Cadence Reports Second Quarter 2022 Financial Results

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 Reconciliation

 

Three Months Ended

 

 

July 2, 2022

 

July 3, 2021

 

 

(unaudited)

GAAP operating margin as a percent of total revenue

 

33%

 

25%

Reconciling items to non-GAAP operating margin as a percent of total revenue:

 

 

 

 

Stock-based compensation expense

 

7%

 

7%

Amortization of acquired intangibles

 

2%

 

2%

Acquisition and integration-related costs

 

1%

 

1%

Restructuring

 

0%

 

0%

Non-qualified deferred compensation expenses (credits)

 

(1)%

 

0%

Special charges*

 

0%

 

4%

Non-GAAP operating margin as a percent of total revenue

 

42%

 

39%

*

Q2 2021 includes costs related to a voluntary retirement program.

Net Income Reconciliation

 

Three Months Ended

 

 

July 2, 2022

 

July 3, 2021

(in thousands)

 

(unaudited)

Net income on a GAAP basis

 

$

186,920

 

 

$

155,900

 

Stock-based compensation expense

 

 

64,270

 

 

 

50,518

 

Amortization of acquired intangibles

 

 

14,701

 

 

 

17,262

 

Acquisition and integration-related costs

 

 

8,278

 

 

 

5,631

 

Restructuring

 

 

16

 

 

 

(469

)

Non-qualified deferred compensation expenses (credits)

 

 

(6,524

)

 

 

2,411

 

Special charges*

 

 

 

 

 

26,832

 

Other income or expense related to investments and non-qualified deferred compensation plan assets**

 

 

7,610

 

 

 

(1,774

)

Income tax effect of non-GAAP adjustments

 

 

22,551

 

 

 

(18,023

)

Net income on a non-GAAP basis

 

$

297,822

 

 

$

238,288

 

*

Q2 2021 includes costs related to a voluntary retirement program.

 

**

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 Reconciliation

 

Three Months Ended

 

 

July 2, 2022

 

July 3, 2021

(in thousands, except per share data)

 

(unaudited)

Diluted net income per share on a GAAP basis

 

$

0.68

 

 

$

0.56

 

Stock-based compensation expense

 

 

0.23

 

 

 

0.18

 

Amortization of acquired intangibles

 

 

0.05

 

 

 

0.06

 

Acquisition and integration-related costs

 

 

0.03

 

 

 

0.02

 

Restructuring

 

 

 

 

 

 

Non-qualified deferred compensation expenses (credits)

 

 

(0.02

)

 

 

0.01

 

Special charges*

 

 

 

 

 

0.10

 

Other income or expense related to investments and non-qualified deferred compensation plan assets**

 

 

0.03

 

 

 

(0.01

)

Income tax effect of non-GAAP adjustments

 

 

0.08

 

 

 

(0.06

)

Diluted net income per share on a non-GAAP basis

 

$

1.08

 

 

$

0.86

 

Shares used in calculation of diluted net income per share

 

 

275,172

 

 

 

278,558

 

*

Q2 2021 includes costs related to a voluntary retirement program.

 
**

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.


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