On Monday, shares of Cadence Design Systems (NASDAQ:CDNS) experienced a post-market downturn as the company projected current quarter revenue and profit guidance below estimates.

Following the announcement, CDNS stock stumbled as much as 11.8% after hours and settled at a 6.8% downward shift to $285.72.

Based in San Jose, California, Cadence (CDNS) is prominent for its computational software utilized in electronic design and system analysis, primarily specializing in chip designing and packaging for various hardware. Major clients include industry giants such as Nvidia (NVDA), Arm (ARM), and Intel (INTC).

Reportedly, CDNS declared Q4 2023 adjusted earnings per share of $1.38 on revenue of $1.07B, surpassing analysts’ expectations of $1.33 per share on revenue of $1.06B.

Cadence (CDNS) finance chief John Wall expressed, “We had a strong finish to the year, with growth across all our businesses in 2023,” highlighting the company’s year-end backlog of $6B and a record-breaking current remaining performance obligations of $3.2B.

However, attention quickly turned to Cadence’s (CDNS) guidance for Q1 2024, which fell below market consensus. The firm anticipates revenue in the range of $990M to $1.01B, compared to a consensus estimate of $1.09B. Additionally, adjusted profit is expected to be in the range of $1.10 per share to $1.14 per share, compared to a consensus of $1.39.

Notably, Cadence (CDNS) stated that Q1 would face challenging comparisons due to a year-on-year normalization in hardware sales from the exceptional performance in the same quarter of the previous year. The company had then expanded production capacity to enhance delivery lead times against its backlog.

CDNS also provided guidance for fiscal year 2024, expecting adjusted earnings per share of $5.87 to $5.97 on sales of $4.55B to $4.61B, slightly deviating from the consensus estimates of $5.89 and $4.58B, respectively.

The Story of Cadence Design Systems