Cadence(CDNS) Zacks Investment Research·2024-02-13 14:31Core Insights - Cadence Design Systems (CDNS) reported strong fourth-quarter 2023 results with non-GAAP earnings of $1.38 per share, exceeding estimates by 3% and showing a year-over-year increase of 43.8% [1] - Revenues reached $1.069 billion, surpassing estimates by 0.3% and reflecting an 18.8% year-over-year growth, driven by high customer demand and operational efficiency [1] - The company ended the quarter with a backlog of $6 billion and remaining performance obligations of $3.2 billion [1] Financial Performance - For 2023, CDNS achieved a revenue growth of 15% to $4.09 billion and a 20% increase in earnings to $5.15 per share [1] - In the fourth quarter, Product & Maintenance revenues constituted 91.9% of total revenues, amounting to $982 million, a 16.1% year-over-year increase, while Services revenues grew 61.1% to $87 million [4] - The Americas contributed 44% to total revenues, followed by China (15%), Other Asia (19%), Europe, the Middle East and Africa (16%), and Japan (6%) [4] Business Segments - The Digital IC business grew 22% year over year in the fourth quarter, with 34 new customers adopting CDNS' digital full flow [5] - The Functional Verification segment saw an 11% increase, attributed to rising system complexity, with significant traction in Palladium and Protium platforms [5] - The IP business registered a remarkable 36% year-over-year growth in revenues during the fourth quarter [6] Guidance and Projections - For 2024, CDNS projects revenues between $4.55 billion and $4.61 billion, indicating an 11.4% growth from the previous year [2] - Non-GAAP EPS for 2024 is expected to be between $5.87 and $5.97, suggesting a 13.7% increase from the prior year [2] - The company anticipates a non-GAAP operating margin of 42-43% and operating cash flow between $1.35 billion and $1.45 billion for 2024 [3] Cash Flow and Share Repurchase - CDNS generated operating cash flow of $272 million in the fourth quarter, down from $396 million in the previous quarter, while free cash flow was $238 million [7] - For 2023, the company reported operating cash flow of $1.349 billion and free cash flow of $1.247 billion, with $125 million in share repurchases during the fourth quarter [7] Stock Performance - The stock experienced a 7.9% decline in pre-market trading on February 13, despite a 54% increase over the past year, outperforming the sub-industry's growth of 49.5% [3]