Open the filing on EDGARCadence Reports Third Quarter 2025 Financial Results
Record Backlog of $7.0 Billion
Raising 2025 Revenue Outlook to ~14% Growth YoY
SAN JOSE, Calif. - October 27, 2025 - Cadence (Nasdaq: CDNS) today announced results for the third quarter of 2025.
Third Quarter 2025 Financial Results
- Revenue of $1.339 billion, compared to revenue of $1.215 billion in Q3 2024
- GAAP operating margin of 31.8%, compared to 28.8% in Q3 2024
- Non-GAAP operating margin of 47.6%, compared to 44.8% in Q3 2024
- GAAP diluted net income per share of $1.05, compared to $0.87 in Q3 2024
- Non-GAAP diluted net income per share of $1.93, compared to $1.64 in Q3 2024
- Quarter-end backlog was $7.0 billion and revenue expected to be recognized in the next 12 months from remaining performance obligations was $3.5 billion
“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:
- Revenue in the range of $5.262 billion to $5.292 billion
- GAAP operating margin in the range of 27.9% to 28.9%
- Non-GAAP operating margin in the range of 43.9% to 44.9%
- GAAP diluted net income per share in the range of $3.80 to $3.86
- Non-GAAP diluted net income per share in the range of $7.02 to $7.08
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
- IP business maintained strong momentum, driven by global accelerating IP demand and increasing customer proliferation of Cadence's expanding IP portfolio
- Completed acquisition of the Arm Artisan foundation IP that augments Cadence's Design IP portfolio with standard cell libraries, memory compilers, and I/Os
- Hardware had a record Q3 with several significant expansions, especially at AI and HPC customers
- Signed a definitive agreement to acquire Hexagon’s D&E business, which will expand Cadence’s portfolio with leading structural analysis and multi-body dynamics technologies
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.
Forward-looking statements notice
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:
| September 30, 2025 | September 30, 2024 |
|---|
| (unaudited) |
|---|
| Operating Margin Reconciliation | Three Months Ended |
| 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% | 2.0% |
| Non-qualified deferred compensation expenses | 0.4% | 0.4% |
| Non-GAAP operating margin as a percent of total revenue | 47.6% | 44.8% |
| September 30, 2025 | September 30, 2024 |
|---|
| Net Income Reconciliation | Three Months Ended |
| (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 |
| September 30, 2025 | September 30, 2024 |
|---|
| Diluted Net Income Per Share Reconciliation | Three Months Ended |
| (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 | 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 |
For more information, please contact:
Cadence Investor Relations
408-944-7100 investor_relations@cadence.com
Cadence Newsroom
408-944-7039 newsroom@cadence.com
Condensed Consolidated Balance Sheets
September 30, 2025 and December 31, 2024
(In thousands)
(Unaudited)
| September 30, 2025 | December 31, 2024 |
|---|
| Current assets: | | |
| Cash and cash equivalents | $2,753,246 | $2,644,030 |
| Receivables, net | 755,265 | 680,460 |
| Inventories | 286,193 | 257,711 |
| Prepaid expenses and other | 492,336 | 433,878 |
| Total current assets | 4,287,040 | 4,016,079 |
| Property, plant and equipment, net | 494,701 | 458,200 |
| Goodwill | 2,644,910 | 2,378,671 |
| Acquired intangibles, net | 672,508 | 594,734 |
| Deferred taxes | 892,568 | 982,057 |
| Other assets | 607,544 | 544,741 |
| Total assets | $9,599,271 | $8,974,482 |
| Current liabilities: | | |
| Accounts payable and accrued liabilities | $631,273 | $632,692 |
| Current portion of deferred revenue | 775,284 | 737,413 |
| Total current liabilities | 1,406,557 | 1,370,105 |
| Long-term liabilities: | | |
| Long-term portion of deferred revenue | 130,060 | 115,168 |
| Long-term debt | 2,479,142 | 2,476,183 |
| Other long-term liabilities | 384,510 | 339,448 |
| Total long-term liabilities | 2,993,712 | 2,930,799 |
| Stockholders’ equity | 5,199,002 | 4,673,578 |
| Total liabilities and stockholders’ equity | $9,599,271 | $8,974,482 |
Condensed Consolidated Income Statements
For the Three and Nine Months Ended September 30, 2025 and September 30, 2024
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended | Nine Months Ended |
|---|
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 |
|---|
| Revenue: | | | | |
| Product and maintenance | $1,207,703 | $1,100,380 | $3,489,063 | $2,974,222 |
| Services | 131,135 | 115,119 | 367,582 | 311,061 |
| Total revenue | 1,338,838 | 1,215,499 | 3,856,645 | 3,285,283 |
| Costs and expenses: | | | | |
| Cost of product and maintenance | 118,702 | 109,593 | 374,672 | 279,351 |
| Cost of services | 63,493 | 53,451 | 158,823 | 148,160 |
| Marketing and sales | 192,560 | 189,763 | 595,855 | 557,077 |
| Research and development | 423,031 | 407,369 | 1,304,190 | 1,157,067 |
| General and administrative | 78,035 | 71,581 | 210,162 | 203,733 |
| Amortization of acquired intangibles | 10,233 | 9,148 | 28,359 | 21,222 |
| Loss related to contingent liability | - | - | 128,545 | - |
| Restructuring | 27,394 | 24,538 | 27,332 | 24,785 |
| Total costs and expenses | 913,448 | 865,443 | 2,827,938 | 2,391,395 |
| Income from operations | 425,390 | 350,056 | 1,028,707 | 893,888 |
| Interest expense | (29,035) | (24,495) | (87,101) | (46,092) |
| Other income (expense), net | (3,572) | 7,853 | 87,476 | 111,371 |
| Income before provision for income taxes | 392,783 | 333,414 | 1,029,082 | 959,167 |
| Provision for income taxes | 105,661 | 95,303 | 308,330 | 243,893 |
| Net income | $287,122 | $238,111 | $720,752 | $715,274 |
| Net income per share - basic | $1.06 | $0.87 | $2.65 | $2.64 |
| Net income per share - diluted | $1.05 | $0.87 | $2.64 | $2.61 |
| Weighted average common shares outstanding - basic | 271,152 | 272,244 | 271,471 | 270,925 |
| Weighted average common shares outstanding - diluted | 273,798 | 273,958 | 273,440 | 273,679 |
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2025 and September 30, 2024
(In thousands)
(Unaudited)
| Nine Months Ended |
|---|
| September 30, 2025 | September 30, 2024 |
|---|
| Cash and cash equivalents at beginning of period | $2,644,030 | $1,008,152 |
| Cash flows from operating activities: | | |
| Net income | 720,752 | 715,274 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | |
| Depreciation and amortization | 163,269 | 142,252 |
| Stock-based compensation | 342,011 | 284,711 |
| Gain on divestitures and investments, net | (22,135) | (64,458) |
| Deferred income taxes | 89,756 | (5,082) |
| ROU asset amortization and change in operating lease liabilities | 1,702 | (1,100) |
| Other non-cash items | 4,713 | 3,814 |
| Changes in operating assets and liabilities, net of effect of acquired businesses: | | |
| Receivables | (90,666) | (44,766) |
| Inventories | (60,858) | (139,179) |
| Prepaid expenses and other | (14,834) | (114,785) |
| Other assets | 5,811 | (8,759) |
| Accounts payable and accrued liabilities | (23,237) | 21,858 |
| Deferred revenue | 44,456 | 6,680 |
| Other long-term liabilities | 14,546 | 22,732 |
| Net cash provided by operating activities | 1,175,286 | 819,192 |
| Cash flows from investing activities: | | |
| Purchases of investments | (35,182) | (2,095) |
| Proceeds from the sale and maturity of investments | 3,493 | 45,656 |
| Proceeds from the sale of IP and other assets | 11,500 | - |
| Purchases of property, plant and equipment | (100,830) | (105,340) |
| Cash paid in business combinations, net of cash acquired | (250,695) | (735,327) |
| Net cash used for investing activities | (371,714) | (797,106) |
| Cash flows from financing activities: | | |
| Proceeds from issuance of debt | - | 3,196,595 |
| Payments of debt | - | (1,000,000) |
| Payments of debt issuance costs | - | (22,669) |
| Proceeds from issuance of common stock | 138,069 | 193,933 |
| Stock received for payment of employee taxes on vesting of restricted stock | (148,130) | (217,462) |
| Payments for repurchases of common stock | (725,025) | (400,018) |
| Net cash provided by (used for) financing activities | (735,086) | 1,750,379 |
| Effect of exchange rate changes on cash and cash equivalents | 40,730 | 5,423 |
| Increase in cash and cash equivalents | 109,216 | 1,777,888 |
| Cash and cash equivalents at end of period | $2,753,246 | $2,786,040 |
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
| 2024 | 2025 |
|---|
| GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 |
| Americas | 46% | 49% | 50% | 49% | 49% | | 48% | 49% | 43% | |
| China | 12% | 12% | 13% | 13% | 12% | | 11% | 9% | 18% | |
| Other Asia | 20% | 19% | 17% | 17% | 18% | | 19% | 19% | 18% | |
| Europe, Middle East and Africa | 17% | 14% | 14% | 15% | 15% | | 16% | 16% | 14% | |
| Japan | 5% | 6% | 6% | 6% | 6% | | 6% | 7% | 7% | |
| Total | 100% | 100% | 100% | 100% | 100% | | 100% | 100% | 100% | |
Revenue Mix by Product Category (% of Total Revenue)
| 2024 | 2025 |
|---|
| PRODUCT CATEGORY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 |
| Core EDA | 76% | 73% | 70% | 68% | 71% | | 71% | 71% | 71% | |
| Semiconductor IP | 12% | 13% | 14% | 13% | 13% | | 14% | 13% | 14% | |
| System Design and Analysis | 12% | 14% | 16% | 19% | 16% | | 15% | 16% | 15% | |
| Total | 100% | 100% | 100% | 100% | 100% | | 100% | 100% | 100% | |
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of October 27, 2025
(Unaudited)
| Three Months EndingDecember 31, 2025 | Year EndingDecember 31, 2025 |
|---|
| Forecast | Forecast |
|---|
| GAAP operating margin as a percent of total revenue | 32.5% - 33.5% | 27.9% - 28.9% |
| Reconciling items to non-GAAP operating margin as a percent of total revenue: | | |
| Stock-based compensation expense | 8% | 9% |
| Amortization of acquired intangibles | 2% | 2% |
| Acquisition and integration-related costs | 2% | 2% |
| Restructuring | 0% | 1% |
| Loss related to contingent liability* | 0% | 2% |
| Non-GAAP operating margin as a percent of total revenue† | 44.5% - 45.5% | 43.9% - 44.9% |
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of October 27, 2025
(Unaudited)
| Three Months EndingDecember 31, 2025 | Year EndingDecember 31, 2025 |
|---|
| Forecast | Forecast |
|---|
| Diluted net income per share on a GAAP basis | $1.17 to $1.23 | $3.80 to $3.86 |
| Stock-based compensation expense | 0.41 | 1.66 |
| Amortization of acquired intangibles | 0.10 | 0.37 |
| Acquisition and integration-related costs | 0.11 | 0.42 |
| Restructuring | - | 0.10 |
| Non-qualified deferred compensation expenses | - | 0.04 |
| Special charges | - | 0.01 |
| Loss related to contingent liability* | - | 0.47 |
| 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 | - | (0.12) |
| Income tax effect of non-GAAP adjustments | 0.09 | 0.20 |
| Diluted net income per share on a non-GAAP basis† | $1.88 to $1.94 | $7.02 to 7.08 |
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of October 27, 2025
(Unaudited)
| Three Months EndingDecember 31, 2025 | Year EndingDecember 31, 2025 |
|---|
| ($ in millions) | Forecast | Forecast |
| Net income on a GAAP basis | $319 to $335 | $1,040 to $1,056 |
| Stock-based compensation expense | 113 | 455 |
| Amortization of acquired intangibles | 28 | 103 |
| Acquisition and integration-related costs | 29 | 115 |
| Restructuring | - | 27 |
| Non-qualified deferred compensation expenses | - | 12 |
| Special charges | - | 2 |
| Loss related to contingent liability* | - | 129 |
| Other income or expense related to foreign currency forward exchange contract associated with a pending acquisition | - | 19 |
| Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets | - | (34) |
| Income tax effect of non-GAAP adjustments | 25 | 55 |
| Net income on a non-GAAP basis† | $514 to $530 | $1,923 to $1,939 |
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Open the filing on EDGARCADENCE REPORTS THIRD QUARTER2025
CADENCE DESIGN SYSTEMS, INC.
CFO COMMENTARY
Key Takeaways• Strong financial and operational performance resulted in Q3 backlog of $7.0 billion • Raising 2025 revenue growth outlook to ~14% year-over-year• Raising midpoint of 2025 non-GAAP EPS outlook to $7.05
Q4 2025 Outlook • Revenue: $1.405 billion - $1.435 billion• GAAP operating margin: 32.5% - 33.5%• Non-GAAP operating margin: 44.5% - 45.5% • GAAP EPS: $1.17 - $1.23• Non-GAAP EPS: $1.88 - $1.94• Expect to use approximately $200 million to repurchase Cadence shares in Q4
Q3 2025 KEY METRICS
- Revenue: $1.339 billion• GAAP operating margin: 31.8%• Non-GAAP operating margin: 47.6%• GAAP EPS: $1.05• Non-GAAP EPS: $1.93• Operating cash flow: $311 million
FY 2025 Outlook• Revenue: $5.262 billion - $5.292 billion• GAAP operating margin: 27.9% - 28.9%• Non-GAAP operating margin: 43.9% - 44.9%• GAAP EPS: $3.80 - $3.86• Non-GAAP EPS: $7.02 - $7.08• Operating cash flow: $1.65 billion - $1.75 billion• Expect to use at least 50% of free cash flow to repurchase Cadence shares for the year
Financial Results Webcast
Our Q3 2025 financial results webcast will begin October 27, 2025 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on October 27, 2025 until 5:00 p.m. (Pacific) on December 17, 2025.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 1 |
Financial Metrics
| (In Millions, except per share data) | | 2019 | 2020* | | 2021 | | 2022 | 2023* | | 2024 | 2025E |
| Revenue | $2,336 | | $2,683 | | $2,988 | | $3,562 | | $4,090 | | $4,641 | | $5,262- $5,292 |
| Revenue growth | | 9% | | 15% | | 11% | | 19% | | 15% | | 13% | 13% - 14% |
| 3-year CAGR** | | 9% | | 11% | | 12% | | 15% | | 15% | | 16% | ~14% |
| 3-year CAGR without 53rd week impact | | | 11% | | | | 16% | | |
| GAAP operating expenses | $1,845 | | $2,037 | | $2,209 | | $2,488 | | $2,839 | | $3,291 | | ~$3,778 |
| GAAP operating expense growth | | 6% | | 10% | | 8% | | 13% | | 14% | | 16% | ~15% |
| Non-GAAP operating expenses | $1,587 | | $1,739 | | $1,877 | | $2,125 | | $2,373 | | $2,667 | | ~$2,935 |
| Non-GAAP operating expense growth | | 6% | | 10% | | 8% | | 13% | | 12% | | 12% | ~10% |
| GAAP operating margin** | | 21.1% | | 24.1% | | 26.1% | | 30.1% | | 30.6% | | 29.1% | 28.4% |
| Non-GAAP operating margin** | | 32.1% | | 35.2% | | 37.2% | | 40.3% | | 42.0% | | 42.5% | 44.4% |
| GAAP earnings per share | $3.53 | | $2.11 | | $2.50 | | $3.09 | | $3.82 | | $3.85 | | $3.80 - $3.86 |
| Non-GAAP earning per share | $2.20 | | $2.80 | | $3.29 | | $4.27 | | $5.15 | | $5.97 | | $7.02 - $7.08 |
| Non-GAAP EPS growth** | | 18% | | 27% | | 18% | | 30% | | 21% | | 16% | 18% |
| 3-year Non-GAAP EPS CAGR** | | 22% | | 26% | | 21% | | 25% | | 23% | | 22% | 18% |
| Weighted average diluted shares outstanding | | 280.5 | | 279.6 | | 278.9 | | 275.0 | | 272.7 | | 273.8 | 273 - 275 |
| Cash flow from operations | | 730 | | 905 | | 1,101 | | 1,242 | | 1,349 | | 1,261 | $1,650 - $1,750 |
| Capital expenditures | | 75 | | 95 | | 65 | | 123 | | 102 | | 143 | ~$150 |
* Fiscal 2020 was a 53-week year, compared to all other years which were 52 week years. 2020 (which impacts the 3 year CAGR in 2023) included approximately $45 million revenue impact for the extra week.
** At midpoint of outlook.
Profitability Trends
| (In Millions) | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | 2025E* |
| Revenue | $2,336 | | $2,683 | | $2,988 | | $3,562 | | $4,090 | | $4,641 | | $5,277 | |
| Revenue Growth | | 9% | | 15% | | 11% | | 19% | | 15% | | 13% | ~14% |
| 3-Year Revenue Growth CAGR | | 9% | | 11% | | 12% | | 15% | | 15% | | 16% | ~14% |
| GAAP operating margin | | 21.1% | | 24.1% | | 26.1% | | 30.1% | | 30.6% | | 29.1% | | 28.4% |
| Non-GAAP operating margin | | 32.1% | | 35.2% | | 37.2% | | 40.3% | | 42.0% | | 42.5% | | 44.4% |
| Stock-based compensation | | (7.8)% | | (7.4)% | | (7.0)% | | (7.6)% | | (8.0)% | | (8.4)% | | (8.6)% |
| Non-GAAP operating margin adjusted for stock-based compensation | | 24.3% | | 27.8% | | 30.2% | | 32.7% | | 34.0% | | 34.1% | | 35.8% |
| GAAP operating income | $492 | | $646 | | $779 | | $1,074 | | $1,251 | | $1,351 | | $1,499 | |
| Non-GAAP operating income | $749 | | $944 | | $1,111 | | $1,436 | | $1,717 | | $1,974 | | $2,342 | |
| Non-GAAP operating income adjusted for stock-based compensation | $567 | | $747 | | $901 | | $1,166 | | $1,391 | | $1,583 | | $1,887 | |
* At midpoint of outlook.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 2 |
Fourth Quarter 2025 Financial Outlook
| Q4 2024 | Q3 2025 | Q4 2025E |
|---|
| Total Revenue ($ Millions) | $1,356 | | $1,339 | | $1,405 - $1,435 |
| Q/Q Growth | | | 5% | 5% - 7% |
| Y/Y Growth | | | 10% | 4% - 6% |
| GAAP Operating Margin | | 33.7% | | 31.8% | 32.5% - 33.5% |
| Non-GAAP Operating Margin | | 46.0% | | 47.6% | 44.5% - 45.5% |
| GAAP EPS | $1.24 | | $1.05 | | $1.17 - $1.23 |
| Non-GAAP EPS | $1.88 | | $1.93 | | $1.88 - $1.94 |
Fiscal Year 2025 Financial Outlook
| | Previous | Current |
|---|
| FY 2024 | FY 2025E | FY 2025E |
|---|
| Recurring Revenue | | 84% | ~80% | ~80% |
| Total Revenue ($ Millions) | $4,641 | | $5,210 - $5,270 | $5,262 - $5,292 |
| Y/Y Growth | | 13% | 12% - 14% | 13% - 14% |
| Revenue from Beginning Backlog | ~70% | ~70% | ~70% |
| GAAP Operating Margin | | 29.1% | 28.5% - 29.5% | 27.9% - 28.9% |
| Non-GAAP Operating Margin | | 42.5% | 43.5% - 44.5% | 43.9% - 44.9% |
| GAAP Other Income & Expense ($ Millions) | $45 | | $(9) - $11 | $(18) - $(10) |
| Non-GAAP Other Income & Expense ($ Millions) | $(16) | | $(52) - $(32) | $(33) - $(25) |
| GAAP Tax Rate | | 24.4% | ~28% | ~29% |
| Non-GAAP Tax Rate | | 16.5% | 16.5% | 16.5% |
| Weighted Average Diluted Shares Outstanding (Millions) | | 273.8 | 273 - 275 | 273 - 275 |
| GAAP EPS | $3.85 | | $3.97 - $4.07 | $3.80 - $3.86 |
| Y/Y Growth | | 1% | 3% - 6% | (1)% - 0% |
| Non-GAAP EPS | $5.97 | | $6.85 - $6.95 | $7.02 - $7.08 |
| Y/Y Growth | | 16% | 15% - 16% | 18% - 19% |
| Cash Flow from Operations ($ Millions) | $1,261 | | $1,650 - $1,750 | $1,650 - $1,750 |
| DSO | | 48 | ~50 | ~50 |
| Capital Expenditures ($ Millions) | $143 | | ~$160 | ~$150 |
| October 27, 2025 | Cadence Q3 2025 Financial Results | 3 |
Third Quarter Financial Results
Backlog
| (In Billions) | | 2021 | | 2022 | | 2023 | | 2024 | Q3 2025 |
| Backlog | $4.4 | | $5.8 | | $6.0 | | $6.8 | | $7.0 |
Revenue
| (In Millions) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| Product and Maintenance | $1,100 | $1,239 | $1,111 | $1,170 | $1,208 |
| Services | 115 | 117 | 131 | 105 | 131 |
| Total Revenue | $1,215 | $1,356 | $1,242 | $1,275 | $1,339 |
Recurring and Up-Front Revenue*
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|
| Revenue Recognized Over Time | 79% | 72% | 77% | 73% | 78% |
| Other Recurring Revenue | 4% | 4% | 5% | 5% | 4% |
| Recurring Revenue | 83% | 76% | 82% | 78% | 82% |
| Up-Front Revenue | 17% | 24% | 18% | 22% | 18% |
| Total Revenue | 100% | 100% | 100% | 100% | 100% |
*The definition of recurring revenue was updated in Q2 2025. Prior period numbers reflect the updated definition. Other recurring revenue includes revenue recognized at a point in time for short-term software arrangements that are typically renewed at least annually and revenue recognized at varying points in time over the term of other arrangements with non-cancelable commitments, whereby the customer commits to a fixed dollar amount over a specified period of time that can be used to purchase from a list of products.
Trailing Twelve Months Recurring and Up-Front Revenue
| Trailing Twelve Months Ended |
|---|
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|
| Recurring Revenue | 87% | 84% | 82% | 80% | 80% |
| Up-Front Revenue | 13% | 16% | 18% | 20% | 20% |
| Total | 100% | 100% | 100% | 100% | 100% |
Revenue Mix by Geography
| (% of Total Revenue) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| Americas | 50% | 49% | 48% | 49% | 43% |
| China | 13% | 13% | 11% | 9% | 18% |
| Other Asia | 17% | 17% | 19% | 19% | 18% |
| Europe, Middle East and Africa | 14% | 15% | 16% | 16% | 14% |
| Japan | 6% | 6% | 6% | 7% | 7% |
| Total | 100% | 100% | 100% | 100% | 100% |
Revenue Mix by Product Category
| (% of Total Revenue) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| Core EDA | 70% | 68% | 71% | 71% | 71% |
| Semiconductor IP | 14% | 13% | 14% | 13% | 14% |
| System Design and Analysis | 16% | 19% | 15% | 16% | 15% |
| Total | 100% | 100% | 100% | 100% | 100% |
| October 27, 2025 | Cadence Q3 2025 Financial Results | 4 |
Gross Margin
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|
| GAAP Gross Margin | 86.6% | 83.8% | 86.5% | 85.6% | 86.4% |
| Non-GAAP Gross Margin | 88.6% | 85.5% | 88.4% | 87.2% | 88.0% |
Total Costs and Expenses
| (In Millions) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| Total GAAP Costs and Expenses | $865 | $899 | $881 | $1,034 | $913 |
| Total Non-GAAP Costs and Expenses | $671 | $733 | $724 | $729 | $701 |
Operating Margin
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|
| GAAP Operating Margin | 28.8% | 33.7% | 29.1% | 19.0% | 31.8% |
| Non-GAAP Operating Margin | 44.8% | 46.0% | 41.7% | 42.8% | 47.6% |
Net Income Per Share
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|
| GAAP Net Income Per Share | $0.87 | $1.24 | $1.00 | $0.59 | $1.05 |
| Non-GAAP Net Income Per Share | $1.64 | $1.88 | $1.57 | $1.65 | $1.93 |
Total DSO
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|
| DSO | 44 | 48 | 44 | 51 | 55 |
Balance Sheet and Cash Review
Free Cash Flow
| (In Millions) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| Net Cash from Operating Activities | $410 | $441 | $487 | $378 | $311 |
| Capital Expenditures | 27 | 37 | 23 | 44 | 34 |
| Free Cash Flow | $383 | $404 | $464 | $334 | $277 |
Cash and Cash Equivalents
| (In Millions) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| Cash and Cash Equivalents | $2,786 | $2,644 | $2,778 | $2,823 | $2,753 |
- Approximately 61 percent of our cash and cash equivalents were in the U.S. at quarter-end.
Debt
| (In Millions) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| Debt (principal value) | $2,850 | $2,500 | $2,500 | $2,500 | $2,500 |
- In September 2024, Cadence issued $2.5 billion of Senior Notes at a weighted average interest rate of 4.44%.
Share Repurchase
| (In Millions) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| Share Repurchase | $150 | $150 | $350 | $175 | $200 |
| Number of Shares | 0.563 | 0.519 | 1.361 | 0.607 | 0.584 |
Employees
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|
| Headcount | 12,703 | 12,705 | 12,837 | 13,152 | 13,693 |
| October 27, 2025 | Cadence Q3 2025 Financial Results | 5 |
Forward Looking Statements
Forward-looking statements notice
This CFO Commentary 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 document are based on management's expectations as of the date of this document 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 GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this CFO Commentary with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance. See our earnings press release issued today for further discussion of our non-GAAP financial measures, as well as the reconciliation provided in the Appendix to this CFO Commentary.
Cadence’s management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company’s core business operations and therefore provides supplemental information to Cadence’s 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’s management, including forecasting and budgeting.
© 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.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 6 |
APPENDIX I
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses
| (In Millions) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| GAAP total costs and expenses | $865 | $899 | $881 | $1,034 | $913 |
| Reconciling items to non-GAAP total costs and expenses | | | | | |
| Stock-based compensation expense | (109) | (107) | (108) | (118) | (116) |
| Amortization of acquired intangibles | (27) | (27) | (25) | (24) | (26) |
| Acquisition and integration-related costs | (29) | (23) | (23) | (26) | (37) |
| Restructuring | (25) | 1 | - | - | (27) |
| Non-qualified deferred compensation (expenses) credits | (4) | - | 2 | (8) | (6) |
| Special charges | - | (2) | (2) | - | - |
| Loss related to contingent liability* | - | (8) | - | (129) | - |
| Non-GAAP total costs and expenses** | $671 | $733 | $724 | $729 | $701 |
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses
| (In Millions) | | 2019 | 2020* | | 2021 | | 2022 | | 2023 | | 2024 | 2025E |
| GAAP total costs and expenses | $1,845 | | $2,037 | $2,209 | | $2,488 | | $2,839 | | $3,291 | | $3,778 |
| Reconciling items to non-GAAP total costs and expenses | | | | | | | |
| Stock-based compensation expense | (182) | | (197) | (210) | | (270) | | (326) | | (391) | | (455) |
| Amortization of acquired intangibles | (53) | | (64) | (67) | | (60) | | (62) | | (90) | | (103) |
| Acquisition and integration-related costs | (8) | | (23) | (23) | | (41) | | (56) | | (96) | | (115) |
| Restructuring | (9) | | (9) | 1 | | - | | (11) | | (24) | | (27) |
| Non-qualified deferred compensation (expenses) credits | (5) | | (5) | (6) | | 8 | | (11) | | (11) | | (12) |
| Special charges** | (1) | | - | (27) | | - | | - | | (3) | | (2) |
| Loss related to contingent liability*** | - | | - | - | | - | | - | | (8) | | (129) |
| Non-GAAP total costs and expenses**** | $1,587 | | $1,739 | $1,877 | | $2,125 | | $2,373 | | $2,667 | | $2,935 |
* Fiscal 2020 was a 53-week year.
** 2021 includes costs related to a voluntary retirement program.
*** Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
****
The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 7 |
Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and Non-GAAP Operating Income Adjusted for Stock-based Compensation
| (In Millions) | | 2019 | 2020* | | 2021 | | 2022 | | 2023 | | 2024 | 2025E |
| GAAP operating income | $492 | | $646 | $779 | | $1,074 | | $1,251 | | $1,351 | | $1,499 |
| Reconciling items to non-GAAP operating income | | | | | | | |
| Stock-based compensation expense | 182 | | 197 | 210 | | 270 | | 326 | | 391 | | 455 |
| Amortization of acquired intangibles | 53 | | 64 | 67 | | 60 | | 62 | | 90 | | 103 |
| Acquisition and integration-related costs | 8 | | 23 | 23 | | 41 | | 56 | | 96 | | 115 |
| Restructuring | 9 | | 9 | (1) | | - | | 11 | | 24 | | 27 |
| Non-qualified deferred compensation expenses (credits) | 5 | | 5 | 6 | | (8) | | 11 | | 11 | | 12 |
| Special charges** | 1 | | - | 27 | | - | | - | | 3 | | 2 |
| Loss related to contingent liability*** | - | | - | - | | - | | - | | 8 | | 129 |
| Non-GAAP operating income**** | $749 | | $944 | $1,111 | | $1,436 | | $1,717 | | $1,974 | | $2,342 |
| Stock-based compensation expense | (182) | | (197) | (210) | | (270) | | (326) | | (391) | | (455) |
| Non-GAAP operating income adjusted for stock-based compensation**** | $567 | | $747 | $901 | | $1,166 | | $1,391 | | $1,583 | | $1,887 |
* Fiscal 2020 was a 53-week year.
** 2021 includes costs related to a voluntary retirement program.
*** Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
****
The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 8 |
Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|
| GAAP gross margin as a percent of total revenue | 86.6% | 83.8% | 86.5% | 85.6% | 86.4% |
| Reconciling items to non-GAAP gross margin as a percent of total revenue | | | | | |
| Stock-based compensation expense | 0.3% | 0.3% | 0.4% | 0.4% | 0.3% |
| Amortization of acquired intangibles | 1.5% | 1.3% | 1.4% | 1.1% | 1.2% |
| Non-qualified deferred compensation expenses (credits) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Acquisition and integration-related costs | 0.2% | 0.1% | 0.1% | 0.1% | 0.1% |
| Non-GAAP gross margin as a percent of total revenue* | 88.6% | 85.5% | 88.4% | 87.2% | 88.0% |
* The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 9 |
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
| Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025E |
|---|
| GAAP operating margin as a percent of total revenue | 28.8% | 33.7% | 29.1% | 19.0% | 31.8% | 32.5% - 33.5% |
| Reconciling items to non-GAAP operating margin as a percent of total revenue | | | | | | |
| Stock-based compensation expense | 9.0% | 7.9% | 8.7% | 9.3% | 8.7% | 8% |
| Amortization of acquired intangibles | 2.2% | 2.0% | 2.0% | 1.8% | 1.9% | 2% |
| Acquisition and integration-related costs | 2.4% | 1.7% | 1.8% | 2.0% | 2.8% | 2% |
| Restructuring | 2.0% | (0.1)% | 0.0% | 0.0% | 2.0% | 0% |
| Non-qualified deferred compensation expenses (credits) | 0.4% | 0.0% | (0.1)% | 0.6% | 0.4% | 0% |
| Special charges | 0.0% | 0.2% | 0.2% | 0.0% | 0.0% | 0% |
| Loss related to contingent liability* | 0.0% | 0.6% | 0.0% | 10.1% | 0.0% | 0% |
| Non-GAAP operating margin as a percent of total revenue** | 44.8% | 46.0% | 41.7% | 42.8% | 47.6% | 44.5% - 45.5% |
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 10 |
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025E |
|---|
| GAAP operating margin as a percent of total revenue | 21.1% | 24.1% | 26.1% | 30.1% | 30.6% | 29.1% | 27.9% - 28.9% |
| Reconciling items to non-GAAP operating margin as a percent of total revenue | | | | | | | |
| Stock-based compensation expense | 7.8% | 7.4% | 7.0% | 7.6% | 8.0% | 8.4% | 9% |
| Amortization of acquired intangibles | 2.3% | 2.4% | 2.2% | 1.7% | 1.5% | 2.0% | 2% |
| Acquisition and integration-related costs | 0.3% | 0.8% | 0.8% | 1.1% | 1.4% | 2.1% | 2% |
| Restructuring | 0.4% | 0.3% | 0.0% | 0.0% | 0.3% | 0.5% | 1% |
| Non-qualified deferred compensation expenses (credits) | 0.2% | 0.2% | 0.2% | (0.2)% | 0.2% | 0.2% | 0% |
| Special charges* | 0.0% | 0.0% | 0.9% | 0.0% | 0.0% | 0.0% | 0% |
| Loss related to contingent liability** | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.2% | 2% |
| Non-GAAP operating margin as a percent of total revenue*** | 32.1% | 35.2% | 37.2% | 40.3% | 42.0% | 42.5% | 43.9% - 44.9% |
* 2021 includes costs related to a voluntary retirement program.
** Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
*** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 11 |
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
| (In Thousands, Except Per Share Data) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025E |
| Diluted net income per share on a GAAP basis | $0.87 | $1.24 | $1.00 | $0.59 | $1.05 | $1.17 - $1.23 |
| Stock-based compensation expense | 0.40 | 0.39 | 0.39 | 0.43 | 0.42 | 0.41 |
| Amortization of acquired intangibles | 0.10 | 0.10 | 0.09 | 0.09 | 0.10 | 0.10 |
| Acquisition and integration-related costs | 0.11 | 0.08 | 0.09 | 0.09 | 0.14 | 0.11 |
| Restructuring | 0.09 | - | - | - | 0.10 | - |
| Non-qualified deferred compensation expenses (credits) | 0.01 | - | (0.01) | 0.03 | 0.02 | - |
| Special charges | - | 0.01 | 0.01 | - | - | - |
| Loss related to contingent liability* | - | 0.03 | - | 0.47 | - | - |
| 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 | 0.04 | 0.05 | 0.01 | (0.17) | 0.03 | - |
| Income tax effect of non-GAAP adjustments | 0.02 | (0.02) | (0.01) | 0.12 | - | 0.09 |
| Diluted net income per share on a non-GAAP basis** | $1.64 | $1.88 | $1.57 | $1.65 | $1.93 | $1.88 - $1.94 |
| Shares used in calculation of diluted net income per share | 273,958 | 274,292 | 273,631 | 272,899 | 273,798 | |
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 12 |
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
| (In Thousands, Except Per Share Data) | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | 2025E |
| Diluted net income per share on a GAAP basis | $3.53 | | $2.11 | | $2.50 | | $3.09 | | $3.82 | | $3.85 | | $3.80 - $3.86 |
| Stock-based compensation expense | 0.65 | | 0.71 | | 0.75 | | 0.98 | | 1.19 | | 1.43 | | 1.66 |
| Amortization of acquired intangibles | 0.19 | | 0.23 | | 0.24 | | 0.22 | | 0.23 | | 0.33 | | 0.37 |
| Acquisition and integration-related costs | 0.03 | | 0.08 | | 0.08 | | 0.15 | | 0.21 | | 0.35 | | 0.42 |
| Restructuring | 0.03 | | 0.03 | | - | | - | | 0.04 | | 0.09 | | 0.10 |
| Non-qualified deferred compensation expenses (credits) | 0.02 | | 0.02 | | 0.02 | | (0.03) | | 0.04 | | 0.04 | | 0.04 |
| Special charges* | - | | - | | 0.10 | | - | | - | | 0.01 | | 0.01 |
| Loss related to contingent liability** | - | | - | | - | | - | | - | | 0.03 | | 0.47 |
| 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 | (0.01) | | - | | (0.03) | | 0.05 | | (0.17) | | (0.22) | | (0.12) |
| Income tax benefit related to intercompany transfers of certain intellectual property rights | (2.05) | | - | | - | | - | | - | | - | | - |
| Income tax effect of non-GAAP adjustments | (0.19) | | (0.38) | | (0.37) | | (0.19) | | (0.21) | | 0.06 | | 0.20 |
| Diluted net income per share on a non-GAAP basis*** | $2.20 | | $2.80 | | $3.29 | | $4.27 | | $5.15 | | $5.97 | | $7.02 - $7.08 |
| Shares used in calculation of diluted net income per share | 280,515 | | 279,641 | | 278,858 | | 275,011 | | 272,748 | | 273,833 | | 273 - 275M |
* 2021 includes costs related to a voluntary retirement program.
** Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
*** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 13 |
Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense
| (In Millions) | FY 2023 | FY 2024 | FY 2025E |
| GAAP total other income and expense | $31 | $45 | $(18) - $(10) |
| Reconciling items to non-GAAP total income and expense | | | |
| Other income or expense related to foreign currency forward exchange contract associated with a pending acquisition | - | - | 19 |
| Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets | (46) | (61) | (34) |
| Non-GAAP total other income and expense* | $(15) | $(16) | $(33) - $(25) |
* The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
| October 27, 2025 | Cadence Q3 2025 Financial Results | 14 |