Cadence Reports First Quarter 2022 Financial Results

Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Cadence may reiterate the business outlook published in this press release. At the same time, Cadence will keep this press release, including the business outlook, publicly available on its website.

Prior to the start of the Quiet Period (described below), the public may continue to rely on the business outlook contained herein as still being Cadence’s current expectations on matters covered unless Cadence publishes a notice stating otherwise.

Beginning June 17, 2022, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute Cadence’s current expectations. During the Quiet Period, the business outlook in these documents should be considered historical, speaking as of prior to the Quiet Period only and not subject to any update by Cadence. During the Quiet Period, Cadence’s representatives will not comment on Cadence’s business outlook, financial results or expectations. The Quiet Period will extend until Cadence’s second quarter 2022 earnings release is published, which is currently scheduled for July 25, 2022.

Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
April 2, 2022 and January 1, 2022
(In thousands)
(Unaudited)
 

April 2, 2022

January 1, 2022

 
Current assets:
Cash and cash equivalents

$

1,134,752

$

1,088,940

Receivables, net

 

361,789

 

337,596

Inventories

 

110,213

 

115,721

Prepaid expenses and other

 

128,143

 

173,512

Total current assets

 

1,734,897

 

1,715,769

 
Property, plant and equipment, net

 

310,690

 

305,911

Goodwill

 

923,719

 

928,358

Acquired intangibles, net

 

219,110

 

233,265

Deferred taxes

 

787,111

 

763,770

Other assets

 

419,540

 

439,226

Total assets

$

4,395,067

$

4,386,299

 
Current liabilities:
Accounts payable and accrued liabilities

$

360,547

$

417,283

Current portion of deferred revenue

 

600,279

 

553,942

Total current liabilities

 

960,826

 

971,225

 
Long-term liabilities:
Long-term portion of deferred revenue

 

106,838

 

101,148

Long-term debt

 

347,792

 

347,588

Other long-term liabilities

 

219,428

 

225,663

Total long-term liabilities

 

674,058

 

674,399

 
Stockholders' equity

 

2,760,183

 

2,740,675

Total liabilities and stockholders' equity

$

4,395,067

$

4,386,299

Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months Ended April 2, 2022 and April 3, 2021
(In thousands, except per share amounts)
(Unaudited)
 
 

Three Months Ended

April 2, 2022

April 3, 2021

 
Revenue:
Product and maintenance

$

846,244

 

$

699,054

 

Services

 

55,522

 

 

36,974

 

 
Total revenue

 

901,766

 

 

736,028

 

 
Costs and expenses:
Cost of product and maintenance

 

72,795

 

 

64,906

 

Cost of services

 

25,048

 

 

19,061

 

Marketing and sales

 

140,186

 

 

132,826

 

Research and development

 

290,895

 

 

270,992

 

General and administrative

 

48,937

 

 

39,952

 

Amortization of acquired intangibles

 

4,964

 

 

4,631

 

Restructuring

 

12

 

 

(277

)

 
Total costs and expenses

 

582,837

 

 

532,091

 

 
Income from operations

 

318,929

 

 

203,937

 

 
Interest expense

 

(4,108

)

 

(4,217

)

Other income (expense), net

 

(4,900

)

 

2,701

 

 
Income before provision for income taxes

 

309,921

 

 

202,421

 

 
Provision for income taxes

 

74,586

 

 

15,252

 

 
Net income

$

235,335

 

$

187,169

 

 
 
Net income per share - basic

$

0.86

 

$

0.68

 

 
Net income per share - diluted

$

0.85

 

$

0.67

 

 
Weighted average common shares outstanding - basic

 

272,431

 

 

274,021

 

 
Weighted average common shares outstanding - diluted

 

276,918

 

 

280,140

 

Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended April 2, 2022 and April 3, 2021
(In thousands)
(Unaudited)
 
 

Three Months Ended

April 2,

April 3,

 

2022

 

 

2021

 

 
Cash and cash equivalents at beginning of period

$

1,088,940

 

$

928,432

 

Cash flows from operating activities:
Net income

 

235,335

 

 

187,169

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

 

34,825

 

 

36,218

 

Amortization of debt discount and fees

 

268

 

 

264

 

Stock-based compensation

 

59,469

 

 

52,596

 

(Gain) loss on investments, net

 

2,038

 

 

(1,433

)

Deferred income taxes

 

(24,920

)

 

2,710

 

Provisions for losses (recoveries) on receivables

 

(344

)

 

77

 

ROU asset amortization and change in operating lease liabilities

 

926

 

 

(2,136

)

Other non-cash items

 

88

 

 

302

 

Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables

 

(28,426

)

 

(45,927

)

Inventories

 

4,580

 

 

(669

)

Prepaid expenses and other

 

44,419

 

 

(3,014

)

Other assets

 

11,588

 

 

6,260

 

Accounts payable and accrued liabilities

 

(58,203

)

 

(80,769

)

Deferred revenue

 

56,225

 

 

59,166

 

Other long-term liabilities

 

(1,260

)

 

(2,372

)

Net cash provided by operating activities

 

336,608

 

 

208,442

 

 
Cash flows from investing activities:
Purchases of non-marketable investments

 

(1,000

)

 

-

 

Purchases of property, plant and equipment

 

(18,130

)

 

(16,968

)

Purchases of intangible assets

 

(750

)

 

-

 

Cash paid in business combinations, net of cash acquired

 

-

 

 

(189,262

)

Net cash used for investing activities

 

(19,880

)

 

(206,230

)

 
Cash flows from financing activities:
Proceeds from issuance of common stock

 

45,673

 

 

46,384

 

Stock received for payment of employee taxes on vesting of restricted stock

 

(56,343

)

 

(56,385

)

Payments for repurchases of common stock

 

(250,016

)

 

(172,267

)

Net cash used for financing activities

 

(260,686

)

 

(182,268

)

 
Effect of exchange rate changes on cash and cash equivalents

 

(10,230

)

 

(5,395

)

 
Increase (decrease) in cash and cash equivalents

 

45,812

 

 

(185,451

)

 
Cash and cash equivalents at end of period

$

1,134,752

 

$

742,981

 

Cadence Design Systems, Inc.
(Unaudited)
 
 
 
Revenue Mix by Geography (% of Total Revenue)

2021

 

2022

GEOGRAPHY

Q1

 

Q2

 

Q3

 

Q4

 

Year

 

Q1

 
Americas

46%

44%

46%

43%

45%

47%

China

12%

14%

13%

12%

13%

16%

Other Asia

18%

19%

18%

21%

19%

18%

Europe, Middle East and Africa

18%

17%

17%

18%

17%

14%

Japan

6%

6%

6%

6%

6%

5%

Total

100%

100%

100%

100%

100%

100%

 
 
 
 
Revenue Mix by Product Category (% of Total Revenue)

2021

 

 

2022

PRODUCT CATEGORY

Q1

 

Q2

 

Q3

 

Q4

 

Year

 

 

Q1

 
Custom IC Design and Simulation

23%

23%

23%

24%

23%

22%

Digital IC Design and Signoff

27%

28%

29%

29%

29%

27%

Functional Verification, including Emulation and Prototyping Hardware

26%

25%

23%

21%

24%

28%

IP

14%

13%

14%

14%

13%

13%

System Design and Analysis

10%

11%

11%

12%

11%

10%

Total

100%

100%

100%

100%

100%

100%

Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of April 25, 2022
(Unaudited)
 

Three Months Ending

 

Year Ending

July 2, 2022

 

December 31, 2022

Forecast

 

Forecast

 

 

 

GAAP operating margin as a percent of total revenue

29% - 30%

 

28.5% - 30%

 

 

 

Reconciling items to non-GAAP operating margin as a percent of total revenue:

 

 

 

Stock-based compensation expense

8%

 

8%

Amortization of acquired intangibles

2%

 

2%

Acquisition and integration-related costs

0%

 

0%

Non-qualified deferred compensation credits

0%

 

0%

 

 

 

Non-GAAP operating margin as a percent of total revenue�nbsp;

39% - 40%

 

38.5% - 40%

�nbsp;

The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of April 25, 2022
(Unaudited)
 

Three Months Ending

 

Year Ending

July 2, 2022

 

December 31, 2022

Forecast

 

Forecast

 

 

 

Diluted net income per share on a GAAP basis

$0.59 to $0.63

 

$2.51 to $2.59

 

 

 

Stock-based compensation expense

0.23

 

0.98

Amortization of acquired intangibles

0.05

 

0.19

Acquisition and integration-related costs

0.01

 

0.03

Non-qualified deferred compensation credits

-

 

(0.01)

Other income or expense related to investments and non-qualified deferred compensation plan assets*

-

 

0.02

Income tax effect of non-GAAP adjustments

0.07

 

0.17

 

 

 

Diluted net income per share on a non-GAAP basis�nbsp;

$0.95 to $0.99

 

$3.89 to $3.97

 
 
 
 
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of April 25, 2022
(Unaudited)
 
 

Three Months Ending

 

Year Ending

July 2, 2022

 

December 31, 2022

($ in millions)

Forecast

 

Forecast

 

 

 

Net income on a GAAP basis

$164 to $175

 

$697 to $719

 

 

 

Stock-based compensation expense

64

 

272

Amortization of acquired intangibles

15

 

52

Acquisition and integration-related costs

1

 

8

Non-qualified deferred compensation credits -

 

(3)

Other income or expense related to investments and non-qualified deferred compensation plan assets* -

 

5

Income tax effect of non-GAAP adjustments

19

 

49

 

 

 

Net income on a non-GAAP basis�nbsp;

$263 to $274

 

$1,080 to $1,102

�nbsp;

The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

 

 

*

Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.


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