Cadence Design Systems (CDNS) came out with quarterly earnings of $1.88 per share, beating the Zacks Consensus Estimate of $1.82 per share. This compares to earnings of $1.38 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.30%. A quarter ago, it was expected that this maker of hardware and software products for validating chip designs would post earnings of $1.44 per share when it actually produced earnings of $1.64, deliver ...

Core Insights - Cadence Design Systems reported strong fourth-quarter results for 2024, surpassing revenue and earnings expectations, but provided cautious guidance for 2025 [1][2][10] Financial Performance - Adjusted earnings per share (EPS) for Q4 2024 were $1.88, exceeding the forecast of $1.82, while revenue reached $1.36 billion, slightly above the expected $1.35 billion [2][3] - Year-over-year growth was notable, with adjusted EPS increasing by 36% from $1.38 in Q4 2023 and revenue rising by 27% from $1.07 billion [3][6] - The adjusted operating margin improved to 46% from 42.9% the previous year, and the GAAP operating margin increased to 33.7% from 31.5% [3][7] Business Overview - Cadence operates in the electronic system design sector, focusing on software solutions for integrated circuits and systems on a chip, with a strategy centered on Intelligent System Design [4] - The company serves various industries, including automotive, aerospace, and healthcare, emphasizing technological innovation and a recurring revenue model [4][5] Market Dynamics - The demand for Cadence's products is driven by complex design needs and the necessity for efficient electronic solutions, supported by a diverse customer base and significant investment in R&D [5] - The electronic design automation (EDA) and intellectual property (IP) segments showed strong performance, with the IP business growing by 28% year-over-year [6] Strategic Developments - Cadence's backlog reached a record $6.8 billion, indicating a robust revenue outlook [7] - The company is forming strategic partnerships with industry leaders like Nvidia and Arm Holdings, enhancing its capabilities in AI and system design [9] Geographic Insights - Revenue distribution favored the Americas, while challenges in China were noted due to geopolitical tensions and regulatory issues [8] Future Outlook - For fiscal year 2025, management projects revenue between $5.14 billion and $5.22 billion, with non-GAAP EPS expected between $6.65 and $6.75, slightly below analyst estimates [10][11] - Continued expansion into high-growth markets like AI and advancements in key technologies are expected to support Cadence's growth trajectory [11]

Financial Performance - Revenue growth of 13.5% year-over-year, with total revenue reaching $4.641 billion for FY 2024[6] - GAAP EPS for FY 2024 was $3.85, while Non-GAAP EPS was $5.97[6] - FY 2025 revenue guidance is projected between $5.14 billion and $5.22 billion, reflecting a year-over-year growth of 11% to 12%[7] - Operating cash flow for FY 2024 was $1.261 billion, with expectations of $1.6 billion to $1.7 billion for FY 2025[7] - Recurring revenue accounted for 82.6% of total revenue in FY 2024, projected to be around 80% in FY 2025[13] - The GAAP operating income for 2024 is projected to be $1,351 million, an increase from $1,251 million in 2023, representing a growth of 8%[48] - Non-GAAP operating income for 2024 is expected to reach $1,974 million, up from $1,717 million in 2023, reflecting a growth of 15%[48] - The diluted net income per share on a non-GAAP basis for FY 2025 is projected to be between $6.65 - $6.75[67] Margins and Expenses - Non-GAAP operating margin of 42.5% and GAAP operating margin of 29.1% for FY 2024[6] - The company plans to maintain a GAAP operating margin of 30.25% to 31.25% for FY 2025[13] - Non-GAAP gross margin decreased to 85.5% in Q4 2024 from 91.7% in Q4 2023[23] - Total GAAP costs and expenses rose to $899 million in Q4 2024, compared to $732 million in Q4 2023[24] - Non-GAAP total costs and expenses for Q4 2024 were $733 million, compared to $671 million in Q3 2024, indicating a sequential increase of 9.2%[43] - The GAAP gross margin as a percentage of total revenue for Q4 2024 was 83.8%, down from 86.6% in Q3 2024[51] - Non-GAAP gross margin as a percentage of total revenue for Q4 2024 was 85.5%, compared to 88.6% in Q3 2024, indicating a decline of 3.5%[51] - Stock-based compensation expense for Q4 2024 was $107 million, slightly down from $109 million in Q3 2024[43] Cash Flow and Capital Expenditures - Approximately 50% of free cash flow is expected to be used for share repurchases in FY 2025[7] - Free cash flow reached $404 million in Q4 2024, up from $238 million in Q4 2023[29] - The total capital expenditures for FY 2025 are estimated to be around $150 million[13] Revenue Composition - Recurring revenue accounted for 83% of total revenue in Q4 2024, while up-front revenue was 17%[17] - The Americas contributed 49% to total revenue in Q4 2024, showing a significant increase from 44% in Q4 2023[18] - Core EDA revenue represented 68% of total revenue in Q4 2024, down from 75% in Q4 2023[19] Debt and Headcount - Total debt (principal value) was $2.5 billion in Q4 2024, reflecting an increase from $650 million in Q4 2023[31] - The headcount increased to 12,705 in Q4 2024, up from 11,226 in Q4 2023[33] Strategic Initiatives - Cadence anticipates continued investment in AI and operational efficiency to drive future growth despite competitive pressures[36] - The company plans to focus on strategic acquisitions and technology integration to enhance its market position[36] - Cadence's management emphasizes the importance of maintaining strong cash flow and liquidity to support ongoing business operations and strategic initiatives[36] Future Projections - GAAP operating margin for Q4 2023 was 31.5%, with a projected range of 27% - 28% for Q1 2025[56] - Non-GAAP operating margin for Q4 2024 is expected to be 46.0%, compared to 42.9% in Q4 2023[56] - Diluted net income per share on a GAAP basis for Q4 2023 was $1.19, with an estimated range of $0.93 - $0.99 for Q1 2025[62] - Non-GAAP diluted net income per share for Q4 2024 is projected to be $1.88, compared to $1.38 in Q4 2023[62] - GAAP total other income and expense for FY 2023 was $31 million, expected to increase to $45 million in FY 2024[72] - The company anticipates a non-GAAP total other income and expense of $(16) million for FY 2024[72]

Core Viewpoint - Cadence Design Systems, Inc (CDNS) is set to release its fourth-quarter 2024 results on February 18, with expectations of significant revenue and earnings growth compared to the previous year [1][2]. Financial Estimates - The Zacks Consensus Estimate for fourth-quarter 2024 earnings is $1.82 per share, reflecting a 31.9% increase from the previous year [2]. - Revenue estimates for the same quarter are projected at $1.35 billion, indicating a 26.1% year-over-year growth [2]. - CDNS anticipates revenues between $1.325 billion and $1.365 billion, with non-GAAP EPS expected to range from $1.78 to $1.84 [3]. Price Performance - CDNS has a strong earnings surprise history, with an average beat of 6.1% over the last four quarters [5]. - However, the stock has underperformed compared to its industry, gaining only 1.7% over the past year, while the Computer-Software industry grew by 7.9% [6]. Factors Influencing Q4 Results - Robust design activity in sectors like data centers and automotive, driven by trends such as AI, hyperscale computing, 5G, and autonomous driving, is expected to boost demand for Cadence's solutions [7]. - The Cadence.AI portfolio has seen nearly tripled sales year-over-year, indicating strong market uptake [8]. - Collaborations with major companies like NVIDIA and Taiwan Semiconductor Manufacturing Company are expected to positively impact performance [9]. Revenue Breakdown - Revenue from the System Design and Analysis division is estimated at $192.3 million, reflecting a 49.9% year-over-year growth [9]. - Functional Verification segment revenues are projected at $345.6 million, up 34.8% [11]. - Digital IC Design and Signoff segment revenues are expected to reach $343.9 million, indicating an 11% growth [11]. - Custom IC business segment revenues are anticipated to rise by 16.8% to $274.5 million [11]. - The IP business division is expected to see a 36.3% increase in revenues to $189.3 million [12]. Competitive Landscape - The company faces challenges from ongoing global macroeconomic uncertainty and inflation, which may impact operating costs and pricing power [13].

In the latest trading session, Cadence Design Systems (CDNS) closed at $296.16, marking a +0.72% move from the previous day. The stock trailed the S&P 500, which registered a daily gain of 1.04%. Meanwhile, the Dow gained 0.77%, and the Nasdaq, a tech-heavy index, added 1.51%.Prior to today's trading, shares of the maker of hardware and software products for validating chip designs had lost 2.22% over the past month. This has lagged the Computer and Technology sector's gain of 1.48% and the S&P 500's gain o ...

The upcoming report from Cadence Design Systems (CDNS) is expected to reveal quarterly earnings of $1.82 per share, indicating an increase of 31.9% compared to the year-ago period. Analysts forecast revenues of $1.35 billion, representing an increase of 26.1% year over year.The current level reflects a downward revision of 0.6% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projections ove ...

Cadence Design Systems (CDNS) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released ...

Cadence Design Systems (CDNS) closed the latest trading day at $302.91, indicating a +0.09% change from the previous session's end. The stock fell short of the S&P 500, which registered a gain of 0.36% for the day. Meanwhile, the Dow lost 0.28%, and the Nasdaq, a tech-heavy index, added 0.51%.Coming into today, shares of the maker of hardware and software products for validating chip designs had lost 0.03% in the past month. In that same time, the Computer and Technology sector 0%, while the S&P 500 gained ...

Cadence Design Systems, Inc. CDNS is one of the standout tech stocks of the last 15 years, soaring 5,000% to blow away the Tech Sector’s 640% run. Yet, CDNS stock has been flat over the past 12 months, lagging Tech’s 25%.The recent stagnation allows investors to buy Cadence Design Systems 10% below its highs as it finds support at some key technical levels and looks ready to break out of the trading range it’s been stuck in.See the Zacks Earnings Calendar to stay ahead of market-making news.The modeling and ...

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Cadence Design Systems (CDNS), and highlights the importance of using these recommendations in conjunction with other analytical tools like Zacks Rank to make informed investment decisions [1][4]. Brokerage Recommendations for Cadence Design Systems - Cadence has an average brokerage recommendation (ABR) of 1.50, indicating a consensus between Strong Buy and Buy, based on recommendations from 18 brokerage firms [2]. - Out of the 18 recommendations, 14 are Strong Buy and 1 is Buy, which accounts for 77.8% and 5.6% of all recommendations respectively [2]. Limitations of Brokerage Recommendations - The article notes that relying solely on brokerage recommendations may not be wise, as studies indicate limited success in guiding investors towards stocks with the best price increase potential [4]. - Analysts from brokerage firms often exhibit a strong positive bias due to vested interests, issuing five "Strong Buy" recommendations for every "Strong Sell" [5][9]. Zacks Rank as an Alternative Indicator - Zacks Rank categorizes stocks into five groups based on earnings estimate revisions, which are strongly correlated with near-term stock price movements, making it a more reliable indicator than ABR [7][10]. - The Zacks Rank is updated more frequently than ABR, reflecting changes in earnings estimates promptly, thus providing timely insights into future price movements [11]. Current Earnings Estimates for Cadence - The Zacks Consensus Estimate for Cadence remains unchanged at $5.91 for the current year, suggesting steady analyst views on the company's earnings prospects [12]. - Due to the unchanged consensus estimate and other factors, Cadence holds a Zacks Rank of 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [13].