Last week Cadence reported both its 4Q11 and its fiscal 2011 results. The bottom line is that 2011 was a good year for EDA, at least most of EDA. Cadence reported 4th quarter revenue of $308 million an improvement of 24% over the same period in 2010. For the year Cadence had revenue of $1.150 billion which are 23% more than the previous year. Considering that the market capitalization of the company is around $2.944 billion I agree with Jay Vleeschhouwer that its stock is undervalued at present.
When looking at revenue by product category, the three largest sources of revenue were Functional Verification and IP representing almost 31% of yearly revenue, Custom IC design at 22%, and Digital IC design which almost equaled the custom IC design group (21.9%). Geographically practically 45% of revenue originated from the US, while Europe and Japan were practically equal at 19% of revenue each. Rest of Asia represented slightly more than 17% of revenue.
When it comes to the balance sheet, Cadence now has more cash ($605 million) then convertible notes ($509 million) after last December it retired its 2011 convertible notes using $150 million in cash. During the year Cadence generated $240 million in cash, significantly more than in 2010 (142 in 2010). In 2011 Cadence spent around $400 million in R&D and $323 million in Marketing and Sales, a sign that the company is investing in the future.
Cadence is working with both GlobalFoundries and Samsung on developing support for these foundries advanced process nodes, so it will certainly play a significant role in the coming years. A reasonable balance sheet, growing revenue worldwide, and focus on R&D should keep Cadence as a very competitive supplier of EDA tools in the next two or three years.