Yahoo Finance Firing on All Cylinders: Cadence (NASDAQ:CDNS) Q2 Earnings Lead the Way
As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at design software stocks, starting with Cadence (NASDAQ:CDNS).
The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.
The 6 design software stocks we track reported a weaker Q2. As a group, revenues beat analysts' consensus estimates by 1.8% while next quarter's revenue guidance was 0.8% below.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility, and while some design software stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.5% since the latest earnings results.
Best Q2: Cadence (NASDAQ:CDNS)
With the name chosen to reflect 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 revenues of $1.06 billion, up 8.6% year on year. This print exceeded analysts' expectations by 1.7%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts' billings estimates but a decline in its gross margin.
“Cadence delivered strong results for the second quarter of 2024, with robust demand for our cutting-edge technologies from AI, hyperscale, and automotive customers,” said Anirudh Devgan, president and chief executive officer.
Cadence pulled off the highest full-year guidance raise of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 6.5% since reporting and currently trades at $15.30.
Is now the time to buy Cadence? Access our full analysis of the earnings results here, it's free.
Unity (NYSE:U)
Started as a game studio by three friends in a Copenhagen apartment, 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.
Unity reported revenues of $449.3 million, down 15.8% year on year, outperforming analysts' expectations by 1.7%. It performed better than its peers, but it was unfortunately a weaker quarter for the company with a miss of analysts' billings estimates.
The market seems happy with the results as the stock is up 6.5% since reporting. It currently trades at $15.30.
Is now the time to buy Unity? Access our full analysis of the earnings results here, it's free.
Weakest Q2: PTC (NASDAQ:PTC)
Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ:PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.
PTC reported revenues of $518.6 million, down 4.4% year on year, falling short of analysts' expectations by 2.8%. It was a weak quarter for the company with a miss of analysts' billings estimates and a decline in its gross margin.
PTC posted the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 4.2% since the results and currently trades at $170.19.
Read our full analysis of PTC's results here.
ANSYS (NASDAQ:ANSS)
Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.
ANSYS reported revenues of $594.1 million, up 19.6% year on year, surpassing analysts' expectations by 6.9%. Revenue aside, it was a slower quarter for the company with a miss of analysts' average contract value estimates and a decline in its gross margin.
ANSYS achieved the biggest analyst estimates beat among its peers. The stock is flat since reporting and currently trades at $313.31.
Read our full, actionable report on ANSYS here, it's free.
Procore (NYSE:PCOR)
Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore (NYSE:PCOR) offers a software-as-service project, finance, and quality management platform for the construction industry.
Procore reported revenues of $284.3 million, up 24.4% year on year, surpassing analysts' expectations by 3.3%. Taking a step back, it was a mixed quarter for the company with a solid beat of analysts' ARR (annual recurring revenue) estimates but decelerating customer growth.
Procore pulled off the fastest revenue growth among its peers. The company added 152 customers to reach a total of 16,750. The stock is down 20% since reporting and currently trades at $53.75.
Read our full, actionable report on Procore here, it's free.
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