Cadence Reports Q2 2024 Financial Results

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Cadence Design Systems, Inc. announced results for the second quarter of 2024.

Second Quarter 2024 Financial Results:

• Revenue of $1.061 billion, compared to revenue of $977 million in Q2 2023
• GAAP operating margin of 28%, compared to 31% in Q2 2023
• Non-GAAP operating margin of 40%, compared to 42% in Q2 2023
• GAAP diluted net income per share of $0.84, compared to $0.81 in Q2 2023
• Non-GAAP diluted net income per share of $1.28, compared to $1.22 in Q2 2023
• Quarter-end backlog was $6.0 billion and current remaining performance obligations ("cRPO"), contract revenue expected to be recognized as revenue in the next 12 months, was $3.1 billion.

“Cadence delivered strong results for the second quarter of 2024, with robust demand for our cutting-edge technologies from AI, hyperscale, and automotive customers,” said Anirudh Devgan, president and chief executive officer. “I'm pleased with the strong momentum of our Cadence.AI portfolio and our next generation Z3 / X3 hardware systems, and am excited about the growing demand for our industry leading products from an expanding foundry ecosystem.”

“I am pleased with our strong Q2 results. We exceeded our outlook on all key financial metrics, closing Q2 with backlog of approximately $6 billion,” said John Wall, senior vice president and chief financial officer. “A good finish to the first half of the year, combined with ongoing demand for our solutions, sets us up for strong growth in the second half of 2024.”

Business Outlook

For fiscal year 2024, the company expects:

• Revenue in the range of $4.60 billion to $4.66 billion
• GAAP operating margin in the range of 29.7% to 31.3%
• Non-GAAP operating margin in the range of 41.7% to 43.3%
• GAAP diluted net income per share in the range of $3.82 to $4.02
• Non-GAAP diluted net income per share in the range of $5.77 to $5.97

For the third quarter of 2024, the company expects:

• Revenue in the range of $1.165 billion to $1.195 billion
• GAAP operating margin in the range of 27.7% to 29.3%
• Non-GAAP operating margin in the range of 40.7% to 42.3%
• GAAP diluted net income per share in the range of $0.83 to $0.93
• Non-GAAP diluted net income per share in the range of $1.39 to $1.49

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

• Cadence.AI portfolio continues to gain momentum, offering unparalleled chip-to-systems design capabilities that empower our customers to achieve exceptional quality of results and productivity benefits
• IP business continued its strong momentum with AI, 3D-IC and HPC applications fueling demand for our IP titles at the most advanced nodes
• Major long-term development partner broadly deployed Palladium Z3 to deliver to its next generation AI product roadmap, further solidifying Cadence’s leadership in verification
• Closed BETA CAE acquisition and we now offer a comprehensive multiphysics platform covering electromagnetics, electrothermal, CFD and structural analysis solutions