Cadence Design Systems Reports 19% Revenue Growth, Net Income Decline in Q3 2024

Cadence Design Systems, Inc. reported significant financial growth for the three and nine months ended September 30, 2024, with total revenue reaching $1,215.5 million, a 19% increase from $1,023.1 million in the same period of 2023. For the nine-month period, revenue rose to $3,285.3 million, up 9% from $3,021.4 million year-over-year. This growth was driven by a notable increase in services revenue, which surged 101% to $115.1 million for the quarter, largely due to enhanced design service offerings and the acquisition of Invecas, Inc. Product and maintenance revenue also saw a rise, reaching $1,100.4 million for the quarter, up 14% from the previous year.

Despite the revenue growth, Cadence's net income for the three months ended September 30, 2024, decreased to $238.1 million from $254.3 million in 2023, resulting in a basic net income per share of $0.87, down from $0.94. For the nine-month period, net income was $715.3 million, slightly lower than $717.2 million in the prior year. The decline in net income was attributed to increased operating expenses, including higher costs related to acquisitions and restructuring activities initiated in August 2024.

Cadence's total assets increased significantly to $9,167.0 million as of September 30, 2024, compared to $5,669.5 million at the end of 2023. Current assets also rose sharply to $4,099.9 million, driven by a substantial increase in cash and cash equivalents, which reached $2,786.0 million, up from $1,008.2 million. Total stockholders’ equity rose to $4,563.3 million from $3,404.3 million.

The company completed two major acquisitions in 2024: BETA CAE Systems International AG for $1.14 billion and Invecas, Inc. for $71.2 million. These acquisitions are expected to enhance Cadence's capabilities in system design and engineering. The acquisition of BETA CAE was finalized in May 2024, while Invecas was acquired in January 2024. Cadence also established a new five-year senior unsecured revolving credit facility with a borrowing capacity of up to $1.25 billion, which replaced its previous credit facility.

Operating expenses increased due to higher employee-related costs and professional services associated with the acquisitions. Interest expenses also rose significantly, totaling $24.5 million for the quarter, compared to $9.1 million in the same period last year, reflecting the increased debt levels. The company anticipates continued investment in research and development and technical sales support, alongside ongoing restructuring efforts to align resources with its strategic objectives.