Cadence Reports Fourth Quarter and Fiscal Year 2025 Financial Results

SAN JOSE, Calif.--( BUSINESS WIRE)--Cadence (Nasdaq: CDNS) today announced results for the fourth quarter and fiscal year 2025.

Fourth Quarter 2025 Financial Results

Fiscal Year 2025 Financial Results

“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.”

CFO Commentary

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

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:

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

Audio Webcast Scheduled

Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the fourth quarter and fiscal year 2025 financial results audio webcast today, February 17, 2026, 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 February 17, 2026 at 5 p.m. (Pacific) and ending March 17, 2026 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.

© 2026 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, pending acquisition of Hexagon's design and engineering ("D&E") business, 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, 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. Cadence’s pending D&E acquisition remains subject to certain closing conditions, which may not be satisfied in a timely manner or at all. Cadence may not successfully integrate the D&E business or realize the anticipated benefits of the acquisition. The acquisition and its effects on Cadence are subject to additional risks and uncertainties including fluctuations in the trading price of Cadence shares and in currency exchange and interest rates; Cadence’s ability to repay debt incurred to fund the acquisition; Cadence’s ability to motivate and retain key personnel; and the acquisition’s impact on relationships with third parties, including customers, partners and governmental authorities. 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

December 31, 2025

December 31, 2024

(unaudited)

GAAP operating margin as a percent of total revenue

32.2

33.7

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

Stock-based compensation expense

7.9

Amortization of acquired intangibles

2.1

2.0

Acquisition and integration-related costs

3.4

1.7

Restructuring

0.1

(0.1

Non-qualified deferred compensation expenses

0.1

0.0

Special charges

0.0

0.2

Loss related to contingent liability*

0.0

0.6

Non-GAAP operating margin as a percent of total revenue

45.8

46.0

Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.

Operating Margin Reconciliation

Years Ended

December 31, 2025

December 31, 2024

(unaudited)

GAAP operating margin as a percent of total revenue

28.2

29.1

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

Stock-based compensation expense

8.6

8.4

Amortization of acquired intangibles

2.0

Acquisition and integration-related costs

2.5

2.1

Restructuring

0.6

0.5

Non-qualified deferred compensation expenses

0.3

0.2

Special charges

0.0

Loss related to contingent liability*

2.4

0.2

Non-GAAP operating margin as a percent of total revenue

44.6

42.5

Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.

Net Income Reconciliation

Three Months Ended

December 31, 2025

December 31, 2024

(in thousands)

(unaudited)

Net income on a GAAP basis

388,136

340,210

Stock-based compensation expense

113,164

106,508

Amortization of acquired intangibles

30,229

26,776

Acquisition and integration-related costs

48,652

23,477

Restructuring

1,862

(1,020

)

Non-qualified deferred compensation expenses

2,064

293

Special charges

—

1,902

Loss related to contingent liability*

—

8,322

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

10,666

—

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

(49,111

)

14,654

Income tax effect of non-GAAP adjustments

(2,505

)

(5,456

)

Net income on a non-GAAP basis

543,157

515,666

Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.

Net Income Reconciliation

Years Ended

December 31, 2025

December 31, 2024

(in thousands)

(unaudited)

Net income on a GAAP basis

1,108,888

1,055,484

Stock-based compensation expense

455,175

391,219

Amortization of acquired intangibles

105,332

90,449

Acquisition and integration-related costs

135,073

95,562

Restructuring

29,194

23,765

Non-qualified deferred compensation expenses

14,029

11,145

Special charges

1,988

3,135

Loss related to contingent liability*

128,545

8,322

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

29,227

—

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

(83,286

)

(60,798

)

Income tax effect of non-GAAP adjustments

27,497

17,162

Net income on a non-GAAP basis

1,951,662

1,635,445

Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.

Diluted Net Income Per Share Reconciliation

Three Months Ended

December 31, 2025

December 31, 2024

(in thousands, except per share data)

(unaudited)

Diluted net income per share on a GAAP basis

1.42

1.24

Stock-based compensation expense

0.41

0.39

Amortization of acquired intangibles

0.11

0.10

Acquisition and integration-related costs

0.18

0.08

Restructuring

0.01

—

Non-qualified deferred compensation expenses

0.01

—

Special charges

—

0.01

Loss related to contingent liability*

—

0.03

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

0.04

—

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

(0.18

)

0.05

Income tax effect of non-GAAP adjustments

(0.01

)

(0.02

)

Diluted net income per share on a non-GAAP basis

1.99

1.88

Shares used in calculation of diluted net income per share

272,932

274,292

Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.

Diluted Net Income Per Share Reconciliation

Years Ended

December 31, 2025

December 31, 2024

(in thousands, except per share data)

(unaudited)

Diluted net income per share on a GAAP basis

4.06

3.85

Stock-based compensation expense

1.67

1.43

Amortization of acquired intangibles

0.38

0.33

Acquisition and integration-related costs

0.49

0.35

Restructuring

0.11

0.09

Non-qualified deferred compensation expenses

0.05

0.04

Special charges

0.01

Loss related to contingent liability*

0.47

0.03

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

0.11

—

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

(0.31

)

(0.22

)

Income tax effect of non-GAAP adjustments

0.10

0.06

Diluted net income per share on a non-GAAP basis

7.14

5.97

Shares used in calculation of diluted net income per share

273,312

273,833

Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.

3,001,317

2,644,030

944,939

680,460

303,545

257,711

419,872

433,878

4,669,673

4,016,079

517,004

458,200

2,749,143

2,378,671

718,223

594,734

917,733

982,057

581,372

544,741

10,153,148

8,974,482

856,856

632,692

778,435

737,413

1,635,291

1,370,105

155,997

115,168

2,480,150

2,476,183

407,529

339,448

3,043,676

2,930,799

5,474,181

4,673,578

10,153,148

8,974,482

1,332,526

1,239,287

4,821,589

4,213,509

107,588

116,694

475,170

427,755

1,440,114

1,355,981

5,296,759

4,641,264

144,001

157,249

518,673

436,600

44,753

62,742

203,576

210,902

206,778

200,406

802,633

757,483

464,582

392,026

1,768,772

1,549,093

103,225

70,228

313,387

273,961

11,578

9,153

39,937

30,375

8,322

128,545

8,322

1,862

(1,020

)

29,194

23,765

976,779

899,106

3,804,717

3,290,501

463,335

456,875

1,492,042

1,350,763

(29,440

)

(29,907

)

(116,541

)

(75,999

)

59,066

9,684

146,542

121,055

492,961

436,652

1,522,043

1,395,819

104,825

96,442

413,155

340,335

388,136

340,210

1,108,888

1,055,484

1.43

1.25

4.09

3.89

1.42

1.24

4.06

3.85

270,924

272,069

271,333

271,212

272,932

274,292

273,312

273,833

December 31,

2025

2024

2,644,030

1,008,152

1,108,888

1,055,484

227,828

196,935

455,175

391,219

(69,089

)

(49,593

)

66,048

(128,737

)

6,016

(1,920

)

7,166

6,138

(274,894

)

(180,287

)

(91,029

)

(82,771

)

43,382

(81,529

)

(18,569

)

11,866

184,897

33,676

69,411

66,478

13,551

23,592

1,728,781

1,260,551

(40,895

)

(4,982

)

140,281

47,980

11,500

(141,871

)

(142,542

)

(429,538

)

(737,574

)

(460,523

)

(837,118

)

3,196,595

(1,350,000

)

(23,828

)

145,901

204,237

(169,842

)

(237,737

)

(925,034

)

(550,026

)

(948,975

)

1,239,241

38,004

(26,796

)

357,287

1,635,878

3,001,317

2,644,030

2024

2025

46%

49%

50%

49%

48%

49%

43%

47%

12%

13%

12%

11%

18%

12%

13%

20%

19%

17%

18%

19%

18%

20%

19%

17%

14%

15%

16%

14%

15%

100%

2024

2025

76%

73%

70%

68%

71%

69%

70%

12%

13%

14%

13%

14%

13%

14%

15%

14%

12%

14%

16%

19%

16%

15%

16%

15%

16%

100%

Three Months Ending

Year Ending

March 31, 2026

December 31, 2026

Forecast

30% - 31%

31.75% - 32.75%

10%

44% - 45%

44.75% - 45.75%

Three Months Ending

Year Ending

March 31, 2026

December 31, 2026

Forecast

$1.16 to $1.22

$4.95 to $5.05

0.50

2.04

0.12

0.46

0.11

0.36

0.00

0.24

$1.89 to $1.95

$8.05 to $8.15

Three Months Ending

Year Ending

March 31, 2026

December 31, 2026

Forecast

$317 to $333

$1,355 to $1,382

137

557

125

100

$518 to $534

$2,203 to $2,230

CDNS–IR

Category: Financial, Featured