Cadence(CDNS) ZACKS·2025-02-21 21:01Core Viewpoint - Cadence Design Systems (CDNS) reported strong fourth-quarter 2024 results, with revenues of 1.88, up 36.2% year-over-year, exceeding management's guidance [1][2] Group 1: Financial Performance - For 2024, CDNS achieved revenue and EPS growth of 13.5% and 15.9% respectively [6] - The company provided soft guidance for 2025, projecting revenue growth of 11-12% and non-GAAP EPS growth of 12% [6] - Estimated revenues for 2025 are between 5.22 billion, with non-GAAP EPS expected to be between 6.75 [7] Group 2: Market Trends and Opportunities - Broad-based demand for solutions is driven by trends such as 5G, hyperscale computing, and autonomous driving, which are influencing design activity in semiconductor and systems companies [2] - The AI super cycle is entering a new phase, with increased focus on Generative AI, Agentic AI, and Physical AI, leading to higher computing demand and semiconductor innovation [3] - CDNS is collaborating with tech giants like Qualcomm and NVIDIA on next-generation AI designs and is exploring new markets like Life Sciences through its OpenEye drug discovery software [3] Group 3: Product Development and Customer Engagement - The verification business is gaining traction due to rising complexity in system verification, with the launch of advanced systems like Palladium Z3 Emulation and Protium X3 FPGA Prototyping [4] - In 2024, hardware solutions attracted over 30 new customers and nearly 200 repeat customers, particularly from AI and hyperscale clients [4] Group 4: Competitive Landscape and Challenges - CDNS faces competition from companies like Keysight Technologies, Synopsys, and ANSYS, with Synopsys' pending acquisition of ANSYS likely intensifying competition in the EDA space [9] - Analysts have revised earnings estimates downward, indicating bearish sentiment towards the stock [12] - The stock has declined 10.2% year-to-date, underperforming its industry and the broader technology sector [11]