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Cadence’s IP Product Category to Get a Boost

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Mar. 8 2018, Updated 7:34 a.m. ET

4Q17 and 2017 performances

Cadence Design Systems’ (CDNS) IP (intellectual property) product division has posted strong double-digit growth in revenue driven by large contract wins and increased royalties from Tensilica. 

In 4Q17, the division’s revenue rose 16.7% YoY (year-over-year) to $60.2 million. Similarly, in 2017, its revenue came in at $223.5 million, a rise of 17.2%.

In the graph above, we can see the revenue growth in Cadence’s IP product division over the last five quarters. During the period, the division’s revenue fell at a CAGR (compound annual growth rate) of 3.9%.

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Key elements driving the IP business

The IP product category recently inked a huge deal with a major client in the automotive semiconductor sector. The company’s Tensilica product is gaining huge traction in the smart speaker market and has been accepted by the top two customers in the automotive semiconductor space. 

Moreover, growing acceptance of DSPs (digital signal processor) in the vision and neural network areas may continue to boost the company’s IP product business.

The company has also struck several important contracts in its safety, test, and reliability EDA (electronic design automation) solutions. The company has also built strong partnerships with GE Aviation (GE) and Northrop Grumman (NOC), which may further allow Cadence’s IP products to gain a strong foothold with both defense contractors and governmental agencies.

In 2017, the company struck a major deal on a design IP contract. The agreement includes a broad array of design IP, including DDR (double data rate) controllers and PCI Express (Peripheral Component Interconnect Express). Such a strong product portfolio in the IP division coupled with solid partnership could continue to drive the company’s IP revenue.

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