Cadence Design Systems (CDNS 1.50%), a player in the computational software arena, released its Q1 2024 earnings on April 22. Revenue of $1.009 billion slightly surpassed analyst expectations, but was a marginal decline from $1.022 billion in the same quarter last year. Earnings per share (EPS) fell well short of the $1.34 forecast, coming in at $1.17, a decrease from $1.29 in the year-ago quarter. Despite these mixed results, the quarter's performance showed notable instances of resilience and growth.
| Metric | Q1 2024 Result | Analyst Estimate | Q1 2023 Result | Change (YOY) |
|---|---|---|---|---|
| Revenue (in billions) | $1.009 | $1.00225 | $1.022 | (1.3%) |
| EPS (non-GAAP) | $1.17 | $1.34 | $1.29 | (9.3%) |
| GAAP operating margin | 25% | N/A | 32% | (7 pp) |
| Non-GAAP operating margin | 38% | N/A | 42% | (4 pp) |
Non-GAAP = adjusted. pp = percentage point
Cadence Design Systems operates in a competitive landscape where technical prowess and innovation are key. It has remained dedicated to advancing its technological offerings and has seen success with its Cadence.AI portfolio and the launch of cutting-edge hardware platforms.
Recent developments highlight Cadence's emphasis on innovation, like its third-generation "dynamic duo" of Palladium Z2 enterprise emulation and Protium X2 enterprise prototyping systems. The company touted record $6 billion backlog in the quarter and $3.1 billion in current remaining performance obligations (cRPO). It also noted success for its Millennium supercomputing platform, including with a "leading automaker."
"Long-term trends of hyperscale computing, autonomous driving and 5G, all turbocharged by [an] AI super cycle are fueling strong broad-based design activity," said CEO Anirudh Devgan during the conference call with analysts.
Looking ahead
Cadence revised its 2024 outlook slightly upward, projecting revenue of $4.56 billion to $4.62 billion and EPS of $5.88 to $5.98, which showcases confidence in its operational and market positioning. This optimism is tempered by the acknowledgment of ongoing global challenges, reminding investors of the macroeconomic uncertainties facing the tech industry. The company also said it plans to use roughly half of free cash flow to repurchase shares this year.
Investors are encouraged to watch Cadence's innovation trajectory, market expansion, and how it navigates global uncertainties.
