EschCollection/DigitalVision via Getty Images Cadence Design Systems, Inc. (NASDAQ:CDNS), a primary player in the electronic design automation, or EDA, market alongside Synopsys (SNPS), reported its Q2 earnings for FY2024 after the bell yesterday. We reiterate our buy-rating but update our investment thesis. We wrote on CDNS back in January, forecasting “the stock outperforming the S&P 500 and SOX index in 2024” on “more optimistic [view] about CDNS' FY24 guidance as the semi-slowdown eases and WFE spen ...

Cadence Design Systems (CDNS) reported second-quarter 2024 non-GAAP earnings per share (EPS) of $1.28, which beat the Zacks Consensus Estimate by 4.1%. The bottom-line number improved 4.9% year over year and exceeded the management’s guided range of $1.20-$1.24.Revenues of $1.061 billion topped the Zacks Consensus Estimate by 1.2% and increased 8.6% on a year-over-year basis. It surpassed the management’s guided range of $1.03-$1.05 billion.The top line was driven by broad-based customer demand. CDNS ended ...

no_limit_pictures/E+ via Getty Images I gave Cadence Design Systems (NASDAQ:CDNS) a 'Hold' rating in my initiation article published in July 2023. I highlighted their leadership position in the semiconductor electronic design automation (EDA) software industry but expressed my concerns about the stock price valuation. They released their Q2 FY24 earnings on July 22nd after the market close, beating the market consensus and gaining momentum with its AI portfolio. As its stock price is overvalued, as per my c ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $1.061 billion, with GAAP operating margin at 27.7% and non-GAAP operating margin at 40.1% [17] - GAAP EPS was $0.84, while non-GAAP EPS was $1.28 [17] - The company has a backlog of approximately $6 billion at the end of Q2 [17] - The updated revenue guidance for 2024 is projected to be between $4.6 billion and $4.66 billion, reflecting over 13% year-over-year growth [18] Business Line Data and Key Metrics Changes - The IP business experienced a 25% year-over-year growth in Q2 [11] - The system design and analysis business delivered 20% year-over-year revenue growth [13] - The AI-driven Cadence.AI portfolio saw orders more than tripling over the last year [8] Market Data and Key Metrics Changes - The company noted strong design activity driven by trends such as hyperscale computing, 5G, and autonomous driving, particularly in data center and automotive sectors [8] - The foundry ecosystem is expanding, leading to increased design activity and opportunities for Cadence's products [9] Company Strategy and Development Direction - Cadence is executing its intelligent system design strategy, focusing on extending leadership in core EDA while expanding into new system design analysis areas [8] - The company is embedding AI into its EDA, SDA, and digital biology solutions to enhance productivity and results [8] - The acquisition of BETA CAE is expected to strengthen the company's position in automotive and data center verticals [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for solutions, with a healthy backlog and expectations for strong growth in the second half of 2024 [19] - The management highlighted that AI is broadening beyond data centers into automotive and consumer devices, which is expected to drive future growth [25] Other Important Information - The company repurchased $125 million of its shares in Q2 [17] - Cash balance at the end of the quarter was $1.059 billion, with a principal value of debt outstanding at $1.350 billion [17] Q&A Session Summary Question: Thoughts on semiconductor sales growth and Cadence's market share - Management noted that they are pleased with their performance and expect over 13% revenue growth, emphasizing their strong position in R&D spending [22][24] Question: China revenue expectations - Management indicated that they only need China to contribute 13% of overall revenue to meet guidance, with expectations for gradual improvement [26][28] Question: Confidence in Q4 growth - Management explained that the revenue curve is back-end loaded, with expectations for higher upfront revenue in Q4 due to hardware and IP [30][31] Question: Visibility on hardware demand - Management confirmed strong demand for hardware systems, with plans to build inventory to meet this demand [32][34] Question: Impact of BETA CAE acquisition - Management clarified that BETA CAE is expected to contribute $40 million in revenue and $0.12 dilution to non-GAAP EPS, with operational accretion anticipated next year [41][43] Question: Memory customers' adoption of advanced design products - Management acknowledged increased adoption of advanced digital design products by memory customers, driven by trends in HBM and 3D-IC [72][74]

Exhibit 99.02 CADENCE REPORTS SECOND QUARTER 2024 CADENCE DESIGN SYSTEMS, INC. CFO COMMENTARY | --- | --- | --- | |------------------------------------|-----------------------------------------------|------------------------------| | Key Takeaways | Q3 2024 Outlook | Q2 2024 KEYMETRICS | | • Annual revenue growth outlook is | • Revenue: $1.165 billion - $1.195 billion | | | now 13%, including $40 million | • GAAP operating margin: 27.7% - 29.3% | • Revenue: $1.061 billion | | from BETA CAE at the midpoint | ...

Cadence Design Systems, Inc (CDNS) is scheduled to release second-quarter 2024 results on Jul 22. The Zacks Consensus Estimate for second-quarter 2024 earnings has been unchanged in the past 60 days and is pegged at $1.23 per share. The consensus mark implies a marginal increase of 0.8% from the year-ago actual. The Zacks Consensus Estimate for second-quarter 2024 revenues is pegged at $1.05 billion, suggesting a 7.4% uptick from the year-ago actual.CDNS Estimate Trend Image Source: Zacks Investment Researc ...

Company Performance - Cadence Design Systems (CDNS) closed at $314.07, down 1.79% from the previous trading day, underperforming the S&P 500 which lost 0.88% [1] - Over the last month, CDNS shares increased by 2.6%, lagging behind the Computer and Technology sector's gain of 9.48% and the S&P 500's gain of 5.11% [1] Upcoming Financial Results - Cadence Design Systems is set to announce earnings on July 22, 2024, with projected earnings of $1.23 per share, indicating a year-over-year growth of 0.82% [2] - The consensus estimate for revenue is $1.05 billion, reflecting a 7.35% increase from the same quarter last year [2] - For the full year, projected earnings are $5.93 per share and revenue is $4.59 billion, representing changes of +15.15% and +12.14% respectively from the prior year [2] Analyst Forecasts and Rankings - Recent revisions to analyst forecasts for Cadence Design Systems are important, as positive estimate revisions are seen as a good sign for the company's business outlook [3] - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently ranks Cadence Design Systems at 4 (Sell) [3] Valuation Metrics - Cadence Design Systems has a Forward P/E ratio of 53.93, which is a premium compared to the industry's average Forward P/E of 30.46 [4] - The company has a PEG ratio of 3.15, compared to the Computer - Software industry's average PEG ratio of 2.46 [4] - The Computer - Software industry ranks in the bottom 39% of all industries, with a Zacks Industry Rank of 154 [4]

In a stock market that’s somewhat lacking in volatility, value investors are sure to find other things to be anxious about. Indeed, momentum is growing behind a wide range of names, especially those in tech with artificial intelligence (AI) plans and products under development.For some value-conscious folks, the magnitude of momentum driven by an emerging technological trend may be enough to keep them glued to the bleachers. Momentum may be scary for value-conscious crowds, as volatility is for short-term t ...

Core Insights - Cadence Design Systems, Inc (CDNS) has introduced the Cadence Janus Network-on-Chip (NoC) to enhance electronic system connectivity, set to be available from July 2024 [1] - The Janus NoC is engineered to facilitate high-speed communications within and between silicon components, minimizing latency and enabling faster achievement of power, performance, and area (PPA) targets [1][2] - The Janus NoC aims to alleviate routing congestion and timing issues prevalent in complex SoC interconnects, which are often only identified during physical implementation [2] - The NoC is compatible with industry-standard memory and I/O coherence protocols, and features built-in power management, clock domain crossing, and width matching to reduce design complexity [2] - Cadence's Intelligent System Design strategy supports users in transforming design concepts into reality through computational software, hardware, and IP offerings [3] - The company is well-positioned to benefit from trends such as generative AI, hyperscale computing, 5G, and autonomous driving, which are expected to drive accelerated design activity [3] Financial Position - As of March 31, 2024, Cadence's goodwill and intangible assets amounted to approximately $1.91 billion, representing 33.4% of total assets, indicating potential risks associated with acquisitions [4]

Company Performance - Cadence Design Systems (CDNS) closed at $311.53, reflecting a +0.77% change from the previous session, outperforming the S&P 500's daily gain of 0.09% [1] - Over the past month, CDNS shares increased by 5.05%, surpassing the Computer and Technology sector's gain of 4.06% and the S&P 500's gain of 2.83% [1] - The upcoming earnings disclosure is anticipated to show EPS of $1.23, a 0.82% increase from the prior-year quarter, with quarterly revenue expected to reach $1.05 billion, up 7.35% year-over-year [1] Annual Estimates - For the annual period, Zacks Consensus Estimates project earnings of $5.93 per share and revenue of $4.59 billion, indicating increases of +15.15% and +12.14% respectively from the previous year [2] Analyst Sentiment - Changes in analyst estimates for Cadence Design Systems are crucial as they reflect the evolving business trends, with positive revisions indicating optimism about the company's outlook [2] - The Zacks Rank system currently rates Cadence Design Systems as 4 (Sell), with the EPS estimate remaining stagnant over the past month [3] Valuation Metrics - Cadence Design Systems has a Forward P/E ratio of 52.13, which is a premium compared to the industry's average Forward P/E of 27.71 [3] - The company holds a PEG ratio of 3.05, higher than the Computer - Software industry's average PEG ratio of 2.43 [3] Industry Context - The Computer - Software industry is part of the Computer and Technology sector, holding a Zacks Industry Rank of 97, placing it in the top 39% of over 250 industries [4] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [4]