06:31 AM EDT, 10/29/2024 (MT Newswires) -- Cadence Design Systems' ( CDNS ) tightened its full-year outlook, raising the lower end of the range on earnings and revenue after a better-than-expected third quarter, sending shares higher early Tuesday.

Per-share adjusted earnings are now set to come in between $5.87 and $5.93 for 2024, the company said late Monday, compared with its previous projections for $5.77 to $5.97. Revenue is pegged at $4.61 billion to $4.65 billion versus the prior guidance range of $4.6 billion to $4.66 billion. The current consensus on Capital IQ is for normalized EPS of $5.92 and revenue of $4.63 billion.

"Cadence delivered exceptional results for the third quarter of 2024, with broad-based strength across our product portfolio," Chief Executive Anirudh Devgan said on an earnings call, according to a Capital IQ transcript. "We are on track for a strong second half."

For the September quarter, adjusted EPS jumped to $1.64 from $1.26 the year before and topped the Street's view for $1.44. Revenue advanced to $1.22 billion from $1.02 billion, surpassing analysts' $1.18 billion estimate. The stock gained 6% in premarket activity.

Product and maintenance revenue increased to $1.1 billion from $965.8 million, while services rose to $115.1 million from $57.3 million. "Our (third-quarter) recurring revenue growth returned to low teens on a year-over-year basis," Chief Financial Officer John Wall said on the call.

System design and analysis "continued to outpace the market" and generated annual revenue growth of 40% in the quarter, Devgan told analysts. The IP business delivered revenue gains of more than 50% year over year, while the firm's core electronic design automation operations, composed of the custom, digital and functional verification businesses, grew 9%, according to the CEO.

By geography, Americas made up 50% of the overall revenue for the quarter versus 43% last year. China contributed 13% of the topline, down from 17% in the 2023 quarter, while Europe, the Middle East and Africa came in at 14%.

The company's backlog at the end of the quarter was $5.6 billion while current remaining performance obligations stood at $2.9 billion.

For the ongoing three-month period, Cadence anticipates adjusted EPS to be in a range of $1.78 to $1.84 and revenue to come in between $1.33 billion and $1.37 billion, Wall said on the call. The Street is looking for normalized EPS of $1.83 and revenue of $1.36 billion. "Our (fourth-quarter) bookings pipeline looks exceptionally strong," Wall said.

Price: 270.00, Change: +17.23, Percent Change: +6.82