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Cadence Reports Second Quarter 2025 Financial Results

Exceeded Q2 Guidance for Revenue & Non-GAAP EPS

Raising 2025 Revenue, Non-GAAP EPS & Cash Flow Outlook

SAN JOSE, Calif.--(BUSINESS WIRE)-- Cadence (Nasdaq: CDNS) today announced results for the second quarter of 2025.

Second Quarter 2025 Financial Results

• Revenue of $1.275 billion, compared to revenue of $1.061 billion in Q2 2024
• GAAP operating margin of 19.0%, compared to 27.7% in Q2 2024
• GAAP diluted net income per share of $0.59, compared to $0.84 in Q2 2024
• Non-GAAP operating margin of 42.8%, compared to 40.1% in Q2 2024
• Non-GAAP diluted net income per share of $1.65, compared to $1.28 in Q2 2024
• Quarter-end backlog was $6.4 billion and current remaining performance obligations (鈥渃RPO鈥�), contract revenue expected to be recognized as revenue in the next 12 months, was $3.1 billion
• GAAP results include a one-time charge relating to the $140.6 million settlements of our previously disclosed legal proceedings with the U.S. Department of Justice (鈥淒OJ鈥�) and the Bureau of Industry and Security (鈥淏IS鈥�) of the U.S. Department of Commerce

鈥淐adence delivered an exceptional Q2, with 20% year-over-year revenue growth and stronger than expected bookings. This highlighted the strategic relevance of our AI-driven portfolio and the depth of our customer relationships,鈥� said Anirudh Devgan, president and chief executive officer. 鈥淭he strength and breadth of our products are enabling us to lead through the accelerating waves of the AI Supercycle, from AI infrastructure build-out, to physical AI in autonomous systems, to the emerging frontier of science AI.鈥�

鈥淚 am pleased to report that Cadence delivered excellent results for Q2, with broad-based strength across all businesses, more than offsetting the impact of the temporary restrictions on exports to China imposed on May 23^rd,鈥� said John Wall, senior vice president and chief financial officer. 鈥淲e are raising our 2025 revenue outlook to 13% growth year-over-year, and non-GAAP operating margin to 44%.鈥�

CFO Commentary

Commentary on the second quarter of 2025 financial results by John Wall, senior vice president and chief financial officer, is available at .

Business Outlook

For fiscal year 2025, the company expects:

• Revenue in the range of $5.21 billion to $5.27 billion
• GAAP operating margin in the range of 28.5% to 29.5%
• Non-GAAP operating margin in the range of 43.5% to 44.5%
• GAAP diluted net income per share in the range of $3.97 to $4.07
• Non-GAAP diluted net income per share in the range of $6.85 to $6.95
• Operating cash flow in the range of $1.65 billion to $1.75 billion

At the midpoint, the $50 million increase in operating cash flow outlook is primarily driven by the $50 million increase in revenue outlook. Cadence anticipates a $140.6 million cash outflow relating to the DOJ and BIS settlements. In addition, Cadence expects to benefit from approximately $140 million in reduced cash tax payments due to the immediate expensing of U.S. R&D expenditures under the One Big Beautiful Bill Act.

The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company鈥檚 geographic earnings mix, or other changes to the company鈥檚 strategy or business operations. The company expects to use the current normalized non-GAAP tax rate through fiscal 2025 but will re-evaluate this rate periodically for significant items that may materially affect its projections.

Reconciliations of the financial results and business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, are included in this press release.

Business Highlights

• Launched Cadence Cerebrus AI Studio, an agentic AI implementation platform delivering up to 20% PPA improvement and 5x to 10x faster chip delivery time.
• Launched Millennium M2000 AI Supercomputer featuring Nvidia Blackwell, delivering AI-accelerated simulation at unprecedented speed and scale across engineering and science workloads.
• Core EDA, comprised of Cadence鈥檚 digital, custom / analog and verification businesses, delivered 16% year-over-year revenue growth, driven by further proliferation of Cadence's AI portfolio.
• IP business delivered more than 25% year-over-year revenue growth, driven by product strength and a broadening silicon solutions portfolio.
• System Design & Analysis business achieved 35% year-over-year revenue growth driven by Cadence鈥檚 multi-physics analysis platform and AI-driven optimization, which delivered superior results.

Audio Webcast Scheduled

Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the second quarter 2025 financial results audio webcast today, July 28, 2025, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting July 28, 2025 at 5 p.m. (Pacific) and ending September 16, 2025 at 5 p.m. (Pacific). Webcast access is available at .

About Cadence

Cadence is a market leader in AI and digital twins, pioneering the application of computational software to accelerate innovation in the engineering design of silicon to systems. Our design solutions, based on Cadence鈥檚 Intelligent System Design鈩� strategy, are essential for the world鈥檚 leading semiconductor and systems companies to build their next-generation products from chips to full electromechanical systems that serve a wide range of markets, including hyperscale computing, mobile communications, automotive, aerospace, industrial, life sciences and robotics. In 2024, Cadence was recognized by the Wall Street Journal as one of the world鈥檚 top 100 best-managed companies. Cadence solutions offer limitless opportunities鈥攍earn more at .

漏 2025 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.

This press release contains forward-looking statements, including Cadence鈥檚 outlook on future operating results, financial condition, strategic objectives, business model and prospects, technology and product developments, backlog, industry trends, market growth, settlements of legal proceedings, tax payments and rates and other statements using words such as 鈥渁nticipates,鈥� 鈥渂elieves,鈥� 鈥渆xpects,鈥� 鈥渋ntends,鈥� 鈥減lans,鈥� 鈥渨ill,鈥� and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence鈥檚 control, and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence鈥檚 ability to compete successfully in the highly competitive industries in which it operates and realize the benefits of its investments in research and development, including opportunities presented by AI; (ii) the success of Cadence鈥檚 efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence鈥檚 products or services; (iv) changes in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence鈥檚 products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence鈥檚 customers; (v) economic, geopolitical and industry conditions, including export controls, tariffs, other trade restrictions and other government regulations, as well as rising tensions and armed conflicts around the world; (vi) changes in tax laws, interest rate and currency exchange rate fluctuations, inflation rates, Cadence鈥檚 increased debt levels and obligations and Cadence鈥檚 ability to access capital and debt markets in the future; (vii) legislative or regulatory requirements; (viii) Cadence鈥檚 pending acquisitions which remain subject to certain closing conditions, the acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (ix) potential harm caused by compromises in cybersecurity and cybersecurity attacks; (x) capital expenditure requirements and events that affect cash flow, liquidity or reserves, or estimates Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (xi) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject, including the settlements with the DOJ (which is subject to court approval) and BIS, Cadence鈥檚 ongoing compliance, cooperation, audit and other obligations under the settlement agreements, any further inquiries or adverse actions by the court, the DOJ, BIS or other U.S. or foreign governmental authorities and any impact of the settlements on Cadence鈥檚 operations and business dealings in China, U.S. government contracting business and other customer relationships; and (xii) Cadence鈥檚 ability to successfully meet any environmental, social and governance targets and practices. In addition, the timing and amount of Cadence鈥檚 repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.

For a detailed discussion of these and other cautionary statements related to Cadence and its business, please refer to Cadence鈥檚 filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings. Cadence plans to file a current report on Form 8-K with more information about the DOJ and BIS settlements and will include further information in its Form 10-Q for the fiscal quarter ended June 30, 2025.

All forward-looking statements in this press release are based on management's expectations as of the date of this press release and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

GAAP to Non-GAAP Reconciliation

Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.

To supplement Cadence鈥檚 financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence鈥檚 performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, income or expenses related to investments, divestitures and Cadence鈥檚 non-qualified deferred compensation plan, restructuring, loss related to contingent liability and other significant items not directly related to Cadence鈥檚 core business operations, and the income tax effect of non-GAAP pre-tax adjustments.

Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence鈥檚 core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.

The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:

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For more information, please contact:

Cadence Investor Relations

408-944-7100

[email protected]

Cadence Newsroom

408-944-7039

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Source: Cadence Design Systems, Inc.