Cadence Reports Fourth Quarter, Fiscal Year 2020 Financial Results

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Cadence Design Systems, Inc. has announced results for the fourth quarter and fiscal year 2020.

Cadence reported 2020 revenue of $2.683 billion, compared to revenue of $2.336 billion for 2019. On a GAAP basis, Cadence achieved operating margin of 24 percent and recognized net income of $591 million, or $2.11 per share on a diluted basis, in 2020, compared to operating margin of 21 percent and net income of $989 million, or $3.53 per share on a diluted basis for 2019. Revenue for the fourth quarter of 2020 totaled $760 million, compared to revenue of $600 million for the same period in 2019. Cadence achieved operating margin of 24 percent and recognized net income of $174 million, or $0.62 per share on a diluted basis, in the fourth quarter of 2020, compared to operating margin of 18 percent and net income of $660 million, or $2.36 per share on a diluted basis, for the same period in 2019. 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 2020 was 35 percent and net income was $782 million, or $2.80 per share on a diluted basis, compared to operating margin of 32 percent and net income of $618 million, or $2.20 per share on a diluted basis, for 2019. For the fourth quarter of 2020, operating margin was 37 percent and net income was $234 million, or $0.83 per share on a diluted basis, compared to operating margin of 31 percent and net income of $152 million, or $0.54 per share on a diluted basis, for the same period in 2019. 

“I am very pleased that against the backdrop of an unprecedented year, Cadence delivered outstanding results for 2020, driven by our highly innovative solutions and strong execution,” said Lip-Bu Tan, chief executive officer. “Generational industry drivers continue to fuel robust design activity and I am especially excited by the momentum in our system design and analysis segment as we further our Intelligent System Design strategy with the pending acquisition of NUMECA.”

“Many unique factors contributed to Cadence’s solid 2020 results of 15% revenue growth, 35% non-GAAP operating margin and over $900 million of operating cash flow. I am pleased that we can follow-up on 2020 with a strong outlook for 2021,” said John Wall, senior vice president and chief financial officer.

Business Outlook

For the first quarter of 2021, the company expects total revenue in the range of $710 million to $730 million. First quarter GAAP operating margin is expected to be approximately 25 percent and GAAP net income per diluted share is expected to be in the range of $0.55 to $0.59. Using the non-GAAP measure defined below, operating margin is expected to be approximately 35 percent and net income per diluted share is expected to be in the range of $0.72 to $0.76.

For 2021, the company expects total revenue in the range of $2.86 billion to $2.92 billion. On a GAAP basis, operating margin is expected to be in the range of 24.5 percent to 26 percent and GAAP net income per diluted share for 2021 is expected to be in the range of $2.09 to $2.19. Using the non-GAAP measure defined below, operating margin for 2021 is expected to be in the range of 34.5 percent to 36 percent and net income per diluted share for 2021 is expected to be in the range of $2.95 to $3.05.

Our fiscal years are 52- or 53-week periods ending on the Saturday closest to December 31. Fiscal 2020 was a 53-week fiscal year, with an additional week in our fourth quarter of 2020. Fiscal 2019 was a 52-week fiscal year and fiscal 2021 will be a 52-week fiscal year.