10-QPeriod: Q2 FY2020

CADENCE DESIGN SYSTEMS INC Quarterly Report for Q2 Ended Jun 27, 2020

Filed July 20, 2020For Securities:CDNS

Summary

Cadence Design Systems Inc. reported strong financial performance for the second quarter of 2020, ended June 26, 2020. Total revenue increased by 10% year-over-year to $638.4 million, driven by growth in product and maintenance revenue, which rose 10% to $601.4 million. Net income also saw a significant increase of 22.4% to $131.3 million, translating to a diluted EPS of $0.47. The company demonstrated robust cash flow generation, with cash and cash equivalents significantly increasing to $1.19 billion from $705.2 million at the end of 2019. Strategically, Cadence completed two acquisitions in early 2020, AWR Corporation and Integrand Software, Inc., for approximately $195 million to enhance its RF/microwave design capabilities. Despite the ongoing uncertainties related to the COVID-19 pandemic, the company has managed its operations effectively, with minimal material adverse impact on its financial results for the first half of 2020. Management expressed confidence in its ability to meet liquidity requirements for at least the next 12 months, supported by strong operating cash flows and existing cash balances.

Financial Highlights

47 data points
Beta

Revenue

$638.42M

Net Income

$131.29M

20.6% Net Margin

EPS (Diluted)

$0.47

Total Assets

$4.00B

Cash & Equivalents

$1.19B

Free Cash Flow

$323.77M

Financial Statements
Beta
Revenue$638.42M
R&D Expenses$250.82M
Operating Expenses$486.47M
Operating Income$151.95M
Interest Expense$5.91M
Net Income$131.29M
EPS (Basic)$0.48
EPS (Diluted)$0.47
Shares Outstanding (Basic)273.43M
Shares Outstanding (Diluted)279.08M

Key Highlights

  • 1Total revenue for the quarter ended June 26, 2020, increased by 10% to $638.4 million compared to the same period in 2019.
  • 2Net income for the quarter grew by 22.4% to $131.3 million, with diluted EPS of $0.47.
  • 3Cash and cash equivalents significantly increased to $1.19 billion as of June 27, 2020, from $705.2 million at December 28, 2019.
  • 4The company completed two strategic acquisitions (AWR Corporation and Integrand Software, Inc.) in early 2020 for approximately $195 million to strengthen its technology portfolio.
  • 5Operating expenses increased by 6% year-over-year, driven by investments in R&D and sales, reflecting continued strategic growth initiatives.
  • 6Despite COVID-19 uncertainties, the company reported that the pandemic did not have a material adverse impact on its financial results for the first half of fiscal 2020.
  • 7Remaining performance obligations were approximately $3.7 billion as of June 27, 2020, indicating a strong backlog of future revenue.

Frequently Asked Questions

Cadence reported a 10% increase in total revenue for the quarter ended June 26, 2020, reaching $638.4 million. Net income also saw a substantial rise of 22.4% to $131.3 million, with diluted earnings per share of $0.47.

While acknowledging the ongoing uncertainties, Cadence stated that the COVID-19 pandemic did not have a material adverse impact on its financial results for the first half of fiscal 2020. The company highlighted its ability to adapt operations, with many employees working remotely and customers continuing to place orders.

Cadence acquired AWR Corporation and Integrand Software, Inc. in early 2020 for approximately $195 million. These acquisitions are aimed at enhancing the company's technology portfolio, particularly to address the growing RF/microwave design activity driven by the expansion of 5G communications.

Cadence's cash and cash equivalents significantly increased to $1.19 billion as of June 27, 2020, up from $705.2 million at the end of 2019. The company expects its current cash position and operating cash flows to be sufficient to meet its liquidity requirements for at least the next 12 months.