10-QPeriod: Q2 FY2015

CADENCE DESIGN SYSTEMS INC Quarterly Report for Q2 Ended Apr 4, 2015

Filed April 27, 2015For Securities:CDNS

Summary

Cadence Design Systems Inc. (CDNS) reported revenue of $411.4 million for the first quarter of fiscal year 2015, a 9% increase compared to the same period last year. This growth was driven by a 7% rise in product and maintenance revenue and a significant 31% increase in services revenue, indicating strong demand for their offerings. The company also demonstrated improved profitability, with net income rising to $36.3 million from $33.1 million in the prior year quarter, resulting in diluted EPS of $0.12. Financially, Cadence maintained a solid liquidity position with $980.4 million in cash, cash equivalents, and short-term investments as of April 4, 2015. The company successfully managed its debt, with total outstanding debt decreasing slightly to $642.4 million. Notably, the upcoming maturity of the 2015 Convertible Notes in June 2015 was addressed, with a significant portion already tendered for early conversion. The company also continued its share repurchase program, demonstrating a commitment to returning value to shareholders.

Financial Highlights

47 data points
Beta

Revenue

$411.37M

Net Income

$36.26M

8.8% Net Margin

EPS (Diluted)

$0.12

Total Assets

$3.06B

Cash & Equivalents

$887.74M

Free Cash Flow

$39.17M

Financial Statements
Beta
Revenue$411.37M
Operating Expenses$362.08M
Operating Income$49.28M
Interest Expense$11.75M
Net Income$36.26M
EPS (Basic)$0.13
EPS (Diluted)$0.12
Shares Outstanding (Basic)284.52M
Shares Outstanding (Diluted)311.85M

Key Highlights

  • 1Total revenue increased by 9% year-over-year to $411.4 million, driven by strong performance in both product/maintenance and services segments.
  • 2Net income grew to $36.3 million from $33.1 million year-over-year, with diluted EPS improving to $0.12.
  • 3The company ended the quarter with a robust cash position of $980.4 million in cash, cash equivalents, and short-term investments.
  • 4Product and maintenance revenue saw a 7% increase, while services revenue surged by 31%, indicating expanding customer engagement.
  • 5Research and development expenses increased by 11% to $163.0 million, reflecting continued investment in innovation.
  • 6The company actively managed its debt, with total outstanding debt decreasing to $642.4 million.
  • 7Cadence continued its share repurchase program, buying back $36.8 million worth of stock during the quarter.

Frequently Asked Questions

Cadence reported a 9% increase in total revenue, reaching $411.4 million for the three months ended April 4, 2015, compared to $378.6 million for the same period in 2014. This growth was fueled by a 7% rise in product and maintenance revenue and a substantial 31% increase in services revenue.

As of April 4, 2015, Cadence maintained a strong liquidity position with $980.4 million in cash, cash equivalents, and short-term investments. Net working capital also increased to $507.2 million. The company had total outstanding debt of $642.4 million, with a significant portion of its 2015 Convertible Notes maturing in June 2015 being addressed through early conversions.

Operating expenses increased by 6% to $290.9 million, primarily due to increased investments in research and development (up 11% to $163.0 million) and higher employee-related costs resulting from additional hiring and the impact of fiscal 2014 acquisitions. Stock-based compensation also saw an increase.

Cadence had $293.7 million in 2015 Convertible Notes outstanding at the end of the quarter, maturing in June 2015. A total of $53.9 million principal value had already been tendered for early conversion and settled. The company expects its current cash balance, operating cash flow, and revolving credit facility to be sufficient to cover the maturity or conversion of these notes.