Cadence raises annual forecasts for design software demand, but tariff concerns continue
(Reuters) – Adding design systems boosted its annual revenue and profit forecasts on Monday, betting on semiconductor companies’ resilient demand for their chip design software as the AI booms, but tariff-led concerns on its Chinese business would cause shadows.
The company has benefited the increased demand for fast and complex AI processors, which provides software for designing chips and computing systems that helps run complex programs.
AI processor head Nvidia and iPhone Maker Apple are Cadence customers.
Cadence now expects revenues to be between $5.15 billion and $5.23 billion in 2025. This is from a previous forecast of $5.14 billion to a forecast of $5.22 billion. Analysts are expected to have an average of $5.19 billion, according to data compiled by LSEG
“At present, we have not seen any changes in our customers’ behavior as they continue to invest in R&D for the next generation of designs,” CEO Anirudh Devgan said in a statement.
The company raised its annual adjusted earnings per share forecast to $6.73 to $6.83, with its previous forecast between $6.65 and $6.75.
However, its stock fell more than 1% in extended trading, with the Chinese trade war hurting revenues in its main markets.
Sales accounted for about 11% of total revenue in the first quarter, down from 12% in the same period last year.
An executive of a company said in a post-graduation call that China’s annual revenue will remain flat at the midpoint of the forecast.
Executives have raised questions about the impact of analysts on tariffs in an attempt to calm concerns about any hits on sales.
“You know, software and services are not affected by tariffs,” said a company executive.
“We don’t think that given our diversified supply chain, tariffs will have an impact on our hardware business…we continue to monitor the situation.”
Cadence reported first-quarter revenue of $1.24 billion, which meets estimates, while adjusted profit was $1.57 per share, or estimated at $1.49.
Its forecast for second-quarter revenue and profits also meets street expectations.
(Reported by Arsheeya Bajwa in Bangalore and Stephen Nellis in San Francisco; Edited by Sriraj Kalluvila)
