Cadence Reports Fourth Quarter and Fiscal Year 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 March 17, 2023, 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 first quarter 2023 earnings release is published, which is currently scheduled for April 24, 2023.

Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
December 31, 2022 and January 1, 2022
(In thousands)
(Unaudited)
   
December 31, 2022   January 1, 2022
   
Current assets:  
Cash and cash equivalents

$

882,325

 

$

1,088,940

Receivables, net

 

486,710

 

 

337,596

Inventories

 

128,005

 

 

115,721

Prepaid expenses and other

 

209,727

 

 

173,512

Total current assets

 

1,706,767

 

 

1,715,769

   
Property, plant and equipment, net

 

371,451

 

 

305,911

Goodwill

 

1,374,268

 

 

928,358

Acquired intangibles, net

 

354,617

 

 

233,265

Deferred taxes

 

853,691

 

 

763,770

Other assets

 

476,277

 

 

439,226

Total assets

$

5,137,071

 

$

4,386,299

   
Current liabilities:  
Revolving credit facility

$

100,000

 

$

-

Accounts payable and accrued liabilities

 

557,158

 

 

417,283

Current portion of deferred revenue

 

690,538

 

 

553,942

Total current liabilities

 

1,347,696

 

 

971,225

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

 

91,524

 

 

101,148

Long-term debt

 

648,078

 

 

347,588

Other long-term liabilities

 

304,660

 

 

225,663

Total long-term liabilities

 

1,044,262

 

 

674,399

   
Stockholders' equity

 

2,745,113

 

 

2,740,675

Total liabilities and stockholders' equity

$

5,137,071

 

$

4,386,299

 
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months and Years Ended December 31, 2022 and January 1, 2022
(In thousands, except per share amounts)
(Unaudited)
       
       
Three Months Ended   Years Ended
December 31,
2022
  January 1,
2022
  December 31,
2022
  January 1,
2022
       
Revenue:      
Product and maintenance

$

845,880

 

 

$

719,849

 

 

$

3,340,197

 

 

$

2,812,947

 

Services

 

53,997

 

 

 

53,187

 

 

 

221,521

 

 

 

175,297

 

       
Total revenue

 

899,877

 

 

 

773,036

 

 

 

3,561,718

 

 

 

2,988,244

 

       
Costs and expenses:      
Cost of product and maintenance

 

69,702

 

 

 

47,714

 

 

 

273,565

 

 

 

222,647

 

Cost of services

 

23,813

 

 

 

21,979

 

 

 

98,058

 

 

 

84,359

 

Marketing and sales

 

171,817

 

 

 

148,068

 

 

 

604,224

 

 

 

560,262

 

Research and development

 

350,423

 

 

 

288,953

 

 

 

1,251,544

 

 

 

1,134,277

 

General and administrative

 

68,065

 

 

 

65,743

 

 

 

242,116

 

 

 

189,018

 

Amortization of acquired intangibles

 

4,927

 

 

 

4,979

 

 

 

18,470

 

 

 

19,640

 

Restructuring

 

13

 

 

 

(80

)

 

 

55

 

 

 

(1,048

)

       
Total costs and expenses

 

688,760

 

 

 

577,356

 

 

 

2,488,032

 

 

 

2,209,155

 

       
Income from operations

 

211,117

 

 

 

195,680

 

 

 

1,073,686

 

 

 

779,089

 

       
Interest expense

 

(9,082

)

 

 

(4,251

)

 

 

(22,934

)

 

 

(16,980

)

Other income (expense), net

 

8,490

 

 

 

2,625

 

 

 

(5,389

)

 

 

6,326

 

       
Income before provision (benefit) for income taxes

 

210,525

 

 

 

194,054

 

 

 

1,045,363

 

 

 

768,435

 

       
Provision (benefit) for income taxes

 

(29,867

)

 

 

17,475

 

 

 

196,411

 

 

 

72,480

 

       
Net income

$

240,392

 

 

$

176,579

 

 

$

848,952

 

 

$

695,955

 

       
       
Net income per share - basic

$

0.89

 

 

$

0.65

 

 

$

3.13

 

 

$

2.54

 

       
Net income per share - diluted

$

0.88

 

 

$

0.63

 

 

$

3.09

 

 

$

2.50

 

       
Weighted average common shares outstanding - basic

 

269,709

 

 

 

273,066

 

 

 

271,198

 

 

 

273,504

 

       
Weighted average common shares outstanding - diluted

 

272,997

 

 

 

278,253

 

 

 

275,011

 

 

 

278,858

 

 
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended December 31, 2022 and January 1, 2022
(In thousands)
(Unaudited)
   
Years Ended

December 31,

 

 

January 1,

 

2022

 

 

 

 

2022

 

   
Cash and cash equivalents at beginning of year

$

1,088,940

 

 

$

928,432

 

Cash flows from operating activities:  
Net income

 

848,952

 

 

 

695,955

 

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

 

132,088

 

 

 

142,308

 

Amortization of debt discount and fees

 

1,134

 

 

 

1,219

 

Stock-based compensation

 

270,439

 

 

 

210,090

 

(Gain) loss on investments, net

 

5,425

 

 

 

(580

)

Deferred income taxes

 

(107,606

)

 

 

(43,178

)

Provisions for losses on receivables

 

204

 

 

 

525

 

ROU asset amortization and change in operating lease liabilities

 

3,342

 

 

 

(11,606

)

Other non-cash items

 

371

 

 

 

427

 

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

 

(138,471

)

 

 

2,014

 

Inventories

 

(23,073

)

 

 

(39,027

)

Prepaid expenses and other

 

(38,927

)

 

 

(34,342

)

Other assets

 

(933

)

 

 

(7,133

)

Accounts payable and accrued liabilities

 

113,945

 

 

 

67,356

 

Deferred revenue

 

131,462

 

 

 

100,731

 

Other long-term liabilities

 

43,542

 

 

 

16,199

 

Net cash provided by operating activities

 

1,241,894

 

 

 

1,100,958

 

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

 

(1,000

)

 

 

-

 

Proceeds from the sale of non-marketable investments

 

366

 

 

 

128

 

Purchases of property, plant and equipment

 

(123,215

)

 

 

(65,298

)

Purchases of intangible assets

 

(1,000

)

 

 

(1,583

)

Cash paid in business combinations, net of cash acquired

 

(613,785

)

 

 

(226,201

)

Net cash used for investing activities

 

(738,634

)

 

 

(292,954

)

   
Cash flows from financing activities:  
Proceeds from revolving credit facility

 

585,000

 

 

 

-

 

Payments on revolving credit facility

 

(485,000

)

 

 

-

 

Proceeds from term loan

 

300,000

 

 

 

-

 

Payment of debt issuance costs

 

(425

)

 

 

(1,285

)

Proceeds from issuance of common stock

 

105,331

 

 

 

87,772

 

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

 

(111,864

)

 

 

(117,982

)

Payments for repurchases of common stock

 

(1,050,091

)

 

 

(612,297

)

Net cash used for financing activities

 

(657,049

)

 

 

(643,792

)

   
Effect of exchange rate changes on cash and cash equivalents

 

(52,826

)

 

 

(3,704

)

   
Increase (decrease) in cash and cash equivalents

 

(206,615

)

 

 

160,508

 

   
Cash and cash equivalents at end of year

$

882,325

 

 

$

1,088,940

 

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

2021

   

2022

GEOGRAPHY Q1   Q2   Q3   Q4   Year     Q1   Q2   Q3   Q4   Year
                     
Americas

46%

 

44%

 

46%

 

43%

 

45%

   

47%

 

45%

 

45%

 

46%

 

46%

China

12%

 

14%

 

13%

 

12%

 

13%

   

16%

 

13%

 

17%

 

13%

 

15%

Other Asia

18%

 

19%

 

18%

 

21%

 

19%

   

18%

 

18%

 

17%

 

18%

 

18%

Europe, Middle East and Africa

18%

 

17%

 

17%

 

18%

 

17%

   

14%

 

18%

 

16%

 

17%

 

16%

Japan

6%

 

6%

 

6%

 

6%

 

6%

   

5%

 

6%

 

5%

 

6%

 

5%

Total

100%

 

100%

 

100%

 

100%

 

100%

   

100%

 

100%

 

100%

 

100%

 

100%

                     
                     
Revenue Mix by Product Category (% of Total Revenue)                    

2021

   

2022

PRODUCT CATEGORY Q1   Q2   Q3   Q4   Year     Q1   Q2   Q3   Q4   Year
                     
Custom IC Design and Simulation

23%

 

23%

 

23%

 

24%

 

23%

   

22%

 

23%

 

22%

 

22%

 

22%

Digital IC Design and Signoff

27%

 

28%

 

29%

 

29%

 

29%

   

27%

 

27%

 

29%

 

28%

 

28%

Functional Verification, including Emulation and Prototyping Hardware

26%

 

25%

 

23%

 

21%

 

24%

   

28%

 

24%

 

25%

 

25%

 

26%

IP

14%

 

13%

 

14%

 

14%

 

13%

   

13%

 

14%

 

12%

 

12%

 

12%

System Design and Analysis

10%

 

11%

 

11%

 

12%

 

11%

   

10%

 

12%

 

12%

 

13%

 

12%

Total

100%

 

100%

 

100%

 

100%

 

100%

   

100%

 

100%

 

100%

 

100%

 

100%

 
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of February 13, 2023
(Unaudited)
 

Three Months Ending

 

Year Ending

March 31, 2023

 

December 31, 2023

Forecast

 

Forecast

 

 

 

GAAP operating margin as a percent of total revenue

31% - 32%

 

30.5% - 32.0%

 

 

 

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

 

 

 

Stock-based compensation expense

8%

 

8%

Amortization of acquired intangibles

1%

 

1%

Acquisition and integration-related costs

1%

 

1%

 

 

 

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

41% - 42%

 

40.5% - 42.0%

�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 February 13, 2023
(Unaudited)
     
 

Three Months Ending

 

 

Year Ending

 

March 31, 2023

 

 

December 31, 2023

 

Forecast

 

 

Forecast

 

 

 

 

 

Diluted net income per share on a GAAP basis  

$0.84 to $0.88

 

 

$3.24 to $3.34

 

 

 

 

 

Stock-based compensation expense  

0.28

 

 

1.21

Amortization of acquired intangibles  

0.05

 

 

0.21

Acquisition and integration-related costs  

0.05

 

 

0.15

Income tax effect of non-GAAP adjustments  

0.01

 

 

0.09

 

 

 

 

 

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

$1.23 to $1.27

 

 

$4.90 to $5.00

     
     
     
     
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of February 13, 2023
(Unaudited)
     
     
 

Three Months Ending

 

 

Year Ending

 

March 31, 2023

 

 

December 31, 2023

($ in millions)  

Forecast

 

 

Forecast

 

 

 

 

 

Net income on a GAAP basis  

$230 to $241

 

 

$886 to $913

 

 

 

 

 

Stock-based compensation expense  

77

 

 

330

Amortization of acquired intangibles  

15

 

 

58

Acquisition and integration-related costs  

13

 

 

40

Income tax effect of non-GAAP adjustments  

1

 

 

24

 

 

 

 

 

Net income on a non-GAAP basis�nbsp;  

$336 to $347

 

 

$1,338 to $1,365

�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.


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