CDNS 8-K/A
Cadence Design Systems Inc (CDNS)
8-K/A
2025-02-20
For: 2025-02-18
View Original
Added on
April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 18, 2025
(Exact Name of Registrant as Specified in its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices) (Zip Code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
This Amendment No. 1 on Form 8-K/A is being filed by Cadence Design Systems, Inc. (“Cadence”) to amend its Current Report on Form 8-K dated February 18, 2025 (the “Original Form 8-K”) to correct a clerical error in Exhibit 99.02 furnished with the Original Form 8-K.
Item 2.02. Results of Operations and Financial Condition.
On February 18, 2025, Cadence furnished the Original Form 8-K and announced its financial results for its fourth quarter and fiscal year ended December 31, 2024. This Current Report on Form 8-K/A (the “Amended 8-K”) amends the Original Form 8-K solely for the purpose of correcting a clerical error with respect to Cadence’s guidance for the first quarter of 2025 of (i) GAAP operating margin and (ii) non-GAAP operating margin included on page 3 of the commentary by the Chief Financial Officer of Cadence (the “CFO Commentary”) furnished as Exhibit 99.02 to the Original Form 8-K.
Cadence expects (i) GAAP operating margin of 27% - 28% and (ii) non-GAAP operating margin of 40% - 41% for the first quarter of 2025, as correctly reflected on pages 1 and 12 of the CFO Commentary furnished as Exhibit 99.02 to the Original Form 8-K, and now reflected on page 3 of the corrected CFO Commentary furnished as Exhibit 99.02 to this Amended 8-K. Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation of GAAP operating margin as a percent of total revenue to non-GAAP operating margin as a percent of total revenue is contained within the corrected CFO Commentary. Cadence’s management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence’s management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence’s business from the same perspective as Cadence’s management, including forecasting and budgeting.
A copy of the corrected CFO Commentary is attached as Exhibit 99.02 to this Amended 8-K and is incorporated herein by reference.
The information contained in this Amended 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Other than correction of the error discussed in this Amended 8-K, no other changes have been made to the Original Form 8-K or the press release dated February 18, 2025 or the CFO Commentary furnished as exhibits therewith.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
* Furnished with Original Form 8-K
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: February 19, 2025
| CADENCE DESIGN SYSTEMS, INC. | ||||||||
| By: | /s/ John M. Wall | |||||||
| John M. Wall | ||||||||
| Senior Vice President and Chief Financial Officer | ||||||||
Exhibit 99.02
CADENCE REPORTS FOURTH QUARTER AND FISCAL YEAR 2024 | ||||||||
| CADENCE DESIGN SYSTEMS, INC. | ||||||||
CFO COMMENTARY | ||||||||
Key Takeaways for 2024 • Record year-end backlog of $6.8B and current RPO of $3.4B • Revenue growth of 13.5% • Non-GAAP operating margin of 42.5% | Q1 2025 Outlook • Revenue: $1.23 billion - $1.25 billion • GAAP operating margin: 27% - 28% • Non-GAAP operating margin: 40% - 41% • GAAP EPS: $0.93 - $0.99 • Non-GAAP EPS: $1.46 - $1.52 • Expect to use approximately $175 million to repurchase Cadence shares in Q1 | Q4 2024 KEY METRICS | ||||||
• Revenue: $1.356 billion • GAAP operating margin: 33.7% • Non-GAAP operating margin: 46.0% • GAAP EPS: $1.24 • Non-GAAP EPS: $1.88 • Operating cash flow: $441 million | ||||||||
FY 2025 Outlook • Revenue: $5.14 billion - $5.22 billion • GAAP operating margin: 30.25% - 31.25% • Non-GAAP operating margin: 43.25% - 44.25% • GAAP EPS: $4.19 - $4.29 • Non-GAAP EPS: $6.65 - $6.75 • Operating cash flow: $1.6 billion - $1.7 billion • Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year | Financial Results Webcast | FY 2024 KEY METRICS | ||||||
Our Q4 2024 financial results webcast will begin February 18, 2025 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on February 18, 2025 until 5:00 p.m. (Pacific) on March 17, 2025. | • Revenue: $4.641 billion • GAAP operating margin: 29.1% • Non-GAAP operating margin: 42.5% • GAAP EPS: $3.85 • Non-GAAP EPS: $5.97 • Operating cash flow: $1.261 billion | |||||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 1 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Financial Metrics
| (In Millions, except per share data) | 2019 | 2020* | 2021 | 2022 | 2023* | 2024 | 2025E | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 2,336 | $ | 2,683 | $ | 2,988 | $ | 3,562 | $ | 4,090 | $ | 4,641 | $5,140- $5,220 | ||||||||||||||||||||||||||||||||||
| Revenue growth* | 9% | 15% | 11% | 19% | 15% | 13% | 11% - 12% | ||||||||||||||||||||||||||||||||||||||||
| 3-year CAGR | 9% | 11% | 12% | 15% | 15% | 16% | ~13% | ||||||||||||||||||||||||||||||||||||||||
| 3-year CAGR without 53rd week impact | 11% | 16% | |||||||||||||||||||||||||||||||||||||||||||||
| GAAP operating expenses | $ | 1,845 | $ | 2,037 | $ | 2,209 | $ | 2,488 | $ | 2,839 | $ | 3,291 | ~$3,563 | ||||||||||||||||||||||||||||||||||
| GAAP operating expense growth | 6% | 10% | 8% | 13% | 14% | 16% | ~8% | ||||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating expenses | $ | 1,587 | $ | 1,739 | $ | 1,877 | $ | 2,125 | $ | 2,373 | $ | 2,667 | ~$2,914 | ||||||||||||||||||||||||||||||||||
| Non-GAAP operating expense growth | 6% | 10% | 8% | 13% | 12% | 12% | ~9% | ||||||||||||||||||||||||||||||||||||||||
| GAAP operating margin** | 21.1% | 24.1% | 26.1% | 30.1% | 30.6% | 29.1% | 30.75 | % | |||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin** | 32.1% | 35.2% | 37.2% | 40.3% | 42.0% | 42.5% | 43.75 | % | |||||||||||||||||||||||||||||||||||||||
| GAAP earnings per share | $ | 3.53 | $ | 2.11 | $ | 2.50 | $ | 3.09 | $ | 3.82 | $ | 3.85 | $4.19 - $4.29 | ||||||||||||||||||||||||||||||||||
| Non-GAAP earning per share | $ | 2.20 | $ | 2.80 | $ | 3.29 | $ | 4.27 | $ | 5.15 | $ | 5.97 | $6.65 - $6.75 | ||||||||||||||||||||||||||||||||||
| Non-GAAP EPS growth** | 18% | 27% | 18% | 30% | 21% | 16% | 12 | % | |||||||||||||||||||||||||||||||||||||||
| 3-year Non-GAAP EPS CAGR** | 22% | 26% | 21% | 25% | 23% | 22% | 16 | % | |||||||||||||||||||||||||||||||||||||||
| Weighted average shares diluted outstanding | 280.5 | 279.6 | 278.9 | 275.0 | 272.7 | 273.8 | 274 - 276 | ||||||||||||||||||||||||||||||||||||||||
| Cash flow from operations | 730 | 905 | 1,101 | 1,242 | 1,349 | 1261 | $1,600 - $1,700 | ||||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 75 | 95 | 65 | 123 | 102 | 143 | ~$150 | ||||||||||||||||||||||||||||||||||||||||
* Fiscal 2020 was a 53-week year, compared to all other years which were 52 week years. 2020 (which impacts the 3 year CAGR in 2023) included approximately $45 million revenue impact for the extra week.
** At midpoint of outlook.
Profitability Trends
* At midpoint of outlook.
| (In Millions) | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025E* | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 2,336 | $ | 2,683 | $ | 2,988 | $ | 3,562 | $ | 4,090 | $ | 4,641 | $ | 5,180 | |||||||||||||||||||||||||||||||||
| Revenue Growth | 9% | 15% | 11% | 19% | 15% | 13% | 12% | ||||||||||||||||||||||||||||||||||||||||
| 3-Year Revenue Growth CAGR | 9% | 11% | 12% | 15% | 15% | 16% | 13% | ||||||||||||||||||||||||||||||||||||||||
| GAAP operating margin | 21.1% | 24.1% | 26.1% | 30.1% | 30.6% | 29.1% | 30.75% | ||||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin | 32.1% | 35.2% | 37.2% | 40.3% | 42.0% | 42.5% | 43.75% | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | (7.8)% | (7.4)% | (7.0)% | (7.6)% | (8.0)% | (8.4)% | (9.0)% | ||||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin adjusted for stock-based compensation | 24.3% | 27.8% | 30.2% | 32.7% | 34.0% | 34.1% | 34.75% | ||||||||||||||||||||||||||||||||||||||||
| GAAP operating income | $ | 492 | $ | 646 | $ | 779 | $ | 1,074 | $ | 1,251 | $ | 1,351 | $ | 1,617 | |||||||||||||||||||||||||||||||||
| Non-GAAP operating income | $ | 749 | $ | 944 | $ | 1,111 | $ | 1,436 | $ | 1,717 | $ | 1,974 | $ | 2,266 | |||||||||||||||||||||||||||||||||
| Non-GAAP operating income adjusted for stock-based compensation | $ | 567 | $ | 747 | $ | 901 | $ | 1,166 | $ | 1,391 | $ | 1,583 | $ | 1,800 | |||||||||||||||||||||||||||||||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 2 | ||||||
| Cadence Design Systems, Inc. | ||||||||
First Quarter 2025 Financial Outlook
Q1 2024 | Q4 2024 | Q1 2025E | |||||||||||||||||||||
| Total Revenue ($ Millions) | $ | 1,009 | $ | 1,356 | $1,230 - $1,250 | ||||||||||||||||||
| Q/Q Growth | 12% | (8)% - (9)% | |||||||||||||||||||||
| Y/Y Growth | 27% | 22% - 24% | |||||||||||||||||||||
| GAAP Operating Margin | 24.8% | 33.7% | 27% - 28% | ||||||||||||||||||||
| Non-GAAP Operating Margin | 37.8% | 46.0% | 40% - 41% | ||||||||||||||||||||
| GAAP EPS | $ | 0.91 | $ | 1.24 | $0.93 - $0.99 | ||||||||||||||||||
| Non-GAAP EPS | $ | 1.17 | $ | 1.88 | $1.46 - $1.52 | ||||||||||||||||||
Fiscal Year 2025 Financial Outlook
FY 2024 | FY 2025E | ||||||||||||||||
| Recurring Revenue | 82.6% | ~80% | |||||||||||||||
| Total Revenue ($ Millions) | $ | 4,641 | $5,140 - $5,220 | ||||||||||||||
| Y/Y Growth | 13% | 11% - 12% | |||||||||||||||
| Revenue from Beginning Backlog | ~70% | ~70% | |||||||||||||||
| GAAP Operating Margin | 29.1% | 30.25% - 31.25% | |||||||||||||||
| Non-GAAP Operating Margin | 42.5% | 43.25% - 44.25% | |||||||||||||||
| GAAP Other Income & Expense ($ Millions) | $ | 45 | $(53) - $(67) | ||||||||||||||
| Non-GAAP Other Income & Expense ($ Millions) | $ | (16) | $(53) - $(67) | ||||||||||||||
| GAAP Tax Rate | 24.4% | ~25% | |||||||||||||||
| Non-GAAP Tax Rate | 16.5% | 16.5% | |||||||||||||||
| Weighted Average Diluted Shares Outstanding (Millions) | 273.8 | 274 - 276 | |||||||||||||||
| GAAP EPS | $ | 3.85 | $4.19 - $4.29 | ||||||||||||||
| Y/Y Growth | 1% | 9% - 11% | |||||||||||||||
| Non-GAAP EPS | $ | 5.97 | $6.65 - $6.75 | ||||||||||||||
| Y/Y Growth | 16% | 11% - 13% | |||||||||||||||
| Cash Flow from Operations ($ Millions) | $ | 1,261 | $1,600 - $1,700 | ||||||||||||||
| DSO | 48 | ~50 | |||||||||||||||
| Capital Expenditures ($ Millions) | $ | 143 | ~$150 | ||||||||||||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 3 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Fourth Quarter and Fiscal Year Financial Results
Backlog
| (In Billions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
| Backlog | $ | 3.9 | $ | 4.4 | $ | 5.8 | $ | 6.0 | $ | 6.8 | |||||||||||||||||||||||||
Revenue
| (In Millions) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
| Product and Maintenance | $ | 982 | $ | 913 | $ | 961 | $ | 1,100 | $ | 1,239 | |||||||||||||||||||||||||
| Services | 87 | 96 | 100 | 115 | 117 | ||||||||||||||||||||||||||||||
| Total Revenue | $ | 1,069 | $ | 1,009 | $ | 1,061 | $ | 1,215 | $ | 1,356 | |||||||||||||||||||||||||
| (In Millions) | 2020* | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
| Product and Maintenance | $ | 2,537 | $ | 2,813 | $ | 3,340 | $ | 3,834 | $ | 4,213 | |||||||||||||||||||||||||
| Services | 146 | 175 | 222 | 256 | 428 | ||||||||||||||||||||||||||||||
| Total Revenue | $ | 2,683 | $ | 2,988 | $ | 3,562 | $ | 4,090 | $ | 4,641 | |||||||||||||||||||||||||
* Fiscal 2020 was a 53-week year.
Recurring and Up-Front Revenue
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | |||||||||||||||||||||||||||||||
| Revenue recognized over time | 85 | % | 87 | % | 85 | % | 80 | % | 72 | % | |||||||||||||||||||||||||
| Revenue from arrangements with non-cancelable commitments | 2 | % | 3 | % | 3 | % | 2 | % | 2 | % | |||||||||||||||||||||||||
| Recurring Revenue | 87 | % | 90 | % | 88 | % | 82 | % | 74 | % | |||||||||||||||||||||||||
Up-Front Revenue | 13 | % | 10 | % | 12 | % | 18 | % | 26 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||||||||||||||
| Revenue recognized over time | 85 | % | 85 | % | 83 | % | 81 | % | 80 | % | |||||||||||||||||||||||||
| Revenue from arrangements with non-cancelable commitments | 3 | % | 3 | % | 2 | % | 3 | % | 3 | % | |||||||||||||||||||||||||
| Recurring Revenue | 88 | % | 88 | % | 85 | % | 84 | % | 83 | % | |||||||||||||||||||||||||
Up-Front Revenue | 12 | % | 12 | % | 15 | % | 16 | % | 17 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Trailing Twelve Months Recurring and Up-Front Revenue
| Trailing Twelve Months Ended | |||||||||||||||||||||||||||||||||||
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | |||||||||||||||||||||||||||||||
| Recurring Revenue | 84 | % | 87 | % | 87 | % | 86 | % | 83 | % | |||||||||||||||||||||||||
| Up-Front Revenue | 16 | % | 13 | % | 13 | % | 14 | % | 17 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 4 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Revenue Mix by Geography
| (% of Total Revenue) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
| Americas | 44 | % | 46 | % | 49 | % | 50 | % | 49 | % | |||||||||||||||||||||||||
| China | 15 | % | 12 | % | 12 | % | 13 | % | 13 | % | |||||||||||||||||||||||||
| Other Asia | 19 | % | 20 | % | 19 | % | 17 | % | 17 | % | |||||||||||||||||||||||||
| Europe, Middle East and Africa | 16 | % | 17 | % | 14 | % | 14 | % | 15 | % | |||||||||||||||||||||||||
| Japan | 6 | % | 5 | % | 6 | % | 6 | % | 6 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
| (% of Total Revenue) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
| Americas | 42 | % | 45 | % | 46 | % | 43 | % | 49 | % | |||||||||||||||||||||||||
| China | 15 | % | 13 | % | 15 | % | 17 | % | 12 | % | |||||||||||||||||||||||||
| Other Asia | 18 | % | 19 | % | 18 | % | 19 | % | 18 | % | |||||||||||||||||||||||||
| Europe, Middle East and Africa | 18 | % | 17 | % | 16 | % | 16 | % | 15 | % | |||||||||||||||||||||||||
| Japan | 7 | % | 6 | % | 5 | % | 5 | % | 6 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Revenue Mix by Product Category
| (% of Total Revenue) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
Core EDA | 75 | % | 76 | % | 73 | % | 70 | % | 68 | % | |||||||||||||||||||||||||
| IP | 13 | % | 12 | % | 13 | % | 14 | % | 13 | % | |||||||||||||||||||||||||
| System Design and Analysis | 12 | % | 12 | % | 14 | % | 16 | % | 19 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
| (% of Total Revenue) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
Core EDA | 76 | % | 76 | % | 76 | % | 76 | % | 71 | % | |||||||||||||||||||||||||
| IP | 14 | % | 13 | % | 12 | % | 12 | % | 13 | % | |||||||||||||||||||||||||
| System Design and Analysis | 10 | % | 11 | % | 12 | % | 12 | % | 16 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
3 Year Revenue CAGR by Product Category
2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||||||||||||||
Core EDA | 10 | % | 10 | % | 14 | % | 15 | % | 13 | % | |||||||||||||||||||||||||
| IP | 18 | % | 16 | % | 15 | % | 8 | % | 15 | % | |||||||||||||||||||||||||
| System Design and Analysis | 13 | % | 19 | % | 24 | % | 22 | % | 30 | % | |||||||||||||||||||||||||
Total 3 Year CAGR | 11 | % | 12 | % | 15 | % | 15 | % | 16 | % | |||||||||||||||||||||||||
3 Year Revenue CAGR by Product Category Without 53rd Week Impact*
2020* | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||||||||||||||
Core EDA | 9 | % | 10 | % | 14 | % | 16 | % | 13 | % | |||||||||||||||||||||||||
| IP | 18 | % | 16 | % | 15 | % | 9 | % | 15 | % | |||||||||||||||||||||||||
| System Design and Analysis | 12 | % | 19 | % | 24 | % | 23 | % | 30 | % | |||||||||||||||||||||||||
Total 3 Year CAGR | 11 | % | 12 | % | 15 | % | 16 | % | 16 | % | |||||||||||||||||||||||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 5 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Gross Margin
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | |||||||||||||||||||||||||||||||
| GAAP Gross Margin | 90.3 | % | 87.6 | % | 86.9 | % | 86.6 | % | 83.8 | % | |||||||||||||||||||||||||
| Non-GAAP Gross Margin | 91.7 | % | 89.1 | % | 88.5 | % | 88.6 | % | 85.5 | % | |||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||||||||||||||
| GAAP Gross Margin | 88.6 | % | 89.7 | % | 89.6 | % | 89.4 | % | 86.0 | % | |||||||||||||||||||||||||
| Non-GAAP Gross Margin | 90.6 | % | 91.7 | % | 91.0 | % | 90.7 | % | 87.8 | % | |||||||||||||||||||||||||
Total Costs and Expenses
| (In Millions) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
| Total GAAP Costs and Expenses | $ | 732 | $ | 759 | $ | 767 | $ | 865 | $ | 899 | |||||||||||||||||||||||||
| Total Non-GAAP Costs and Expenses | $ | 610 | $ | 627 | $ | 635 | $ | 671 | $ | 733 | |||||||||||||||||||||||||
| (In Millions) | 2020* | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
| Total GAAP Costs and Expenses | $ | 2,037 | $ | 2,209 | $ | 2,488 | $ | 2,839 | $ | 3,291 | |||||||||||||||||||||||||
| Total Non-GAAP Costs and Expenses | $ | 1,739 | $ | 1,877 | $ | 2,125 | $ | 2,373 | $ | 2,667 | |||||||||||||||||||||||||
* Fiscal 2020 was a 53-week year.
Operating Margin
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | |||||||||||||||||||||||||||||||
| GAAP Operating Margin | 31.5 | % | 24.8 | % | 27.7 | % | 28.8 | % | 33.7 | % | |||||||||||||||||||||||||
| Non-GAAP Operating Margin | 42.9 | % | 37.8 | % | 40.1 | % | 44.8 | % | 46.0 | % | |||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||||||||||||||
| GAAP Operating Margin | 24.1 | % | 26.1 | % | 30.1 | % | 30.6 | % | 29.1 | % | |||||||||||||||||||||||||
| Non-GAAP Operating Margin | 35.2 | % | 37.2 | % | 40.3 | % | 42.0 | % | 42.5 | % | |||||||||||||||||||||||||
Net Income Per Share
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | |||||||||||||||||||||||||||||||
| GAAP Net Income Per Share | $ | 1.19 | $ | 0.91 | $ | 0.84 | $ | 0.87 | $ | 1.24 | |||||||||||||||||||||||||
| Non-GAAP Net Income Per Share | $ | 1.38 | $ | 1.17 | $ | 1.28 | $ | 1.64 | $ | 1.88 | |||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||||||||||||||
| GAAP Net Income Per Share | $ | 2.11 | $ | 2.50 | $ | 3.09 | $ | 3.82 | $ | 3.85 | |||||||||||||||||||||||||
| Non-GAAP Net Income Per Share | $ | 2.80 | $ | 3.29 | $ | 4.27 | $ | 5.15 | $ | 5.97 | |||||||||||||||||||||||||
Total DSO
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | |||||||||||||||||||||||||||||||
| DSO | 43 | 36 | 49 | 44 | 48 | ||||||||||||||||||||||||||||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 6 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Balance Sheet and Cash Review
Free Cash Flow
| (In Millions) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
| Net Cash from Operating Activities | $ | 272 | $ | 253 | $ | 156 | $ | 410 | $ | 441 | |||||||||||||||||||||||||
| Capital Expenditures | 34 | 49 | 29 | 27 | 37 | ||||||||||||||||||||||||||||||
| Free Cash Flow | $ | 238 | $ | 204 | $ | 127 | $ | 383 | $ | 404 | |||||||||||||||||||||||||
| (In Millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
| Net Cash from Operating Activities | $ | 905 | $ | 1,101 | $ | 1,242 | $ | 1,349 | $ | 1,261 | |||||||||||||||||||||||||
| Capital Expenditures | 95 | 65 | 123 | 102 | 143 | ||||||||||||||||||||||||||||||
| Free Cash Flow | $ | 810 | $ | 1,036 | $ | 1,119 | $ | 1,247 | $ | 1,118 | |||||||||||||||||||||||||
Cash and Cash Equivalents
| (In Millions) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 1,008 | $ | 1,012 | $ | 1,059 | $ | 2,786 | $ | 2,644 | |||||||||||||||||||||||||
| (In Millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 928 | $ | 1,089 | $ | 882 | $ | 1,008 | $ | 2,644 | |||||||||||||||||||||||||
•Approximately 66 percent of our cash and cash equivalents were in the U.S. at quarter-end.
Debt
| (In Millions) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
Debt (principal value) | $ | 650 | $ | 650 | $ | 1,350 | $ | 2,850 | $ | 2,500 | |||||||||||||||||||||||||
| (In Millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
Debt (principal value) | $ | 350 | $ | 350 | $ | 750 | $ | 650 | $ | 2,500 | |||||||||||||||||||||||||
•In September 2024, Cadence issued $2.5 billion of Senior Notes at a weighted average interest rate of 4.44%.
Share Repurchase
| (In Millions) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
| Share Repurchase | $ | 125 | $ | 125 | $ | 125 | $ | 150 | $ | 150 | |||||||||||||||||||||||||
| Number of Shares | 0.488 | 0.425 | 0.423 | 0.563 | 0.519 | ||||||||||||||||||||||||||||||
| (In Millions) | 2020 | 2021 | 2022 | 2023 | 2024 | ||||||||||||||||||||||||||||||
| Share Repurchase | $ | 380 | $ | 612 | $ | 1,050 | $ | 700 | $ | 550 | |||||||||||||||||||||||||
| Number of Shares | 4.247 | 4.401 | 6.602 | 3.145 | 1.930 | ||||||||||||||||||||||||||||||
Employees
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | |||||||||||||||||||||||||||||||
| Headcount | 11,226 | 11,753 | 12,665 | 12,703 | 12,705 | ||||||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||||||||||||||
| Headcount | 8,746 | 9,298 | 10,228 | 11,226 | 12,705 | ||||||||||||||||||||||||||||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 7 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Forward Looking Statements
This CFO Commentary contains forward-looking statements, including Cadence's outlook on future operating results, financial condition, strategic objectives, business prospects, technology and product developments, industry trends, market growth and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates and realize the benefits of its investments in research and development, including opportunities presented by AI; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) changes in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence’s products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including export controls, tariffs, other trade restrictions and other government regulations, as well as rising tensions and armed conflicts around the world; (vi) changes in tax laws, interest rate and currency exchange rate fluctuations, inflation rates, Cadence’s increased debt levels and obligations and Cadence’s ability to access capital and debt markets in the future; (vii) legislative or regulatory requirements; (viii) Cadence’s acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (ix) potential harm caused by compromises in cybersecurity and cybersecurity attacks; (x) capital expenditure requirements and events that affect cash flow, liquidity or reserves, or estimates Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (xi) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject; and (xii) Cadence’s ability to successfully meet any governance, environmental and social targets and strategies. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.
For a detailed discussion of these and other cautionary statements related to Cadence’s business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this document are based on management's expectations as of the date of this document and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
GAAP to Non-GAAP Reconciliation
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this CFO Commentary with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance. See our earnings press release issued today for further discussion of our non-GAAP financial measures, as well as the reconciliation provided in the Appendix to this CFO Commentary.
Cadence’s management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company’s core business operations and therefore provides supplemental information to Cadence’s management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence’s business from the same perspective as Cadence’s management, including forecasting and budgeting.
© 2025 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 8 | ||||||
| Cadence Design Systems, Inc. | ||||||||
APPENDIX I
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses
| (In Millions) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | ||||||||||||||||||||||||||||||
| GAAP total costs and expenses | $ | 732 | $ | 759 | $ | 767 | $ | 865 | $ | 899 | |||||||||||||||||||||||||
| Reconciling items to non-GAAP total costs and expenses | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (87) | (88) | (88) | (109) | (107) | ||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | (17) | (17) | (20) | (27) | (27) | ||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | (13) | (22) | (21) | (29) | (23) | ||||||||||||||||||||||||||||||
| Restructuring | 1 | — | — | (25) | 1 | ||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses | (6) | (5) | (2) | (4) | — | ||||||||||||||||||||||||||||||
Special charges* | — | — | (1) | — | (10) | ||||||||||||||||||||||||||||||
Non-GAAP total costs and expenses** | $ | 610 | $ | 627 | $ | 635 | $ | 671 | $ | 733 | |||||||||||||||||||||||||
| * | Q4 2024 includes costs related to adjustments to estimated legal liabilities and executive severance. | ||||
** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses
| (In Millions) | 2019 | 2020* | 2021 | 2022 | 2023 | 2024 | 2025E | ||||||||||||||||||||||||||||||||||||||||
| GAAP total costs and expenses | $ | 1,845 | $ | 2,037 | $ | 2,209 | $ | 2,488 | $ | 2,839 | $ | 3,291 | $ | 3,563 | |||||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP total costs and expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (182) | (197) | (210) | (270) | (326) | (391) | (466) | ||||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | (53) | (64) | (67) | (60) | (62) | (90) | (98) | ||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | (8) | (23) | (23) | (41) | (56) | (96) | (85) | ||||||||||||||||||||||||||||||||||||||||
| Restructuring | (9) | (9) | 1 | — | (11) | (24) | — | ||||||||||||||||||||||||||||||||||||||||
| Non-qualified deferred compensation (expenses) credits | (5) | (5) | (6) | 8 | (11) | (11) | — | ||||||||||||||||||||||||||||||||||||||||
| Special charges** | (1) | — | (27) | — | — | (11) | — | ||||||||||||||||||||||||||||||||||||||||
| Non-GAAP total costs and expenses*** | $ | 1,587 | $ | 1,739 | $ | 1,877 | $ | 2,125 | $ | 2,373 | $ | 2,667 | $ | 2,914 | |||||||||||||||||||||||||||||||||
Table may not foot due to rounding
| * | Fiscal 2020 was a 53-week year. | ||||
| ** | 2021 includes costs related to a voluntary retirement program. 2024 includes costs related to adjustments to estimated legal liabilities and executive severance. | ||||
| *** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 9 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and Non-GAAP Operating Income Adjusted for Stock-based Compensation
| (In Millions) | 2019 | 2020* | 2021 | 2022 | 2023 | 2024 | 2025E | ||||||||||||||||||||||||||||||||||||||||
GAAP operating income | $ | 492 | $ | 646 | $ | 779 | $ | 1,074 | $ | 1,251 | $ | 1,351 | $ | 1,617 | |||||||||||||||||||||||||||||||||
Reconciling items to non-GAAP operating income | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 182 | 197 | 210 | 270 | 326 | 391 | 466 | ||||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 53 | 64 | 67 | 60 | 62 | 90 | 98 | ||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 8 | 23 | 23 | 41 | 56 | 96 | 85 | ||||||||||||||||||||||||||||||||||||||||
| Restructuring | 9 | 9 | (1) | — | 11 | 24 | — | ||||||||||||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses (credits) | 5 | 5 | 6 | (8) | 11 | 11 | — | ||||||||||||||||||||||||||||||||||||||||
| Special charges** | 1 | — | 27 | — | — | 11 | — | ||||||||||||||||||||||||||||||||||||||||
Non-GAAP operating income*** | $ | 749 | $ | 944 | $ | 1,111 | $ | 1,436 | $ | 1,717 | $ | 1,974 | $ | 2,266 | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (182) | (197) | (210) | (270) | (326) | (391) | $ | (466) | |||||||||||||||||||||||||||||||||||||||
Non-GAAP operating income adjusted for stock-based compensation*** | $ | 567 | $ | 747 | $ | 901 | $ | 1,166 | $ | 1,391 | $ | 1,583 | $ | 1,800 | |||||||||||||||||||||||||||||||||
Table may not foot due to rounding
| * | Fiscal 2020 was a 53-week year. | ||||
| ** | 2021 includes costs related to a voluntary retirement program. 2024 includes costs related to adjustments to estimated legal liabilities and executive severance. | ||||
| *** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 10 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | |||||||||||||||||||||||||||||||
| GAAP gross margin as a percent of total revenue | 90.3% | 87.6% | 86.9% | 86.6% | 83.8% | ||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP gross margin as a percent of total revenue | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.3% | 0.3% | 0.3% | 0.3% | 0.3% | ||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 1.1% | 1.1% | 1.2% | 1.5% | 1.3% | ||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | ||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.0% | 0.1% | 0.1% | 0.2% | 0.1% | ||||||||||||||||||||||||||||||
| Non-GAAP gross margin as a percent of total revenue* | 91.7% | 89.1% | 88.5% | 88.6% | 85.5% | ||||||||||||||||||||||||||||||
| * | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
2020 | 2021 | 2022 | 2023 | 2024 | |||||||||||||||||||||||||||||||
| GAAP gross margin as a percent of total revenue | 88.6% | 89.7% | 89.6% | 89.4% | 86.0% | ||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP gross margin as a percent of total revenue | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.3% | 0.3% | 0.2% | 0.2% | 0.3% | ||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 1.7% | 1.6% | 1.2% | 1.1% | 1.3% | ||||||||||||||||||||||||||||||
| Non-qualified deferred compensation expenses (credits) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | ||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.0% | 0.0% | 0.0% | 0.0% | 0.2% | ||||||||||||||||||||||||||||||
Special charges* | 0.0% | 0.1% | 0.0% | 0.0% | 0.0% | ||||||||||||||||||||||||||||||
Non-GAAP gross margin as a percent of total revenue** | 90.6% | 91.7% | 91.0% | 90.7% | 87.8% | ||||||||||||||||||||||||||||||
| * | 2021 includes costs related to a voluntary retirement program. | ||||
** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 11 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025E | |||||||||||||||||||||||||||||||||||||||
| GAAP operating margin as a percent of total revenue | 31.5% | 24.8% | 27.7% | 28.8% | 33.7% | 27% - 28% | ||||||||||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP operating margin as a percent of total revenue | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 8.1% | 8.7% | 8.3% | 9.0% | 7.9% | 9% | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 1.6% | 1.7% | 1.9% | 2.2% | 2.0% | 2% | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 1.2% | 2.2% | 1.9% | 2.4% | 1.7% | 2% | ||||||||||||||||||||||||||||||||||||||
| Restructuring | (0.1)% | 0.0% | 0.0% | 2.0% | (0.1)% | 0% | ||||||||||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses | 0.6% | 0.4% | 0.2% | 0.4% | 0.0% | 0% | ||||||||||||||||||||||||||||||||||||||
Special charges* | 0.0% | 0.0% | 0.1% | 0.0% | 0.8% | 0% | ||||||||||||||||||||||||||||||||||||||
Non-GAAP operating margin as a percent of total revenue** | 42.9% | 37.8% | 40.1% | 44.8% | 46.0% | 40% - 41% | ||||||||||||||||||||||||||||||||||||||
| * | Q4 2024 includes costs related to adjustments to estimated legal liabilities and executive severance. | ||||
** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025E | ||||||||||||||||||||||||||||||||||||||||||||
| GAAP operating margin as a percent of total revenue | 21.1% | 24.1% | 26.1% | 30.1% | 30.6% | 29.1% | 30.25% - 31.25% | |||||||||||||||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP operating margin as a percent of total revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 7.8% | 7.4% | 7.0% | 7.6% | 8.0% | 8.4% | 9% | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 2.3% | 2.4% | 2.2% | 1.7% | 1.5% | 2.0% | 2% | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.3% | 0.8% | 0.8% | 1.1% | 1.4% | 2.1% | 2% | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring | 0.4% | 0.3% | 0.0% | 0.0% | 0.3% | 0.5% | 0% | |||||||||||||||||||||||||||||||||||||||||||
| Non-qualified deferred compensation expenses (credits) | 0.2% | 0.2% | 0.2% | (0.2)% | 0.2% | 0.2% | 0% | |||||||||||||||||||||||||||||||||||||||||||
Special charges* | 0.0% | 0.0% | 0.9% | 0.0% | 0.0% | 0.2% | 0% | |||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin as a percent of total revenue** | 32.1% | 35.2% | 37.2% | 40.3% | 42.0% | 42.5% | 43.25% - 44.25% | |||||||||||||||||||||||||||||||||||||||||||
| * | 2021 includes costs related to a voluntary retirement program. 2024 includes costs related to adjustments to estimated legal liabilities and executive severance. | ||||
| ** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 12 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
| (In Thousands, Except Per Share Data) | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025E | ||||||||||||||||||||||||||||||||||||||
| Diluted net income per share on a GAAP basis | $ | 1.19 | $ | 0.91 | $ | 0.84 | $ | 0.87 | $ | 1.24 | $0.93 - $0.99 | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.32 | 0.32 | 0.32 | 0.40 | 0.39 | 0.40 | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 0.06 | 0.06 | 0.07 | 0.10 | 0.10 | 0.09 | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.04 | 0.08 | 0.08 | 0.11 | 0.08 | 0.08 | ||||||||||||||||||||||||||||||||||||||
| Restructuring | — | — | — | 0.09 | — | — | ||||||||||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses | 0.02 | 0.02 | 0.01 | 0.01 | — | — | ||||||||||||||||||||||||||||||||||||||
Special charges* | — | — | — | — | 0.04 | — | ||||||||||||||||||||||||||||||||||||||
| Other income or expense related to investments and non-qualified deferred compensation plan assets** | (0.10) | (0.22) | (0.10) | 0.04 | 0.05 | — | ||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments | (0.15) | — | 0.06 | 0.02 | (0.02) | (0.04) | ||||||||||||||||||||||||||||||||||||||
Diluted net income per share on a non-GAAP basis*** | $ | 1.38 | $ | 1.17 | $ | 1.28 | $ | 1.64 | $ | 1.88 | $1.46 - $1.52 | |||||||||||||||||||||||||||||||||
| Shares used in calculation of diluted net income per share | 272,419 | 273,544 | 273,520 | 273,958 | 274,292 | |||||||||||||||||||||||||||||||||||||||
| * | Q4 2024 includes costs related to adjustments to estimated legal liabilities and executive severance. | ||||
| ** | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. | ||||
*** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 13 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
| (In Thousands, Except Per Share Data) | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025E | ||||||||||||||||||||||||||||||||||||||||
| Diluted net income per share on a GAAP basis | $ | 3.53 | $ | 2.11 | $ | 2.50 | $ | 3.09 | $ | 3.82 | $ | 3.85 | $4.19 - $4.29 | ||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.65 | 0.71 | 0.75 | 0.98 | 1.19 | 1.43 | 1.69 | ||||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 0.19 | 0.23 | 0.24 | 0.22 | 0.23 | 0.33 | 0.36 | ||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.03 | 0.08 | 0.08 | 0.15 | 0.21 | 0.35 | 0.31 | ||||||||||||||||||||||||||||||||||||||||
| Restructuring | 0.03 | 0.03 | — | — | 0.04 | 0.09 | — | ||||||||||||||||||||||||||||||||||||||||
| Non-qualified deferred compensation expenses (credits) | 0.02 | 0.02 | 0.02 | (0.03) | 0.04 | 0.04 | — | ||||||||||||||||||||||||||||||||||||||||
Special charges* | — | — | 0.10 | — | — | 0.04 | — | ||||||||||||||||||||||||||||||||||||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets** | (0.01) | — | (0.03) | 0.05 | (0.17) | (0.22) | — | ||||||||||||||||||||||||||||||||||||||||
| Income tax benefit related to intercompany transfers of certain intellectual property rights | (2.05) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments | (0.19) | (0.38) | (0.37) | (0.19) | (0.21) | 0.06 | 0.10 | ||||||||||||||||||||||||||||||||||||||||
Diluted net income per share on a non-GAAP basis*** | $ | 2.20 | $ | 2.80 | $ | 3.29 | $ | 4.27 | $ | 5.15 | $ | 5.97 | $6.65 - $6.75 | ||||||||||||||||||||||||||||||||||
| Shares used in calculation of diluted net income per share | 280,515 | 279,641 | 278,858 | 275,011 | 272,748 | 273,833 | 274 - 276M | ||||||||||||||||||||||||||||||||||||||||
| * | 2021 includes costs related to a voluntary retirement program. 2024 includes costs related to adjustments to estimated legal liabilities and executive severance. | ||||
| ** | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. | ||||
| *** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 14 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense
| (In Millions) | FY 2023 | FY 2024 | FY 2025E | |||||||||||||||||||||||
| GAAP total other income and expense | $ | 31 | $ | 45 | $(53) - $(67) | |||||||||||||||||||||
| Reconciling items to non-GAAP total income and expense | ||||||||||||||||||||||||||
Other income or expense related to investments and non-qualified deferred compensation plan assets* | (46) | (61) | — | |||||||||||||||||||||||
Non-GAAP total other income and expense** | $ | (15) | $ | (16) | $(53) - $(67) | |||||||||||||||||||||
| * | Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense. | ||||
| ** | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
| February 18, 2025 | Cadence Q4 and Fiscal Year 2024 Financial Results | 15 | ||||||