Cadence Design Systems (CDNS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $1.061 billion, up 9% year-over-year, driven by strong demand in AI, hyperscale, and automotive sectors, with a robust $6B backlog.

• GAAP operating margin was 28% (down from 31% YoY); non-GAAP operating margin was 40% (down from 42% YoY).

• GAAP EPS was $0.84, non-GAAP EPS $1.28; net income for Q2 was $229.5 million.

• Completed the acquisition of BETA CAE for $1.14B, expanding multiphysics and automotive offerings; Invecas acquired for $71.5M.

• Updated 2024 revenue guidance to over 13% year-over-year growth, reflecting strong customer R&D spend in AI-driven automation.

Financial highlights

• Product and maintenance revenue for Q2 was $961 million; services revenue was $100 million, with recurring revenue at 85%–88%.

• Q2 GAAP gross margin was 86.9%; non-GAAP gross margin was 88.5%.

• Operating cash flow for Q2 was $156 million; free cash flow was $127 million.

• Cash and cash equivalents at quarter end were $1.059 billion; principal value of debt $1.35 billion.

• Used $125 million to repurchase shares in Q2; $1.1B remains under repurchase authorization.

Outlook and guidance

• FY 2024 revenue expected between $4.6B–$4.66B, with GAAP operating margin 29.7%–31.3% and non-GAAP 41.7%–43.3%.

• FY 2024 GAAP EPS guidance is $3.82–$4.02; non-GAAP EPS is $5.77–$5.97; operating cash flow $1B–$1.2B.

• Q3 2024 revenue guidance: $1.165B–$1.195B; GAAP EPS $0.83–$0.93; non-GAAP EPS $1.39–$1.49.

• Plan to use ~50% of annual free cash flow for share repurchases.

• Fiscal 2024 effective tax rate expected to be approximately 25.1%.