Chip Design Software Maker Cadence forecasts annual profits below estimated and shares decline

(Reuters) – Cadence Design Systems show annual revenue and profits below Tuesday’s below analyst estimates, signs of soft demand for soft design software for chip design software to enhance spending in a tough economy. I’m predicting.

The San Jose, California-based company’s shares fell 5% in expanded transactions.

The company, which counts British chip designer Armholdings, Nvidia and electric vehicle manufacturer Tesla, is writing software to design everything from chips to jet engines. They also sell computing systems designed to run that complex software.

Berenberg analysts say demand and customer budgets for Cadence’s system design and analytics products will be muted throughout 2025 due to the ongoing industry slump in the automotive end market.

China is an important part of Cadence’s business. Further restrictions from the US government regarding the sale of semiconductor technology to Chinese companies were mentioned in a January memo.

Cadence’s market share in a highly concentrated industry is threatened by the buyout proposal from engineering software company ANSYS, with $35 billion in cash and stock trading.

The company expects revenues to range from $5.14 billion to $5.22 billion for fiscal year 2025, compared to an average analyst estimate of $5.25 billion, according to data compiled by LSEG.

Cadence forecasts annual earnings excluding items, ranging from $6.65 to $6.75 per share, down below $6.83 per share.

That revenue was $1.36 billion for the quarter ended December 31, up 26.8% year-on-year.

Excluding items, the company won $1.88 per share in the fourth quarter, compared to an estimate of $1.82.

(Reporting by Juby Babu in Mexico City, Editing by Shilpi Majumdar)