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 robust bookings and a $6 billion backlog.

• GAAP diluted EPS was $0.84 (up from $0.81), and non-GAAP EPS was $1.28; net income for Q2 was $229.5 million.

• Completed the acquisition of BETA CAE for $1.14B, expanding the multiphysics platform and strengthening the automotive and system analysis portfolio.

• Continued momentum in AI-driven automation, hyperscale computing, 5G, and automotive verticals, with significant customer wins and expanded partnerships.

• Acquired Invecas for $71.5M, expanding design engineering and embedded software capabilities.

Financial highlights

• Q2 2024 GAAP operating margin was 28% (down from 31% in Q2 2023); non-GAAP operating margin was 40%–40.1%.

• Product and maintenance revenue grew 4% year-over-year to $960.5 million; services revenue rose 86% to $100.2 million.

• Operating cash flow for Q2 was $156 million; cash and cash equivalents at quarter end were $1.06 billion.

• Debt outstanding at quarter end was $1.35 billion.

• Used $125 million to repurchase shares in Q2; $250 million repurchased in H1 2024.

Outlook and guidance

• FY2024 revenue guidance raised to $4.60–$4.66 billion, representing 13% year-over-year growth.

• FY2024 GAAP operating margin expected at 29.7%–31.3%; non-GAAP at 41.7%–43.3%.

• FY2024 GAAP EPS expected at $3.82–$4.02; non-GAAP EPS at $5.77–$5.97; operating cash flow projected at $1.0–$1.2 billion.

• Q3 2024 revenue expected at $1.165–$1.195 billion; GAAP EPS $0.83–$0.93; non-GAAP EPS $1.39–$1.49.

• Approximately 50% of annual free cash flow to be used for share repurchases.