Cadence Design Systems (CDNS) Q4 2023 earnings summary

Executive summary

• FY2023 revenue rose to $4.090B from $3.562B, with growth across all five product categories; net income reached $1.041B and diluted EPS was $3.82.

• Growth reflected demand for software and emulation/prototyping hardware, alongside continued R&D and technical sales investment; acquisition-related expenses exceeded acquired revenue.

Financial highlights

• Revenue increased $528.3M YoY: product and maintenance $3.834B; services $255.6M.

• Operating income was $1.251B vs. $1.074B; net income was $1.041B vs. $849.0M; diluted EPS was $3.82 vs. $3.09.

• Cash from operating activities was $1.349B vs. $1.242B; cash and equivalents ended FY2023 at $1.008B vs. $882.3M.

• Recurring revenue was 84% of total, including 81% recognized over time and 3% from non-cancelable commitments; up-front revenue was 16%, up from 15% in FY2022.

Outlook and guidance

• FY2024 effective tax rate expected to be ~23.0%; quarterly rates may vary due to stock-based compensation tax effects and other items.

• Remaining performance obligations were $6.0B at Dec. 31, 2023; excluding non-cancelable commitments, 56% expected as revenue in the next 12 months and 39% in months 13–36.

• Cash balances and operating and financing cash flows expected to fund operations, acquisitions, investments, debt payments and repurchases for at least 12 months and the foreseeable future.