Name: Cadence Design Systems Inc. (NASDAQ:CDNS) | Common-Size Income Statement
Creator: Stock Analysis on Net

Common-Size Income Statement

Cadence Design Systems Inc., common-size consolidated income statement

12 months ended:	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Product and maintenance	90.78%	93.75%	93.78%	94.13%	94.55%
Services	9.22%	6.25%	6.22%	5.87%	5.45%
Revenue	100.00%	100.00%	100.00%	100.00%	100.00%
Cost of product and maintenance	-9.41%	-8.11%	-7.68%	-7.45%	-8.61%
Cost of services	-4.54%	-2.53%	-2.75%	-2.82%	-2.78%
Cost of revenue	-13.95%	-10.64%	-10.43%	-10.27%	-11.39%
Gross margin	86.05%	89.36%	89.57%	89.73%	88.61%
Marketing and sales	-16.32%	-16.88%	-16.96%	-18.75%	-19.25%
Research and development	-33.38%	-35.25%	-35.14%	-37.96%	-38.53%
General and administrative	-6.08%	-5.93%	-6.80%	-6.33%	-5.76%
Amortization of acquired intangibles	-0.65%	-0.44%	-0.52%	-0.66%	-0.67%
Restructuring	-0.51%	-0.27%	0.00%	0.04%	-0.34%
Income from operations	29.10%	30.59%	30.15%	26.07%	24.06%
Interest expense	-1.64%	-0.88%	-0.64%	-0.57%	-0.77%
Interest income	1.35%	0.72%	0.28%	0.09%	0.14%
Gains (losses) on investments	1.07%	0.85%	-0.15%	0.02%	-0.18%
Gains (losses) on securities in NQDC trust	0.24%	0.27%	-0.25%	0.21%	0.18%
Gains (losses) on foreign exchange	-0.02%	-0.13%	-0.01%	-0.09%	0.17%
Other expense, net	-0.03%	-0.07%	-0.02%	-0.01%	-0.01%
Other income (expense), net	2.61%	1.64%	-0.15%	0.21%	0.30%
Income before provision for income taxes	30.07%	31.34%	29.35%	25.72%	23.58%
Provision for income taxes	-7.33%	-5.89%	-5.51%	-2.43%	-1.57%
Net income	22.74%	25.46%	23.84%	23.29%	22.02%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Revenue Composition: The revenue breakdown shows a consistent majority contribution from product and maintenance services, although its share has gradually declined from 94.55% in 2020 to 90.78% in 2024. In contrast, the services segment has increased its proportion of revenue from 5.45% to 9.22% over the same period, indicating a strategic shift toward higher services engagement.
Cost Structure: The cost of product and maintenance as a percentage of revenue has fluctuated, initially decreasing between 2020 and 2021 but rising in later years to reach 9.41% in 2024. The cost of services shows a similar pattern with a notable increase to 4.54% in 2024, driving total cost of revenue higher from 11.39% in 2020 to 13.95% in 2024. This indicates increased expense pressure in both product and service cost areas, potentially impacting gross profitability.
Gross Margin: Gross margin as a percentage of revenue improved from 88.61% in 2020 to a peak of 89.73% in 2021 but then trended downward to 86.05% by 2024. This decline corresponds with the rising cost of revenue, signaling margin compression despite revenue composition changes.
Operating Expenses: Marketing and sales expenses have steadily decreased from 19.25% in 2020 to 16.32% in 2024, reflecting improved operational efficiency or a strategic reduction. Research and development expenses also show a decreasing trend from 38.53% to 33.38%, suggesting cost management or resource reallocation in innovation efforts. General and administrative costs remained relatively stable, fluctuating around 6%. Amortization of acquired intangibles has generally decreased, with a slight uptick in 2024.
Profitability: Income from operations increased from 24.06% in 2020 to a peak of 30.59% in 2023, before slightly declining to 29.1% in 2024. The improvement reflects efficient control over operating expenses and revenue growth. However, the decline in 2024 may be linked to increased costs and lower gross margin.
Financial Income and Expenses: Interest expense has increased notably from 0.77% in 2020 to 1.64% in 2024, suggesting higher borrowing costs or increased debt levels. Conversely, interest income has grown significantly from 0.14% to 1.35%, possibly due to better cash management or higher interest rates. Gains on investments and securities show fluctuating results but overall positive trends toward 2024. Foreign exchange gains/losses and other expense items have minimal impact.
Income Before Taxes and Tax Provision: Income before provision for income taxes rose from 23.58% in 2020 to a maximum of 31.34% in 2023, then decreased to 30.07% in 2024, closely mirroring operating income trends. The provision for income taxes increased substantially as a percentage of revenue from 1.57% to 7.33%, indicating higher effective tax rates or increased tax liabilities affecting net profitability.
Net Income: Net income as a percentage of revenue showed an increasing trend from 22.02% in 2020 to 25.46% in 2023, followed by a decline to 22.74% in 2024. The peak in net income corresponds with optimal operational efficiency and lower tax impact, while the subsequent decline reflects rising costs and tax provisions.

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