The latest trading session saw Cadence Design Systems (CDNS) ending at $296.21, denoting a +0.66% adjustment from its last day's close. The stock outpaced the S&P 500's daily gain of 0.03%. Meanwhile, the Dow lost 0.56%, and the Nasdaq, a tech-heavy index, added 0.59%.Shares of the maker of hardware and software products for validating chip designs witnessed a gain of 4.17% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 6.87% and the S&P 500's gain o ...

A month has gone by since the last earnings report for Cadence Design Systems (CDNS) . Shares have added about 3% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Cadence due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Cadence Q1 Earnings Top EstimatesCadence Des ...

Have you evaluated the performance of Cadence Design Systems' (CDNS) international operations for the quarter ending March 2024? Given the extensive global presence of this maker of hardware and software products for validating chip designs, analyzing the patterns in international revenues is crucial for understanding its financial strength and potential for growth.In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping ...

Revenue Performance - Revenue for the three months ended March 31, 2024, was $1,009.1 million, a decrease of 1% compared to $1,021.7 million for the same period in 2023[92]. - Total revenue for the three months ended March 31, 2024, was $1,009.1 million, a decrease of $12.6 million or 1% compared to $1,021.7 million for the same period in 2023[96]. - Revenue from the United States was $435.5 million, a slight increase of $1.2 million or 0.3% year-over-year[96]. - Revenue from China decreased by $60.4 million or 34% to $117.2 million, contributing to a decline in overall revenue[96]. - Recurring revenue increased to 90% of total revenue for the three months ended March 31, 2024, up from 80% in the same period of 2023[90]. - Revenue from services grew by 65% to $95.7 million for the three months ended March 31, 2024, compared to $58.0 million in the same period of 2023[93]. - The percentage of revenue recognized over time increased to 87% for the three months ended March 31, 2024, compared to 77% in the same period of 2023[89]. - Revenue from Custom IC Design and Simulation remained stable at 22% for the three months ended March 31, 2024, consistent with previous quarters[95]. - The Digital IC Design and Signoff category accounted for 29% of total revenue for the three months ended March 31, 2024, consistent with the previous quarter[95]. Operating Expenses and Margins - Operating expenses increased to $628.3 million, up $57.8 million or 10% from $570.5 million in the prior year[107]. - Total operating expenses increased by 10% to $628.3 million for the three months ended March 31, 2024, from $570.5 million in the same period of 2023[107]. - Operating margin decreased to 25% for the three months ended March 31, 2024, down from 32% in the same period last year[116]. - Research and development expenses rose by $28.7 million or 8% to $379.0 million, reflecting continued investment in talent and infrastructure[107]. - Marketing and sales expenses increased by 8% to $180.6 million for the three months ended March 31, 2024, from $166.7 million in the same period of 2023[107]. - General and administrative expenses rose by 28% to $68.7 million for the three months ended March 31, 2024, compared to $53.5 million for the same period in 2023[107]. - Cost of product and maintenance decreased by $24.8 million or 25% to $75.4 million, primarily due to reduced costs associated with emulation and prototyping hardware[100]. - Product and maintenance-related costs decreased by 29% to $64.1 million for the three months ended March 31, 2024, compared to $89.9 million for the same period in 2023[102]. Cash Flow and Financial Position - Cash provided by operating activities decreased to $253.2 million for the three months ended March 31, 2024, down from $267.4 million in the same period of 2023, a decline of $14.2 million[125]. - Cash used for investing activities increased significantly to $(79.8) million in the three months ended March 31, 2024, compared to $(35.7) million in the same period of 2023, primarily due to higher payments for business combinations and property purchases[127]. - Cash used for financing activities decreased to $(159.4) million for the three months ended March 31, 2024, from $(197.4) million in the same period of 2023, reflecting reduced payments on the revolving credit facility[128]. - As of March 31, 2024, cash and cash equivalents totaled $1,012.4 million, a slight increase from $1,008.2 million as of December 31, 2023, with net working capital rising to $464.2 million from $385.4 million[122][123]. - The company had no outstanding borrowings under its $700 million revolving credit facility as of March 31, 2024, and was in compliance with all financial covenants[131]. - The company issued $350 million of 4.375% Senior Notes due October 15, 2024, and was in compliance with all covenants associated with these notes as of March 31, 2024[132]. - Approximately 73% of the company's cash and cash equivalents were held by foreign subsidiaries as of March 31, 2024, which may vary due to the timing of collections and repatriation of foreign earnings[123]. Acquisitions and Investments - The acquisition of Invecas, Inc. is expected to enhance the company's capabilities in delivering end-to-end system solutions[82]. - The company completed the acquisition of Invecas, enhancing its capabilities in design engineering and embedded software solutions[82]. - The company entered into a definitive agreement to acquire BETA CAE Systems International AG for $1.24 billion, with 60% to be paid in cash and 40% in common stock, expected to close in the second quarter of fiscal 2024[129]. - The company expects to continue attracting and retaining talent through hiring and acquisitions to support growth in both technical sales and research and development[109][111]. - The company reported gains from investments in equity securities, contributing positively to its financial performance[87]. Tax and Compliance - The provision for income taxes for the three months ended March 31, 2024, was $62.4 million, compared to $79.7 million for the same period in 2023, reflecting a decrease in the effective tax rate from 24.8% to 20.1%[119]. - The company expects the fiscal 2024 effective tax rate to be approximately 25.0%, with quarterly rates varying due to stock-based awards and other factors[121]. - Interest expense decreased to $8.7 million, down from $9.3 million in the prior year, mainly due to reduced borrowings under the 2021 Credit Facility[118]. - The company has a five-year senior unsecured revolving credit facility with a maximum borrowing capacity of $1.05 billion, with no outstanding borrowings as of March 31, 2024[131]. - The company has a $300.0 million three-year senior non-amortizing term loan facility due on September 7, 2025, and was also in compliance with all financial covenants associated with this loan as of March 31, 2024[133]. Geopolitical and Market Impact - The company anticipates limited impact from expanded trade control laws and geopolitical conflicts on its business operations[84]. - The company continues to monitor the impact of geopolitical conflicts and trade control laws on its operations, with limited expected impact on financial results[84].

A look at Cadence Design Systems' Q1 2024 earnings.Cadence Design Systems (CDNS -1.74%), a player in the computational software arena, released its Q1 2024 earnings on April 22. Revenue of $1.009 billion slightly surpassed analyst expectations, but was a marginal decline from $1.022 billion in the same quarter last year. Earnings per share (EPS) fell well short of the $1.34 forecast, coming in at $1.17, a decrease from $1.29 in the year-ago quarter. Despite these mixed results, the quarter's performance sho ...

Cadence Design Systems (CDNS) reported first-quarter 2024 non-GAAP earnings per share (EPS) of $1.17, which beat the Zacks Consensus Estimate by 3.5%. However, it decreased 9.3% year over year.Revenues of $1.009 billion missed the Zacks Consensus Estimate by 0.5% and decreased 1.2% on a year-over-year basis. The top line was affected by weakness in Product & Maintenance revenues. CDNS ended the quarter with a backlog of $6 billion and current remaining performance obligations of $3.1 billion.Management prov ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $1.009 billion, with GAAP operating margin at 24.8% and non-GAAP operating margin at 37.8% [20] - GAAP EPS was $0.91 and non-GAAP EPS was $1.17 [20] - The cash balance at the end of the quarter was approximately $1.012 billion, with outstanding debt of $650 million and operating cash flow of $253 million [20] Business Line Data and Key Metrics Changes - The System Design and Analysis business showed steady growth, driven by AI-driven design optimization platforms [12] - The Digital IC business experienced strong growth, particularly at hyperscalers, with over 50 customers deploying digital solutions at three nanometer and below design [16] - The IP business benefited from market opportunities related to AI and multi-chiplet architectures, with strong momentum in interface IPs [17] Market Data and Key Metrics Changes - China revenue was down 12% in Q1 compared to the previous year, attributed to lower hardware and functional verification revenue [38] - Despite the decline in China, other Asian markets showed growth, indicating a diversified geographical revenue mix [39] Company Strategy and Development Direction - The company is focused on executing its Intelligent System Design strategy, leveraging long-term trends in hyperscale computing, autonomous driving, and 5G, all accelerated by AI [8] - The recent launch of the Palladium Z3 and Protium X3 platforms aims to meet the increasing demand for higher performance and capacity in hardware accelerated verification solutions [9] - The acquisition of BETA CAE is expected to unlock a multi-billion dollar total addressable market opportunity, particularly in automotive and aerospace sectors [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong start to 2024, raising the financial outlook for the year based on a record backlog of $6 billion [7] - The company anticipates that hardware revenue will be more weighted towards the second half of 2024 due to new product launches and backlog scaling [21] - Management highlighted the significant impact of AI on design processes, leading to increased customer engagement and potential for larger renewal contracts [34] Other Important Information - Cadence was recognized as one of the 2024's 100 best companies to work for, ranking number 9 [18] - The company is committed to using at least 50% of its annual free cash flow for share repurchases [21] Q&A Session Summary Question: Can you provide your second half assumption before this quarter versus where it stands today? - Management noted that upfront revenue is driving quarter-over-quarter trends, with expectations for a shift towards the second half of the year due to a record backlog and new hardware systems [25][28] Question: What is the outlook for China revenue for the rest of the year? - Management indicated that while China revenue was down, strong design activity remains, and they expect the percentage of revenue from China to increase in the second half as upfront revenue grows [39][40] Question: How do you view the demand for the new Z3 and X3 systems? - Management expects a combination of replacement demand and new customer adoption, with significant capacity increases allowing for the design of larger chips [41][44] Question: Can you comment on the impact of AI on customer engagement and renewals? - Management confirmed that AI is creating stickiness and incentives for broader deployment, leading to larger average renewal contracts [34] Question: How is the IP business expected to perform in 2024? - Management reported strong bookings in Q1 and anticipates a very strong growth year for the IP business, particularly in the second half [59]

Company Performance - Cadence Design Systems (CDNS) reported quarterly earnings of $1.17 per share, exceeding the Zacks Consensus Estimate of $1.13 per share, but down from $1.29 per share a year ago, representing an earnings surprise of 3.54% [1] - The company posted revenues of $1.01 billion for the quarter ended March 2024, missing the Zacks Consensus Estimate by 0.49%, compared to $1.02 billion in the same quarter last year [1] - Over the last four quarters, Cadence has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [1] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.44 on revenues of $1.11 billion, and for the current fiscal year, it is $5.93 on revenues of $4.59 billion [4] - The estimate revisions trend for Cadence is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [4] Industry Context - The Computer - Software industry, to which Cadence belongs, is currently in the top 35% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [5] - Manhattan Associates (MANH), another company in the same industry, is expected to report quarterly earnings of $0.87 per share, reflecting a year-over-year change of +8.8%, with revenues anticipated to be $243.32 million, up 10.1% from the previous year [5][6]

Exhibit 99.02 CADENCE REPORTS FIRST QUARTER 2024 CADENCE DESIGN SYSTEMS, INC. CFO COMMENTARY Q1 2024 KEY Key Takeaways Q2 2024 Outlook METRICS • Record Q1 bookings and record Q1 • Revenue : $1.03 billion - $1.05 billion backlog of approximately $6.0 • Revenue $1.009 billion • GAAP operating margin: 26.5% - 27.5% billion • Non-GAAP operating margin: 38.5% - 39.5% • GAAP operating margin 25% • Raising 2024 revenue outlook • GAAP EPS: $0.73 - $0.77 • Non-GAAP operating margin • The pending acquisition of BETA ...

Core Viewpoint - Cadence Design Systems (CDNS) has experienced significant selling pressure, resulting in a 13.2% decline in stock price over the past four weeks, but analysts anticipate better earnings than previously predicted, indicating potential for recovery [1]. Group 1: Stock Performance and Indicators - CDNS is currently in oversold territory with an RSI reading of 28.22, suggesting that the stock may be nearing a reversal point [4]. - The consensus EPS estimate for CDNS has increased by 0.1% over the last 30 days, indicating a positive trend in earnings estimates which typically correlates with price appreciation [4]. Group 2: Analyst Ratings and Market Position - CDNS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [5].