Cadence Revenue Growth Faces Threat from Synopsys-Ansys Deal

Cadence Design Systems reported a strong finish for the fourth quarter of 2024, surpassing earnings and revenue estimates with $1.88 per share and $1.36 billion in revenue. Despite this, the company issued a softer outlook for 2025, with expected revenues between $5.14 billion and $5.22 billion, below analysts' estimates. This cautious guidance reflects anticipated challenges in demand for chip design software amidst tightened client budgets, particularly in the automotive sector, and potential impacts from U.S. restrictions on semiconductor sales to China. Cadence's shares fell in extended trading, highlighting investor concerns over future growth. Nonetheless, the company maintains a robust backlog and continues to focus on innovation in electronic system design. Its competitive position is further threatened by Synopsys' potential acquisition of Ansys.