CDNS
Cadence Design Systems INC
NASDAQ
8-K: Cadence Design Systems Reports Record Fourth Quarter and Fiscal Year 2024 Results, Exceeding Expectations
Sentiment:
Earnings Release
18 February 2025 4:04 PM
Cadence Design Systems announces strong Q4 and fiscal year 2024 results, driven by revenue growth and a record backlog of $6.8 billion.
Better than expected
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.
Summary
- Cadence Design Systems, Inc. reported its financial results for the fourth quarter and fiscal year ended December 31, 2024.
- The company's Q4 revenue reached $1.356 billion, compared to $1.069 billion in Q4 2023.
- GAAP operating margin for Q4 was 33.7%, up from 31.5% in the same period last year, while non-GAAP operating margin was 46.0%, compared to 42.9% in Q4 2023.
- GAAP diluted net income per share for Q4 was $1.24, compared to $1.19 in Q4 2023, and non-GAAP diluted net income per share was $1.88, compared to $1.38 in Q4 2023.
- For the full fiscal year 2024, revenue was $4.641 billion, compared to $4.090 billion in 2023.
- GAAP operating margin for fiscal year 2024 was 29.1%, compared to 30.6% in 2023, and non-GAAP operating margin was 42.5%, compared to 42.0% in 2023.
- GAAP diluted net income per share for fiscal year 2024 was $3.85, compared to $3.82 in 2023, and non-GAAP diluted net income per share was $5.97, compared to $5.15 in 2023.
- The year-end backlog reached a record $6.8 billion, and current remaining performance obligations (cRPO) were $3.4 billion.
- For fiscal year 2025, the company expects revenue in the range of $5.14 billion to $5.22 billion.
- The company anticipates a GAAP operating margin between 30.25% and 31.25% and a non-GAAP operating margin between 43.25% and 44.25% for fiscal year 2025.
- GAAP diluted net income per share is projected to be between $4.19 and $4.29, while non-GAAP diluted net income per share is expected to be between $6.65 and $6.75 for fiscal year 2025.
Sentiment
Score: 9
Explanation: The document presents a highly positive outlook with record financial results, strong growth projections, and strategic positioning in key technology areas like AI. The management's comments further reinforce this positive sentiment.
Positives
- Cadence achieved record bookings and backlog, exiting 2024 with a strong financial position.
- The company's revenue growth was 13.5% for the year, with a non-GAAP operating margin of 42.5%.
- Cadence is well-positioned to benefit from AI trends, including infrastructure buildout and applying AI to its products.
- The company's System Design & Analysis segment experienced strong growth, driven by its multi-physics analysis platform and AI-driven optimization.
- Cadence's IP business saw significant expansion and competitive displacements at top-tier customers.
- The hardware business delivered a record year, with Q4 being the best quarter ever.
- The company expects to use approximately 50% of free cash flow to repurchase Cadence shares for the year.
Negatives
- GAAP operating margin for fiscal year 2024 was 29.1%, compared to 30.6% in 2023.
- GAAP Other Income & Expense is expected to be negative for FY 2025.
Risks
- The company faces risks related to competition, maintaining operational efficiency, and changes in customer demands.
- Economic, geopolitical, and industry conditions, including export controls and trade restrictions, could impact results.
- Changes in tax laws, interest rates, and currency exchange rates pose financial risks.
- Cybersecurity compromises and attacks could cause potential harm.
- The company's ability to meet governance, environmental, and social targets is a risk factor.
Future Outlook
Cadence expects revenue between $5.14 billion and $5.22 billion for fiscal year 2025, with GAAP operating margin between 30.25% and 31.25% and non-GAAP operating margin between 43.25% and 44.25%. GAAP diluted net income per share is projected to be between $4.19 and $4.29, while non-GAAP diluted net income per share is expected to be between $6.65 and $6.75.
Management Comments
- Anirudh Devgan, president and chief executive officer, stated that Cadence delivered exceptional results in Q4, capping off a strong 2024 with 13.5% revenue growth and 42.5% non-GAAP operating margin.
- Anirudh Devgan noted that Cadence is well-positioned to benefit from the various phases of AI.
- John Wall, senior vice president and chief financial officer, expressed satisfaction with the record year-end backlog of $6.8 billion and cRPO of $3.4 billion and looks forward to building on that strength in 2025.
Industry Context
Cadence's results reflect the increasing demand for electronic design automation tools, particularly those related to AI, hyperscale computing, 5G communications, automotive, and healthcare.
Comparison to Industry Standards
- Cadence's revenue growth of 13.5% and non-GAAP operating margin of 42.5% for 2024 positions it competitively within the EDA industry.
- Comparable companies like Synopsys and Siemens EDA also benefit from the increasing complexity of chip design and the growing adoption of AI.
- Cadence's focus on AI-driven optimization and multi-physics analysis aligns with industry trends towards more comprehensive and integrated design solutions.
Stakeholder Impact
- Shareholders can expect continued growth and profitability, supported by the company's strong backlog and strategic investments.
- Employees benefit from the company's recognition as one of the 100 Best Companies to Work For by Fortune magazine.
- Customers gain access to advanced design tools and solutions that enable them to deliver innovative electronic products.
- Suppliers and creditors can rely on the company's financial stability and strong cash flow.
Next Steps
- Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the fourth quarter and fiscal year 2024 financial results audio webcast today, February 18, 2025, at 2 p.m. (Pacific) / 5 p.m. (Eastern).
Key Dates
- February 18, 2025: Date of the press release and financial results webcast.
- March 17, 2025: End date for the availability of the archived webcast.
- December 31, 2024: End of the fourth quarter and fiscal year for which results are reported.
Keywords
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.
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.
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.
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.