Cadence Reports First Quarter 2023 Financial Results

For a detailed discussion of these and other cautionary statements related to Cadence’s business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-K and Form 10-Q and future filings.

GAAP to Non-GAAP Reconciliation

Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.

To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, investment gains or losses, income or expenses related to Cadence’s non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.

Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.

The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:

Operating Margin Reconciliation

 

Three Months Ended

 

 

March 31, 2023

 

April 2, 2022

 

 

(unaudited)

GAAP operating margin as a percent of total revenue

 

32%

 

35%

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

 

 

 

 

Stock-based compensation expense

 

7%

 

7%

Amortization of acquired intangibles

 

1%

 

2%

Acquisition and integration-related costs

 

2%

 

0%

Restructuring

 

0%

 

0%

Non-qualified deferred compensation expenses (credits)

 

0%

 

0%

Non-GAAP operating margin as a percent of total revenue

 

42%

 

44%

Net Income Reconciliation

 

Three Months Ended

 

 

March 31, 2023

 

April 2, 2022

(in thousands)

 

(unaudited)

Net income on a GAAP basis

 

$

241,804

 

 

$

235,335

 

Stock-based compensation expense

 

 

74,288

 

 

 

59,469

 

Amortization of acquired intangibles

 

 

14,527

 

 

 

16,935

 

Acquisition and integration-related costs

 

 

15,800

 

 

 

3,897

 

Restructuring

 

 

 

 

 

12

 

Non-qualified deferred compensation expenses (credits)

 

 

3,150

 

 

 

(2,568

)

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

 

 

(3,273

)

 

 

4,606

 

Income tax effect of non-GAAP adjustments

 

 

5,137

 

 

 

5,938

 

Net income on a non-GAAP basis

 

$

351,433

 

 

$

323,624

 

*

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.

Diluted Net Income Per Share Reconciliation

 

Three Months Ended

 

 

March 31, 2023

 

April 2, 2022

(in thousands, except per share data)

 

(unaudited)

Diluted net income per share on a GAAP basis

 

$

0.89

 

 

$

0.85

 

Stock-based compensation expense

 

 

0.27

 

 

 

0.22

 

Amortization of acquired intangibles

 

 

0.05

 

 

 

0.06

 

Acquisition and integration-related costs

 

 

0.06

 

 

 

0.01

 

Restructuring

 

 

 

 

 

 

Non-qualified deferred compensation expenses (credits)

 

 

0.01

 

 

 

(0.01

)

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

 

 

(0.01

)

 

 

0.02

 

Income tax effect of non-GAAP adjustments

 

 

0.02

 

 

 

0.02

 

Diluted net income per share on a non-GAAP basis

 

$

1.29

 

 

$

1.17

 

Shares used in calculation of diluted net income per share

 

 

273,159

 

 

 

276,918

 

*

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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