Cadence Design Systems, Inc. today reported its results under new revenue rules, ASC Topic 606. For the second quarter of 2018, Cadence reported revenue of $518 million, GAAP net income of $75 million, or $0.27 per share on a diluted basis, and non-GAAP net income (as defined below), of $126 million, or $0.45 per share on a diluted basis.
Cadence also reported its results under the old revenue rules, ASC Topic 605, for easier comparison with prior results, all of which were reported under ASC Topic 605.
Under ASC Topic 605, for the second quarter of 2018, Cadence reported revenue of $515 million, compared to revenue of $479 million reported for the same period in 2017. On a GAAP basis, Cadence recognised net income of $73 million, or $0.26 per share on a diluted basis, in the second quarter of 2018, compared to net income of $69 million, or $0.25 per share on a diluted basis for the same period in 2017. Using the non-GAAP measure defined below, net income for the second quarter of 2018 was $124 million, or $0.44 per share on a diluted basis, as compared to non-GAAP net income of $94 million, or $0.34 per share on a diluted basis, for the same period in 2017.
“Multiple technology waves, especially machine learning, are driving increased design activity and our System Design Enablement strategy is perfectly positioned to benefit from these across multiple verticals,” said Lip-Bu Tan, chief executive officer. “We had notable wins in Aerospace & Defence and introduced Cadence Cloud, the industry’s first broad cloud portfolio for the development of electronic systems and semiconductors.”
“Consistent execution delivered good results for Cadence again this quarter. We continue to lead with innovation, making Cadence products increasingly mission critical to our customers, while our efforts to continually improve operational efficiency results in increased profitability flowing through to free cash flow,” said John Wall, senior vice president and chief financial officer.
Business outlook
The outlook provided below is on an ASC Topic 606 basis, which Cadence has adopted for its fiscal year 2018 using the modified retrospective transition method. As required by the new standard, the company will report revenue under both methods for the 2018 transition year.
For the third quarter of 2018, the company expects total revenue in the range of $510 million to $520 million. Third quarter GAAP net income per diluted share is expected to be in the range of $0.22 to $0.24. Net income per diluted share using the non-GAAP measure defined below is expected to be in the range of $0.40 to $0.42.
For 2018, the company expects total revenue in the range of $2.070 billion to $2.090 billion. On a GAAP basis, net income per diluted share for 2018 is expected to be in the range of $0.95 to $1.01. Using the non-GAAP measure defined below, net income per diluted share for 2018 is expected to be in the range of $1.64 to $1.70.
For 2018, the company is forecasting a non-GAAP income tax rate of 16 percent, down from 23 per cent used in 2017, primarily resulting from the tax rate reduction.
For comparison purposes, the company expects the outlook at the midpoint for 2018 on the prior ASC Topic 605 basis to be as follows: revenue of $2.105 billion, GAAP net income per diluted share of $1.06 and non-GAAP net income per diluted share of $1.74.
A schedule showing a reconciliation of the business outlook from GAAP net income and diluted net income per share to non-GAAP net income and diluted net income per share is included in this release.
