Cadence Design Systems (CDNS 5.46%) stock is moving higher in Tuesday's trading following the company's first-quarter report. The tech specialist's share price was up 5.1% as of 2:15 p.m. ET.
NASDAQ: CDNS
Key Data Points
Cadence published its Q1 results after the market closed yesterday and posted earnings that came in ahead of Wall Street's target. The company also raised its full-year performance guidance.
Cadence stock rises on Q1 profit beat
Cadence posted non-GAAP (adjusted) earnings per share of $1.57 on sales of $1.24 billion in the first quarter. The company's revenue was up roughly 23% year over year and was in line with the average analyst estimate. Meanwhile, the business beat Wall Street's earnings target by $0.07 per share and reported an adjusted operating income margin of 41.7% -- up from 37.8% in last year's quarter. Pricing increases and a negligible increase for cost of services helped power the improvement. Cadence closed out the period with $6.4 billion in remaining performance obligations, with expectations that $3.2 billion of that will be recorded as revenue within the next year.
What's next for Cadence Design Systems?
For this year, Cadence is guiding for sales between $5.15 billion and $5.23 billion. The midpoint of the guidance range was in line with Wall Street's target for sales of $5.19 billion in the period.
On the other hand, the company's adjusted earnings target was significantly better than the average analyst forecast. Management is guiding for per-share earnings for the year to be between $6.73 and $6.83 -- coming in significantly better than the average analyst estimate's call for adjusted earnings of $6.72 per share for the year. The company also guided for an adjusted operating income margin between 43.25% and 44.25% -- suggesting a significant improvement over the margin of 42.5% it posted last year.
Prior to Cadence's Q1 report, the company had guided for adjusted earnings per share between $6.65 and $6.75 this year on sales between $5.14 billion and $5.22 billion. Demand is holding strong even in the face of some macroeconomic uncertainty, and the business's better-than-expected margin performance and forward earnings outlook suggests that a sustained margin improvement may have been achieved head of schedule.
