The Top Line of Cadence’s Gains Rises due to High Demand



Primary reasons for the growth

Cadence Design Systems (CDNS) posted strong revenue growth buoyed by increased global chipset demand coupled with its acquisitions of SFM Technology and Nusemi.

In 4Q17, the company’s top line rose 7% YoY (year-over-year) to nearly $501.7 million. In 2017, its revenue came in at $1.9 billion, a rise of 7% YoY.

In the graph above, we can see the company’s total revenue growth over the last five quarters. During the period, its revenue rose at a CAGR (compound annual growth rate) of 1.7%.

Except for the Functional Verification category, the rest of Cadence’s product categories witnessed YoY rises in revenue in the reported quarter.

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Analysts’ estimates and guidance

According to Yahoo Finance, the average net revenue estimate provided by analysts for Cadence’s 1Q18 is $476.9 million, while the average estimate for its 2018 revenue is $1.9 billion.

The company expects its total 2018 revenue to be between $2.02 billion and $2.06 billion under its new revenue rules. By way of its old accounting method, its revenue was expected to be in the range of $2.06 billion–$2.1 billion. Moreover, CDNS expects its 1Q18 revenue to be in the range of $500 million–$510 million as per its new revenue rule.

The growing demand for smartphones and laptops continues to boost worldwide chipset demand. Hence, a strong partnership with leading chipset makers NVIDIA (NVDA), Texas Instruments (TXN), and Qualcomm (QCOM) could help the company to maintain solid revenue growth going forward.


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