Cadence Reports Fourth Quarter and Fiscal Year 2024 Financial Results

Record Backlog of $6.8 Billion

Exceeded Q4 and 2024 Outlook for Revenue and EPS

Cadence Reports Fourth Quarter and Fiscal Year 2024 Financial Results

For more information, please contact:

Cadence Investor Relations
408-944-7100
investor_relations@cadence.com

Cadence Newsroom
408-944-7039
newsroom@cadence.com

Cadence Design Systems, Inc. (Nasdaq: CDNS) today announced results for the fourth quarter and fiscal year 2024.

Fourth Quarter 2024 Financial Results

Revenue of $1.356 billion, compared to revenue of $1.069 billion in Q4 2023
GAAP operating margin of 33.7%, compared to 31.5% in Q4 2023
Non-GAAP operating margin of 46.0%, compared to 42.9% in Q4 2023
GAAP diluted net income per share of $1.24, compared to $1.19 in Q4 2023
Non-GAAP diluted net income per share of $1.88, compared to $1.38 in Q4 2023

Fiscal Year 2024 Financial Results

Revenue of $4.641 billion, compared to revenue of $4.090 billion in 2023
GAAP operating margin of 29.1%, compared to 30.6% in 2023
Non-GAAP operating margin of 42.5%, compared to 42.0% in 2023
GAAP diluted net income per share of $3.85, compared to $3.82 in 2023
Non-GAAP diluted net income per share of $5.97, compared to $5.15 in 2023
Year-end backlog was $6.8 billion and current remaining performance obligations ("cRPO"), contract revenue expected to be recognized as revenue in the next 12 months, was $3.4 billion

“Cadence delivered exceptional results in the fourth quarter, capping off a strong 2024 with 13.5% revenue growth and 42.5% non-GAAP operating margin for the year,” said Anirudh Devgan, president and chief executive officer. “Our momentum continues to build as we exited 2024 with record bookings and record backlog. Cadence is very well positioned to benefit from the various phases of AI, including the current AI infrastructure buildout, applying AI to our own products, and expanding into new markets such as life sciences.”

“We had a strong finish to 2024, driven by broad based strength across all our businesses,” said John Wall, senior vice president and chief financial officer. “I’m pleased with our record year-end backlog of $6.8 billion and cRPO of $3.4 billion, and I look forward to building on that strength in 2025.”

CFO Commentary

Commentary on the fourth quarter and fiscal year 2024 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.

Business Outlook

For fiscal year 2025, the company expects:

Revenue in the range of $5.14 billion to $5.22 billion
GAAP operating margin in the range of 30.25% to 31.25%
Non-GAAP operating margin in the range of 43.25% to 44.25%
GAAP diluted net income per share in the range of $4.19 to $4.29
Non-GAAP diluted net income per share in the range of $6.65 to $6.75

The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company’s geographic earnings mix, or other changes to the company’s strategy or business operations. The company expects to use the current normalized non-GAAP tax rate through fiscal 2025 but will re-evaluate this rate periodically for significant items that may materially affect its projections.

Reconciliations of the financial results and business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, are included in this press release.

Business Highlights

The Cadence.ai portfolio continued to gain momentum with market shaping customers, as Cadence's AI-driven optimization products including Cadence Cerebrus, Verisium SimAI and Allegro X AI are proliferating at scale. Additionally, Cadence's LLM based Design Agents powered by JedAI data platform, are showing promising results in early engagements.
System Design & Analysis achieved strong results with over 40% growth in 2024 driven by Cadence's multi-physics analysis platform and AI-driven optimization, which delivered superior results to a rapidly expanding customer base across multiple verticals, especially Aerospace & Defense and Automotive.
Cadence's IP business grew 28% year over year in Q4 as Cadence's AI HPC protocols including Cadence's flagship HBM, DDR, PCIe and UCIe solutions continued propelling Cadence's business with significant expansions and competitive displacements at top tier customers.
Core EDA, which comprises of Cadence's digital, custom/analog and verification portfolios grew 15% year over year in Q4.
The hardware business, consisting of the Palladium Z3 and Protium X3, delivered another record year, with Q4 being the best quarter ever.

Audio Webcast Scheduled

Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the fourth quarter and fiscal year 2024 financial results audio webcast today, February 18, 2025, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting February 18, 2025 at 5 p.m. (Pacific) and ending March 17, 2025 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.

About Cadence

Cadence is a pivotal leader in electronic systems design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world’s most innovative companies, delivering extraordinary electronic products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For 10 years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For. Learn more at www.cadence.com.

© 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.

This press release 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 press release are based on management's expectations as of the date of this press release 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 generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.

To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, investment gains or losses, income or expenses related to Cadence’s non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.

Cadence 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 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 management, including forecasting and budgeting.

The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:

Operating Margin Reconciliation	Three Months Ended
	December 31, 2024		December 31, 2023
	(unaudited)
GAAP operating margin as a percent of total revenue	33.7	%	31.5	%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense	7.9	%	8.1	%
Amortization of acquired intangibles	2.0	%	1.6	%
Acquisition and integration-related costs	1.7	%	1.2	%
Restructuring	(0.1	)%	(0.1	)%
Non-qualified deferred compensation expenses	0.0	%	0.6	%
Special charges*	0.8	%	0.0	%
Non-GAAP operating margin as a percent of total revenue	46.0	%	42.9	%

Includes costs related to adjustments to estimated legal liabilities and executive severance.

Operating Margin Reconciliation	Years Ended
	December 31, 2024		December 31, 2023
	(unaudited)
GAAP operating margin as a percent of total revenue	29.1	%	30.6	%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense	8.4	%	8.0	%
Amortization of acquired intangibles	2.0	%	1.5	%
Acquisition and integration-related costs	2.1	%	1.4	%
Restructuring	0.5	%	0.3	%
Non-qualified deferred compensation expenses	0.2	%	0.2	%
Special charges*	0.2	%	0.0	%
Non-GAAP operating margin as a percent of total revenue	42.5	%	42.0	%

Includes costs related to adjustments to estimated legal liabilities and executive severance.

Net Income Reconciliation	Three Months Ended
	December 31, 2024			December 31, 2023
(in thousands)	(unaudited)
Net income on a GAAP basis	$	340,210		$	323,899
Stock-based compensation expense		106,508			86,683
Amortization of acquired intangibles		26,776			16,920
Acquisition and integration-related costs		23,477			12,583
Restructuring		(1,020	)		(569	)
Non-qualified deferred compensation expenses		293			6,295
Special charges*		10,224			—
Other income or expense related to investments and non-qualified deferred compensation plan assets**		14,654			(27,966	)
Income tax effect of non-GAAP adjustments		(5,456	)		(41,638	)
Net income on a non-GAAP basis	$	515,666		$	376,207

*		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.

Net Income Reconciliation	Years Ended
	December 31, 2024			December 31, 2023
(in thousands)	(unaudited)
Net income on a GAAP basis	$	1,055,484		$	1,041,144
Stock-based compensation expense		391,219			325,611
Amortization of acquired intangibles		90,449			61,970
Acquisition and integration-related costs		95,562			56,542
Restructuring		23,765			11,013
Non-qualified deferred compensation expenses		11,145			10,851
Special charges*		11,457			—
Other income or expense related to investments and non-qualified deferred compensation plan assets**		(60,798	)		(45,502	)
Income tax effect of non-GAAP adjustments		17,162			(57,139	)
Net income on a non-GAAP basis	$	1,635,445		$	1,404,490

*		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.

Diluted Net Income Per Share Reconciliation	Three Months Ended
	December 31, 2024			December 31, 2023
(in thousands, except per share data)	(unaudited)
Diluted net income per share on a GAAP basis	$	1.24		$	1.19
Stock-based compensation expense		0.39			0.32
Amortization of acquired intangibles		0.10			0.06
Acquisition and integration-related costs		0.08			0.04
Restructuring		—			—
Non-qualified deferred compensation expenses		—			0.02
Special charges*		0.04			—
Other income or expense related to investments and non-qualified deferred compensation plan assets**		0.05			(0.10	)
Income tax effect of non-GAAP adjustments		(0.02	)		(0.15	)
Diluted net income per share on a non-GAAP basis	$	1.88		$	1.38
Shares used in calculation of diluted net income per share		274,292			272,419

*		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.

Diluted Net Income Per Share Reconciliation	Years Ended
	December 31, 2024			December 31, 2023
(in thousands, except per share data)	(unaudited)
Diluted net income per share on a GAAP basis	$	3.85		$	3.82
Stock-based compensation expense		1.43			1.19
Amortization of acquired intangibles		0.33			0.23
Acquisition and integration-related costs		0.35			0.21
Restructuring		0.09			0.04
Non-qualified deferred compensation expenses		0.04			0.04
Special charges*		0.04			—
Other income or expense related to investments and non-qualified deferred compensation plan assets**		(0.22	)		(0.17	)
Income tax effect of non-GAAP adjustments		0.06			(0.21	)
Diluted net income per share on a non-GAAP basis	$	5.97		$	5.15
Shares used in calculation of diluted net income per share		273,833			272,748

*		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.

Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
December 31, 2024 and December 31, 2023
(In thousands)
(Unaudited)

	December 31, 2024		December 31, 2023

Current assets:
Cash and cash equivalents	$	2,644,030	$	1,008,152
Receivables, net		680,460		489,224
Inventories		257,711		181,661
Prepaid expenses and other		433,878		297,180
Total current assets		4,016,079		1,976,217

Property, plant and equipment, net		458,200		403,213
Goodwill		2,378,671		1,535,845
Acquired intangibles, net		594,734		336,843
Deferred taxes		982,057		880,001
Other assets		544,741		537,372
Total assets	$	8,974,482	$	5,669,491

Current liabilities:
Current portion of long-term debt	$	-	$	349,285
Accounts payable and accrued liabilities		632,692		576,558
Current portion of deferred revenue		737,413		665,024
Total current liabilities		1,370,105		1,590,867

Long-term liabilities:
Long-term portion of deferred revenue		115,168		98,931
Long-term debt		2,476,183		299,771
Other long-term liabilities		339,448		275,651
Total long-term liabilities		2,930,799		674,353

Stockholders' equity		4,673,578		3,404,271
Total liabilities and stockholders' equity	$	8,974,482	$	5,669,491

Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months and Years Ended December 31, 2024 and December 31, 2023
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Years Ended
	December 31, 2024			December 31, 2023			December 31, 2024			December 31, 2023

Revenue:
Product and maintenance	$	1,239,287		$	981,987		$	4,213,509		$	3,834,359
Services		116,694			86,636			427,755			255,627

Total revenue		1,355,981			1,068,623			4,641,264			4,089,986

Costs and expenses:
Cost of product and maintenance		157,249			71,491			436,600			331,760
Cost of services		62,742			32,639			210,902			103,281
Marketing and sales		200,406			180,368			757,483			690,319
Research and development		392,026			367,443			1,549,093			1,441,796
General and administrative		78,550			75,742			282,283			242,430
Amortization of acquired intangibles		9,153			4,981			30,375			18,162
Restructuring		(1,020	)		(569	)		23,765			11,013

Total costs and expenses		899,106			732,095			3,290,501			2,838,761

Income from operations		456,875			336,528			1,350,763			1,251,225

Interest expense		(29,907	)		(8,989	)		(75,999	)		(36,185	)
Other income, net		9,684			34,523			121,055			66,886

Income before provision for income taxes		436,652			362,062			1,395,819			1,281,926

Provision for income taxes		96,442			38,163			340,335			240,782

Net income	$	340,210		$	323,899		$	1,055,484		$	1,041,144


Net income per share - basic	$	1.25		$	1.20		$	3.89		$	3.86

Net income per share - diluted	$	1.24		$	1.19		$	3.85		$	3.82

Weighted average common shares outstanding - basic		272,069			269,088			271,212			269,381

Weighted average common shares outstanding - diluted		274,292			272,419			273,833			272,748

Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024 and December 31, 2023
(In thousands)
(Unaudited)


	Years Ended
	December 31,			December 31,
	2024			2023

Cash and cash equivalents at beginning of year	$	1,008,152		$	882,325
Cash flows from operating activities:
Net income		1,055,484			1,041,144
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		196,935			145,292
Amortization of debt discount and fees		3,473			1,262
Stock-based compensation		391,219			325,611
Gain on investments, net		(49,593	)		(34,602	)
Deferred income taxes		(128,737	)		(36,512	)
Provisions for losses on receivables		2,078			3,325
ROU asset amortization and change in operating lease liabilities		(1,920	)		451
Other non-cash items		587			1,983
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables		(180,287	)		(11,748	)
Inventories		(82,771	)		(65,895	)
Prepaid expenses and other		(81,529	)		39,015
Other assets		11,866			(45,784	)
Accounts payable and accrued liabilities		33,676			5,415
Deferred revenue		66,478			(21,583	)
Other long-term liabilities		23,592			1,802
Net cash provided by operating activities		1,260,551			1,349,176

Cash flows from investing activities:
Purchases of investments		(4,982	)		(176,170	)
Proceeds from the sale and maturity of investments		47,980			64,775
Purchases of property, plant and equipment		(142,542	)		(102,337	)
Purchases of intangible assets		-			(166	)
Cash paid in business combinations, net of cash acquired		(737,574	)		(198,351	)
Net cash used for investing activities		(837,118	)		(412,249	)

Cash flows from financing activities:
Proceeds from revolving credit facility		-			50,000
Payments on revolving credit facility		-			(150,000	)
Proceeds from issuance of debt		3,196,595			-
Payments of debt		(1,350,000	)		-
Payments of debt issuance costs		(23,828	)		-
Proceeds from issuance of common stock		204,237			132,957
Stock received for payment of employee taxes on vesting of restricted stock		(237,737	)		(136,396	)
Payments for repurchases of common stock		(550,026	)		(700,134	)
Net cash provided by (used for) financing activities		1,239,241			(803,573	)

Effect of exchange rate changes on cash and cash equivalents		(26,796	)		(7,527	)

Increase in cash and cash equivalents		1,635,878			125,827

Cash and cash equivalents at end of year	$	2,644,030		$	1,008,152

Cadence Design Systems, Inc.
(Unaudited)

Revenue Mix by Geography (% of Total Revenue)
	2023										2024
GEOGRAPHY	Q1		Q2		Q3		Q4		Year		Q1		Q2		Q3		Q4		Year

Americas	44	%	41	%	43	%	44	%	43	%	46	%	49	%	50	%	49	%	49	%
China	17	%	18	%	17	%	15	%	17	%	12	%	12	%	13	%	13	%	12	%
Other Asia	18	%	18	%	19	%	19	%	19	%	20	%	19	%	17	%	17	%	18	%
Europe, Middle East and Africa	15	%	17	%	15	%	16	%	16	%	17	%	14	%	14	%	15	%	15	%
Japan	6	%	6	%	6	%	6	%	5	%	5	%	6	%	6	%	6	%	6	%
Total	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%


Revenue Mix by Product Category (% of Total Revenue)
	2023										2024
PRODUCT CATEGORY	Q1		Q2		Q3		Q4		Year		Q1		Q2		Q3		Q4		Year

Core EDA	77	%	76	%	76	%	75	%	76	%	76	%	73	%	70	%	68	%	71	%
IP	11	%	11	%	11	%	13	%	12	%	12	%	13	%	14	%	13	%	13	%
System Design and Analysis	12	%	13	%	13	%	12	%	12	%	12	%	14	%	16	%	19	%	16	%
Total	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%

Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of February 18, 2025
(Unaudited)

	Three Months Ending	Year Ending
	March 31, 2025	December 31, 2025
	Forecast	Forecast

GAAP operating margin as a percent of total revenue	27% - 28%	30.25% - 31.25%

Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense	9%	9%
Amortization of acquired intangibles	2%	2%
Acquisition and integration-related costs	2%	2%

Non-GAAP operating margin as a percent of total revenue†	40% - 41%	43.25% - 44.25%

†

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.

Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of February 18, 2025
(Unaudited)

	Three Months Ending	Year Ending
	March 31, 2025	December 31, 2025
	Forecast	Forecast

Diluted net income per share on a GAAP basis	$0.93 to $0.99	$4.19 to $4.29

Stock-based compensation expense	0.40	1.69
Amortization of acquired intangibles	0.09	0.36
Acquisition and integration-related costs	0.08	0.31
Income tax effect of non-GAAP adjustments	(0.04)	0.10

Diluted net income per share on a non-GAAP basis†	$1.46 to $1.52	$6.65 to $6.75

†

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.

Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of February 18, 2025
(Unaudited)

	Three Months Ending	Year Ending
	March 31, 2025	December 31, 2025
($ in millions)	Forecast	Forecast

Net income on a GAAP basis	$256 to $273	$1,151 to $1,179

Stock-based compensation expense	109	466
Amortization of acquired intangibles	25	98
Acquisition and integration-related costs	23	85
Income tax effect of non-GAAP adjustments	(11)	28

Net income on a non-GAAP basis†	$402 to $419	$1,828 to $1,856

†

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.

CDNS–IR
Category: Financial, Featured