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, system design, and services, exceeding guidance.

• Non-GAAP operating margin was 45%, GAAP operating margin held steady at 29%.

• Non-GAAP EPS was $1.64, GAAP EPS was $0.87; net income for Q3 2024 was $238.1 million, down from $254.3 million in Q3 2023.

• 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

• Product and maintenance revenue grew 14% year-over-year to $1.10B in Q3; services revenue more than doubled to $115.1M.

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

• Q3 recurring revenue was 82% of total, with backlog at $5.6 billion.

• Interest expense increased to $24.5M in Q3 2024 due to higher debt levels.

• $150 million used for share repurchases in Q3.

Outlook and guidance

• FY 2024 revenue expected between $4.61–$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.