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Cadence (CDNS) Q4 Earnings & Revenues Top Estimates, Shares Up
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Cadence Design Systems Inc (CDNS - Free Report) posted non-GAAP earnings of 82 cents per share in fourth-quarter 2021, which topped the Zacks Consensus Estimate by 5.1%. However, the bottom line dropped 1.2% year over year.
Revenues of $773 million surpassed the Zacks Consensus Estimate by 2% and increased 1.7% on a year-over-year basis. The top line benefitted from continued strength across all segments. The company ended 2021 with a backlog of $4.4 billion.
For 2021, Cadence reported revenues of $2.988 billion, up 11.4% from the 2020 tally. Non-GAAP earnings per share (EPS) were $3.29 compared with EPS of $2.80 reported in 2020.
Following the announcement, shares of Cadence are up 9.5% in the premarket trading on Feb 23. In the past year, the company’s stock has declined 3.1% compared with the industry’s surge of 12.4%.
Cadence Design Systems, Inc. Price, Consensus and EPS Surprise
In the fourth quarter, Product & Maintenance revenues (93.1% of total revenues) of $720 million declined 0.4% year over year. Services revenues (6.9%) of $53 million increased 43.2% from the year-ago quarter’s figure.
Geographically, Americas, China, Other Asia, Europe, Middle East and Africa (EMEA) and Japan contributed 43%, 12%, 21%, 18% and 6%, respectively, to total revenues in the quarter under review.
Product-wise, Custom IC Design & Simulation, Digital IC Design & Signoff, Functional Verification, IP and Systems Design & Analysis contributed 24%, 29%, 21%, 14% and 12% to total revenues, respectively in the quarter under review.
Cadence Digital Full Flow saw robust traction with 45 new customer wins in 2021. The company’s Cadence Cerebrus solution witnessed accelerating momentum and was deployed by several customers.
Palladium and Protium (especially Z2 and X2) platforms witnessed continued momentum with several deal wins. The company noted that for the hardware family, it won 30 new clients and more than 100 repeat orders in 2021. Most of the deal wins came from clients in the hyperscale, mobile and networking domains.
Cadence’s Verification business reported 20% year over year. The company added 40 new clients for the Jasper verification platform in 2021.
In 2021, Cadence introduced 13 new products, including Cadence Helium Virtual and Hybrid Studio, Midas Safety platform and Allegro X.
Cadence’s System Design & Analysis Business reported 18% year-over-year growth. The company also noted that it now has 250 customers for the Cadence Cloud portfolio.
In the quarter under review, total non-GAAP costs and expenses increased 4.2% year over year to $498 million.
Non-GAAP gross margin expanded 50 basis points (bps) to 92.7%, but the non-GAAP operating margin was down 160 bps on a year-over-year basis to 35.5% in the fourth quarter.
Balance Sheet & Cash Flow
As of Jan 1, 2022, the company had cash and cash equivalents of approximately $1.089 billion compared with $1.014 billion as of Oct 2, 2021.
The company’s long-term debt came in at $347.6 million as of Jan 1, 2022, compared with $347.4 million as of Oct 2, 2021.
The company generated an operating cash flow of $216 million in the reported quarter compared with the prior quarter’s figure of $296 million. Free cash flow in the quarter under review was $201 million compared with $277 million reported in the previous quarter.
In 2021, Cadence generated cash flow from operations of $1.101 billion compared with $905 million in the previous year. Free cash flow for full year was $1.036 million compared with $810 million reported in 2020.
The company repurchased shares worth approximately $110 million in the fourth quarter and $612 million worth of shares for 2021.
Guidance
For 2022, revenues are projected in the range of $3.32-$3.38 billion. The Zacks Consensus Estimate for 2022 revenues is currently pegged at $3.18 billion, which indicates year-over-year growth of 6.3%.
Non-GAAP earnings are expected in the range of $3.70-$3.80 per share. The Zacks Consensus Estimate for 2022 earnings is pegged at $3.55 per share, which suggests year-over-year growth of 7.9%.
Non-GAAP operating margin is forecast in the range of 37.5-39%.
For 2022, operating cash flow is now projected in the range of $1.15-$1.25 billion. Management expects to utilize 50% of the free cash flow generated to buy back shares for the year.
For first-quarter 2022, revenues are projected in the range of $850-$870 million. The Zacks Consensus Estimate for revenues is currently pegged at $750.4 million, suggesting a year-over-year increase of 1.9%.
Non-GAAP earnings are expected in the range of $1.00-$1.04 per share. The Zacks Consensus Estimate for earnings is pegged at 77 cents per share, suggesting a year-over-year decline of 7.2%.
Non-GAAP operating margin is forecast between 40-41% for the first quarter. The company expects to repurchase shares worth $250 million in the current quarter.
The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $33.15 per share. The long-term earnings growth rate of the company is pegged at 14.5%.
Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 1.41%. Shares of Broadcom have increased 26% in the past year.
The Zacks Consensus Estimate for Apple’s fiscal 2022 earnings is pegged at $6.15 per share. The long-term earnings growth rate of the company is pegged at 12.5%.
Apple’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 20.3%. Shares of AAPL have rallied 31.4% in the past year.
The Zacks Consensus Estimate for Texas Instruments for 2022 earnings is pegged at $9.09 per share. The long-term earnings growth rate of the company is pegged at 9.3%.
Texas Instruments’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.4%. Shares of TXN have declined 1.2% in the past year.
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Cadence (CDNS) Q4 Earnings & Revenues Top Estimates, Shares Up
Cadence Design Systems Inc (CDNS - Free Report) posted non-GAAP earnings of 82 cents per share in fourth-quarter 2021, which topped the Zacks Consensus Estimate by 5.1%. However, the bottom line dropped 1.2% year over year.
Revenues of $773 million surpassed the Zacks Consensus Estimate by 2% and increased 1.7% on a year-over-year basis. The top line benefitted from continued strength across all segments. The company ended 2021 with a backlog of $4.4 billion.
For 2021, Cadence reported revenues of $2.988 billion, up 11.4% from the 2020 tally. Non-GAAP earnings per share (EPS) were $3.29 compared with EPS of $2.80 reported in 2020.
Following the announcement, shares of Cadence are up 9.5% in the premarket trading on Feb 23. In the past year, the company’s stock has declined 3.1% compared with the industry’s surge of 12.4%.
Cadence Design Systems, Inc. Price, Consensus and EPS Surprise
Cadence Design Systems, Inc. price-consensus-eps-surprise-chart | Cadence Design Systems, Inc. Quote
Performance in Details
In the fourth quarter, Product & Maintenance revenues (93.1% of total revenues) of $720 million declined 0.4% year over year. Services revenues (6.9%) of $53 million increased 43.2% from the year-ago quarter’s figure.
Geographically, Americas, China, Other Asia, Europe, Middle East and Africa (EMEA) and Japan contributed 43%, 12%, 21%, 18% and 6%, respectively, to total revenues in the quarter under review.
Product-wise, Custom IC Design & Simulation, Digital IC Design & Signoff, Functional Verification, IP and Systems Design & Analysis contributed 24%, 29%, 21%, 14% and 12% to total revenues, respectively in the quarter under review.
Cadence Digital Full Flow saw robust traction with 45 new customer wins in 2021. The company’s Cadence Cerebrus solution witnessed accelerating momentum and was deployed by several customers.
Palladium and Protium (especially Z2 and X2) platforms witnessed continued momentum with several deal wins. The company noted that for the hardware family, it won 30 new clients and more than 100 repeat orders in 2021. Most of the deal wins came from clients in the hyperscale, mobile and networking domains.
Cadence’s Verification business reported 20% year over year. The company added 40 new clients for the Jasper verification platform in 2021.
In 2021, Cadence introduced 13 new products, including Cadence Helium Virtual and Hybrid Studio, Midas Safety platform and Allegro X.
Cadence’s System Design & Analysis Business reported 18% year-over-year growth. The company also noted that it now has 250 customers for the Cadence Cloud portfolio.
In the quarter under review, total non-GAAP costs and expenses increased 4.2% year over year to $498 million.
Non-GAAP gross margin expanded 50 basis points (bps) to 92.7%, but the non-GAAP operating margin was down 160 bps on a year-over-year basis to 35.5% in the fourth quarter.
Balance Sheet & Cash Flow
As of Jan 1, 2022, the company had cash and cash equivalents of approximately $1.089 billion compared with $1.014 billion as of Oct 2, 2021.
The company’s long-term debt came in at $347.6 million as of Jan 1, 2022, compared with $347.4 million as of Oct 2, 2021.
The company generated an operating cash flow of $216 million in the reported quarter compared with the prior quarter’s figure of $296 million. Free cash flow in the quarter under review was $201 million compared with $277 million reported in the previous quarter.
In 2021, Cadence generated cash flow from operations of $1.101 billion compared with $905 million in the previous year. Free cash flow for full year was $1.036 million compared with $810 million reported in 2020.
The company repurchased shares worth approximately $110 million in the fourth quarter and $612 million worth of shares for 2021.
Guidance
For 2022, revenues are projected in the range of $3.32-$3.38 billion. The Zacks Consensus Estimate for 2022 revenues is currently pegged at $3.18 billion, which indicates year-over-year growth of 6.3%.
Non-GAAP earnings are expected in the range of $3.70-$3.80 per share. The Zacks Consensus Estimate for 2022 earnings is pegged at $3.55 per share, which suggests year-over-year growth of 7.9%.
Non-GAAP operating margin is forecast in the range of 37.5-39%.
For 2022, operating cash flow is now projected in the range of $1.15-$1.25 billion. Management expects to utilize 50% of the free cash flow generated to buy back shares for the year.
For first-quarter 2022, revenues are projected in the range of $850-$870 million. The Zacks Consensus Estimate for revenues is currently pegged at $750.4 million, suggesting a year-over-year increase of 1.9%.
Non-GAAP earnings are expected in the range of $1.00-$1.04 per share. The Zacks Consensus Estimate for earnings is pegged at 77 cents per share, suggesting a year-over-year decline of 7.2%.
Non-GAAP operating margin is forecast between 40-41% for the first quarter. The company expects to repurchase shares worth $250 million in the current quarter.
Zacks Rank & Stocks to Consider
Cadence currently carries a Zacks Rank #2 (Buy).
Some better-ranked stocks worth considering from the broader technology sector include Broadcom (AVGO - Free Report) , Apple (AAPL - Free Report) and Texas Instruments (TXN - Free Report) . Apple sports a Zacks Rank #1 while Broadcom and Texas Instruments carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $33.15 per share. The long-term earnings growth rate of the company is pegged at 14.5%.
Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 1.41%. Shares of Broadcom have increased 26% in the past year.
The Zacks Consensus Estimate for Apple’s fiscal 2022 earnings is pegged at $6.15 per share. The long-term earnings growth rate of the company is pegged at 12.5%.
Apple’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 20.3%. Shares of AAPL have rallied 31.4% in the past year.
The Zacks Consensus Estimate for Texas Instruments for 2022 earnings is pegged at $9.09 per share. The long-term earnings growth rate of the company is pegged at 9.3%.
Texas Instruments’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.4%. Shares of TXN have declined 1.2% in the past year.