Cadence Reports Q4, Fiscal Year 2024 Financial Results

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Cadence Design Systems, Inc. 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.