Cadence Reports Third Quarter 2025 Financial Results

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

Third Quarter 2025 Financial Results

“Cadence delivered excellent results for the third quarter of 2025. With a record backlog and ongoing broad-based strength of our business, we are raising our full year revenue outlook to ~14% growth year-over-year,” said Anirudh Devgan, president and chief executive officer. “With deepening strategic relationships across the AI ecosystem, Cadence is uniquely positioned to be the trusted partner to deliver AI-centric transformational solutions.”

“I am pleased to report that Cadence delivered strong results for the third quarter of 2025, with broad-based momentum across all our businesses,” said John Wall, senior vice president and chief financial officer. “Strong financial and operational performance resulted in Q3 backlog of $7.0 billion, putting us on track to deliver a strong 2025.”

CFO Commentary

Commentary on the third quarter of 2025 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.

Business Outlook

For fiscal year 2025, the company expects:

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’s geographic earnings mix, or other changes to the company’s 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. Revenue growth outlook is based on the midpoint of the range.

Business Highlights

Audio Webcast Scheduled

Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the third quarter 2025 financial results audio webcast today, October 27, 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 October 27, 2025 at 5 p.m. (Pacific) and ending December 17, 2025 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.

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’s Intelligent System Design™ strategy, are essential for the world’s 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’s top 100 best-managed companies. Cadence solutions offer limitless opportunities—learn more at www.cadence.com.

© 2025 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks 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’s outlook on future operating results, financial condition, strategic objectives, business model and prospects, technology and product developments, strategic relationships, a pending acquisition, backlog, industry trends, market growth, tax rates and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” 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’s 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’s 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’s 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’s products or services; (iv) changes in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence’s products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s 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’s increased debt levels and obligations and Cadence’s ability to access capital and debt markets in the future; (vii) legislative or regulatory requirements; (viii) Cadence’s 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 Cadence’s ongoing compliance, cooperation, audit and other obligations under its July 2025 settlement agreements with the U.S. Department of Justice (“DOJ”) and Bureau of Industry and Security (“BIS”), any further inquiries or adverse actions by the DOJ, BIS or other U.S. or foreign governmental authorities and any impact of the settlements on Cadence’s operations and business dealings in China, U.S. government contracting business and other customer relationships; and (xii) Cadence’s ability to successfully meet any environmental, social and governance targets and practices. In addition, the timing and amount of Cadence’s 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’s 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.

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’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s 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 foreign currency forward exchange contract associated with a pending acquisition, investments, divestitures and Cadence’s non-qualified deferred compensation plan, restructuring, loss related to contingent liability and other significant items not directly related to Cadence’s 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’s 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:

Operating Margin Reconciliation

Three Months Ended

September 30, 2025

September 30, 2024

(unaudited)

GAAP operating margin as a percent of total revenue

31.8%

28.8%

Reconciling items to non-GAAP operating margin as a percent of total revenue:

Stock-based compensation expense

8.7%

9.0%

Amortization of acquired intangibles

1.9%

2.2%

Acquisition and integration-related costs

2.8%

2.4%

Restructuring

2.0%

Non-qualified deferred compensation expenses

0.4%

Non-GAAP operating margin as a percent of total revenue

47.6%

44.8%

Net Income Reconciliation

Three Months Ended

September 30, 2025

September 30, 2024

(in thousands)

(unaudited)

Net income on a GAAP basis

287,122

238,111

Stock-based compensation expense

116,073

109,013

Amortization of acquired intangibles

25,984

26,763

Acquisition and integration-related costs

37,295

29,284

Restructuring

27,394

24,538

Non-qualified deferred compensation expenses

5,760

4,567

Other income or expense related to foreign currency forward exchange contract associated with a pending acquisition

18,561

—

Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets

8,741

11,582

Income tax effect of non-GAAP adjustments

1,283

6,341

Net income on a non-GAAP basis

528,213

450,199

Diluted Net Income Per Share Reconciliation

Three Months Ended

September 30, 2025

September 30, 2024

(in thousands, except per share data)

(unaudited)

Diluted net income per share on a GAAP basis

1.05

0.87

Stock-based compensation expense

0.42

0.40

Amortization of acquired intangibles

0.10

Acquisition and integration-related costs

0.14

0.11

Restructuring

0.10

0.09

Non-qualified deferred compensation expenses

0.02

0.01

Other income or expense related to foreign currency forward exchange contract associated with a pending acquisition

0.07

—

Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets

0.03

0.04

Income tax effect of non-GAAP adjustments

—

0.02

Diluted net income per share on a non-GAAP basis

1.93

1.64

Shares used in calculation of diluted net income per share

273,798

273,958

2,753,246

2,644,030

755,265

680,460

286,193

257,711

492,336

433,878

4,287,040

4,016,079

494,701

458,200

2,644,910

2,378,671

672,508

594,734

892,568

982,057

607,544

544,741

9,599,271

8,974,482

631,273

632,692

775,284

737,413

1,406,557

1,370,105

130,060

115,168

2,479,142

2,476,183

384,510

339,448

2,993,712

2,930,799

5,199,002

4,673,578

9,599,271

8,974,482

1,207,703

1,100,380

3,489,063

2,974,222

131,135

115,119

367,582

311,061

1,338,838

1,215,499

3,856,645

3,285,283

118,702

109,593

374,672

279,351

63,493

53,451

158,823

148,160

192,560

189,763

595,855

557,077

423,031

407,369

1,304,190

1,157,067

78,035

71,581

210,162

203,733

10,233

9,148

28,359

21,222

128,545

27,394

24,538

27,332

24,785

913,448

865,443

2,827,938

2,391,395

425,390

350,056

1,028,707

893,888

(29,035

)

(24,495

)

(87,101

)

(46,092

)

(3,572

)

7,853

87,476

111,371

392,783

333,414

1,029,082

959,167

105,661

95,303

308,330

243,893

287,122

238,111

720,752

715,274

1.06

0.87

2.65

2.64

1.05

0.87

2.64

2.61

271,152

272,244

271,471

270,925

273,798

273,958

273,440

273,679

2025

2024

2,644,030

1,008,152

720,752

715,274

163,269

142,252

342,011

284,711

(22,135

)

(64,458

)

89,756

(5,082

)

1,702

(1,100

)

4,713

3,814

(90,666

)

(44,766

)

(60,858

)

(139,179

)

(14,834

)

(114,785

)

5,811

(8,759

)

(23,237

)

21,858

44,456

6,680

14,546

22,732

1,175,286

819,192

(35,182

)

(2,095

)

3,493

45,656

11,500

(100,830

)

(105,340

)

(250,695

)

(735,327

)

(371,714

)

(797,106

)

3,196,595

(1,000,000

)

(22,669

)

138,069

193,933

(148,130

)

(217,462

)

(725,025

)

(400,018

)

(735,086

)

1,750,379

40,730

5,423

109,216

1,777,888

2,753,246

2,786,040

2024

2025

46%

49%

50%

49%

48%

49%

43%

12%

13%

12%

11%

18%

20%

19%

17%

18%

19%

18%

17%

14%

15%

16%

14%

100%

2024

2025

76%

73%

70%

68%

71%

12%

13%

14%

13%

14%

13%

14%

12%

14%

16%

19%

16%

15%

16%

15%

100%

32.5% - 33.5%

27.9% - 28.9%

44.5% - 45.5%

43.9% - 44.9%

0.41

1.66

0.10

0.37

0.11

0.42

0.10

0.04

0.01

0.47

0.07

(0.12)

0.09

0.20

113

455

103

115

129

(34)

CDNS–IR

Category: Financial, Featured