Cadence Design Systems, Inc. (CDNS) Bundle
A Brief History of Cadence Design Systems, Inc.
Cadence Design Systems, Inc. (CDNS) has established itself as a leader in electronic design automation (EDA) tools and engineering services, catering primarily to the semiconductor and electronics industries. As of 2024, the company has experienced significant growth, driven by strategic acquisitions and an expanding portfolio of software and services.
Financial Performance
For the nine months ended September 30, 2024, Cadence reported total revenue of $3,285.3 million, reflecting a 9% increase from the $3,021.4 million reported during the same period in 2023. This growth was notably supported by a 14% increase in product and maintenance revenue, reaching $2,974.2 million.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Revenue | $1,215.5 million | $1,023.1 million | $192.4 million | 19% |
| Net Income | $238.1 million | $254.3 million | ($16.2 million) | (6.4%) |
| Net Income per Share (Diluted) | $0.87 | $0.93 | ($0.06) | (6.4%) |
Acquisitions and Growth Strategy
In 2024, Cadence made strategic acquisitions, including BETA CAE Systems International AG, which enhanced its capabilities in simulation technologies. The company has also focused on expanding its service offerings through acquisitions like Invecas, which bolstered its design service revenue.
Debt and Financing Activities
As of September 30, 2024, Cadence's total outstanding debt was $2.85 billion, which includes newly issued senior notes of $2.5 billion in September 2024. The debt structure consists of:
- 2027 Notes: $500 million
- 2029 Notes: $1 billion
- 2034 Notes: $1 billion
The company settled its $350 million 2024 Notes on October 15, 2024, and utilized proceeds from the new notes to prepay term loans due in 2025 and 2026.
Liquidity Position
Cadence reported cash and cash equivalents of $2,786 million as of September 30, 2024, up from $1,008 million at the end of 2023. This increase in liquidity has been attributed to net proceeds from debt issuance and cash generated from operations.
Stock Repurchase Program
The company has an ongoing stock repurchase program, with 701,612 shares repurchased in the three months ended September 30, 2024, at an average price of $269.25 per share. The total cost of repurchased shares in this period was $150 million.
Market Position and Future Outlook
Cadence continues to strengthen its market position through innovation in EDA tools and strategic acquisitions. The company’s focus on recurring revenue streams and expanding service offerings positions it well for sustained growth in the competitive semiconductor landscape.
A Who Owns Cadence Design Systems, Inc. (CDNS)
Major Shareholders
Major Shareholders
As of 2024, the ownership of Cadence Design Systems, Inc. (CDNS) is primarily held by institutional investors and individual shareholders. The following table details the major shareholders along with their respective ownership percentages:
| Shareholder Name | Ownership Percentage |
|---|---|
| The Vanguard Group, Inc. | 8.75% |
| BlackRock, Inc. | 8.55% |
| State Street Corporation | 4.95% |
| FMR LLC (Fidelity) | 4.80% |
| Invesco Ltd. | 3.40% |
| Other Institutional Investors | 65.55% |
| Retail Investors | 0.00% |
Insider Ownership
Insider ownership is an important aspect to consider as it reflects the confidence of management in the company. As of September 30, 2024, the following table summarizes the ownership of key executives:
| Name | Position | Shares Owned |
|---|---|---|
| Anirudh Devgan | President & CEO | 137,837 |
| Chin-Chi Teng | Senior VP, R&D | 41,018 |
| Karna Nisewaner | SVP, General Counsel | 4,757 |
| Paul Scannell | SVP, Worldwide Field Ops | 10,596 |
Stock Performance and Market Trends
Cadence Design Systems has shown strong stock performance recently. As of September 30, 2024, the stock price was approximately $269.25, representing a significant increase from previous quarters. The company's market capitalization is approximately $45.5 billion, based on the latest trading prices.
Recent Financial Data
For the nine months ended September 30, 2024, Cadence reported the following financial metrics:
| Metric | Value |
|---|---|
| Total Revenue | $3,285.3 million |
| Net Income | $715.3 million |
| Operating Income | $893.9 million |
| Total Assets | $4,563.3 million |
| Total Liabilities | $2,825.2 million |
Debt and Financing
As of September 30, 2024, Cadence had outstanding debt totaling $2.85 billion, comprising various senior notes and term loans:
| Debt Instrument | Amount | Due Date |
|---|---|---|
| 2024 Notes | $350 million | October 15, 2024 |
| 2027 Notes | $500 million | September 10, 2027 |
| 2029 Notes | $1.0 billion | September 10, 2029 |
| 2034 Notes | $1.0 billion | September 10, 2034 |
In September 2024, Cadence issued a total of $2.5 billion in new senior notes to refinance existing debt and fund acquisitions.
Cadence Design Systems, Inc. (CDNS) Mission Statement
Overview
Cadence Design Systems, Inc. (CDNS) focuses on delivering innovative software and engineering solutions that enable customers to design and develop advanced electronic systems. Their mission is to empower engineers and designers to achieve maximum productivity and efficiency through state-of-the-art technology.
Core Values
- Innovation: Continuously evolving their product offerings to meet the demands of the rapidly changing technology landscape.
- Customer-Centricity: Prioritizing customer success and satisfaction through robust support and tailored solutions.
- Integrity: Conducting business with transparency and ethical practices.
- Collaboration: Fostering teamwork internally and with partners to drive shared success.
Financial Performance
As of September 30, 2024, Cadence reported net income of $715.3 million, which reflects a slight decrease from $717.2 million in the same period of the previous year. The company achieved total revenue of $3.3 billion during the nine months ended September 30, 2024, representing an increase of 9% from $3.0 billion in the prior year.
| Financial Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Net Income | $715.3 million | $717.2 million | -0.3% |
| Total Revenue | $3.3 billion | $3.0 billion | +9% |
| Operating Income | $893.9 million | $914.7 million | -2.3% |
| Cash and Cash Equivalents | $1.0 billion | $882.3 million | +13.4% |
| Total Assets | $2.2 billion | $2.2 billion | 0% |
Strategic Goals
Cadence aims to enhance its market position through:
- Investment in research and development, with R&D expenses amounting to $176 million for the nine months ended September 30, 2024.
- Expansion of their product portfolio, particularly in the areas of digital design and verification.
- Strengthening partnerships with key technology players to foster innovation.
- Increasing operational efficiency and reducing costs to improve profitability.
Market Position
Cadence operates within the electronic design automation (EDA) industry, where it holds a significant share. As of September 30, 2024, the company reported a contracted but unsatisfied performance obligation of approximately $5.6 billion, indicating strong future revenue potential.
Recent Developments
In September 2024, Cadence issued $2.5 billion in Senior Notes to finance its growth initiatives and acquisitions, including the acquisition of BETA CAE Systems International AG. The details of the notes are as follows:
| Note Type | Principal Amount | Interest Rate | Due Date |
|---|---|---|---|
| 2027 Notes | $500 million | 4.200% | September 10, 2027 |
| 2029 Notes | $1 billion | 4.300% | September 10, 2029 |
| 2034 Notes | $1 billion | 4.700% | September 10, 2034 |
Conclusion
Cadence Design Systems, Inc. is committed to driving innovation in electronic design automation while maintaining a strong financial foundation. The company's strategic vision and robust financial performance position it well for future growth and success in the technology sector.
How Cadence Design Systems, Inc. (CDNS) Works
Company Overview
Cadence Design Systems, Inc. (CDNS) specializes in electronic design automation (EDA) software and engineering services for the semiconductor and electronics industries. The company provides tools for design, verification, and implementation of integrated circuits and systems-on-chip.
Financial Performance
As of September 30, 2024, Cadence reported the following financial results:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income (in thousands) | $238,111 | $254,321 | -6.3% |
| Total Revenue (in thousands) | $1,215,500 | $1,023,100 | 19% increase |
| Operating Income (in thousands) | $350,056 | $292,906 | 19.5% increase |
| Net Income per Share (diluted) | $0.87 | $0.93 | -6.5% |
| Weighted Average Shares Outstanding (diluted) | 273,958 | 272,427 | 0.6% increase |
Revenue Breakdown
Cadence generates revenue from multiple product categories. The following table summarizes the revenue from product categories for Q3 2024:
| Product Category | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Custom IC Design and Simulation | $230,000 | 19% |
| Digital IC Design and Signoff | $290,000 | 24% |
| Functional Verification, including Emulation and Prototyping Hardware | $330,000 | 27% |
| IP | $170,000 | 14% |
| System Design and Analysis | $210,000 | 16% |
Cost Structure
Cadence’s cost of revenue includes product and maintenance costs, and costs related to services. The following table outlines these costs for Q3 2024:
| Cost Category | Cost (in millions) | Percentage Change from Q3 2023 |
|---|---|---|
| Cost of Product and Maintenance | $109.6 | 28% |
| Cost of Services | $53.5 | 125% |
Operating Expenses
The operating expenses for Cadence for the nine months ended September 30, 2024, are detailed below:
| Expense Category | Amount (in thousands) |
|---|---|
| Research and Development | $175,985 |
| General and Administrative | $43,015 |
| Sales and Marketing | $55,513 |
Cash Flow Analysis
For the nine months ended September 30, 2024, Cadence's cash flow from operating activities was reported as follows:
| Cash Flow Category | Amount (in thousands) |
|---|---|
| Net Cash Provided by Operating Activities | $819,192 |
| Net Cash Used for Investing Activities | ($797,106) |
| Net Cash Provided by Financing Activities | $1,750,379 |
Debt Structure
As of September 30, 2024, Cadence's outstanding debt was as follows:
| Debt Instrument | Principal Amount (in thousands) | Carrying Value (in thousands) |
|---|---|---|
| 2024 Notes | $350,000 | $349,958 |
| 2027 Notes | $500,000 | $496,521 |
| 2029 Notes | $1,000,000 | $989,873 |
| 2034 Notes | $1,000,000 | $988,838 |
| Total Outstanding Debt | $2,850,000 | $2,825,190 |
Stock Performance and Repurchase Program
Cadence has an active stock repurchase program. During the nine months ended September 30, 2024, the following repurchases were made:
| Period | Shares Repurchased | Total Cost (in millions) |
|---|---|---|
| Q3 2024 | 1,411,000 | $400.0 |
| Q3 2023 | 1,800,000 | $375.0 |
How Cadence Design Systems, Inc. (CDNS) Makes Money
Revenue Model Overview
Cadence Design Systems generates revenue through a combination of software licensing, hardware sales, professional services, and royalties from intellectual property (IP). As of September 30, 2024, total revenue was $3.285 billion, up from $3.021 billion for the same period in 2023, reflecting a growth of 9% year-over-year.
Revenue Breakdown
The following table illustrates Cadence's revenue by product category for the nine months ended September 30, 2024, compared to the same period in 2023:
| Product Category | 2024 Revenue (in millions) | 2023 Revenue (in millions) | Change (in millions) | Percentage Change |
|---|---|---|---|---|
| Product and Maintenance | $2,974.2 | $2,852.4 | $121.8 | 4% |
| Services | $311.1 | $169.0 | $142.1 | 84% |
| Total Revenue | $3,285.3 | $3,021.4 | $263.9 | 9% |
Recurring vs. Up-Front Revenue
Cadence's revenue can be classified as either recurring or up-front. Recurring revenue typically comes from software licensing agreements, maintenance, and services, while up-front revenue is generated from hardware sales and individual software licenses. The following table shows the revenue classification for the three months ended September 30, 2024, compared to 2023:
| Revenue Type | 2024 Percentage | 2023 Percentage |
|---|---|---|
| Recurring Revenue | 82% | 85% |
| Up-Front Revenue | 18% | 15% |
Geographic Revenue Distribution
Cadence's revenue is also distributed across various geographic regions. The breakdown for the three months ended September 30, 2024, is as follows:
| Region | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| United States | $580.5 | 48% |
| Other Americas | $24.9 | 2% |
| China | $156.7 | 13% |
| Other Asia | $211.1 | 17% |
| EMEA | $174.6 | 14% |
| Japan | $67.7 | 6% |
Cost Structure
Cadence's costs associated with revenue generation include costs of product and maintenance, services, marketing, research and development, and general administration. For the nine months ended September 30, 2024, total costs and expenses were $2.391 billion, compared to $2.107 billion for the same period in 2023.
The following table summarizes Cadence's major expense categories for the same periods:
| Expense Category | 2024 (in millions) | 2023 (in millions) | Change (in millions) |
|---|---|---|---|
| Cost of Product and Maintenance | $279.4 | $260.3 | $19.1 |
| Cost of Services | $148.2 | $70.6 | $77.6 |
| Marketing and Sales | $557.1 | $509.9 | $47.2 |
| Research and Development | $1,157.1 | $1,074.4 | $82.7 |
| General and Administrative | $203.7 | $166.7 | $37.0 |
Net Income and Earnings Per Share
For the nine months ended September 30, 2024, Cadence reported a net income of $715.3 million, with a diluted earnings per share (EPS) of $2.61, compared to a net income of $717.2 million and diluted EPS of $2.63 in the same period of 2023.
| Period | Net Income (in millions) | Diluted EPS |
|---|---|---|
| 2024 | $715.3 | $2.61 |
| 2023 | $717.2 | $2.63 |
Investments and Acquisitions
Cadence continues to enhance its capabilities through strategic acquisitions. As of September 30, 2024, the company had a cash and cash equivalents balance of $1.008 billion. Additionally, the company issued $1.0 billion in senior notes in September 2024 to support its growth strategies.
Cadence's approach to generating revenue is multifaceted, focusing on software and hardware products, professional services, and strategic investments, which collectively contribute to its financial performance.
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Article updated on 8 Nov 2024
Resources:
- Cadence Design Systems, Inc. (CDNS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Cadence Design Systems, Inc. (CDNS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Cadence Design Systems, Inc. (CDNS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.