CDNS
Cadence Design Systems INC
NASDAQ
8-K: Cadence Design Systems Reports Record Fiscal Year 2023 Results, Revenue Up 15%
Sentiment:
Annual Results
12 February 2024 4:04 PM
Cadence Design Systems announced strong fourth quarter and fiscal year 2023 results, with total revenue up 15% year-over-year and EPS up over 20% year-over-year.
Better than expected
The company's fiscal year 2023 revenue and EPS growth exceeded expectations.
Cadence achieved a record year-end backlog and cRPO, indicating strong future performance.
The company's operating margins and profitability were better than anticipated.
Summary
- Cadence Design Systems reported its financial results for the fourth quarter and fiscal year ended December 31, 2023.
- The company's fiscal year 2023 total revenue reached $4.090 billion, a 15% increase compared to $3.562 billion in 2022.
- GAAP diluted net income per share for the year was $3.82, up from $3.09 in 2022, while non-GAAP diluted net income per share was $5.15, compared to $4.27 in the previous year.
- Cadence achieved a record year-end backlog of $6.0 billion and current remaining performance obligations (cRPO) of $3.2 billion.
- For the fourth quarter of 2023, revenue was $1.069 billion, compared to $900 million in Q4 2022.
- The company's GAAP operating margin for Q4 2023 was 31%, compared to 23% in Q4 2022, and non-GAAP operating margin was 43%, compared to 36% in the same period of the previous year.
- GAAP diluted net income per share for Q4 2023 was $1.19, compared to $0.88 in Q4 2022, and non-GAAP diluted net income per share was $1.38, compared to $0.96 in Q4 2022.
- Cadence expects fiscal year 2024 revenue to be in the range of $4.55 billion to $4.61 billion.
- The company anticipates a GAAP operating margin between 32% and 33% and a non-GAAP operating margin between 42% and 43% for fiscal year 2024.
- Cadence projects GAAP diluted net income per share to be between $4.08 and $4.18 and non-GAAP diluted net income per share to be between $5.87 and $5.97 for fiscal year 2024.
Sentiment
Score: 9
Explanation: The document conveys a very positive sentiment due to the strong financial results, record backlog, and optimistic future outlook. The company's growth in key areas like AI and system design further reinforces the positive sentiment.
Positives
- Cadence experienced strong revenue growth of 15% year-over-year in 2023.
- The company's earnings per share increased by over 20% year-over-year in 2023.
- Cadence achieved a record backlog of $6.0 billion, indicating strong future revenue potential.
- The company's cRPO of $3.2 billion demonstrates solid near-term revenue visibility.
- Cadence's System Design and Analysis segment grew by 22% year-over-year, showing strength in this area.
- The company's new Millennium Enterprise Multiphysics Platform offers significant energy efficiency and design impact improvements.
- Cadence is expanding its AI portfolio and seeing increased customer adoption of its GenAI solutions.
- The company is forecasting continued growth in revenue and profitability for 2024.
- Cadence plans to repurchase shares, which can positively impact shareholder value.
Negatives
- The company's Q1 2024 revenue is expected to be lower than Q4 2023, with a projected range of $990 million to $1.01 billion.
- The GAAP operating margin for Q1 2024 is expected to be lower than Q4 2023, with a projected range of 24.5% to 25.5%.
- The non-GAAP operating margin for Q1 2024 is expected to be lower than Q4 2023, with a projected range of 36.5% to 37.5%.
- The GAAP EPS for Q1 2024 is expected to be lower than Q4 2023, with a projected range of $0.74 to $0.78.
- The non-GAAP EPS for Q1 2024 is expected to be lower than Q4 2023, with a projected range of $1.10 to $1.14.
- The company's recurring revenue is expected to decrease from 84% in 2023 to 80-85% in 2024.
Risks
- Cadence faces competition in the industries it operates in.
- The company's ability to maintain and improve operational efficiency and growth is crucial.
- Changes in customer demands or supply constraints could impact the timing of orders and deliveries.
- Economic, geopolitical, and industry conditions, including those in the semiconductor and electronics industries, could affect Cadence's performance.
- The company is subject to risks related to cybersecurity and potential attacks.
- Cadence's ability to meet corporate governance, environmental, and social targets is a risk.
- The company's share repurchases are subject to business and market conditions.
- The company's non-GAAP tax rate is subject to change due to various factors.
Future Outlook
Cadence expects fiscal year 2024 revenue to be in the range of $4.55 billion to $4.61 billion, with a GAAP operating margin between 32% and 33% and a non-GAAP operating margin between 42% and 43%. The company projects GAAP diluted net income per share to be between $4.08 and $4.18 and non-GAAP diluted net income per share to be between $5.87 and $5.97 for fiscal year 2024.
Management Comments
- Anirudh Devgan, president and chief executive officer, stated that Cadence delivered exceptional results for 2023, propelled by innovative solutions and the successful execution of their Intelligent System Design strategy.
- Anirudh Devgan expressed excitement about opportunities in AI and 3D-IC.
- John Wall, senior vice president and chief financial officer, noted the strong finish to the year with growth across all businesses in 2023.
- John Wall expressed satisfaction with the record year-end backlog and cRPO and looks forward to building on that strength in 2024.
Industry Context
Cadence's strong results reflect the ongoing demand for electronic design automation solutions, particularly in areas like AI and 3D-IC. The company's focus on its Intelligent System Design strategy aligns with the industry's need for more integrated and efficient design tools. The expanded collaborations with NVIDIA, Arm, and Intel highlight the importance of partnerships in driving innovation in this sector.
Comparison to Industry Standards
- Cadence's 15% revenue growth in 2023 is strong compared to the overall growth of the EDA market, which is estimated to be around 10-12%.
- Competitors like Synopsys and Mentor Graphics (now part of Siemens) also reported solid growth, but Cadence's growth rate is at the higher end of the range.
- Cadence's non-GAAP operating margin of 42% is also competitive with industry leaders, indicating strong profitability.
- The company's focus on AI and 3D-IC aligns with the industry's move towards more complex and integrated designs, which is a key growth driver.
- Cadence's backlog of $6.0 billion is a strong indicator of future revenue and is comparable to the backlogs of other major EDA companies.
Stakeholder Impact
- Shareholders will benefit from the strong financial performance and share repurchase program.
- Employees will benefit from the company's continued growth and success.
- Customers will benefit from Cadence's innovative solutions and technology leadership.
- Suppliers will benefit from the company's continued operations and growth.
- Creditors will benefit from the company's strong financial position.
Next Steps
- Cadence will continue to execute its Intelligent System Design strategy.
- The company will focus on opportunities in AI and 3D-IC.
- Cadence will build on its strong backlog and cRPO in 2024.
- The company will host a financial results audio webcast on February 12, 2024.
- Cadence will continue to repurchase shares in 2024.
Key Dates
- February 12, 2024: Date of the press release and financial results announcement.
- February 12, 2024: Date of the financial results audio webcast at 2 p.m. (Pacific) / 5 p.m. (Eastern).
- March 15, 2024: End date for the archive of the financial results webcast at 5 p.m. (Pacific).
Keywords
Cadence, Financial Results, Semiconductor, Electronic Design Automation, EDA, AI, System Design, Software, Hardware, IP, Revenue, EPS, Backlog, Operating Margin, cRPO
CDNS
Cadence Design Systems INC
NASDAQ
Sector: TBD
Filings with Classifications
Better than expected
3 July 2025 8:25 AM
Current Report
- The U.S. Bureau of Industry and Security rescinded the previously imposed export license requirements for Cadence's electronic design automation software and technology to China, removing a significant trade barrier.
- This allows Cadence to restore access to its products for affected customers, which is a positive development for its business operations and revenue potential in the Chinese market.
Worse than expected
29 May 2025 4:08 PM
Current Report
- The imposition of new, complex license requirements for key products (EDA software and technology) when dealing with China or Chinese military end users introduces significant operational and financial uncertainty.
- The company explicitly states it is assessing the 'impact on our business and financial results,' implying potential negative consequences.
- The uncertainty surrounding license grants and the broader effect on customers and the industry indicates a deterioration of the operating environment for a significant market.
Better than expected
29 April 2025 9:44 PM
Quarterly Report (Form 10-Q)
- Revenue growth of 23% exceeded expectations.
- Operating margin improvement indicates better efficiency.
- Net income and EPS increased, surpassing previous year's results.
Better than expected
28 April 2025 4:03 PM
Earnings Release
- Cadence exceeded its Q1 guidance for all key financial metrics, including revenue and EPS.
- The company is raising its full-year revenue and EPS outlook, indicating confidence in future performance.
Better than expected
18 February 2025 4:04 PM
Earnings Release
- Cadence exceeded its Q4 and 2024 outlook for revenue and EPS.
- The company achieved a record backlog of $6.8 billion.
- Cadence's IP business grew 28% year over year in Q4.
Worse than expected
29 October 2024 5:40 PM
Quarterly Report
- Net income decreased in Q3 2024 compared to Q3 2023.
- Operating margin decreased for the nine months ended September 30, 2024, compared to the same period in 2023.
Capital raise
29 October 2024 5:40 PM
Quarterly Report
- Cadence issued $2.5 billion in senior notes in September 2024.
- The company established a new $1.25 billion revolving credit facility in August 2024.
Better than expected
28 October 2024 4:03 PM
Quarterly Report
- Cadence exceeded its Q3 guidance for both revenue and operating margin.
- The company raised its full-year non-GAAP EPS outlook.
- The company reported strong growth in key areas such as IP and System Design & Analysis.
Capital raise
10 September 2024 5:19 PM
Debt Issuance Announcement
- Cadence Design Systems raised $2.5 billion through a public offering of senior notes.
- The offering included three tranches with varying interest rates and maturity dates.
Capital raise
4 September 2024 8:56 PM
Debt Offering Announcement
- Cadence Design Systems is raising $2.5 billion through the issuance of senior notes.
- The offering includes three tranches of notes with different interest rates and maturity dates.
- The proceeds will be used to repay existing debt and for general corporate purposes.
Worse than expected
23 July 2024 6:58 PM
Quarterly Report
- The operating margin decreased to 28% for the quarter and 26% for the six months ended June 30, 2024, compared to 31% for both periods in 2023, indicating worse than expected profitability.
Better than expected
22 July 2024 4:04 PM
Quarterly Report
- Cadence exceeded its outlook on all key financial metrics for Q2 2024.
- The company raised its full-year revenue growth outlook to 13% year-over-year.
Worse than expected
23 April 2024 5:45 PM
Quarterly Report
- The company's total revenue decreased slightly compared to the same quarter last year.
- Product and maintenance revenue declined by 5%.
Capital raise
23 April 2024 5:45 PM
Quarterly Report
- Cadence intends to fund the cash consideration for the BETA CAE Systems acquisition through a combination of cash on hand and borrowings under existing and/or new debt facilities.
- The acquisition of BETA CAE Systems will involve the issuance of Cadence common stock to current BETA CAE shareholders.
Worse than expected
23 April 2024 5:17 PM
8-K Amendment
- The company initially misreported its first quarter bookings as record bookings, which was later corrected to the second highest first quarter bookings.
Worse than expected
22 April 2024 4:02 PM
Quarterly Report
- The company's Q1 2024 revenue was slightly lower than Q1 2023, and both GAAP and non-GAAP operating margins decreased year-over-year.
- Non-GAAP diluted net income per share also decreased compared to the same quarter last year.
Delay expected
21 March 2024 5:41 PM
SEC Form 4 Filing
- The Form 4 filing was submitted late due to an administrative oversight.
Capital raise
5 March 2024 9:10 AM
Merger Announcement
- Cadence intends to fund the cash portion of the acquisition through a combination of cash on hand and borrowings under existing and/or new debt facilities.
- This indicates a potential need for Cadence to raise capital through debt financing.
Delay expected
5 March 2024 9:10 AM
Merger Announcement
- The deal is subject to regulatory approvals, which could delay the closing beyond the expected second quarter of 2024.
- The agreement includes a longstop date of November 29, 2024, indicating a potential for delays.
Better than expected
12 February 2024 4:04 PM
Annual Results
- The company's fiscal year 2023 revenue and EPS growth exceeded expectations.
- Cadence achieved a record year-end backlog and cRPO, indicating strong future performance.
- The company's operating margins and profitability were better than anticipated.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.