Cadence Design Systems on Monday increased its fiscal 2026 revenue and adjusted earnings guidance, citing a pronounced uptick in orders for its AI-enabled chip and system design software. Shares climbed more than 5% in after-hours trading following the announcement.
Cadence's electronic design automation (EDA) suite - software used to design and validate semiconductors and electronic systems - has seen heightened demand as customers develop more advanced systems-on-chip (SoCs) and AI accelerators. The company specifically counts AI-chip leader Nvidia and iPhone-maker Apple among its customers.
Updated full-year targets
- Cadence now projects full-year 2026 revenue of between $6.26 billion and $6.34 billion, up from its previous range of $6.13 billion to $6.23 billion.
- By comparison, analysts on average had been expecting annual revenue of $6.21 billion, according to data compiled by LSEG.
- Annual adjusted earnings per share are now forecast to be $8.05 to $8.15, raised from a prior outlook of $7.85 to $7.95 and above consensus estimates of $7.96.
Quarterly performance and backlog
Cadence reported second-quarter revenue of $1.584 billion, a 24.2% increase year-over-year and largely in line with estimates. Adjusted profit for the quarter was $2.11 per share, compared with analyst estimates of $2.05 per share.
The company said its quarter-end backlog stood at $8.1 billion, with approximately $4.2 billion of that backlog expected to be recognized as revenue within the next 12 months.
New product initiative
Earlier in the month, Cadence introduced an AI "super agent" named AuraStack. The company says AuraStack enables engineers to describe design goals in plain language; the system then plans and executes tasks using Cadence's existing software tools to lay out and virtually test circuit designs.
Implications
Cadence attributed its revised guidance to sharply rising demand for its software as chipmakers and technology companies pursue more complex SoCs and AI accelerators. The company highlighted both its customer roster and new AI-driven tooling as elements in the revenue and profit outlook it released.