Cadence Design Systems (CDNS) CDNS Q3 Financial Results Summary
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Cadence Design Systems (CDNS) Q3 2025 Financial Results Summary
Cadence Design Systems (Nasdaq: CDNS) released its financial results for the third quarter of 2025 on October 27, 2025.
Key Financial Metrics
- Revenue: $1.339 billion, an increase of 10.2% from $1.215 billion in Q3 2024.
- GAAP Operating Margin: 31.8%, up from 28.8% in Q3 2024, representing a growth of 3 percentage points.
- Non-GAAP Operating Margin: 47.6%, compared to 44.8% in Q3 2024, marking an increase of 2.8 percentage points.
- GAAP Diluted Net Income per Share: $1.05, an increase of 20.7% from $0.87 in Q3 2024.
- Non-GAAP Diluted Net Income per Share: $1.93, up from $1.64 in Q3 2024, an increase of 17.7%.
- Quarter-End Backlog: $7.0 billion, with expected revenue to be recognized in the next 12 months of $3.5 billion.
Business Outlook for FY 2025
- Revenue: Expected to be between $5.262 billion and $5.292 billion, representing 14% growth year-over-year.
- GAAP Operating Margin: Projected between 27.9% and 28.9%.
- Non-GAAP Operating Margin: Expected between 43.9% and 44.9%.
- GAAP Diluted Net Income per Share: Forecasted to be between $3.80 and $3.86.
- Non-GAAP Diluted Net Income per Share: Anticipated between $7.02 and $7.08.
Business Highlights
- The IP business showed strong growth driven by increasing demand and a broader customer base.
- Completed the acquisition of Arm Artisan foundation IP, enhancing its Design IP portfolio.
- Achieved record sales in the hardware segment, with significant growth from AI and HPC customers.
- Entered a definitive agreement to acquire Hexagon’s D&E business, expanding Cadence’s capabilities in structural analysis and multi-body dynamics technologies.
Share Buyback and Dividends
- Cadence reported share repurchases amounting to $725 million for the quarter, up from $400 million during the same period last year.
- The report did not mention any declarations of quarterly dividends.
Summary of Financial Performance
- Net Income:
- GAAP: $287.1 million (up 20.5% from $238.1 million in Q3 2024).
- Non-GAAP: $528.2 million (up 17.3% from $450.2 million in Q3 2024).
- Cash Position: Cash and cash equivalents at the end of the quarter stood at $2.753 billion, compared to $2.644 billion at the start of the quarter.
Additional Information
Cadence’s strong operational performances are underscored by a robust backlog, demonstrating their strategic positioning within the AI ecosystem. The ongoing demand for their services reflects a growing reliance on AI-centric technological solutions across various sectors.
For investors and stakeholders, more details and analysis on the Q3 results can be found in the audio webcast hosted by executives, available through their investor relations website.
| Three Months Ended | September 30, 2025 | September 30, 2024 | Nine Months Ended | September 30, 2025 | 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 |
| 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 |