Back to top

Image: Bigstock

Cadence Design (CDNS) Q4 Earnings In Line, Revenues Beat

Read MoreHide Full Article

Cadence Design Systems, Inc. (CDNS - Free Report) reported earnings of 39 cents per share for fourth-quarter 2017, in line with the Zacks Consensus Estimate. The figure surged 14.7% on a year-over-year basis and was within management’sguided range of 38-40 cents per share.

Revenues increased 7% year over year to $501.7 million, beating the Zacks Consensus Estimate of $498 million. The top line also met the high end of management’s expectation.

Notably, huge adoption of the company’s digital and signoff, custom-analog and IP solutions along withan expanding customer base droveits impressive year-over-year growth.

Geographically, revenues from Americas, Asia, Europe, Middle East and Africa (EMEA) and Japan contributed 44%, 27%, 20% and 9%, respectively of the total revenues.

Shares of the company went up 2%, yesterday. Cadence stock has gained 55.1% year over year, substantially outperforming the 39.2% rally of the industry it belongs to.

Quarter Details

Product wise, revenues from Digital and signoff grew 10% year over year, with deeper market penetration and increasing customer base. IP revenues grew 18% year over year as the company’s new refined strategy gained momentum. Custom and analog design solutions grew 11% year over year driven by increasing requirement of the company’s advanced node custom design and simulation solutions.

Systems interconnect and analysis solutions grew 8% year over year, on the back ofbetter-than-expected growth across PCB implementation, IC packaging, and Sigrity power integrity analysis.

Cadence executed a number of successful projects during the quarter. The company released the industry’s first ever Verification IP (VIP), making use of the new PCI Express (PCIe) 5.0 architecture. This helps designers to easily produce original designs backed by faster compliance and enhanced IP verification.

Moreover, Cadence Tensilica announced extended support to Dolby Atmos for PCs, making it the only DSP IP core to deliver this facility. This integration will help users enjoy the Dolby experience through their PC or via headphones as well as reduce battery consumption.

During the quarter, Cadence acquired nusemi inc, a company that develops high-speed Serializer/Deserializer (SerDes) communications IP, to compliment itsexisting SerDes solutions. With the integration of nusemi’s technologies, Cadence will be able to deliver efficient, cost saving and high bandwidth functionality for telecom segments, edge computing and networking services.

Notably, the company partnered with Xilinx and TSMC for the development of Cache Coherent Interconnect for Accelerators (“CCIX”) based on 7nm FinFET technology scheduled for delivery in 2018. The fields of big data analytics, search, machine learning and 5G wireless are expected to benefit from this innovation.

Furthermore, the company plans to display its latest Sigrity signal and power integrity technologies, advanced packaging solutions as well as high-speed DDR-4400 IP integration during DesignCon.

Additionally, Cadence’s well-known emulator, Palladium Z1,won an investment from Marvell for extending emulation of its engineering products.

The company’s parallel logic simulator, Xcelium,witnessed the addition of 25 new customers in mobile, communication, storage and memory segments.

Non-GAAP operating margin was 30% on the back of higher software and IP revenues and a stringent cost approach.

The company ended the quarter with cash and short-term investments of $693 million. The long-term outstanding debt was $735 million at the end of the quarter. The company repurchased shares worth $50 million in the fourth quarter. Operating cash flow was $127 million.

Guidance

For first-quarter 2018, Cadence expects total revenue to be in the range of $500-$510 million and non-GAAP earnings in the range of 36-38 cents per share. The Zacks Consensus Estimates for revenues and earnings are pegged at $497.8 million and 39 cents, respectively. Non-GAAP operating margin is expected to be around 26%.

For 2018, revenues are expected to be in the range of $2.015-$2.055 billion. Non-GAAP earnings are guided in the range of $1.50-$1.60 per share. The Zacks Consensus Estimates for revenues and earnings are pegged at $2.05 billion and $1.51 per share, respectively.

Non-GAAP operating margin for 2018 is expected to be approximately 27%. Operating cash flow is expected to be in the range of $480-$530 million.

Zacks Rank and Stock to Consider

Cadence carriesa Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Vishay Intertechnology, Inc. (VSH - Free Report) , all carrying a Zacks Rank #2(Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Applied Materials, NVIDIA and Vishay are projected at 12.7%, 10.3 and 20.6%,respectively.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Published in