Cadence Reports Fourth Quarter and Fiscal Year 2019 Financial Results

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Cadence Design Systems, Inc. today announced results for the fourth quarter and fiscal year 2019.

Cadence reported 2019 revenue of $2.336 billion, compared to revenue of $2.138 billion for 2018. On a GAAP basis, Cadence achieved operating margin of 21% and recognized net income of $989 million, or $3.53 per share on a diluted basis, in 2019, compared to operating margin of 19% and net income of $346 million, or $1.23 per share on a diluted basis for 2018. Revenue for the fourth quarter of 2019 totaled $600 million, compared to revenue of $570 million for the same period in 2018. Cadence achieved operating margin of 18% and recognized net income of $660 million, or $2.36 per share on a diluted basis, in the fourth quarter of 2019, compared to operating margin of 20% and net income of $98 million, or $0.35 per share on a diluted basis, for the same period in 2018. GAAP net income for the fourth quarter of 2019 and fiscal 2019 included a one-time non-cash tax benefit of $576 million related to intercompany transfers of certain intellectual property rights to Cadence's Irish subsidiary.

Using the non-GAAP measure defined below, operating margin for 2019 was 32% and net income was $618 million, or $2.20 per share on a diluted basis, compared to operating margin of 30% and net income of $526 million, or $1.87 per share on a diluted basis, for 2018. For the fourth quarter of 2019, operating margin was 31% and net income was $152 million, or $0.54 per share on a diluted basis, compared to operating margin of 31% and net income of $147 million, or $0.52 per share on a diluted basis, for the same period in 2018.

“Generational trends such as 5G, AI and hyperscale computing are driving strong design activity and our Intelligent System Design strategy has us very well positioned to maximize the resulting opportunities,” said Lip-Bu Tan, chief executive officer. “We introduced seven significant new products, including two in the System Analysis space, and coupled with strong execution, drove 9% revenue growth and 32% non-GAAP operating margin in 2019, and I look forward to driving further customer and shareholder success this year.”

“We are pleased with our performance in Q4 and for the full year,” said John Wall, senior vice president and chief financial officer. “Thanks to the efforts of the entire Cadence team, we achieved broad based strength across all of our businesses and look forward to building upon our success in 2020.”

CFO Commentary

Commentary on the fourth quarter and fiscal year 2019 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.

Business Outlook

For the first quarter of 2020, the company expects total revenue in the range of $610 million to $620 million. First quarter GAAP operating margin is expected to be approximately 19% and GAAP net income per diluted share is expected to be in the range of $0.32 to $0.34. Using the non-GAAP measure defined below, operating margin is expected to be approximately 30% and net income per diluted share is expected to be in the range of $0.53 to $0.55.

For 2020, the company expects total revenue in the range of $2.545 billion to $2.585 billion. On a GAAP basis, operating margin is expected to be in the range of 21% to 22% and net income per diluted share for 2020 is expected to be in the range of $1.46 to $1.56. Using the non-GAAP measure defined below, operating margin for 2020 is expected to be in the range of 32% to 33% and net income per diluted share for 2020 is expected to be in the range of $2.40 to $2.50.

A schedule showing a reconciliation of the business outlook from GAAP operating margin, GAAP net income and diluted net income per share to non-GAAP operating margin and non-GAAP net income and diluted net income per share is included in this release.

Audio Webcast Scheduled

Lip-Bu Tan, chief executive officer, and John Wall, senior vice president and chief financial officer, will host the fourth quarter and fiscal year 2019 financial results audio webcast today, February 12, 2020, 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 12, 2020 at 5 p.m. (Pacific) and ending March 13, 2020 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.