SAN JOSE, Calif. — (BUSINESS WIRE) — January 31, 2018 — Cadence Design Systems, Inc. (NASDAQ: CDNS) today announced results for the fourth quarter and fiscal year 2017.
Cadence reported 2017 revenue of $1.943 billion, compared to revenue of $1.816 billion for 2016. On a GAAP basis, Cadence recognized net income of $204 million, or $0.73 per share on a diluted basis, in 2017, compared to net income of $203 million, or $0.70 per share on a diluted basis for 2016. Revenue for the fourth quarter of 2017 totaled $502 million, compared to revenue of $469 million reported for the same period in 2016. Net loss for the fourth quarter of 2017 was $14 million, or $(0.05) per share on a diluted basis, compared to net income of $38 million, or $0.14 per share on a diluted basis, for the same period in 2016.
Due to the U.S. Tax Cuts and Jobs Act enacted in December 2017, GAAP net loss for the fourth quarter of 2017 included a $67 million income tax expense on a provisional basis for a one time transition tax on previously untaxed foreign earnings and a $25 million income tax expense on a provisional basis for the reduction in the value of Cadence’s U.S. deferred tax assets caused by the U.S. corporate tax rate reduction. These provisional amounts may change as Cadence continues to evaluate the impact of the Tax Act.
Using the non-GAAP measure defined below, net income for 2017 was $393 million, or $1.40 per share on a diluted basis, as compared to non-GAAP net income of $351 million, or $1.21 per share on a diluted basis for 2016. For the fourth quarter of 2017, non-GAAP net income was $111 million, or $0.39 per share on a diluted basis, as compared to net income of $95 million, or $0.34 per share on a diluted basis, for the same period in 2016.
“Through the execution of our System Design Enablement Strategy and our innovative solutions, Cadence delivered strong performance for our shareholders,” said Lip-Bu Tan, chief executive officer. “The Data-Driven Economy is emerging as the new paradigm and has key underlying technology waves including mobile, cloud/datacenter, edge computing and automotive. We are confident that we are well positioned to provide enablement solutions to fuel and ride with these technology waves.”
“Cadence continues to capitalize on the growth opportunities presented by the new trends. As a result, during the fourth quarter, we met or exceeded our key operating metrics and delivered strong financial results for the fiscal year,” said John Wall, senior vice president and chief financial officer. “We are excited about the opportunities we see to drive top line growth in 2018. We also expect to continue to deliver shareholder value by repurchasing approximately $50 million of Cadence common stock per quarter through 2018.”
CFO Commentary
Commentary on the fourth quarter and fiscal year 2017 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
The outlook provided below is on an ASC Topic 606 basis, which Cadence is adopting for its fiscal year 2018 using the modified retrospective transition method. As required by the new standard, the company will report revenue under both methods for the 2018 transition year. We expect the difference between revenue under the new and old standard to gradually decline over time and be de minimis within two years.
For the first quarter of 2018, the company expects total revenue in the range of $500 million to $510 million. First quarter GAAP net income per diluted share is expected to be in the range of $0.20 to $0.22. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.36 to $0.38.
For 2018, the company expects total revenue in the range of $2.015 billion to $2.055 billion. On a GAAP basis, net income per diluted share for 2018 is expected to be in the range of $0.80 to $0.90. Using the non-GAAP measure defined below, net income per diluted share for 2018 is expected to be in the range of $1.50 to $1.60.
For 2018, the company is forecasting a non-GAAP income tax rate of 16 percent, down from 23 percent used in fiscal 2017, primarily resulting from the tax rate reduction.
For comparison purposes, the company expects the outlook for 2018 on the prior ASC Topic 605 basis to be as follows: revenue in the range of $2.055 billion to $2.095 billion, GAAP net income per diluted share in the range of $0.93 to $1.03 and non-GAAP net income per diluted share in the range of $1.62 to $1.72.
A schedule showing a reconciliation of the business outlook from GAAP net income and diluted net income per share to non-GAAP net income and diluted net income per share is included in this release.
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