Cadence Design Systems shares jumped 5% in extended trading Tuesday after the company reported fourth-quarter results that topped estimates, driven by strong demand for its AI-focused design tools. The company posted non-GAAP earnings of $1.99 per share, beating analysts’ estimates of $1.91, with revenue rising to $1.44 billion from $1.356 billion a year earlier.

For 2026, Cadence forecast first-quarter earnings of $1.89 to $1.95 per share, above expectations of $1.81, and full-year earnings of $8.05 to $8.15 per share compared with consensus of $8.03. The company expects revenue of $5.9 billion to $6 billion, roughly in line with estimates of $5.94 billion. Cadence closed 2025 with more than 14% revenue growth and about 45% non-GAAP operating margin for the year.

CEO Anirudh Devgan cited strong demand for the company’s expanding AI-driven product portfolio, while CFO John Wall noted the record $7.8 billion backlog supports visibility into future growth. The results reflect continued productivity-driven profitability improvement, with non-GAAP operating margin reaching 44.6% in the fourth quarter.