Cadence Reports Third Quarter 2019 Financial Results

SAN JOSE, Calif., 21 Oct 2019 -- Cadence Design Systems, Inc. (NASDAQ: CDNS) Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the third quarter of 2019.

Cadence reported third quarter 2019 revenue of $580 million, compared to revenue of $532 million reported for the same period in 2018. On a GAAP basis, Cadence achieved operating margin of 21 percent and recognized net income of $102 million, or $0.36 per share on a diluted basis, in the third quarter of 2019, compared to operating margin of 19 percent and net income of $99 million, or $0.35 per share on a diluted basis, for the same period in 2018.

Using the non-GAAP measure defined below, operating margin for the third quarter of 2019 was 32 percent and net income was $153 million, or $0.54 per share on a diluted basis, compared to operating margin of 32 percent and net income of $139 million, or $0.49 per share on a diluted basis, for the same period in 2018.

“Major industry trends led by AI and data analytics are driving strong design activity, which coupled with innovation and outstanding execution by Cadence, again led to strong operating results, as Cadence delivered 9 percent year-over-year revenue growth,” said Lip-Bu Tan, chief executive officer. “Our Intelligent System Design strategy enables us to provide more capabilities and value to our customers, while also expanding our total addressable market.”

“I am pleased with our third quarter results and outlook,” said John Wall, senior vice president and chief financial officer. “We are raising our outlook for revenue, operating margin, earnings and cash from operations for the year while we continue to invest in proliferation opportunities with market-shaping customers.”

CFO Commentary

Commentary on the third quarter 2019 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 2019, the company expects total revenue in the range of $590 million to $600 million. Fourth quarter GAAP operating margin is expected to be approximately 20 percent and GAAP net income per diluted share is expected to be in the range of $0.33 to $0.35. Using the non-GAAP measure defined below, operating margin is expected to be approximately 30 percent and net income per diluted share is expected to be in the range of $0.52 to $0.54.

For 2019, the company expects total revenue in the range of $2.327 billion to $2.337 billion. On a GAAP basis, operating margin is expected to be in the range of 21.3 percent to 21.8 percent and net income per diluted share for 2019 is expected to be in the range of $1.50 to $1.52. Using the non-GAAP measure defined below, operating margin for 2019 is expected to be in the range of 31.5 percent to 32.0 percent and net income per diluted share for 2019 is expected to be in the range of $2.18 to $2.20.

In October 2019, Cadence initiated a series of transactions involving a realignment of its international operating structure. Cadence expects that this realignment may significantly increase its foreign deferred tax assets. This outlook does not include the income tax impact to GAAP net income related to these transactions. Cadence expects to complete its analysis and record the income tax impact in the fourth quarter of 2019.

A schedule showing a reconciliation of the business outlook from GAAP operating margin, GAAP net income and diluted net income per share to non-GAAP operating margin and non-GAAP net income and diluted net income per share is included in this release.

Click here for the Q3 2019 Financial Schedules.

Audio Webcast Scheduled

Lip-Bu Tan, chief executive officer, and John Wall, senior vice president and chief financial officer, will host the third quarter 2019 financial results audio webcast today, October 21, 2019, 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 21, 2019 at 5 p.m. (Pacific) and ending December 13, 2019 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.

About Cadence

Cadence enables electronic systems and semiconductor companies to create the innovative end products that are transforming the way people live, work and play. Cadence's software, hardware and semiconductor IP are used by customers to deliver products to market faster. The company’s Intelligent System Design™ strategy helps customers develop differentiated products—from chips to boards to intelligent systems—in mobile, consumer, cloud, data center, automotive, aerospace, IoT, industrial and other market segments. Cadence is listed as one of Fortune Magazine's 100 Best Companies to Work For. Learn more at www.cadence.com.

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