Cadence Design Systems Reports Strong Q3 2024 Financial Results

Cadence Design Systems, Inc., a leader in electronic systems design, has released its financial results for the third quarter of 2024. The company reported robust performance, surpassing its guidance for revenue and operating margin, and has raised its non-GAAP EPS outlook for the year.

Financial Highlights

For the third quarter of 2024, Cadence reported:

• Revenue of $1.215 billion, a 19% increase from $1.023 billion in Q3 2023.
• GAAP operating margin remained steady at 29% year-over-year.
• Non-GAAP operating margin improved to 45%, up from 41% in Q3 2023.
• GAAP diluted net income per share of $0.87, down from $0.93 in Q3 2023.
• Non-GAAP diluted net income per share of $1.64, up from $1.26 in Q3 2023.
• Quarter-end backlog of $5.6 billion and current remaining performance obligations (cRPO) of $2.9 billion.

Business and Operational Highlights

Cadence's performance was driven by strong demand across its portfolio, particularly in IP, System Design & Analysis (SD&A), and hardware systems. Key business highlights include:

• The Cadence.AI portfolio, powered by GenAI agents and AI-driven optimization, saw its revenue nearly triple over the last year.
• The System Design & Analysis business achieved a 47% year-over-year revenue growth in Q3.
• The IP business experienced a 59% year-over-year growth, with a major deal signed with a long-term partner for AI product roadmap and next-generation subsystems.
• Functional Verification delivered a 22% year-over-year revenue growth, driven by demand from AI, hyperscale, and automotive companies.

Strategic Initiatives and Corporate Developments

Cadence continues to focus on strategic growth and operational efficiency. The company highlighted its strong Q4 bookings pipeline and its well-positioned stance to deliver a strong 2024. Additionally, Cadence raised the midpoint of its 2024 non-GAAP EPS outlook to $5.90.

Management's Perspective

Anirudh Devgan, President and CEO, commented, "Cadence delivered exceptional results for the third quarter of 2024, driven by broad-based strength across our portfolio, especially in IP, SD&A, and hardware systems. Customers are achieving outstanding results with Cadence.AI, and I’m excited by its accelerating proliferation as AI rapidly becomes an integral part of the design workflow."

John Wall, Senior Vice President and CFO, added, "I am pleased to report that Cadence delivered strong Q3 results, with total revenue growing 19% year-over-year. Our Q3 recurring revenue growth returned to low teens on a year-over-year basis, and China revenue continues to improve, representing 13% of our total revenue for Q3."

Future Outlook

For fiscal year 2024, Cadence expects:

• Revenue in the range of $4.61 billion to $4.65 billion.
• GAAP operating margin in the range of 29% to 30%.
• Non-GAAP operating margin in the range of 42% to 43%.
• GAAP diluted net income per share in the range of $3.70 to $3.76.
• Non-GAAP diluted net income per share in the range of $5.87 to $5.93.

SEC Filing: CADENCE DESIGN SYSTEMS INC [ CDNS ] - 8-K - Oct. 28, 2024