Cadence Design Systems Inc (NASDAQ: CDNS) stock fell over 0.3% on 20th October, 2020 (As of 9:52 am GMT-4; Source: Google finance) despite decent results for the third quarter of FY 20.
This is due to higher demand for hardware and IP sales activity in China and expected improvement in its system design and analysis business for the second half of the year. The company delivered operating margin for the third quarter of 2020 was 36 percent and net income was $197 million compared to operating margin of 32 percent and net income of $153 million, for the same period in 2019.
CDNS in the third quarter of FY 20 has reported the adjusted earnings per share of 70 cents, while reported the adjusted revenue growth of 35.9 percent to $666.6 million in the third quarter of FY 20, beating the analysts’ estimates for revenue of $642.1 million.
During the third quarter of 2020, Cadence repurchased $75 million of its common stock and the Board of Directors has increased the previously announced authorization by an additional $750 million. As of the end of the third quarter of 2020, approximately $869 million remained available under the authorization to repurchase Cadence common stock.
The company raised 2020 revenue and earnings guidance primarily due to higher second half hardware and IP sales activity in China and continuing progress in the System Design and Analysis business.
For the fourth quarter of 2020, the company expects revenue to be in the range of $720 million to $740 million; non-GAAP operating margin is expected to be in the range of 34% to 35%, non-GAAP EPS is expected to be in the range of $0.72 to $0.76; and the company expects to repurchase $130 million of Cadence shares.
For fiscal 2020, the company now expects revenue to be in the range of $2.643 billion to $2.663 billion; non-GAAP operating margin is expected to be in the range of 34% to 35% and non-GAAP EPS is expected to be in the range of $2.68 to $2.72. The company expects operating cash flow to be in the range of $840 million to $870 million and the company expects to use approximately 50% of the free cash flow to repurchase Cadence shares in 2020.