Winners And Losers Of Q4: Cadence (NASDAQ:CDNS) Vs The Rest Of The Design Software Stocks

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Cadence (NASDAQ:CDNS) and the best and worst performers in the design software industry.

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 mixed Q4. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 9.8% since the latest earnings results.

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 $1.36 billion, up 26.9% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with an impressive beat of analysts’ billings estimates but full-year revenue guidance slightly missing analysts’ expectations.

“Cadence delivered exceptional results in the fourth quarter, capping off a strong 2024 with 13.5% revenue growth and 42.5% non-GAAP operating margin for the year,” said Anirudh Devgan, president and chief executive officer.

Cadence pulled off the fastest revenue growth of the whole group. Still, the market seems discontent with the results. The stock is down 3.7% since reporting and currently trades at $282.98.

Is now the time to buy Cadence? Access our full analysis of the earnings results here, it’s free.

Best Q4: Autodesk (NASDAQ:ADSK)

Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ:ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.

Autodesk reported revenues of $1.64 billion, up 11.6% year on year, in line with analysts’ expectations. The business had a very strong quarter with full-year guidance of accelerating revenue growth and an impressive beat of analysts’ EBITDA estimates.

The stock is down 3.7% since reporting. It currently trades at $271.99.

Is now the time to buy Autodesk? Access our full analysis of the earnings results here, it’s free.

Weakest Q4: 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 $565.1 million, up 2.7% year on year, exceeding analysts’ expectations by 1.9%. Still, it was a softer quarter as it posted full-year EPS guidance missing analysts’ expectations.

PTC delivered the weakest full-year guidance update in the group. As expected, the stock is down 19.4% since the results and currently trades at $152.83.

Read our full analysis of PTC’s results here.

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 $302 million, up 16.2% year on year. This number surpassed analysts’ expectations by 1.4%. Zooming out, it was a slower quarter as it logged full-year guidance of slowing revenue growth.

Procore delivered the highest full-year guidance raise among its peers. The company added 113 customers to reach a total of 17,088. The stock is down 16.8% since reporting and currently trades at $62.50.

Read our full, actionable report on Procore 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 $457.1 million, down 25% year on year. This print topped analysts’ expectations by 5.9%. Aside from that, it was a satisfactory quarter as it also produced a solid beat of analysts’ billings estimates.

Unity pulled off the biggest analyst estimates beat but had the slowest revenue growth among its peers. The stock is up 4.2% since reporting and currently trades at $22.40.

Read our full, actionable report on Unity here, it’s free.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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