Exhibit 99.01
Cadence Reports Third Quarter 2022 Financial Results
SAN JOSE, Calif. — October 24, 2022 — Cadence Design Systems, Inc. (Nasdaq: CDNS) today announced results for the third quarter of 2022.

Cadence reported third quarter 2022 revenue of $903 million, compared to revenue of $751 million for the same period in 2021. On a GAAP basis, Cadence achieved operating margin of 29 percent and recognized net income of $186 million, or $0.68 per share on a diluted basis, in the third quarter of 2022, compared to operating margin of 26 percent and net income of $176 million, or $0.63 per share on a diluted basis, for the same period in 2021.

Using the non-GAAP measures defined below, operating margin for the third quarter of 2022 was 39 percent and net income was $290 million, or $1.06 per share on a diluted basis, compared to operating margin of 36 percent and net income of $222 million, or $0.80 per share on a diluted basis, for the same period in 2021.

“I’m pleased with our excellent results for Q3 driven by our technology leadership, strong execution, diversified customer base and resilient business model,” said Anirudh Devgan, president and chief executive officer. “Generational industry trends are driving continued investment by semiconductor and system companies, and our broad, differentiated portfolio positions us extremely well to help our customers accelerate their next generation innovation.”

“We delivered another quarter of strong financial results,” said John Wall, senior vice president and chief financial officer. “I am pleased that we exceeded all key operating metrics for the quarter, allowing us to raise our full year outlook.”

CFO Commentary
Commentary on the third quarter 2022 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
For the fourth quarter of 2022, the company expects total revenue in the range of $870 million to $890 million. Fourth quarter GAAP operating margin is expected to be approximately 24 percent and GAAP net income per diluted share is expected to be in the range of $0.50 to $0.54. Using the non-GAAP measures defined below, operating margin is expected to be approximately 35 percent and net income per diluted share is expected to be in the range of $0.89 to $0.93.
For fiscal year 2022, the company expects total revenue in the range of $3.532 billion to $3.552 billion. On a GAAP basis, operating margin for 2022 is expected to be in the range of 29.7 percent to 30.7 percent and GAAP net income per diluted share for 2022 is expected to be in the range of $2.71 to $2.75. Using the non-GAAP measures defined below, operating margin for 2022 is expected to be in the range of 39.7 percent to 40.7 percent and net income per diluted share for 2022 is expected to be in the range of $4.20 to $4.24.
The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company’s geographic earnings mix, or other changes to the company’s strategy or business operations. The company expects to use this normalized non-GAAP tax rate through fiscal 2025 but will re-evaluate this rate periodically for significant items that may materially affect its projections.
A schedule showing reconciliations of the business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, is included in this release.




Audio Webcast Scheduled
Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the third quarter 2022 financial results audio webcast today, October 24, 2022, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting October 24, 2022 at 5 p.m. (Pacific) and ending December 16, 2022 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
About Cadence
Cadence is a pivotal leader in electronic systems design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world’s most innovative companies, delivering extraordinary products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For eight years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For. Learn more at www.cadence.com.

© 2022 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.

This document includes forward-looking statements which are based on current expectations and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those described in the forward-looking statements. Statements regarding our outlook on future operating results, strategic objectives, business prospects, technology and product developments, industry trends and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof constitute forward-looking statements. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) change in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence's products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations, inflation rates and Cadence’s ability to access capital and debt markets; (vii) the acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate OpenEye Scientific, Future Facilities or other acquired companies, businesses or technologies; (viii) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (ix) the effects of any litigation, regulatory or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services or properties are subject; and (x) the duration, severity, volatility and effects of the COVID-19 pandemic and containment measures on Cadence, its employees, and its suppliers and customers, which may also have the effect of heightening the other risks described in this paragraph. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.
For a detailed discussion of these and other cautionary statements related to Cadence’s business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-K and Form 10-Q and future filings.



GAAP to Non-GAAP Reconciliation

Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.

To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, investment gains or losses, income or expenses related to Cadence’s non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.

Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
 
Operating Margin ReconciliationThree Months Ended
October 1, 2022October 2, 2021
 (unaudited)
GAAP operating margin as a percent of total revenue29%26%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense8%7%
Amortization of acquired intangibles1%2%
Acquisition and integration-related costs1%1%
Restructuring 0%0%
Non-qualified deferred compensation credits0%0%
Non-GAAP operating margin as a percent of total revenue39%36%


Net Income ReconciliationThree Months Ended
October 1, 2022October 2, 2021
(in thousands)(unaudited)
Net income on a GAAP basis$186,305 $176,307 
Stock-based compensation expense73,451 52,746 
Amortization of acquired intangibles12,813 16,774 
Acquisition and integration-related costs11,418 5,326 
Restructuring 14 (222)
Non-qualified deferred compensation credits(2,885)(351)
Other income or expense related to investments and non-qualified deferred compensation plan assets*4,539 815 
Income tax effect of non-GAAP adjustments4,433 (29,817)
Net income on a non-GAAP basis$290,088 $221,578 

*Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.


Diluted Net Income Per Share ReconciliationThree Months Ended
October 1, 2022October 2, 2021
(in thousands, except per share data)(unaudited)
Diluted net income per share on a GAAP basis$0.68 $0.63 
Stock-based compensation expense0.27 0.19 
Amortization of acquired intangibles0.05 0.06 
Acquisition and integration-related costs0.04 0.02 
Restructuring — — 
Non-qualified deferred compensation credits(0.01)— 
Other income or expense related to investments and non-qualified deferred compensation plan assets*0.02 — 
Income tax effect of non-GAAP adjustments0.01 (0.10)
Diluted net income per share on a non-GAAP basis$1.06 $0.80 
Shares used in calculation of diluted net income per share274,957 278,311 

*Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.




Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Cadence may reiterate the business outlook published in this press release. At the same time, Cadence will keep this press release, including the business outlook, publicly available on its website.
Prior to the start of the Quiet Period (described below), the public may continue to rely on the business outlook contained herein as still being Cadence’s current expectations on matters covered unless Cadence publishes a notice stating otherwise.
Beginning December 16, 2022, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute Cadence’s current expectations. During the Quiet Period, the business outlook in these documents should be considered historical, speaking as of prior to the Quiet Period only and not subject to any update by Cadence. During the Quiet Period, Cadence’s representatives will not comment on Cadence’s business outlook, financial results or expectations. The Quiet Period will extend until Cadence’s fourth quarter 2022 earnings release is published, which is currently scheduled for February 13, 2023.

For more information, please contact:
Cadence Investor Relations
408-944-7100
investor_relations@cadence.com
Cadence Newsroom
408-944-7039
newsroom@cadence.com



Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
October 1, 2022 and January 1, 2022
(In thousands)
(Unaudited)
 
October 1, 2022January 1, 2022
Current assets:
Cash and cash equivalents$1,026,051 $1,088,940 
Receivables, net 391,181 337,596 
Inventories114,283 115,721 
Prepaid expenses and other138,968 173,512 
Total current assets1,670,483 1,715,769 
Property, plant and equipment, net 348,238 305,911 
Goodwill1,348,494 928,358 
Acquired intangibles, net 353,912 233,265 
Deferred taxes783,315 763,770 
Other assets463,645 439,226 
Total assets$4,968,087 $4,386,299 
Current liabilities:
Revolving credit facility$150,000 $— 
Accounts payable and accrued liabilities454,688 417,283 
Current portion of deferred revenue652,306 553,942 
Total current liabilities1,256,994 971,225 
Long-term liabilities:
Long-term portion of deferred revenue102,167 101,148 
Long-term debt647,799 347,588 
Other long-term liabilities252,999 225,663 
Total long-term liabilities1,002,965 674,399 
Stockholders’ equity2,708,128 2,740,675 
Total liabilities and stockholders’ equity$4,968,087 $4,386,299 




Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Nine Months Ended October 1, 2022 and October 2, 2021
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended Nine Months Ended
 October 1, 2022October 2, 2021October 1, 2022October 2, 2021
Revenue:
Product and maintenance$845,788 $706,160 $2,494,317 $2,093,098 
Services56,766 44,735 167,524 122,110 
Total revenue902,554 750,895 2,661,841 2,215,208 
Costs and expenses:
Cost of product and maintenance62,351 54,185 203,863 174,933 
Cost of services25,249 22,402 74,245 62,380 
Marketing and sales152,925 143,401 432,407 412,194 
Research and development323,629 289,105 901,121 845,324 
General and administrative73,688 42,990 174,051 123,275 
Amortization of acquired intangibles3,946 5,000 13,543 14,661 
Restructuring 14 (222)42 (968)
Total costs and expenses641,802 556,861 1,799,272 1,631,799 
Income from operations260,752 194,034 862,569 583,409 
Interest expense(5,463)(4,196)(13,852)(12,729)
Other income (expense), net(3,017)(1,143)(13,879)3,701 
Income before provision for income taxes252,272 188,695 834,838 574,381 
Provision for income taxes65,967 12,388 226,278 55,005 
Net income$186,305 $176,307 $608,560 $519,376 
Net income per share - basic$0.69 $0.65 $2.24 $1.90 
Net income per share - diluted$0.68 $0.63 $2.21 $1.86 
Weighted average common shares outstanding - basic271,131 273,194 271,694 273,636 
Weighted average common shares outstanding - diluted274,957 278,311 275,683 279,046 



Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended October 1, 2022 and October 2, 2021
(In thousands)
(Unaudited) 
Nine Months Ended
 October 1, 2022October 2, 2021
Cash and cash equivalents at beginning of period$1,088,940 $928,432 
Cash flows from operating activities:
Net income608,560 519,376 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization98,178 106,962 
Amortization of debt discount and fees810 952 
Stock-based compensation197,190 155,860 
(Gain) loss on investments, net4,777 (330)
Deferred income taxes(49,834)(34,566)
Provisions for losses on receivables471 234 
ROU asset amortization and change in operating lease liabilities(883)(2,917)
Other non-cash items158 146 
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables(57,309)15,132 
Inventories(8,020)(25,608)
Prepaid expenses and other30,596 36,632 
Other assets17,644 8,127 
Accounts payable and accrued liabilities24,514 10,501 
Deferred revenue113,712 84,183 
Other long-term liabilities(2,305)10,417 
Net cash provided by operating activities978,259 885,101 
Cash flows from investing activities:
Purchases of non-marketable investments(1,000)— 
Proceeds from the sale of non-marketable investments— 128 
Purchases of property, plant and equipment(86,295)(49,977)
Purchases of intangible assets(1,000)— 
Cash paid in business combinations, net of cash acquired (586,163)(220,026)
Net cash used for investing activities(674,458)(269,875)
Cash flows from financing activities:
Proceeds from term loan300,000 — 
Proceeds from revolving credit facility450,000 — 
Payment on revolving credit facility(300,000)— 
Payment of debt issuance costs(425)(1,285)
Proceeds from issuance of common stock103,682 83,632 
Stock received for payment of employee taxes on vesting of restricted stock(103,093)(108,185)
Payments for repurchases of common stock(750,062)(502,301)
Net cash used for financing activities(299,898)(528,139)
Effect of exchange rate changes on cash and cash equivalents(66,792)(1,700)
Increase (decrease) in cash and cash equivalents(62,889)85,387 
Cash and cash equivalents at end of period$1,026,051 $1,013,819 






Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
 
 20212022
GEOGRAPHYQ1Q2Q3Q4YearQ1Q2Q3
Americas46 %44 %46 %43 %45 %47 %45 %45 %
China12 %14 %13 %12 %13 %16 %13 %17 %
Other Asia18 %19 %18 %21 %19 %18 %18 %17 %
Europe, Middle East and Africa18 %17 %17 %18 %17 %14 %18 %16 %
Japan6 %6 %6 %6 %6 %5 %6 %5 %
Total100 %100 %100 %100 %100 %100 %100 %100 %

Revenue Mix by Product Category (% of Total Revenue)
 
 20212022
PRODUCT CATEGORYQ1Q2Q3Q4YearQ1Q2Q3
Custom IC Design and Simulation23 %23 %23 %24 %23 %22 %23 %22 %
Digital IC Design and Signoff27 %28 %29 %29 %29 %27 %27 %29 %
Functional Verification, including Emulation and Prototyping Hardware26 %25 %23 %21 %24 %28 %24 %25 %
IP14 %13 %14 %14 %13 %13 %14 %12 %
System Design and Analysis10 %11 %11 %12 %11 %10 %12 %12 %
Total100 %100 %100 %100 %100 %100 %100 %100 %

















Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of October 24, 2022
(Unaudited)
 
Three Months Ending
December 31, 2022		Year Ending
December 31, 2022
 ForecastForecast
GAAP operating margin as a percent of total revenue~24%29.7% - 30.7%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense8%7.7%
Amortization of acquired intangibles2%1.7%
Acquisition and integration-related costs1%0.9%
Non-qualified deferred compensation credits0%(0.3)%
Non-GAAP operating margin as a percent of total revenue†~35%39.7% - 40.7%
†The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.









































Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of October 24, 2022
(Unaudited)
 
Three Months Ending
December 31, 2022		Year Ending
December 31, 2022
 ForecastForecast
Diluted net income per share on a GAAP basis$0.50 to $0.54$2.71 to $2.75
Stock-based compensation expense0.270.98
Amortization of acquired intangibles0.050.22
Acquisition and integration-related costs0.040.12
Non-qualified deferred compensation credits—(0.04)
Other income or expense related to investments and non-qualified deferred compensation plan assets*—0.06
Income tax effect of non-GAAP adjustments0.030.15
Diluted net income per share on a non-GAAP basis†$0.89 to $0.93$4.20 to $4.24


Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of October 24, 2022
(Unaudited)
 
Three Months Ending
December 31, 2022		Year Ending
December 31, 2022
($ in millions)ForecastForecast
Net income on a GAAP basis$137 to $147$746 to $756
Stock-based compensation expense74271
Amortization of acquired intangibles1560
Acquisition and integration-related costs1033
Non-qualified deferred compensation credits—(12)
Other income or expense related to investments and non-qualified deferred compensation plan assets*—17
Income tax effect of non-GAAP adjustments942
Net income on a non-GAAP basis†$245 to $255$1,157 to $1,167
†
The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
*
Includes, as applicable, equity in losses or income from investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.