Cadence Design Systems (NASDAQ:CDNS) saw its shares climb 6% in premarket U.S. trading on Tuesday after the chip design firm raised its full-year guidance and reported stronger-than-expected second-quarter earnings.
For the quarter ending June 30, Cadence reported earnings per share of $1.65 on revenue of $1.28 billion. That beat analyst expectations, which had forecast EPS of $1.56 and revenue of $1.25 billion, according to estimates compiled by Investing.com.
“Strength across all businesses, more than offsetting the impact of the temporary restrictions on exports to China imposed on May 23,” the company said in a statement. Sales to China accounted for approximately 9% of total revenue during the quarter, a decline from 12% in the year-ago period.
Earlier in July, Cadence revealed it was working to reinstate access to its software and tools for Chinese customers. That followed the U.S. government’s decision to lift restrictions on exports of chip design software to China.
Looking ahead, Cadence projected adjusted diluted earnings per share for the current quarter to range from $1.75 to $1.85, exceeding the $1.73 estimate. For the full year, it now expects EPS between $6.85 and $6.95 and revenue between $5.21 billion and $5.27 billion—both up from its earlier forecast of EPS between $6.73 and $6.83 and revenue between $5.15 billion and $5.23 billion.
Cadence had already revised its guidance upward in April, driven by surging demand from chipmakers capitalizing on the AI boom. The company’s tools play a key role in designing the complex chips used in artificial intelligence, with customers such as Nvidia (NASDAQ:NVDA) and Apple (NASDAQ:AAPL). Its reach has also expanded into industries like aerospace and biotech.
In a separate development, the U.S. Department of Justice announced Monday that Cadence has agreed to plead guilty and pay over $140 million in penalties to resolve allegations involving the unauthorized sale of its products to a Chinese military-linked university. According to a securities filing, Cadence stated it was “pleased” to have reached a resolution.
Additionally, the company anticipates a financial benefit of roughly $140 million due to changes in cash tax payments resulting from a recently enacted fiscal bill signed into law by President Donald Trump.
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