Cadence Design Systems (CDNS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $1.22 billion, up 19% year-over-year, driven by growth in software, IP, services, and hardware systems, with strong performance in System Design & Analysis and IP businesses.

• Non-GAAP operating margin was 45%, up from 41% in Q3 2023; GAAP operating margin held steady at 29%.

• Non-GAAP EPS was $1.64, up from $1.26 in Q3 2023; GAAP EPS was $0.87.

• Major acquisitions included BETA CAE ($1.14B) and Invecas ($71.2M), expanding system analysis and design services.

• Expanded partnerships with NVIDIA, Arm, and TSMC, and launched new AI-enabled solutions and platforms.

Financial highlights

• Q3 2024 revenue was $1.22 billion, up 19% year-over-year; product and maintenance revenue grew 14% to $1.10B, services revenue more than doubled to $115.1M.

• GAAP operating margin was 29%; non-GAAP operating margin was 45%.

• GAAP EPS was $0.87; non-GAAP EPS was $1.64.

• Operating cash flow for Q3 was $410 million; cash and cash equivalents at quarter-end were $2.79 billion.

• $150 million used for share repurchases in Q3.

Outlook and guidance

• FY 2024 revenue expected between $4.61 billion and $4.65 billion, up 13–14% year-over-year.

• FY 2024 GAAP operating margin projected at 29–30%; non-GAAP at 42–43%.

• FY 2024 GAAP EPS guidance: $3.70–$3.76; non-GAAP EPS: $5.87–$5.93.

• Q4 2024 revenue guidance is $1.325–$1.365 billion; non-GAAP EPS $1.78–$1.84.

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