Unpacking Third Quarter Earnings: Cadence (NASDAQ:CDNS) in the context of other design software stocks
As third-quarter earnings season comes to a close, we’re taking a closer look at this quarter’s best and worst performers in the design software industry, including Cadence (NASDAQ:CDNS) and its peers.
The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse may still be more of a buzzword than a real thing, the demand for the tools to create these experiences is real. are games, 3D tours or interactive films.
The six design software stocks we track reported a strong third quarter. As a group, revenues exceeded analyst consensus expectations by 4.4%, while revenue expectations for the next quarter were 2.9% below that.
While some design software stocks have done slightly better than others, they have collectively fallen. On average, share prices have fallen 2.4% since the last earnings results.
With the name chosen to capture the idea of a repeating pattern or rhythm in electronic design, Cadence Design Systems (NASDAQ:CDNS) offers a software-as-a-service platform for semiconductor engineering and design.
Cadence reported revenue of $1.22 billion, up 18.8% year over year. This print exceeded analyst expectations by 2.9%. Overall, it was a very strong quarter for the company, with an impressive return on analyst expectations and a solid improvement in analyst EBITDA estimates.
“Cadence delivered exceptional results for the third quarter of 2024, driven by the broad strength in our portfolio, especially in IP, SD&A and hardware systems,” said Anirudh Devgan, president and CEO.
Cadence Total output
Interestingly, the stock is up 18.2% since reporting and is currently trading at $298.77.
Read why we think Cadence is one of the best design software companies; our full report is free.
Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) provides a software-as-a-service platform that enables simulation for engineering and design.
ANSYS reported revenues of $601.9 million, up 31.2% year over year, and exceeded analyst expectations by 14.9%. The company had a stunning quarter, solidly beating analyst EBITDA estimates and impressively beating analysts’ annual contract value estimates.
ANSYS Total turnover
ANSYS delivered the highest analyst estimates and the fastest revenue growth among its peers. The market seems pleased with the results, as the stock is up 2% since reporting. It is currently trading at $339.99.
Is Now the Time to Buy ANSYS? See our full analysis of earnings results here. It’s free.
Adobe (NASDAQ:ADBE), one of Silicon Valley’s best-known software companies, is a leading provider of software as a service in digital design and document management.
Adobe reported revenue of $5.41 billion, up 10.6% year over year, beating analyst expectations by 0.6%. Still, it was a slower quarter as revenue expectations for the next quarter fell slightly short of analyst expectations.
Adobe had the weakest performance compared to analyst estimates in the group. As expected, the stock has fallen 10.4% since the results and is currently trading at $526.10.
Read our full analysis of Adobe’s results here.
PTC’s (NASDAQ:PTC) software-as-service platform, used in the design of the Airbus A380 and Boeing 787 Dreamliner commercial aircraft, helps engineers and designers create and test products before they go into production.
PTC reported revenue of $626.5 million, up 14.6% year over year. This result exceeded analyst expectations by 1%. More broadly, it was a mixed quarter, with earnings per share expectations for the next quarter falling significantly short of analyst expectations.
The stock is down 4% since reporting and is currently trading at $190.01.
Read our full, actionable report on PTC here. It’s free.
Founded as a game studio by three friends in an apartment in Copenhagen, Unity (NYSE:U) is a software-as-a-service platform that makes it easier to develop and monetize new games and other visual digital experiences. generate.
Unity reported revenue of $446.5 million, down 18% year over year. This print exceeded analyst expectations by 4.3%. Zooming out, it was a mixed quarter as it also delivered an impressive increase in analyst expectations, but EBITDA guidance for the following quarter fell short of analyst expectations.
Unity had the slowest revenue growth and the weakest full-year guidance update among its peers. The stock has fallen 16.2% since reporting and is currently trading at $18.64.
Read our full, actionable report on Unity here. It’s free.
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually declining from its post-pandemic peak and moving closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashy recession signals. This is the much-desired soft landing that many investors were hoping for. The recent interest rate cuts (0.5% in September and 0.25% in November 2024) have boosted the stock market, making 2024 a strong year for equities. Donald Trump’s presidential victory in November fueled additional market gains, sending indexes to record highs in the days following his victory. However, debates over possible corporate tax rates and adjustments continue, raising questions about economic stability in 2025.
Do you want to invest in winners with rock-solid fundamentals? Check out our 9 best stocks that are beating the market and add them to your watchlist. These companies are primed for growth regardless of the political or macroeconomic environment.
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