SAN JOSE, Calif. — (BUSINESS WIRE) — October 22, 2023 — Cadence Design Systems, Inc. (Nasdaq: CDNS) today announced results for the third quarter of 2023.
Cadence reported third quarter 2023 revenue of $1.023 billion, compared to revenue of $903 million for the same period in 2022. On a GAAP basis, Cadence achieved operating margin of 29 percent and recognized net income of $254 million, or $0.93 per share on a diluted basis, in the third quarter of 2023, compared to operating margin of 29 percent and net income of $186 million, or $0.68 per share on a diluted basis, for the same period in 2022.
Using the non-GAAP measures defined below, operating margin for the third quarter of 2023 was 41 percent and net income was $343 million, or $1.26 per share on a diluted basis, compared to operating margin of 39 percent and net income of $290 million, or $1.06 per share on a diluted basis, for the same period in 2022.
“I’m pleased with our strong Q3 performance and our relentless focus on driving innovation and delighting our customers,” said Anirudh Devgan, president and chief executive officer. “Generational trends including AI, HPC, and autonomous driving continue to fuel robust design activities, and 3D-IC designs are accelerating. We are excited about the momentum of our JedAI platform based Generative AI applications that are delivering breakthrough results for our customers.”
“Cadence delivered yet another strong quarter of top and bottom-line results in Q3, driven by growth across our businesses,” said John Wall, senior vice president and chief financial officer. “Our team’s strong execution and operational efficiency allowed us to raise our outlook for the year.”
CFO Commentary
Commentary on the third quarter 2023 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
For the fourth quarter of 2023, the company expects total revenue in the range of $1.039 billion to $1.079 billion. Fourth quarter GAAP operating margin is expected to be approximately 31 percent and GAAP net income per diluted share is expected to be in the range of $0.85 to $0.91. Using the non-GAAP measures defined below, operating margin is expected to be approximately 42 percent and net income per diluted share is expected to be in the range of $1.30 to $1.36.
For fiscal year 2023, the company expects total revenue in the range of $4.06 billion to $4.10 billion. On a GAAP basis, operating margin for 2023 is expected to be in the range of 30.5 percent to 31.0 percent and GAAP net income per diluted share for 2023 is expected to be in the range of $3.48 to $3.54. Using the non-GAAP measures defined below, operating margin for 2023 is expected to be in the range of 41.5 percent to 42.0 percent and net income per diluted share for 2023 is expected to be in the range of $5.07 to $5.13.
The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company’s geographic earnings mix, or other changes to the company’s strategy or business operations. The company expects to use this normalized non-GAAP tax rate through fiscal 2025 but will re-evaluate this rate periodically for significant items that may materially affect its projections.
A schedule showing reconciliations of the business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, is included in this press release.
Audio Webcast Scheduled
Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the third quarter 2023 financial results audio webcast today, October 23, 2023, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting October 23, 2023 at 5 p.m. (Pacific) and ending December 15, 2023 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
About Cadence
Cadence is a pivotal leader in electronic systems design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world’s most innovative companies, delivering extraordinary products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For nine years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For. Learn more at www.cadence.com.
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This press release contains forward-looking statements, including Cadence's outlook on future operating results, strategic objectives, business prospects, technology and product developments, industry trends and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control, and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) change in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence's products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations, inflation rates and Cadence’s ability to access capital and debt markets; (vii) the acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (viii) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; and (ix) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services or properties are subject. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.
For a detailed discussion of these and other cautionary statements related to Cadence’s business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this press release are based on management's expectations as of the date of this press release and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
