Cadence Design Systems (CDNS) shares fell early Wednesday as the computational software company provided a full-year earnings outlook below market estimates despite reporting stronger-than-expected fourth-quarter results.

Adjusted earnings are anticipated to come in between $6.65 and $6.75 for 2025, the company said late Tuesday, compared with the current consensus on FactSet for $6.76. In the previous year, adjusted EPS increased to $5.97 from $5.15 on an annual basis. The stock declined 3.5% in premarket activity.

Revenue is pegged at $5.14 billion to $5.22 billion for the ongoing year, while the Street is looking for nearly $5.21 billion. Revenue advanced to $4.64 billion in 2024 from $4.09 billion the year prior.

"Our outlook is based on our usual assumption that export control regulations in place today remain substantially similar for the remainder of the year," Chief Financial Officer John Wall said during an earnings call, according to a FactSet transcript. "At the midpoint of revenue guidance, we are assuming 2025 China revenue will be flat year-over-year."

Cadence posted adjusted EPS of $1.88 for the December quarter, up from $1.38 the year before, topping the average analyst estimate of $1.82. Revenue climbed to $1.36 billion from $1.07 billion, just ahead of the Street's view for $1.35 billion.

Product and maintenance revenue inclined to $1.24 billion from about $982 million last year, while services rose to $116.7 million from $86.6 million. "Fourth-quarter bookings were exceptionally strong and we ended the year with a record backlog of $6.8 billion and a record (current remaining performance obligations) of $3.4 billion," Wall said on the call.

By geography, Americas made up 49% of the overall revenue for the quarter versus 44% last year. China contributed 13% to the topline results, down from 15% in the 2023 quarter, while Europe, the Middle East and Africa came in at 15%. Japan accounted for 6% of overall revenue.

"Cadence is very well positioned to benefit from the various phases of (artificial intelligence), including the current AI infrastructure buildout, applying AI to our own products, and expanding into new markets such as life sciences," Chief Executive Anirudh Devgan said in a statement.

For the ongoing three-month period, the company expects adjusted EPS to be in a range of $1.46 to $1.52 on revenue of $1.23 billion to $1.25 billion, Wall told analysts on the call. The market's current forecast is for non-GAAP EPS of $1.51 and revenue of $1.24 billion.