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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 12, 2024
CADENCE DESIGN SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter) | | | | | | | | | | | | | | |
| | | | |
Delaware | | 000-15867 | | 00-0000000 |
(State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
2655 Seely Avenue, San Jose, California 95134
(Address of Principal Executive Offices) (Zip Code)
(408) 943-1234
(Registrant’s telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | | | | | |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, $0.01 par value per share | | CDNS | | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 12, 2024, Cadence Design Systems, Inc. ("Cadence") issued a press release announcing its financial results for the quarter and fiscal year ended December 31, 2023.
A copy of the press release is attached hereto as Exhibit 99.01 and a copy of the commentary by the Chief Financial Officer of Cadence regarding Cadence's financial results for the quarter and fiscal year ended December 31, 2023 is attached hereto as Exhibit 99.02, and the press release and the commentary are incorporated herein by reference.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits | | | | | | | | |
Exhibit No. | | Description |
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104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 12, 2024 | | | | | | | | |
CADENCE DESIGN SYSTEMS, INC. |
| |
By: | | /s/ John M. Wall |
| | John M. Wall |
| | Senior Vice President and Chief Financial Officer |
Exhibit 99.01
Cadence Reports Fourth Quarter and Fiscal Year 2023 Financial Results
Fiscal Year 2023 Total Revenue Up 15% Year Over Year
EPS Up Over 20% Year Over Year
Record Backlog of $6.0 Billion and cRPO of $3.2 Billion
SAN JOSE, Calif. — February 12, 2024 — Cadence Design Systems, Inc. (Nasdaq: CDNS) today announced results for the fourth quarter and fiscal year 2023.
Fourth Quarter 2023 Financial Highlights
•Revenue of $1.069 billion, compared to revenue of $900 million in Q4 2022
•GAAP operating margin of 31%, compared to 23% in Q4 2022
•Non-GAAP operating margin of 43%, compared to 36% in Q4 2022
•GAAP diluted net income per share of $1.19, compared to $0.88 in Q4 2022
•Non-GAAP diluted net income per share of $1.38, compared to $0.96 in Q4 2022
Fiscal Year 2023 Financial Highlights
•Revenue of $4.090 billion, compared to revenue of $3.562 billion in 2022
•GAAP operating margin of 31%, compared to 30% in 2022
•Non-GAAP operating margin of 42%, compared to 40% in 2022
•GAAP diluted net income per share of $3.82, compared to $3.09 in 2022
•Non-GAAP diluted net income per share of $5.15, compared to $4.27 in 2022
•Year-end backlog was $6.0 billion and current remaining performance obligations (“cRPO”), contract revenue expected to be recognized as revenue in the next 12 months, was $3.2 billion
“Cadence delivered exceptional results for 2023, propelled by our innovative solutions and the successful execution of our Intelligent System Design strategy,” said Anirudh Devgan, president and chief executive officer. “I'm thrilled about the opportunities ahead of us, particularly in AI and 3D-IC. And I look forward to continuing to drive our broad-based business momentum through our technology leadership.”
“We had a strong finish to the year, with growth across all our businesses in 2023,” said John Wall, senior vice president and chief financial officer. “I’m pleased with our record year-end backlog of $6.0 billion and cRPO of $3.2 billion, and I look forward to building on that strength in 2024.”
CFO Commentary
Commentary on the fourth quarter and fiscal year 2023 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
For fiscal year 2024, the company expects:
•Revenue in the range of $4.55 billion to $4.61 billion
•GAAP operating margin in the range of 32% to 33%
•Non-GAAP operating margin in the range of 42% to 43%
•GAAP diluted net income per share in the range of $4.08 to $4.18
•Non-GAAP diluted net income per share in the range of $5.87 to $5.97
For the first quarter of 2024, the company expects:
•Revenue in the range of $990 million to $1.01 billion
•GAAP operating margin in the range of 24.5% to 25.5%
•Non-GAAP operating margin in the range of 36.5% to 37.5%
•GAAP diluted net income per share in the range of $0.74 to $0.78
•Non-GAAP diluted net income per share in the range of $1.10 to $1.14
The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company’s geographic earnings mix, or other changes to the company’s strategy or business operations. The company expects to use the current normalized non-GAAP tax rate through fiscal 2025 but will re-evaluate this rate periodically for significant items that may materially affect its projections.
Reconciliations of the financial highlights and business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, are included in this press release.
Business Highlights
•Further broadened Cadence.AI generative AI portfolio with introduction of Voltus™ InsightAI for intelligent power analysis and Celsius™ Studio for AI-driven full system thermal analysis. Accelerating momentum of our Cadence.AI portfolio has led to an almost tenfold increase in the number of customers adopting our GenAI solutions in 2023
•System Design and Analysis grew 22% year over year in 2023, with strong momentum from the company's multiphysics platform delivering superior results to customers across multiple segments including aerospace and defense and automotive
•The Millennium™ Enterprise Multiphysics Platform, which was announced earlier this month, is the industry’s first hardware/software platform combining AI, HPC and digital twin technology delivering 20x energy efficiency and up to 100x design impact
•Expanded long-standing collaborations with strategic partners NVIDIA, Arm and Intel
•2023 was another record year for Palladium® and Protium™ hardware systems, with an exceptionally strong Q1 2023 hardware quarter when the company expanded production capacity to improve delivery lead times against the backlog
Audio Webcast Scheduled
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 2023 financial results audio webcast today, February 12, 2024, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting February 12, 2024 at 5 p.m. (Pacific) and ending March 15, 2024 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
About Cadence
Cadence is a pivotal leader in electronic systems design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world’s most innovative companies, delivering extraordinary products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For nine years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For. Learn more at www.cadence.com.
© 2024 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
This press release contains forward-looking statements, including Cadence's outlook on future operating results, strategic objectives, business prospects, technology and product developments, industry trends and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control, and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates and realize the benefits of its investments in research and development, including opportunities presented by AI; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) change in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence's products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions, and rising tensions and conflicts around the world such as in the Middle East and with respect to Taiwan; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations, inflation rates, Cadence's upcoming debt maturities and Cadence’s ability to access capital and debt markets; (vii) the continued acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (viii) potential harm caused by compromises in cybersecurity and cybersecurity attacks; (ix) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (x) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject; and (xi) Cadence's ability to successfully meet corporate governance, environmental and social targets and strategies. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.
For a detailed discussion of these and other cautionary statements related to Cadence’s business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this press release are based on management's expectations as of the date of this press release and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
GAAP to Non-GAAP Reconciliation
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.
To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, investment gains or losses, income or expenses related to Cadence’s non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.
Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
| | | | | | | | | | | | | | |
Operating Margin Reconciliation | | Three Months Ended |
| | December 31, 2023 | | December 31, 2022 |
| | (unaudited) |
GAAP operating margin as a percent of total revenue | | 31% | | 23% |
Reconciling items to non-GAAP operating margin as a percent of total revenue: | | | | |
Stock-based compensation expense | | 8% | | 8% |
Amortization of acquired intangibles | | 2% | | 2% |
Acquisition and integration-related costs | | 1% | | 2% |
Restructuring | | 0% | | 0% |
Non-qualified deferred compensation expenses | | 1% | | 1% |
| | | | |
Non-GAAP operating margin as a percent of total revenue | | 43% | | 36% |
| | | | | | | | | | | | | | |
Operating Margin Reconciliation | | Years Ended |
| | December 31, 2023 | | December 31, 2022 |
| | (unaudited) |
GAAP operating margin as a percent of total revenue | | 31% | | 30% |
Reconciling items to non-GAAP operating margin as a percent of total revenue: | | | | |
Stock-based compensation expense | | 8% | | 8% |
Amortization of acquired intangibles | | 2% | | 2% |
Acquisition and integration-related costs | | 1% | | 1% |
Restructuring | | 0% | | 0% |
Non-qualified deferred compensation expenses (credits) | | 0% | | (1)% |
| | | | |
Non-GAAP operating margin as a percent of total revenue | | 42% | | 40% |
| | | | | | | | | | | | | | |
Net Income Reconciliation | | Three Months Ended |
| | December 31, 2023 | | December 31, 2022 |
(in thousands) | | (unaudited) |
Net income on a GAAP basis | | $ | 323,899 | | | $ | 240,392 | |
Stock-based compensation expense | | 86,683 | | | 73,249 | |
Amortization of acquired intangibles | | 16,920 | | | 15,369 | |
Acquisition and integration-related costs | | 12,583 | | | 17,510 | |
Restructuring | | (569) | | | 13 | |
Non-qualified deferred compensation expenses | | 6,295 | | | 3,233 | |
| | | | |
Other income or expense related to investments and non-qualified deferred compensation plan assets* | | (27,966) | | | (2,584) | |
Income tax effect of non-GAAP adjustments | | (41,638) | | | (85,397) | |
Net income on a non-GAAP basis | | $ | 376,207 | | | $ | 261,785 | |
| | | | | |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
| | | | | | | | | | | | | | |
Net Income Reconciliation | | Years Ended |
| | December 31, 2023 | | December 31, 2022 |
(in thousands) | | (unaudited) |
Net income on a GAAP basis | | $ | 1,041,144 | | | $ | 848,952 | |
Stock-based compensation expense | | 325,611 | | | 270,439 | |
Amortization of acquired intangibles | | 61,970 | | | 59,818 | |
Acquisition and integration-related costs | | 56,542 | | | 41,103 | |
Restructuring | | 11,013 | | | 55 | |
Non-qualified deferred compensation expenses (credits) | | 10,851 | | | (8,744) | |
| | | | |
Other income or expense related to investments and non-qualified deferred compensation plan assets* | | (45,502) | | | 14,171 | |
Income tax effect of non-GAAP adjustments | | (57,139) | | | (52,475) | |
Net income on a non-GAAP basis | | $ | 1,404,490 | | | $ | 1,173,319 | |
| | | | | |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
| | | | | | | | | | | | | | |
Diluted Net Income Per Share Reconciliation | | Three Months Ended |
| | December 31, 2023 | | December 31, 2022 |
(in thousands, except per share data) | | (unaudited) |
Diluted net income per share on a GAAP basis | | $ | 1.19 | | | $ | 0.88 | |
Stock-based compensation expense | | 0.32 | | | 0.27 | |
Amortization of acquired intangibles | | 0.06 | | | 0.06 | |
Acquisition and integration-related costs | | 0.04 | | | 0.06 | |
Restructuring | | — | | | — | |
Non-qualified deferred compensation expenses | | 0.02 | | | 0.01 | |
| | | | |
Other income or expense related to investments and non-qualified deferred compensation plan assets* | | (0.10) | | | (0.01) | |
Income tax effect of non-GAAP adjustments | | (0.15) | | | (0.31) | |
Diluted net income per share on a non-GAAP basis | | $ | 1.38 | | | $ | 0.96 | |
Shares used in calculation of diluted net income per share | | 272,419 | | | 272,997 | |
| | | | |
| | | | | |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
| | | | | | | | | | | | | | |
Diluted Net Income Per Share Reconciliation | | Years Ended |
| | December 31, 2023 | | December 31, 2022 |
(in thousands, except per share data) | | (unaudited) |
Diluted net income per share on a GAAP basis | | $ | 3.82 | | | $ | 3.09 | |
Stock-based compensation expense | | 1.19 | | | 0.98 | |
Amortization of acquired intangibles | | 0.23 | | | 0.22 | |
Acquisition and integration-related costs | | 0.21 | | | 0.15 | |
Restructuring | | 0.04 | | | — | |
Non-qualified deferred compensation expenses (credits) | | 0.04 | | | (0.03) | |
| | | | |
Other income or expense related to investments and non-qualified deferred compensation plan assets* | | (0.17) | | | 0.05 | |
Income tax effect of non-GAAP adjustments | | (0.21) | | | (0.19) | |
Diluted net income per share on a non-GAAP basis | | $ | 5.15 | | | $ | 4.27 | |
Shares used in calculation of diluted net income per share | | 272,748 | | | 275,011 | |
| | | | |
| | | | | |
* | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
For more information, please contact:
Cadence Investor Relations
408-944-7100
investor_relations@cadence.com
Cadence Newsroom
408-944-7039
newsroom@cadence.com
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
December 31, 2023 and December 31, 2022
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | |
| | December 31, 2023 | | December 31, 2022 |
Current assets: | | | | |
Cash and cash equivalents | | $ | 1,008,152 | | | $ | 882,325 | |
Receivables, net | | 489,224 | | | 486,710 | |
Inventories | | 181,661 | | | 128,005 | |
Prepaid expenses and other | | 297,180 | | | 209,727 | |
Total current assets | | 1,976,217 | | | 1,706,767 | |
Property, plant and equipment, net | | 403,213 | | | 371,451 | |
Goodwill | | 1,535,845 | | | 1,374,268 | |
Acquired intangibles, net | | 336,843 | | | 354,617 | |
Deferred taxes | | 880,001 | | | 853,691 | |
Other assets | | 537,372 | | | 476,277 | |
Total assets | | $ | 5,669,491 | | | $ | 5,137,071 | |
Current liabilities: | | | | |
Revolving credit facility | | $ | — | | | $ | 100,000 | |
Current portion of long-term debt | | 349,285 | | | — | |
Accounts payable and accrued liabilities | | 576,558 | | | 557,158 | |
Current portion of deferred revenue | | 665,024 | | | 690,538 | |
Total current liabilities | | 1,590,867 | | | 1,347,696 | |
Long-term liabilities: | | | | |
Long-term portion of deferred revenue | | 98,931 | | | 91,524 | |
Long-term debt | | 299,771 | | | 648,078 | |
Other long-term liabilities | | 275,651 | | | 304,660 | |
Total long-term liabilities | | 674,353 | | | 1,044,262 | |
Stockholders’ equity | | 3,404,271 | | | 2,745,113 | |
Total liabilities and stockholders’ equity | | $ | 5,669,491 | | | $ | 5,137,071 | |
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months and Years Ended December 31, 2023 and December 31, 2022
(In thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Years Ended |
| | December 31, 2023 | | December 31, 2022 | | December 31, 2023 | | December 31, 2022 |
Revenue: | | | | | | | | |
Product and maintenance | | $ | 981,987 | | | $ | 845,880 | | | $ | 3,834,359 | | | $ | 3,340,197 | |
Services | | 86,636 | | | 53,997 | | | 255,627 | | | 221,521 | |
Total revenue | | 1,068,623 | | | 899,877 | | | 4,089,986 | | | 3,561,718 | |
Costs and expenses: | | | | | | | | |
Cost of product and maintenance | | 71,491 | | | 69,702 | | | 331,760 | | | 273,565 | |
Cost of services | | 32,639 | | | 23,813 | | | 103,281 | | | 98,058 | |
Marketing and sales | | 180,368 | | | 171,817 | | | 690,319 | | | 604,224 | |
Research and development | | 367,443 | | | 350,423 | | | 1,441,796 | | | 1,251,544 | |
General and administrative | | 75,742 | | | 68,065 | | | 242,430 | | | 242,116 | |
Amortization of acquired intangibles | | 4,981 | | | 4,927 | | | 18,162 | | | 18,470 | |
Restructuring | | (569) | | | 13 | | | 11,013 | | | 55 | |
Total costs and expenses | | 732,095 | | | 688,760 | | | 2,838,761 | | | 2,488,032 | |
Income from operations | | 336,528 | | | 211,117 | | | 1,251,225 | | | 1,073,686 | |
Interest expense | | (8,989) | | | (9,082) | | | (36,185) | | | (22,934) | |
Other income (expense), net | | 34,523 | | | 8,490 | | | 66,886 | | | (5,389) | |
Income before provision (benefit) for income taxes | | 362,062 | | | 210,525 | | | 1,281,926 | | | 1,045,363 | |
Provision (benefit) for income taxes | | 38,163 | | | (29,867) | | | 240,782 | | | 196,411 | |
Net income | | $ | 323,899 | | | $ | 240,392 | | | $ | 1,041,144 | | | $ | 848,952 | |
Net income per share - basic | | $ | 1.20 | | | $ | 0.89 | | | $ | 3.86 | | | $ | 3.13 | |
Net income per share - diluted | | $ | 1.19 | | | $ | 0.88 | | | $ | 3.82 | | | $ | 3.09 | |
Weighted average common shares outstanding - basic | | 269,088 | | | 269,709 | | | 269,381 | | | 271,198 | |
Weighted average common shares outstanding - diluted | | 272,419 | | | 272,997 | | | 272,748 | | | 275,011 | |
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended December 31, 2023 and December 31, 2022
(In thousands)
(Unaudited) | | | | | | | | | | | |
| Years Ended |
| December 31, 2023 | | December 31, 2022 |
Cash and cash equivalents at beginning of year | $ | 882,325 | | | $ | 1,088,940 | |
Cash flows from operating activities: | | | |
Net income | 1,041,144 | | | 848,952 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 145,292 | | | 132,088 | |
Amortization of debt discount and fees | 1,262 | | | 1,134 | |
Stock-based compensation | 325,611 | | | 270,439 | |
(Gain) loss on investments, net | (34,602) | | | 5,425 | |
Deferred income taxes | (36,512) | | | (107,606) | |
Provisions for losses on receivables | 3,325 | | | 204 | |
ROU asset amortization and change in operating lease liabilities | 451 | | | 3,342 | |
Other non-cash items | 1,983 | | | 371 | |
Changes in operating assets and liabilities, net of effect of acquired businesses: | | | |
Receivables | (11,748) | | | (138,471) | |
Inventories | (65,895) | | | (23,073) | |
Prepaid expenses and other | 39,015 | | | (38,927) | |
Other assets | (45,784) | | | (933) | |
Accounts payable and accrued liabilities | 5,415 | | | 113,945 | |
Deferred revenue | (21,583) | | | 131,462 | |
Other long-term liabilities | 1,802 | | | 43,542 | |
Net cash provided by operating activities | 1,349,176 | | | 1,241,894 | |
Cash flows from investing activities: | | | |
| | | |
| | | |
Purchases of investments | (176,170) | | | (1,000) | |
Proceeds from the sale and maturity of investments | 64,775 | | | 366 | |
Purchases of property, plant and equipment | (102,337) | | | (123,215) | |
Purchases of intangible assets | (166) | | | (1,000) | |
Cash paid in business combinations, net of cash acquired | (198,351) | | | (613,785) | |
Net cash used for investing activities | (412,249) | | | (738,634) | |
Cash flows from financing activities: | | | |
Proceeds from revolving credit facility | 50,000 | | | 585,000 | |
Payments on revolving credit facility | (150,000) | | | (485,000) | |
Proceeds from term loan | — | | | 300,000 | |
Payment of debt issuance costs | — | | | (425) | |
Proceeds from issuance of common stock | 132,957 | | | 105,331 | |
Stock received for payment of employee taxes on vesting of restricted stock | (136,396) | | | (111,864) | |
Payments for repurchases of common stock | (700,134) | | | (1,050,091) | |
Net cash used for financing activities | (803,573) | | | (657,049) | |
Effect of exchange rate changes on cash and cash equivalents | (7,527) | | | (52,826) | |
Increase (decrease) in cash and cash equivalents | 125,827 | | | (206,615) | |
Cash and cash equivalents at end of year | $ | 1,008,152 | | | $ | 882,325 | |
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
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| 2022 | | 2023 |
GEOGRAPHY | Q1 | | Q2 | | Q3 | | Q4 | | Year | | Q1 | | Q2 | | Q3 | | Q4 | | Year |
Americas | 47 | % | | 45 | % | | 45 | % | | 46 | % | | 46 | % | | 44 | % | | 41 | % | | 43 | % | | 44 | % | | 43 | % |
China | 16 | % | | 13 | % | | 17 | % | | 13 | % | | 15 | % | | 17 | % | | 18 | % | | 17 | % | | 15 | % | | 17 | % |
Other Asia | 18 | % | | 18 | % | | 17 | % | | 18 | % | | 18 | % | | 18 | % | | 18 | % | | 19 | % | | 19 | % | | 19 | % |
Europe, Middle East and Africa | 14 | % | | 18 | % | | 16 | % | | 17 | % | | 16 | % | | 15 | % | | 17 | % | | 15 | % | | 16 | % | | 16 | % |
Japan | 5 | % | | 6 | % | | 5 | % | | 6 | % | | 5 | % | | 6 | % | | 6 | % | | 6 | % | | 6 | % | | 5 | % |
Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % |
Revenue Mix by Product Category (% of Total Revenue)
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| 2022 | | 2023 |
PRODUCT CATEGORY | Q1 | | Q2 | | Q3 | | Q4 | | Year | | Q1 | | Q2 | | Q3 | | Q4 | | Year |
Custom IC Design and Simulation | 22 | % | | 23 | % | | 22 | % | | 22 | % | | 22 | % | | 20 | % | | 22 | % | | 22 | % | | 22 | % | | 22 | % |
Digital IC Design and Signoff | 27 | % | | 27 | % | | 29 | % | | 28 | % | | 28 | % | | 25 | % | | 27 | % | | 28 | % | | 29 | % | | 27 | % |
Functional Verification, including Emulation and Prototyping Hardware | 28 | % | | 24 | % | | 25 | % | | 25 | % | | 26 | % | | 32 | % | | 27 | % | | 26 | % | | 24 | % | | 27 | % |
IP | 13 | % | | 14 | % | | 12 | % | | 12 | % | | 12 | % | | 11 | % | | 11 | % | | 11 | % | | 13 | % | | 12 | % |
System Design and Analysis | 10 | % | | 12 | % | | 12 | % | | 13 | % | | 12 | % | | 12 | % | | 13 | % | | 13 | % | | 12 | % | | 12 | % |
Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % |
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of February 12, 2024
(Unaudited)
| | | | | | | | | | | | | | | | |
| | Three Months Ending March 31, 2024 | | Year Ending December 31, 2024 | | |
| | Forecast | | Forecast | | |
GAAP operating margin as a percent of total revenue | | 24.5% - 25.5% | | 32% - 33% | | |
Reconciling items to non-GAAP operating margin as a percent of total revenue: | | | | | | |
Stock-based compensation expense | | 9% | | 8% | | |
Amortization of acquired intangibles | | 2% | | 1% | | |
Acquisition and integration-related costs | | 1% | | 1% | | |
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Non-GAAP operating margin as a percent of total revenue† | | 36.5% - 37.5% | | 42% - 43% | | |
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† | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of February 12, 2024
(Unaudited)
| | | | | | | | | | | | | | | | |
| | Three Months Ending March 31, 2024 | | Year Ending December 31, 2024 | | |
| | Forecast | | Forecast | | |
Diluted net income per share on a GAAP basis | | $0.74 to $0.78 | | $4.08 to $4.18 | | |
Stock-based compensation expense | | 0.32 | | 1.36 | | |
Amortization of acquired intangibles | | 0.06 | | 0.24 | | |
Acquisition and integration-related costs | | 0.04 | | 0.14 | | |
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| | | | | | |
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Income tax effect of non-GAAP adjustments | | (0.06) | | 0.05 | | |
Diluted net income per share on a non-GAAP basis† | | $1.10 to $1.14 | | $5.87 to $5.97 | | |
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of February 12, 2024
(Unaudited)
| | | | | | | | | | | | | | | | |
| | Three Months Ending March 31, 2024 | | Year Ending December 31, 2024 | | |
($ in millions) | | Forecast | | Forecast | | |
Net income on a GAAP basis | | $202 to $213 | | $1,111 to $1,138 | | |
Stock-based compensation expense | | 88 | | 370 | | |
Amortization of acquired intangibles | | 16 | | 66 | | |
Acquisition and integration-related costs | | 12 | | 39 | | |
| | | | | | |
| | | | | | |
| | | | | | |
Income tax effect of non-GAAP adjustments | | (16) | | 13 | | |
Net income on a non-GAAP basis† | | $302 to $313 | | $1,599 to $1,626 | | |
| | | | | |
†
| The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
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CADENCE REPORTS FOURTH QUARTER AND FISCAL YEAR 2023 |
CADENCE DESIGN SYSTEMS, INC. |
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CFO COMMENTARY | | |
Key Takeaways for 2023 • Revenue growth of 15%, and EPS growth of >20% • A seventh consecutive year of >50% incremental non-GAAP operating margin, resulting in non-GAAP operating margin of 42% • Record year-end backlog of $6.0B and current RPO of $3.2B
| Q1 2024 Outlook • Revenue : $990 million - $1.010 billion • GAAP operating margin: 24.5% - 25.5% • Non-GAAP operating margin: 36.5% - 37.5% • GAAP EPS: $0.74 - $0.78 • Non-GAAP EPS: $1.10 - $1.14 • Expect to use approximately $125 million to repurchase Cadence shares in Q1 | Q4 2023 KEY METRICS |
• Revenue $1.069 billion • GAAP operating margin 31% • Non-GAAP operating margin 43% • GAAP EPS $1.19 • Non-GAAP EPS $1.38 • Operating cash flow $272 million
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FY 2024 Outlook • Revenue: $4.55 - $4.61 billion • GAAP operating margin: 32% - 33% • Non-GAAP operating margin: 42% - 43% • GAAP EPS: $4.08 - $4.18 • Non-GAAP EPS $5.87 - $5.97 • Operating cash flow: $1.35 - $1.45 billion • Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year | Financial Results Webcast | FY 2023 KEY METRICS |
Our Q4 2023 financial results webcast will begin February 12, 2024 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on February 12, 2024 until 5:00 p.m. (Pacific) on March 15, 2024. | • Revenue $4.090 billion • GAAP operating margin 31% • Non-GAAP operating margin 42% • GAAP EPS $3.82 • Non-GAAP EPS $5.15 • Operating cash flow $1.349 billion |
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 1 |
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Cadence Design Systems, Inc. |
|
Financial Metrics | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions, except per share data) | 2018 | | 2019 | | 2020* | | 2021 | | 2022 | | 2023* | | | 2024E | |
| | | | | | | | | | | | | | | |
Revenue | $ | 2,138 | | | $ | 2,336 | | | $ | 2,683 | | | $ | 2,988 | | | $ | 3,562 | | | $ | 4,090 | | | | $4,550- $4,610 | |
Revenue growth* | 10% | | 9% | | 15% | | 11% | | 19% | | 15% | | | 11% - 13% | |
3-year CAGR | 8% | | 9% | | 11% | | 12% | | 15% | | 15% | | | ~15% | |
3-year CAGR without 53rd week impact | | | | | 11% | | | | | | 16% | | | | |
| | | | | | | | | | | | | | | |
GAAP operating expenses | $ | 1,742 | | | $ | 1,845 | | | $ | 2,037 | | | $ | 2,209 | | | $ | 2,488 | | | $ | 2,839 | | | | ~$3,109 | |
GAAP operating expense growth | 8% | | 6% | | 10% | | 8% | | 13% | | 14% | | | ~10% | |
| | | | | | | | | | | | | | | |
Non-GAAP operating expenses | $ | 1,491 | | | $ | 1,587 | | | $ | 1,739 | | | $ | 1,877 | | | $ | 2,125 | | | $ | 2,373 | | | | ~$2,634 | |
Non-GAAP operating expense growth | 6% | | 6% | | 10% | | 8% | | 13% | | 12% | | | ~11% | |
| | | | | | | | | | | | | | | |
GAAP operating margin** | 19% | | 21% | | 24% | | 26% | | 30% | | 31% | | | 32.5 | % | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Non-GAAP operating margin** | 30% | | 32% | | 35% | | 37% | | 40% | | 42% | | | 42.5 | % | |
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| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
GAAP earnings per share | $ | 1.23 | | | $ | 3.53 | | | $ | 2.11 | | | $ | 2.50 | | | $ | 3.09 | | | $ | 3.82 | | | | $4.08 - $4.18 | |
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Non-GAAP earning per share | $ | 1.87 | | | $ | 2.20 | | | $ | 2.80 | | | $ | 3.29 | | | $ | 4.27 | | | $ | 5.15 | | | | $5.87 - $5.97 | |
Non-GAAP EPS growth** | 34% | | 18% | | 27% | | 18% | | 30% | | 21% | | | 15 | % | |
3-year Non-GAAP EPS CAGR** | 20% | | 22% | | 26% | | 21% | | 25% | | 23% | | | 22 | % | |
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Weighted average shares diluted outstanding | 281.1 | | 280.5 | | 279.6 | | 278.9 | | 275.0 | | 272.7 | | | 271.5 - 273.5 | |
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Cash flow from operations | 605 | | 730 | | 905 | | 1,101 | | 1,242 | | 1,349 | | | $1,350 - $1,450 | |
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Capital expenditures | 62 | | 75 | | 95 | | 65 | | 123 | | 102 | | | ~$120 | |
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* Fiscal 2020 was a 53-week year, compared to all other years which were 52 week years. 2020 (which impacts the 3 year CAGR in 2023) included approximately $45 million revenue impact for the extra week.
** At midpoint of guidance.
Profitability Trends | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | | 2024E* | |
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Revenue | $ | 2,138 | | | $ | 2,336 | | | $ | 2,683 | | | $ | 2,988 | | | $ | 3,562 | | | $ | 4,090 | | | | $ | 4,580 | | |
Revenue Growth | 10% | | 9% | | 15% | | 11% | | 19% | | 15% | | | 12% | |
3-Year Revenue Growth CAGR | 8% | | 9% | | 11% | | 12% | | 15% | | 15% | | | 15% | |
GAAP operating margin | 19% | | 21% | | 24% | | 26% | | 30% | | 31% | | | 32.5% | |
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Non-GAAP operating margin | 30% | | 32% | | 35% | | 37% | | 40% | | 42% | | | 42.5% | |
Stock-based compensation | (8)% | | (8)% | | (7)% | | (7)% | | (8)% | | (8)% | | | (8)% | |
Non-GAAP operating margin adjusted for stock-based compensation | 22% | | 24% | | 28% | | 30% | | 32% | | 34% | | | 34.5% | |
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GAAP operating income | $ | 396 | | | $ | 492 | | | $ | 646 | | | $ | 779 | | | $ | 1,074 | | | $ | 1,251 | | | | $ | 1,471 | | |
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Non-GAAP operating income | $ | 647 | | | $ | 749 | | | $ | 944 | | | $ | 1,111 | | | $ | 1,436 | | | $ | 1,717 | | | | $ | 1,946 | | |
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Non-GAAP operating income adjusted for stock-based compensation | $ | 479 | | | $ | 567 | | | $ | 747 | | | $ | 901 | | | $ | 1,166 | | | $ | 1,391 | | | | $ | 1,576 | | |
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* At midpoint of guidance. | | | | | | | | |
February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 2 |
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Cadence Design Systems, Inc. |
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First Quarter 2024 Financial Outlook | | | | | | | | | | | | | | | | | | | | | | | |
| Q1 2023 | | Q4 2023 | | | Q1 2024E | |
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Total Revenue ($ Millions) | $ | 1,022 | | | $ | 1,069 | | | | $990 - $1,010 | |
Q/Q Growth | | | 4% | | | (7)% - (6)% | |
Y/Y Growth | | | 19% | | | (3)% - (1)% | |
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GAAP Operating Margin | 32% | | 31% | | | 24.5% - 25.5% | |
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Non-GAAP Operating Margin | 42% | | 43% | | | 36.5% - 37.5% | |
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GAAP EPS | $ | 0.89 | | | $ | 1.19 | | | | $0.74 - $0.78 | |
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Non-GAAP EPS | $ | 1.29 | | | $ | 1.38 | | | | $1.10 - $1.14 | |
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Fiscal Year 2024 Financial Outlook | | | | | | | | | | | | | | | | | | | |
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| FY 2023 | | | | | FY 2024E | |
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Recurring Revenue | 84% | | | | | 80% - 85% | |
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Total Revenue ($ Millions) | $ | 4,090 | | | | | | $4,550 - $4,610 | |
Y/Y Growth | 15% | | | | | 11% - 13% | |
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Revenue from Beginning Backlog | ~75% | | | | | ~70% | |
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GAAP Operating Margin | 30.6% | | | | | 32% - 33% | |
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Non-GAAP Operating Margin | 42.0% | | | | | 42% - 43% | |
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GAAP Other Income & Expense ($ Millions) | $ | 31 | | | | | | $(10) - $(18) | |
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Non-GAAP Other Income & Expense ($ Millions) | $ | (15) | | | | | | $(10) - $(18) | |
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GAAP Tax Rate | 19% | | | | | ~23% | |
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Non-GAAP Tax Rate | 17.5% | | | | | 16.5% | |
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Weighted Average Diluted Shares Outstanding (Millions) | 272.7 | | | | | 271.5 - 273.5 | |
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GAAP EPS | $ | 3.82 | | | | | | $4.08 - $4.18 | |
Y/Y Growth | 24% | | | | | 7% - 9% | |
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Non-GAAP EPS | $ | 5.15 | | | | | | $5.87 - $5.97 | |
Y/Y Growth | 21% | | | | | 14% - 16% | |
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Cash Flow from Operations ($ Millions) | $ | 1,349 | | | | | | $1,350 - $1,450 | |
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DSO | 43 | | | | | ~45 | |
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Capital Expenditures ($ Millions) | $ | 102 | | | | | | ~$120 | |
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 3 |
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Cadence Design Systems, Inc. |
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Fourth Quarter and Fiscal Year Financial Results
Backlog | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Billions) | 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
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Backlog | $ | 3.6 | | | $ | 3.9 | | | $ | 4.4 | | | $ | 5.8 | | | | $ | 6.0 | | |
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Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
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Product and Maintenance | $ | 846 | | | $ | 964 | | | $ | 923 | | | $ | 966 | | | | $ | 982 | | |
Services | 54 | | | 58 | | | 54 | | | 57 | | | | 87 | | |
Total Revenue | $ | 900 | | | $ | 1,022 | | | $ | 977 | | | $ | 1,023 | | | | $ | 1,069 | | |
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(In Millions) | 2019 | | 2020* | | 2021 | | 2022 | | | 2023 | |
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Product and Maintenance | $ | 2,204 | | | $ | 2,537 | | | $ | 2,813 | | | $ | 3,340 | | | | $ | 3,834 | | |
Services | 132 | | | 146 | | | 175 | | | 222 | | | | 256 | | |
Total Revenue | $ | 2,336 | | | $ | 2,683 | | | $ | 2,988 | | | $ | 3,562 | | | | $ | 4,090 | | |
* Fiscal 2020 was a 53-week year.
Recurring and Up-Front Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
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Revenue recognized over time | 84 | % | | 77 | % | | 82 | % | | 83 | % | | | 85 | % | |
Revenue from arrangements with non-cancelable commitments | 3 | % | | 3 | % | | 3 | % | | 2 | % | | | 2 | % | |
Recurring Revenue | 87 | % | | 80 | % | | 85 | % | | 85 | % | | | 87 | % | |
Up-Front Revenue | 13 | % | | 20 | % | | 15 | % | | 15 | % | | | 13 | % | |
Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | 100 | % | |
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| | | 2020 | | 2021 | | 2022 | | | 2023 | |
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Revenue recognized over time | | | 85 | % | | 85 | % | | 83 | % | | | 81 | % | |
Revenue from arrangements with non-cancelable commitments | | | 3 | % | | 3 | % | | 2 | % | | | 3 | % | |
Recurring Revenue | | | 88 | % | | 88 | % | | 85 | % | | | 84 | % | |
Up-Front Revenue | | | 12 | % | | 12 | % | | 15 | % | | | 16 | % | |
Total | | | 100 | % | | 100 | % | | 100 | % | | | 100 | % | |
| | | | | | | | | | | |
Trailing Twelve Months Recurring and Up-Front Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Trailing Twelve Months Ended |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
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Recurring Revenue | 85 | % | | 84 | % | | 84 | % | | 84 | % | | | 84 | % | |
Up-Front Revenue | 15 | % | | 16 | % | | 16 | % | | 16 | % | | | 16 | % | |
Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | 100 | % | |
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 4 |
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Cadence Design Systems, Inc. |
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Revenue Mix by Geography | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(% of Total Revenue) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
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Americas | 46 | % | | 44 | % | | 41 | % | | 43 | % | | | 44 | % | |
China | 13 | % | | 17 | % | | 18 | % | | 17 | % | | | 15 | % | |
Other Asia | 18 | % | | 18 | % | | 18 | % | | 19 | % | | | 19 | % | |
Europe, Middle East and Africa | 17 | % | | 15 | % | | 17 | % | | 15 | % | | | 16 | % | |
Japan | 6 | % | | 6 | % | | 6 | % | | 6 | % | | | 6 | % | |
Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | 100 | % | |
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(% of Total Revenue) | 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
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Americas | 44 | % | | 42 | % | | 45 | % | | 46 | % | | | 43 | % | |
China | 10 | % | | 15 | % | | 13 | % | | 15 | % | | | 17 | % | |
Other Asia | 20 | % | | 18 | % | | 19 | % | | 18 | % | | | 19 | % | |
Europe, Middle East and Africa | 18 | % | | 18 | % | | 17 | % | | 16 | % | | | 16 | % | |
Japan | 8 | % | | 7 | % | | 6 | % | | 5 | % | | | 5 | % | |
Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | 100 | % | |
Revenue Mix by Product Category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(% of Total Revenue) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
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Custom IC Design and Simulation | 22 | % | | 20 | % | | 22 | % | | 22 | % | | | 22 | % | |
Digital IC Design and Signoff | 28 | % | | 25 | % | | 27 | % | | 28 | % | | | 29 | % | |
Functional Verification | 25 | % | | 32 | % | | 27 | % | | 26 | % | | | 24 | % | |
IP | 12 | % | | 11 | % | | 11 | % | | 11 | % | | | 13 | % | |
System Design and Analysis | 13 | % | | 12 | % | | 13 | % | | 13 | % | | | 12 | % | |
Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | 100 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(% of Total Revenue) | 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Custom IC Design and Simulation | 25 | % | | 25 | % | | 23 | % | | 22 | % | | | 22 | % | |
Digital IC Design and Signoff | 30 | % | | 29 | % | | 29 | % | | 28 | % | | | 27 | % | |
Functional Verification | 23 | % | | 22 | % | | 24 | % | | 26 | % | | | 27 | % | |
IP | 13 | % | | 14 | % | | 13 | % | | 12 | % | | | 12 | % | |
System Design and Analysis | 9 | % | | 10 | % | | 11 | % | | 12 | % | | | 12 | % | |
Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | | | 100 | % | |
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 5 |
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Cadence Design Systems, Inc. |
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3 Year Revenue CAGR by Product Category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(% of Total Revenue) | 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Custom IC Design and Simulation | 9 | % | | 9 | % | | 8 | % | | 10 | % | | | 10 | % | |
Digital IC Design and Signoff | 10 | % | | 11 | % | | 11 | % | | 13 | % | | | 13 | % | |
Functional Verification | 5 | % | | 11 | % | | 11 | % | | 20 | % | | | 23 | % | |
IP | 16 | % | | 18 | % | | 16 | % | | 15 | % | | | 8 | % | |
System Design and Analysis | 7 | % | | 13 | % | | 19 | % | | 24 | % | | | 22 | % | |
Total 3 Year CAGR | 9 | % | | 11 | % | | 12 | % | | 15 | % | | | 15 | % | |
3 Year Revenue CAGR by Product Category Without 53rd Week Impact*
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(% of Total Revenue) | 2019 | | 2020* | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Custom IC Design and Simulation | 9 | % | | 8 | % | | 8 | % | | 10 | % | | | 11 | % | |
Digital IC Design and Signoff | 10 | % | | 10 | % | | 11 | % | | 13 | % | | | 14 | % | |
Functional Verification | 5 | % | | 10 | % | | 11 | % | | 20 | % | | | 24 | % | |
IP | 16 | % | | 18 | % | | 16 | % | | 15 | % | | | 9 | % | |
System Design and Analysis | 7 | % | | 12 | % | | 19 | % | | 24 | % | | | 23 | % | |
Total 3 Year CAGR | 9 | % | | 11 | % | | 12 | % | | 15 | % | | | 16 | % | |
* Fiscal 2020 was a 53-week year and included approximately $45 million revenue impact for the extra week.
Gross Margin | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
GAAP Gross Margin | 89.6 | % | | 87.8 | % | | 90.1 | % | | 89.3 | % | | | 90.3 | % | |
Non-GAAP Gross Margin | 91.1 | % | | 89.1 | % | | 91.4 | % | | 90.6 | % | | | 91.7 | % | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
GAAP Gross Margin | 88.6 | % | | 88.6 | % | | 89.7 | % | | 89.6 | % | | | 89.4 | % | |
Non-GAAP Gross Margin | 90.6 | % | | 90.6 | % | | 91.7 | % | | 91.0 | % | | | 90.7 | % | |
| | | | | | | | | | | |
Total Costs and Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total GAAP Costs and Expenses | $ | 689 | | | $ | 699 | | | $ | 677 | | | $ | 730 | | | | $ | 732 | | |
| | | | | | | | | | | |
Total Non-GAAP Costs and Expenses | $ | 579 | | | $ | 591 | | | $ | 569 | | | $ | 603 | | | | $ | 610 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | 2019 | | 2020* | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total GAAP Costs and Expenses | $ | 1,845 | | | $ | 2,037 | | | $ | 2,209 | | | $ | 2,488 | | | | $ | 2,839 | | |
| | | | | | | | | | | |
Total Non-GAAP Costs and Expenses | $ | 1,587 | | | $ | 1,739 | | | $ | 1,877 | | | $ | 2,125 | | | | $ | 2,373 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
* Fiscal 2020 was a 53-week year.
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 6 |
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Cadence Design Systems, Inc. |
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Operating Margin | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
GAAP Operating Margin | 23.5 | % | | 31.6 | % | | 30.7 | % | | 28.6 | % | | | 31.5 | % | |
Non-GAAP Operating Margin | 35.6 | % | | 42.1 | % | | 41.8 | % | | 41.1 | % | | | 42.9 | % | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
GAAP Operating Margin | 21.1 | % | | 24.1 | % | | 26.1 | % | | 30.1 | % | | | 30.6 | % | |
Non-GAAP Operating Margin | 32.1 | % | | 35.2 | % | | 37.2 | % | | 40.3 | % | | | 42.0 | % | |
| | | | | | | | | | | |
Net Income Per Share | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
GAAP Net Income Per Share | $ | 0.88 | | | $ | 0.89 | | | $ | 0.81 | | | $ | 0.93 | | | | $ | 1.19 | | |
| | | | | | | | | | | |
Non-GAAP Net Income Per Share | $ | 0.96 | | | $ | 1.29 | | | $ | 1.22 | | | $ | 1.26 | | | | $ | 1.38 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
GAAP Net Income Per Share | $ | 3.53 | | | $ | 2.11 | | | $ | 2.50 | | | $ | 3.09 | | | | $ | 3.82 | | |
| | | | | | | | | | | |
Non-GAAP Net Income Per Share | $ | 2.20 | | | $ | 2.80 | | | $ | 3.29 | | | $ | 4.27 | | | | $ | 5.15 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total DSO | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
DSO | 49 | | 44 | | 42 | | 39 | | | 43 | |
| | | | | | | | | | | |
Balance Sheet and Cash Review
Free Cash Flow | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Net Cash from Operating Activities | $ | 264 | | | $ | 267 | | | $ | 414 | | | $ | 396 | | | | $ | 272 | | |
Capital Expenditures | 37 | | | 26 | | | 20 | | | 22 | | | | 34 | | |
Free Cash Flow | $ | 227 | | | $ | 241 | | | $ | 394 | | | $ | 374 | | | | $ | 238 | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Net Cash from Operating Activities | $ | 730 | | | $ | 905 | | | $ | 1,101 | | | $ | 1,242 | | | | $ | 1,349 | | |
Capital Expenditures | 75 | | | 95 | | | 65 | | | 123 | | | | 102 | | |
Free Cash Flow | $ | 655 | | | $ | 810 | | | $ | 1,036 | | | $ | 1,119 | | | | $ | 1,247 | | |
| | | | | | | | | | | |
Cash and Cash Equivalents | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Cash and Cash Equivalents | $ | 882 | | | $ | 917 | | | $ | 874 | | | $ | 962 | | | | $ | 1,008 | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Cash and Cash Equivalents | $ | 705 | | | $ | 928 | | | $ | 1,089 | | | $ | 882 | | | | $ | 1,008 | | |
| | | | | | | | | | | |
•Approximately 45 percent of our cash and cash equivalents were in the U.S. at quarter-end.
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 7 |
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Cadence Design Systems, Inc. |
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Share Repurchase | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Share Repurchase | $ | 300 | | | $ | 125 | | | $ | 265 | | | $ | 185 | | | | $ | 125 | | |
Number of Shares | 1.939 | | | 0.668 | | | 1.178 | | | 0.811 | | | | 0.488 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
•Q3 2023 includes 276,330 shares and $60 million equity forward contract from Q2 2023 ASR settled in Q3 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Share Repurchase | $ | 306 | | | $ | 380 | | | $ | 612 | | | $ | 1,050 | | | | $ | 700 | | |
Number of Shares | 4.841 | | | 4.247 | | | 4.401 | | | 6.602 | | | | 3.145 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Employees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Headcount | 10,228 | | | 10,579 | | | 10,832 | | | 11,139 | | | | 11,226 | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Headcount | 8,078 | | | 8,746 | | | 9,298 | | | 10,228 | | | | 11,226 | | |
| | | | | | | | | | | |
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 8 |
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Cadence Design Systems, Inc. |
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Forward Looking Statements
This CFO Commentary contains forward-looking statements, including Cadence's outlook on future operating results, strategic objectives, business prospects, technology and product developments, industry trends and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates and realize the benefits of its investments in research and development, including opportunities presented by AI; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) change in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence's products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions, and rising tensions and conflicts around the world such as in the Middle East and with respect to Taiwan; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations, inflation rates, Cadence's upcoming debt maturities and Cadence’s ability to access capital and debt markets; (vii) the continued acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (viii) potential harm caused by compromises in cybersecurity and cybersecurity attacks; (ix) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (x) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject; and (xi) Cadence's ability to successfully meet corporate governance, environmental and social targets and strategies. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.
For a detailed discussion of these and other cautionary statements related to Cadence’s business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this document are based on management's expectations as of the date of this document and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
GAAP to Non-GAAP Reconciliation
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this CFO Commentary with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance. See our earnings press release issued today for further discussion of our non-GAAP financial measures, as well as the reconciliation provided in the Appendix to this CFO Commentary.
Cadence’s management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company’s core business operations and therefore provides supplemental information to Cadence’s management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence’s business from the same perspective as Cadence’s management, including forecasting and budgeting.
© 2024 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 9 |
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Cadence Design Systems, Inc. |
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APPENDIX I
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
GAAP total costs and expenses | $ | 689 | | | $ | 699 | | | $ | 677 | | | $ | 730 | | | | $ | 732 | | |
| | | | | | | | | | | |
Reconciling items to non-GAAP total costs and expenses | | | | | | | | | | | |
Stock-based compensation expense | (73) | | | (74) | | | (76) | | | (88) | | | | (87) | | |
Amortization of acquired intangibles | (16) | | | (15) | | | (15) | | | (15) | | | | (17) | | |
Acquisition and integration-related costs | (18) | | | (16) | | | (14) | | | (14) | | | | (13) | | |
Restructuring | — | | | — | | | — | | | (12) | | | | 1 | | |
Non-qualified deferred compensation (expenses) credits | (3) | | | (3) | | | (3) | | | 2 | | | | (6) | | |
| | | | | | | | | | | |
Non-GAAP total costs and expenses* | $ | 579 | | | $ | 591 | | | $ | 569 | | | $ | 603 | | | | $ | 610 | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | |
* | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | 2018 | | 2019 | | 2020* | | 2021 | | 2022 | | 2023 | | | 2024E | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
GAAP total costs and expenses | $ | 1,742 | | | $ | 1,845 | | | $ | 2,037 | | | $ | 2,209 | | | $ | 2,488 | | | $ | 2,839 | | | | $ | 3,109 | | |
| | | | | | | | | | | | | | | |
Reconciling items to non-GAAP total costs and expenses | | | | | | | | | | | | | | | |
Stock-based compensation expense | (168) | | | (182) | | | (197) | | | (210) | | | (270) | | | (326) | | | | (370) | | |
Amortization of acquired intangibles | (53) | | | (53) | | | (64) | | | (67) | | | (60) | | | (62) | | | | (66) | | |
Acquisition and integration-related costs | (20) | | | (8) | | | (23) | | | (23) | | | (41) | | | (56) | | | | (39) | | |
Restructuring | (11) | | | (9) | | | (9) | | | 1 | | | — | | | (11) | | | | — | | |
Non-qualified deferred compensation (expenses) credits | 1 | | | (5) | | | (5) | | | (6) | | | 8 | | | (11) | | | | — | | |
Special charges** | — | | | (1) | | | — | | | (27) | | | — | | | — | | | | — | | |
Non-GAAP total costs and expenses*** | $ | 1,491 | | | $ | 1,587 | | | $ | 1,739 | | | $ | 1,877 | | | $ | 2,125 | | | $ | 2,373 | | | | $ | 2,634 | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | |
* | Fiscal 2020 was a 53-week year. |
** | 2021 includes costs related to a voluntary retirement program. |
*** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 10 |
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Cadence Design Systems, Inc. |
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Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and Non-GAAP Operating Income Adjusted for Stock-based Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Millions) | 2018 | | 2019 | | 2020* | | 2021 | | 2022 | | 2023 | | | 2024E | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
GAAP operating income | $ | 396 | | | $ | 492 | | | $ | 646 | | | $ | 779 | | | $ | 1,074 | | | $ | 1,251 | | | | $ | 1,471 | | |
| | | | | | | | | | | | | | | |
Reconciling items to non-GAAP operating income | | | | | | | | | | | | | | | |
Stock-based compensation expense | 168 | | | 182 | | | 197 | | | 210 | | | 270 | | | 326 | | | | 370 | | |
Amortization of acquired intangibles | 53 | | | 53 | | | 64 | | | 67 | | | 60 | | | 62 | | | | 66 | | |
Acquisition and integration-related costs | 20 | | | 8 | | | 23 | | | 23 | | | 41 | | | 56 | | | | 39 | | |
Restructuring | 11 | | | 9 | | | 9 | | | (1) | | | — | | | 11 | | | | — | | |
Non-qualified deferred compensation expenses (credits) | (1) | | | 5 | | | 5 | | | 6 | | | (8) | | | 11 | | | | — | | |
Special charges** | — | | | 1 | | | — | | | 27 | | | — | | | — | | | | — | | |
Non-GAAP operating income*** | $ | 647 | | | $ | 749 | | | $ | 944 | | | $ | 1,111 | | | $ | 1,436 | | | $ | 1,717 | | | | $ | 1,946 | | |
Stock-based compensation expense | (168) | | | (182) | | | (197) | | | (210) | | | (270) | | | (326) | | | | $ | (370) | | |
Non-GAAP operating income adjusted for stock-based compensation*** | $ | 479 | | | $ | 567 | | | $ | 747 | | | $ | 901 | | | $ | 1,166 | | | $ | 1,391 | | | | $ | 1,576 | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Table may not foot due to rounding
| | | | | |
* | Fiscal 2020 was a 53-week year. |
** | 2021 includes costs related to a voluntary retirement program. |
*** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
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February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 11 |
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Cadence Design Systems, Inc. |
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Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
GAAP gross margin as a percent of total revenue | 89.6% | | 87.8% | | 90.1% | | 89.3% | | | 90.3% | | | | |
| | | | | | | | | | | | | | |
Reconciling items to non-GAAP gross margin as a percent of total revenue | | | | | | | | | | | | | | |
Stock-based compensation expense | 0.3% | | 0.3% | | 0.2% | | 0.2% | | | 0.3% | | | | |
Amortization of acquired intangibles | 1.2% | | 1.0% | | 1.1% | | 1.1% | | | 1.1% | | | | |
Non-qualified deferred compensation expenses (credits) | 0.0% | | 0.0% | | 0.0% | | 0.0% | | | 0.0% | | | | |
Acquisition and integration-related costs | 0.0% | | 0.0% | | 0.0% | | 0.0% | | | 0.0% | | | | |
Non-GAAP gross margin as a percent of total revenue* | 91.1% | | 89.1% | | 91.4% | | 90.6% | | | 91.7% | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | |
* | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | 2020 | | 2021 | | 2022 | | | 2023 | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
GAAP gross margin as a percent of total revenue | 88.6% | | 88.6% | | 89.7% | | 89.6% | | | 89.4% | | | | |
| | | | | | | | | | | | | | |
Reconciling items to non-GAAP gross margin as a percent of total revenue | | | | | | | | | | | | | | |
Stock-based compensation expense | 0.3% | | 0.3% | | 0.3% | | 0.2% | | | 0.2% | | | | |
Amortization of acquired intangibles | 1.7% | | 1.7% | | 1.6% | | 1.2% | | | 1.1% | | | | |
Non-qualified deferred compensation expenses (credits) | 0.0% | | 0.0% | | 0.0% | | 0.0% | | | 0.0% | | | | |
Acquisition and integration-related costs | 0.0% | | 0.0% | | 0.0% | | 0.0% | | | 0.0% | | | | |
Special charges * | 0.0% | | 0.0% | | 0.1% | | 0.0% | | | 0.0% | | | | |
Non-GAAP gross margin as a percent of total revenue** | 90.6% | | 90.6% | | 91.7% | | 91.0% | | | 90.7% | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | |
* | 2021 includes costs related to a voluntary retirement program. |
** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
| | | | | | | | |
February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 12 |
| | | | | | | | |
Cadence Design Systems, Inc. |
|
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | | | Q1 2024E | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
GAAP operating margin as a percent of total revenue | 23% | | 32% | | 31% | | 29% | | | 31% | | | 24.5% - 25.5% | |
| | | | | | | | | | | | | | |
Reconciling items to non-GAAP operating margin as a percent of total revenue | | | | | | | | | | | | | | |
Stock-based compensation expense | 8% | | 7% | | 8% | | 9% | | | 8% | | | 9% | |
Amortization of acquired intangibles | 2% | | 1% | | 2% | | 1% | | | 2% | | | 2% | |
Acquisition and integration-related costs | 2% | | 2% | | 1% | | 1% | | | 1% | | | 1% | |
Restructuring | 0% | | 0% | | 0% | | 1% | | | 0% | | | 0% | |
Non-qualified deferred compensation expenses (credits) | 1% | | 0% | | 0% | | 0% | | | 1% | | | 0% | |
| | | | | | | | | | | | | | |
Non-GAAP operating margin as a percent of total revenue* | 36% | | 42% | | 42% | | 41% | | | 43% | | | 36.5% - 37.5% | |
| | | | | | | | | | | | | | |
| | | | | |
* | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | | 2024E | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
GAAP operating margin as a percent of total revenue | | 19% | | 21% | | 24% | | 26% | | 30% | | 31% | | | 32% - 33% | |
| | | | | | | | | | | | | | | | |
Reconciling items to non-GAAP operating margin as a percent of total revenue | | | | | | | | | | | | | | | | |
Stock-based compensation expense | | 8% | | 8% | | 7% | | 7% | | 8% | | 8% | | | 8% | |
Amortization of acquired intangibles | | 2% | | 2% | | 3% | | 2% | | 2% | | 2% | | | 1% | |
Acquisition and integration-related costs | | 1% | | 0% | | 1% | | 1% | | 1% | | 1% | | | 1% | |
Restructuring | | 0% | | 1% | | 0% | | 0% | | 0% | | 0% | | | 0% | |
Non-qualified deferred compensation expenses (credits) | | 0% | | 0% | | 0% | | 0% | | (1)% | | 0% | | | 0% | |
Special charges * | | 0% | | 0% | | 0% | | 1% | | 0% | | 0% | | | 0% | |
Non-GAAP operating margin as a percent of total revenue** | | 30% | | 32% | | 35% | | 37% | | 40% | | 42% | | | 42% - 43% | |
| | | | | | | | | | | | | | | | |
| | | | | |
* | 2021 includes costs related to a voluntary retirement program. |
** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
| | | | | | | | |
February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 13 |
| | | | | | | | |
Cadence Design Systems, Inc. |
|
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Thousands, Except Per Share Data) | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | | Q4 2023 | | | Q1 2024E | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Diluted net income per share on a GAAP basis | $ | 0.88 | | | $ | 0.89 | | | $ | 0.81 | | | $ | 0.93 | | | | $ | 1.19 | | | | $0.74 - $0.78 | |
Stock-based compensation expense | 0.27 | | | 0.27 | | | 0.28 | | | 0.32 | | | | 0.32 | | | | 0.32 | | |
Amortization of acquired intangibles | 0.06 | | | 0.05 | | | 0.06 | | | 0.06 | | | | 0.06 | | | | 0.06 | | |
Acquisition and integration-related costs | 0.06 | | | 0.06 | | | 0.05 | | | 0.05 | | | | 0.04 | | | | 0.04 | | |
Restructuring | — | | | — | | | — | | | 0.04 | | | | — | | | | — | | |
Non-qualified deferred compensation expenses (credits) | 0.01 | | | 0.01 | | | 0.01 | | | — | | | | 0.02 | | | | — | | |
| | | | | | | | | | | | | | |
Other income or expense related to investments and non-qualified deferred compensation plan assets** | (0.01) | | | (0.01) | | | (0.01) | | | (0.04) | | | | (0.10) | | | | — | | |
| | | | | | | | | | | | | | |
Income tax effect of non-GAAP adjustments | (0.31) | | | 0.02 | | | 0.02 | | | (0.10) | | | | (0.15) | | | | (0.06) | | |
Diluted net income per share on a non-GAAP basis* | $ | 0.96 | | | $ | 1.29 | | | $ | 1.22 | | | $ | 1.26 | | | | $ | 1.38 | | | | $1.10 - $1.14 | |
| | | | | | | | | | | | | | |
Shares used in calculation of diluted net income per share | 272,997 | | | 273,159 | | | 272,996 | | | 272,427 | | | | 272,419 | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | |
* | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
** | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
| | | | | | | | |
February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 14 |
| | | | | | | | |
Cadence Design Systems, Inc. |
|
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In Thousands, Except Per Share Data) | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | | 2024E | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Diluted net income per share on a GAAP basis | $ | 1.23 | | | $ | 3.53 | | | $ | 2.11 | | | $ | 2.50 | | | $ | 3.09 | | | $ | 3.82 | | | | $4.08 - $4.18 | |
Stock-based compensation expense | 0.60 | | | 0.65 | | | 0.71 | | | 0.75 | | | 0.98 | | | 1.19 | | | | 1.36 | | |
Amortization of acquired intangibles | 0.19 | | | 0.19 | | | 0.23 | | | 0.24 | | | 0.22 | | | 0.23 | | | | 0.24 | | |
Acquisition and integration-related costs | 0.07 | | | 0.03 | | | 0.08 | | | 0.08 | | | 0.15 | | | 0.21 | | | | 0.14 | | |
Restructuring | 0.04 | | | 0.03 | | | 0.03 | | | — | | | — | | | 0.04 | | | | — | | |
Non-qualified deferred compensation expenses (credits) | (0.01) | | | 0.02 | | | 0.02 | | | 0.02 | | | (0.03) | | | 0.04 | | | | — | | |
Special charges** | — | | | — | | | — | | | 0.10 | | | — | | | — | | | | — | | |
Other income or expense related to investments and non-qualified deferred compensation plan assets*** | — | | | (0.01) | | | — | | | (0.03) | | | 0.05 | | | (0.17) | | | | — | | |
Income tax benefit related to intercompany transfers of certain intellectual property rights | — | | | (2.05) | | | — | | | — | | | — | | | — | | | | — | | |
Income tax effect of non-GAAP adjustments | (0.25) | | | (0.19) | | | (0.38) | | | (0.37) | | | (0.19) | | | (0.21) | | | | 0.05 | | |
Diluted net income per share on a non-GAAP basis* | $ | 1.87 | | | $ | 2.20 | | | $ | 2.80 | | | $ | 3.29 | | | $ | 4.27 | | | $ | 5.15 | | | | $5.87 - $5.97 | |
| | | | | | | | | | | | | | | |
Shares used in calculation of diluted net income per share | 281,144 | | | 280,515 | | | 279,641 | | | 278,858 | | | 275,011 | | | 272,748 | | | | 271.5 - 273.5M | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | |
* | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
** | 2021 includes costs related to a voluntary retirement program. |
*** | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
| | | | | | | | |
February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 15 |
| | | | | | | | |
Cadence Design Systems, Inc. |
|
Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
(In Millions) | | | | FY 2022 | | | FY 2023 | | | FY 2024E | |
| | | | | | | | | | | |
| | | | | | | | | | | |
GAAP total other income and expense | | | | $ | (28) | | | | $ | 31 | | | | $(10) - $(18) | |
| | | | | | | | | | | |
Reconciling items to non-GAAP total income and expense | | | | | | | | | | | |
Other income or expense related to investments and non-qualified deferred compensation plan assets** | | | | 14 | | | | (46) | | | | — | | |
Non-GAAP total other income and expense* | | | | $ | (14) | | | | $ | (15) | | | | $(10) - $(18) | |
| | | | | | | | | | | |
| | | | | |
* | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. |
** | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. |
| | | | | | | | |
February 12, 2024 | Cadence Q4 and Fiscal Year 2023 Financial Results | 16 |
v3.24.0.1
Document and Entity Information
|
Feb. 12, 2024 |
Cover [Abstract] |
|
Document Type |
8-K
|
Document Period End Date |
Feb. 12, 2024
|
Entity Registrant Name |
CADENCE DESIGN SYSTEMS, INC.
|
Entity Incorporation, State or Country Code |
DE
|
Entity File Number |
000-15867
|
Entity Tax Identification Number |
00-0000000
|
Entity Address, Address Line One |
2655 Seely Avenue,
|
Entity Address, City or Town |
San Jose,
|
Entity Address, State or Province |
CA
|
Entity Address, Postal Zip Code |
95134
|
City Area Code |
(408)
|
Local Phone Number |
943-1234
|
Written Communications |
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Pre-commencement Tender Offer |
false
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Pre-commencement Issuer Tender Offer |
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Title of 12(b) Security |
Common Stock, $0.01 par value per share
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Trading Symbol |
CDNS
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Security Exchange Name |
NASDAQ
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Entity Emerging Growth Company |
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Grafico Azioni Cadence Design Systems (NASDAQ:CDNS)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Cadence Design Systems (NASDAQ:CDNS)
Storico
Da Giu 2023 a Giu 2024