10-QPeriod: Q3 FY2019

CADENCE DESIGN SYSTEMS INC Quarterly Report for Q3 Ended Sep 28, 2019

Filed October 21, 2019For Securities:CDNS

Summary

Cadence Design Systems, Inc. reported solid financial results for the nine months ended September 28, 2019. Total revenue increased by 11% year-over-year to $1.74 billion, driven by an 12% increase in product and maintenance revenue. This growth was observed across all geographic regions, with particularly strong performance in Asia. The company demonstrated strong operational efficiency, with income from operations increasing by 36% to $383 million and net income growing by 33% to $329 million for the nine-month period. Financially, Cadence maintained a healthy liquidity position, with cash and cash equivalents increasing by $122 million to $655 million. The company also continued its commitment to returning capital to shareholders through its share repurchase program, with $444 million remaining under its authorization as of the period end. The company's strategic investments and continued investment in R&D highlight its focus on long-term growth and innovation in the electronic design automation sector.

Financial Highlights

47 data points
Beta

Revenue

$579.60M

Net Income

$101.51M

17.5% Net Margin

EPS (Diluted)

$0.36

Total Assets

$2.66B

Cash & Equivalents

$655.22M

Free Cash Flow

$121.56M

Financial Statements
Beta
Revenue$579.60M
Operating Expenses$458.78M
Operating Income$120.83M
Interest Expense$4.24M
Net Income$101.51M
EPS (Basic)$0.37
EPS (Diluted)$0.36
Shares Outstanding (Basic)273.33M
Shares Outstanding (Diluted)280.67M

Key Highlights

  • 1Total revenue grew 11% to $1.74 billion for the nine months ended September 28, 2019, compared to the same period in 2018.
  • 2Product and maintenance revenue increased by 12% to $1.64 billion, indicating strong demand for core offerings.
  • 3Income from operations rose significantly by 36% to $382.9 million for the nine-month period.
  • 4Net income increased by 33% to $329.3 million for the nine months ended September 28, 2019.
  • 5Cash and cash equivalents increased by $121.9 million to $655.2 million, indicating strong cash generation.
  • 6Remaining authorized share repurchases amounted to $444 million as of September 28, 2019, demonstrating commitment to shareholder returns.
  • 7The company continues to invest heavily in Research and Development, with R&D expenses increasing 5% to $700.6 million for the nine-month period.

Frequently Asked Questions

The primary driver of revenue growth was the increase in product and maintenance revenue, which rose by 12% year-over-year to $1.64 billion for the nine months ended September 28, 2019. This growth was attributed to increased customer investments in new, complex designs across various market segments like machine learning, 5G, automotive, and cloud data centers.

Cadence demonstrated strong profitability improvements. For the nine months ended September 28, 2019, income from operations increased by 36% to $382.9 million, and net income grew by 33% to $329.3 million, compared to the same period in the prior year. This reflects effective cost management and revenue growth.

Cadence maintained a robust liquidity position, with cash and cash equivalents increasing by $121.9 million to $655.2 million as of September 28, 2019. Net working capital also saw a significant increase to $431.0 million. The company has sufficient resources to meet its operating needs, including potential acquisitions and share repurchases.

The filing highlights several risks, including economic uncertainties, cyclicality in the semiconductor and electronics industries, rapid technological changes, competitive pressures, and regulatory changes, particularly concerning trade restrictions with China. The company also notes the ongoing investments in R&D and the potential impact of foreign currency fluctuations.