Cadence Reports Q2 2025 Financial Results

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Cadence 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 (“cRPO”), 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 (“DOJ”) and the Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce

“Cadence 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,” said Anirudh Devgan, president and chief executive officer. “The 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.”

“I 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,” said John Wall, senior vice president and chief financial officer. “We are raising our 2025 revenue outlook to 13% growth year-over-year, and non-GAAP operating margin to 44%.”

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’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.

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’s 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’s multi-physics analysis platform and AI-driven optimization, which delivered superior results.