Cadence Reports First Quarter 2023 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 16, 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 second quarter 2023 earnings release is published, which is currently scheduled for July 24, 2023.

Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
March 31, 2023 and December 31, 2022
(In thousands)
(Unaudited)

	March 31, 2023		December 31, 2022

Current assets:
Cash and cash equivalents	$	916,963	$	882,325
Receivables, net		488,237		486,710
Inventories		127,566		128,005
Prepaid expenses and other		165,778		209,727
Total current assets		1,698,544		1,706,767

Property, plant and equipment, net		372,956		371,451
Goodwill		1,377,625		1,374,268
Acquired intangibles, net		341,738		354,617
Deferred taxes		864,750		853,691
Other assets		516,006		476,277
Total assets	$	5,171,619	$	5,137,071

Current liabilities:
Revolving credit facility	$	30,000	$	100,000
Accounts payable and accrued liabilities		430,135		557,158
Current portion of deferred revenue		721,246		690,538
Total current liabilities		1,181,381		1,347,696

Long-term liabilities:
Long-term portion of deferred revenue		102,515		91,524
Long-term debt		648,301		648,078
Other long-term liabilities		298,546		304,660
Total long-term liabilities		1,049,362		1,044,262

Stockholders' equity		2,940,876		2,745,113
Total liabilities and stockholders' equity	$	5,171,619	$	5,137,071

Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months Ended March 31, 2023 and April 2, 2022
(In thousands, except per share amounts)
(Unaudited)


	Three Months Ended
	March 31, 2023			April 2, 2022

Revenue:
Product and maintenance	$	963,742		$	846,244
Services		57,948			55,522

Total revenue		1,021,690			901,766

Costs and expenses:
Cost of product and maintenance		100,238			72,795
Cost of services		24,234			25,048
Marketing and sales		166,666			140,186
Research and development		350,295			290,895
General and administrative		53,527			48,937
Amortization of acquired intangibles		4,267			4,964
Restructuring		-			12

Total costs and expenses		699,227			582,837

Income from operations		322,463			318,929

Interest expense		(9,260	)		(4,108	)
Other income (expense), net		8,284			(4,900	)

Income before provision for income taxes		321,487			309,921

Provision for income taxes		79,683			74,586

Net income	$	241,804		$	235,335


Net income per share - basic	$	0.90		$	0.86

Net income per share - diluted	$	0.89		$	0.85

Weighted average common shares outstanding - basic		269,501			272,431

Weighted average common shares outstanding - diluted		273,159			276,918

Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2023 and April 2, 2022
(In thousands)
(Unaudited)


	Three Months Ended
	March 31,			April 2,
	2023			2022

Cash and cash equivalents at beginning of period	$	882,325		$	1,088,940
Cash flows from operating activities:
Net income		241,804			235,335
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		34,400			34,825
Amortization of debt discount and fees		311			268
Stock-based compensation		74,288			59,469
(Gain) loss on investments, net		(123	)		2,038
Deferred income taxes		(11,640	)		(24,920	)
Provisions for losses (recoveries) on receivables		214			(344	)
ROU asset amortization and change in operating lease liabilities		(1,392	)		926
Other non-cash items		99			88
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables		(8,719	)		(28,426	)
Inventories		399			4,580
Prepaid expenses and other		56,212			44,419
Other assets		(42,084	)		11,588
Accounts payable and accrued liabilities		(117,915	)		(58,203	)
Deferred revenue		40,650			56,225
Other long-term liabilities		897			(1,260	)
Net cash provided by operating activities		267,401			336,608

Cash flows from investing activities:
Purchases of investments		(9,055	)		(1,000	)
Proceeds from the sale of investments		102			-
Purchases of property, plant and equipment		(26,719	)		(18,130	)
Purchases of intangible assets		-			(750	)
Net cash used for investing activities		(35,672	)		(19,880	)

Cash flows from financing activities:
Proceeds from revolving credit facility		50,000			-
Payments on revolving credit facility		(120,000	)		-
Proceeds from issuance of common stock		65,370			45,673
Stock received for payment of employee taxes on vesting of restricted stock		(67,712	)		(56,343	)
Payments for repurchases of common stock		(125,010	)		(250,016	)
Net cash used for financing activities		(197,352	)		(260,686	)

Effect of exchange rate changes on cash and cash equivalents		261			(10,230	)

Increase in cash and cash equivalents		34,638			45,812

Cash and cash equivalents at end of period	$	916,963		$	1,134,752

Cadence Design Systems, Inc.
(Unaudited)

Revenue Mix by Geography (% of Total Revenue)
	2022					2023
GEOGRAPHY	Q1	Q2	Q3	Q4	Year	Q1

Americas	47%	45%	45%	46%	46%	44%
China	16%	13%	17%	13%	15%	17%
Other Asia	18%	18%	17%	18%	18%	18%
Europe, Middle East and Africa	14%	18%	16%	17%	16%	15%
Japan	5%	6%	5%	6%	5%	6%
Total	100%	100%	100%	100%	100%	100%


Revenue Mix by Product Category (% of Total Revenue)
	2022					2023
PRODUCT CATEGORY	Q1	Q2	Q3	Q4	Year	Q1

Custom IC Design and Simulation	22%	23%	22%	22%	22%	20%
Digital IC Design and Signoff	27%	27%	29%	28%	28%	25%
Functional Verification, including Emulation and Prototyping Hardware	28%	24%	25%	25%	26%	32%
IP	13%	14%	12%	12%	12%	11%
System Design and Analysis	10%	12%	12%	13%	12%	12%
Total	100%	100%	100%	100%	100%	100%

Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of April 24, 2023
(Unaudited)

	Three Months Ending	Year Ending
	June 30, 2023	December 31, 2023
	Forecast	Forecast

GAAP operating margin as a percent of total revenue	29% - 30%	30% - 31%

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	1%	1%
Non-qualified deferred compensation expenses	0%	0%

Non-GAAP operating margin as a percent of total revenue�nbsp;	40% - 41%	41% - 42%

�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 24, 2023
(Unaudited)

	Three Months Ending	Year Ending
	June 30, 2023	December 31, 2023
	Forecast	Forecast

Diluted net income per share on a GAAP basis	$0.73 to $0.77	$3.26 to $3.34

Stock-based compensation expense	0.29	1.21
Amortization of acquired intangibles	0.05	0.21
Acquisition and integration-related costs	0.04	0.16
Non-qualified deferred compensation expenses	-	0.01
Other income or expense related to investments and non-qualified deferred compensation plan assets*	-	(0.01)
Income tax effect of non-GAAP adjustments	0.04	0.12

Diluted net income per share on a non-GAAP basis�nbsp;	$1.15 to $1.19	$4.96 to $5.04




Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of April 24, 2023
(Unaudited)


	Three Months Ending	Year Ending
	June 30, 2023	December 31, 2023
($ in millions)	Forecast	Forecast

Net income on a GAAP basis	$199 to $210	$889 to $911

Stock-based compensation expense	79	330
Amortization of acquired intangibles	15	58
Acquisition and integration-related costs	12	43
Non-qualified deferred compensation expenses	-	3
Other income or expense related to investments and non-qualified deferred compensation plan assets*	-	(3)
Income tax effect of non-GAAP adjustments	10	34

Net income on a non-GAAP basis�nbsp;	$315 to $326	$1,354 to $1,376


�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.

« Previous Page 1 | 2 | 3 | 4 Next Page »