Core Insights - Cadence Design Systems (CDNS) reported fourth-quarter 2024 non-GAAP earnings per share (EPS) of $1.88, exceeding the Zacks Consensus Estimate by 3.3% and reflecting a year-over-year increase of 36.2% [1] - Revenues for the quarter reached $1.356 billion, surpassing the Zacks Consensus Estimate by 0.6% and showing a year-over-year growth of 26.9% [2] - The company highlighted a new phase in the AI super cycle, emphasizing the demand for Generative AI, Agentic AI, and Physical AI, which is driving semiconductor innovation [3] Financial Performance - CDNS ended the quarter with a backlog of $6.8 billion and current remaining performance obligations of $3.4 billion [2] - Management's outlook for 2025 estimates revenues between $5.14 billion and $5.22 billion, a 13.5% increase from the $4.64 billion reported in 2024 [5] - Non-GAAP EPS for 2025 is projected to be between $6.65 and $6.75, reflecting a 15.9% increase from the $5.97 reported in 2024 [6] Revenue Breakdown - Product & Maintenance revenues, which constitute 91.4% of total revenues, amounted to $1.239 billion, a year-over-year increase of 26.2% [7] - Services revenues, making up 8.6% of total revenues, reached $117 million, up 34.5% year over year [7] - Geographically, the Americas contributed 49%, China 13%, Other Asia 17%, Europe, the Middle East and Africa 15%, and Japan 6% to total revenues [9] Business Segment Performance - The System Design & Analysis business saw a revenue increase of 40% in 2024, driven by AI-driven design-optimization platforms and the acquisition of BETA CAE [10] - The core EDA business experienced a 15% year-over-year revenue growth, supported by demand for new hardware systems and digital full-flow solutions [11] - The IP business reported a 28% year-over-year revenue increase, benefiting from rising demand in AI, HPC, and chiplet use cases [12] Margin and Cash Flow - Total non-GAAP costs and expenses rose 20.2% year over year to $733 million, while non-GAAP gross margin contracted by 620 basis points to 85.5% [13] - Non-GAAP operating margin expanded by 310 basis points year over year to 46% [13] - Operating cash flow for the quarter was $441 million, with free cash flow at $404 million [15] Future Outlook - For the first quarter of 2025, revenues are estimated to be between $1.23 billion and $1.25 billion, compared to $1.01 billion in the year-ago quarter [17] - Non-GAAP EPS for the first quarter is anticipated to be between $1.46 and $1.52, up from $1.17 in the prior-year quarter [17] - Non-GAAP operating margin is projected to be between 40% and 41% for the first quarter [18]

Group 1 - The analyst downgraded Cadence Design Systems, Inc. (NASDAQ: CDNS) to "Sell" in December 2024, and since then, the stock price has underperformed [1] - Potential export restrictions to China were highlighted as a key risk in previous analyses of Cadence [1] - The analyst emphasizes a fundamental, bottom-up, long-term investment style, focusing on companies with strong growth potential and reasonable valuations [1] Group 2 - The analyst targets a 15% annual return in their portfolio, typically constructing it with 15-20 stocks to ensure diversification and risk management [1] - The investment strategy includes macro-driven sector weights and disciplined trading and valuations as key factors [1]

Shares of Cadence Design Systems Inc CDNS were trading lower on Wednesday, despite the company reporting upbeat fourth-quarter results.The results came in amid an exciting earnings season. Here are some key analyst takeaways.Piper Sandler On Cadence Design SystemsAnalyst Clarke Jeffries reaffirmed an Overweight rating, while raising the price target from $318 to $328.Cadence Design Systems reported fourth-quarter revenues at $1.356 billion, representing 27% year-on-year growth and beating the midpoint of gu ...

Financial Data and Key Metrics Changes - Cadence reported a revenue growth of 13.5% for the year, with a total revenue of $4.641 billion for 2024 and $1.356 billion for Q4 [6][27] - The non-GAAP operating margin was 42.5% for the year and 46% for Q4, while the GAAP operating margin was 29.1% for the year and 33.7% for Q4 [7][27] - GAAP EPS was $3.85 for the year and $1.24 for Q4, while non-GAAP EPS was $5.97 for the year and $1.88 for Q4 [27][28] - The cash balance at year-end was $2.644 billion, with $2.500 billion in outstanding debt [28] Business Line Data and Key Metrics Changes - The System Design & Analysis business achieved over 40% growth in 2024 [15] - The IP business grew 28% year-over-year in Q4, driven by strong demand for AI HPC protocols [18] - The core EDA business, which includes digital, custom analog, and verification portfolios, grew 15% year-over-year in Q4 [21] Market Data and Key Metrics Changes - The company exited 2024 with a record backlog of $6.8 billion and a record current Remaining Performance Obligations (cRPO) of $3.4 billion [8][27] - The growth outside of China was in the high teens, while China revenue declined by over $100 million from 2023 to 2024 [39][40] Company Strategy and Development Direction - Cadence is focusing on AI-driven chip-to-systems portfolio, with significant investments in AI integration across products [8][10] - The company is expanding partnerships with major players like NVIDIA, Qualcomm, and TSMC to enhance its AI capabilities and product offerings [10][14] - The strategy includes exploring new markets such as life sciences with the OpenEye drug discovery software [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong backlog and pipeline, but noted a cautious outlook for China due to macroeconomic uncertainties [41][42] - The guidance for 2025 anticipates revenue in the range of $5.14 billion to $5.22 billion, with a non-GAAP EPS outlook of $6.65 to $6.75 [30][31] - Management highlighted the importance of balancing revenue growth with profitability, aiming for a combined metric exceeding 55% [109] Other Important Information - The company announced plans to acquire Secure-IC to enhance its IP portfolio [20] - Cadence was recognized as one of the World's Best Workplaces in 2024, ranking number 9 [130] Q&A Session All Questions and Answers Question: Can you help reconcile the confidence in the backlog with the guidance for 2025? - Management acknowledged the strong backlog but indicated that the first half of 2025 might see some backlog burn, with expectations for a stronger second half [38] Question: Was there any change in the RPO balance from export restrictions in China? - Management confirmed no material impact on RPO from China but noted the challenges in predicting future performance in the region [49] Question: Why is recurring revenue growth decelerating despite strong market conditions? - Management attributed the deceleration to the decline in China and emphasized that the mix of revenue is shifting towards more upfront revenue growth [56][57] Question: Is chiplet design strength limited to China? - Management clarified that chiplet design is a global trend, not confined to any specific region, and is gaining traction across various verticals [68] Question: What is the long-term outlook for core EDA growth? - Management aims for double-digit growth in core EDA but acknowledged recent challenges, particularly from China, impacting overall growth [76][77]

For the quarter ended December 2024, Cadence Design Systems (CDNS) reported revenue of $1.36 billion, up 26.9% over the same period last year. EPS came in at $1.88, compared to $1.38 in the year-ago quarter.The reported revenue represents a surprise of +0.60% over the Zacks Consensus Estimate of $1.35 billion. With the consensus EPS estimate being $1.82, the EPS surprise was +3.30%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wal ...

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]

Cadence Design Systems, Inc (CDNS) is scheduled to release fourth-quarter 2024 results on Feb. 18.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The Zacks Consensus Estimate for fourth-quarter 2024 earnings has been unchanged in the past 60 days at $1.82 per share. The consensus mark implies an increase of 31.9% from the year-ago actual. The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $1.35 billion, indicating a 26.1% uptick from the year-ago actual.For t ...

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 ...