Cadence Reports Q4, Fiscal Year 2025 Financial Results

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Cadence announced results for the fourth quarter and fiscal year 2025.

Fourth Quarter 2025 Financial Results

• Revenue of $1.440 billion, compared to revenue of $1.356 billion in Q4 2024
• GAAP operating margin of 32.2%, compared to 33.7% in Q4 2024
• Non-GAAP operating margin of 45.8%, compared to 46.0% in Q4 2024
• GAAP diluted net income per share of $1.42, compared to $1.24 in Q4 2024
• Non-GAAP diluted net income per share of $1.99, compared to $1.88 in Q4 2024

Fiscal Year 2025 Financial Results

• Revenue of $5.297 billion, compared to revenue of $4.641 billion in 2024
• GAAP operating margin of 28.2%, compared to 29.1% in 2024
• Non-GAAP operating margin of 44.6%, compared to 42.5% in 2024
• GAAP diluted net income per share of $4.06, compared to $3.85 in 2024
• Non-GAAP diluted net income per share of $7.14, compared to $5.97 in 2024
• Year-end backlog was $7.8 billion and revenue expected to be recognized in the next 12 months from remaining performance obligations was $3.8 billion

“Cadence delivered excellent results for the fourth quarter, closing an outstanding 2025 with over 14% revenue growth and 20% non-GAAP EPS growth,” said Anirudh Devgan, president and chief executive officer. “Strong customer demand for our expanding AI-driven product portfolio and the essential nature of Cadence's engineering software position us well to capture the massive opportunities in the AI era.”

“Cadence closed 2025 with a strong finish and broad-based strength across the business,” said John Wall, senior vice president and chief financial officer. “We delivered a 44.6% non-GAAP operating margin, reflecting continued productivity-driven profitability improvement. With strong Q4 bookings, we began 2026 with a record backlog of $7.8 billion and excellent momentum.”

Business Outlook

Cadence's outlook does not include the impact of its pending acquisition of Hexagon's design and engineering business.

For fiscal year 2026, the company expects:

• Revenue in the range of $5.9 billion to $6.0 billion
• GAAP operating margin in the range of 31.75% to 32.75%
• Non-GAAP operating margin in the range of 44.75% to 45.75%
• GAAP diluted net income per share in the range of $4.95 to $5.05
• Non-GAAP diluted net income per share in the range of $8.05 to $8.15

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 2026 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

• The Cadence.ai portfolio continued gaining momentum with market shaping customers. Cadence introduced ChipStack, a groundbreaking agentic AI Super Agent for chip design and verification, built upon Cadence's foundational EDA platform. By leveraging intelligent agents that autonomously call the underlying Cadence tools, ChipStack is enabling faster design convergence and significantly improved engineering productivity
• Cadence’s Core EDA business grew 13% in 2025 driven by broad hyperscaler adoption, expanding digital full-flow deployments, and growing proliferation of its AI-driven products
• Hardware delivered another record year, adding more than 30 new customers, with seven of the top ten customers purchasing both Palladium Z3 and Protium X3 systems, reflecting strong AI and hyperscale demand
• Cadence’s IP business grew nearly 25% year-over-year in 2025, driven by the superior performance and expanding adoption of its IP portfolio, including HBM, UCIe, PCIe, DDR, and SerDes
• The System Design and Analysis business grew 13% in 2025, supported by strong demand for Cadence’s 3D‑IC platform and simulation solutions that are increasingly critical for AI infrastructure, high‑performance computing, and advanced mobile applications