at the midpoint.