Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Cadence Design Systems Inc., EBITDA calculation
US$ in thousands
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).
The financial data reveals a consistent upward trend in all profitability metrics over the five-year period ending December 31, 2024. Each key income measure—Net Income, Earnings Before Tax (EBT), Earnings Before Interest and Tax (EBIT), and Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)—shows sustained growth year over year.
- Net Income
- Net Income demonstrates a steady increase, rising from approximately 590.6 million US dollars in 2020 to about 1.06 billion in 2024. This represents nearly an 80% growth over the period, indicative of improved profitability and effective management of costs and revenues.
- Earnings Before Tax (EBT)
- EBT also exhibits a strong upward trend, increasing from around 632.7 million in 2020 to approximately 1.40 billion in 2024. The growth rate here slightly outpaces that of net income, suggesting beneficial tax management or changes in tax rates may be contributing factors.
- Earnings Before Interest and Tax (EBIT)
- EBIT grew from 653.5 million in 2020 to roughly 1.47 billion in 2024, showing consistent operational profitability improvements. The rise confirms expanding earnings from core business activities prior to the influence of financing and tax expenses.
- EBITDA
- EBITDA increased from 799.2 million in 2020 to about 1.67 billion in 2024, marking significant growth in earnings before depreciation and amortization. This growth points to robust cash flow generation potential and suggests that operating expenses excluding non-cash charges have been well managed or improved.
Overall, the data indicates expanding profitability and financial strength, with a steady improvement in both the absolute values and the relative growth of key earnings metrics. The consistent increase across all levels of earnings suggests enhancing operational efficiency, effective tax planning, and strong revenue growth. There are no apparent signs of volatility or decline, confirming stable and positive performance over the analysis period.
Enterprise Value to EBITDA Ratio, Current
Cadence Design Systems Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 86,379,630) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 1,668,753) |
| Valuation Ratio | |
| EV/EBITDA | 51.76 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Accenture PLC | 15.30 |
| Adobe Inc. | 19.28 |
| CrowdStrike Holdings Inc. | 390.59 |
| Fair Isaac Corp. | 52.17 |
| International Business Machines Corp. | 24.93 |
| Intuit Inc. | 46.27 |
| Microsoft Corp. | 28.13 |
| Oracle Corp. | 30.25 |
| Palantir Technologies Inc. | 666.03 |
| Palo Alto Networks Inc. | 98.10 |
| Salesforce Inc. | 21.75 |
| ServiceNow Inc. | 83.79 |
| Synopsys Inc. | 44.05 |
| Workday Inc. | 51.00 |
| EV/EBITDA, Sector | |
| Software & Services | 31.52 |
| EV/EBITDA, Industry | |
| Information Technology | 34.76 |
Based on: 10-K (reporting date: 2024-12-31).
1 Click competitor name to see calculations.
If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.
Enterprise Value to EBITDA Ratio, Historical
Cadence Design Systems Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 70,504,589) | 81,383,702) | 50,546,221) | 36,751,293) | 36,562,087) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 1,668,753) | 1,463,403) | 1,200,385) | 927,723) | 799,150) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 42.25 | 55.61 | 42.11 | 39.61 | 45.75 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Accenture PLC | 19.87 | 17.26 | 14.25 | 23.31 | 17.46 | |
| Adobe Inc. | 22.06 | 34.07 | 22.32 | 35.44 | 43.06 | |
| CrowdStrike Holdings Inc. | 262.20 | — | — | — | — | |
| Fair Isaac Corp. | 69.56 | 37.61 | 22.83 | 21.71 | 42.84 | |
| International Business Machines Corp. | 22.90 | 14.41 | 22.17 | 12.53 | 12.28 | |
| Intuit Inc. | 38.55 | 38.71 | 36.22 | 51.96 | 35.70 | |
| Microsoft Corp. | 23.66 | 22.92 | 20.17 | 24.59 | 21.74 | |
| Oracle Corp. | 21.81 | 21.80 | 17.12 | 13.78 | 11.54 | |
| Palantir Technologies Inc. | 551.39 | 175.93 | — | — | — | |
| Palo Alto Networks Inc. | 84.17 | 85.08 | 515.19 | — | 349.99 | |
| Salesforce Inc. | 31.64 | 38.31 | 38.88 | 33.83 | 49.45 | |
| ServiceNow Inc. | 87.89 | 96.48 | 104.30 | 147.45 | 220.91 | |
| Synopsys Inc. | 39.17 | 54.59 | 36.73 | 53.43 | 42.24 | |
| Workday Inc. | 86.37 | 216.44 | 147.90 | 670.04 | — | |
| EV/EBITDA, Sector | ||||||
| Software & Services | 27.25 | 25.27 | 22.55 | 25.66 | 23.30 | |
| EV/EBITDA, Industry | ||||||
| Information Technology | 27.64 | 23.56 | 18.28 | 20.46 | 19.69 | |
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).
3 2024 Calculation
EV/EBITDA = EV ÷ EBITDA
= 70,504,589 ÷ 1,668,753 = 42.25
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value displayed a fluctuating upward trend over the analyzed period. Beginning at approximately 36.56 billion USD at the end of 2020, it remained relatively stable into 2021 before experiencing a notable increase to about 50.55 billion USD in 2022. This growth accelerated sharply in 2023, reaching roughly 81.38 billion USD, followed by a decline in 2024 to around 70.50 billion USD. This pattern indicates significant market valuation adjustments, with a peak in 2023 and a partial retracement thereafter.
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA exhibited consistent growth throughout the period under review. Starting at 799.15 million USD in 2020, it increased steadily each year, reaching approximately 927.72 million USD in 2021, 1.20 billion USD in 2022, 1.46 billion USD in 2023, and further to 1.67 billion USD in 2024. This upward trajectory suggests improving operational profitability and strong earnings generation over these years.
- EV/EBITDA Ratio
- The EV/EBITDA ratio reflected variability that partially countered the trends seen in enterprise value and EBITDA alone. Beginning at 45.75 in 2020, the ratio decreased to 39.61 in 2021, indicating a more favorable valuation relative to earnings. It increased again to 42.11 in 2022, signifying a slight revaluation. A significant spike occurred in 2023, with the ratio rising sharply to 55.61, which could imply increased market valuation relative to earnings or potential concerns over sustaining EBITDA growth. In 2024, the ratio declined to 42.25, suggesting a rebalancing toward a more normalized valuation aligned with earnings performance.
- Summary of Trends
- Overall, the data reveals a company experiencing strong and consistent earnings growth alongside fluctuating market valuation. The sharp rise and subsequent fall in enterprise value and EV/EBITDA ratio around 2023 imply possible market optimism followed by correction. The EBITDA growth underscores operational improvement, which remains the foundation for valuation. The oscillation in valuation multiples suggests external factors or market sentiment may have influenced investor perceptions beyond fundamental earnings performance.