10-QPeriod: Q3 FY2025

CADENCE DESIGN SYSTEMS INC Quarterly Report for Q3 Ended Sep 30, 2025

Filed October 29, 2025For Securities:CDNS

Summary

Cadence Design Systems, Inc. (CDNS) reported a strong third quarter and year-to-date performance for 2025, demonstrating robust revenue growth and operational efficiency. Total revenue increased by 10% year-over-year for the third quarter and 17% for the first nine months, driven by continued demand across its Core EDA, Semiconductor IP, and System Design and Analysis segments. The company's strategic acquisitions in VLAB Works and Artisan foundation IP are integrated and contributing to growth, while the pending acquisition of Hexagon's design and engineering business, announced in September 2025, is poised to further expand its System Design & Analysis portfolio. Financially, Cadence maintained a healthy balance sheet with increased cash and cash equivalents and solid net working capital. Despite facing a $140.6 million settlement with BIS and DOJ related to past export violations, the company's profitability remained strong, with net income growing and operating margins improving. The company also announced an additional $1.5 billion to its share repurchase program, signaling confidence and a commitment to returning value to shareholders.

Financial Highlights

48 data points
Beta

Revenue

$1.34B

Net Income

$287.12M

21.4% Net Margin

EPS (Diluted)

$1.05

Total Assets

$9.60B

Cash & Equivalents

$2.75B

Free Cash Flow

$276.98M

Financial Statements
Beta
Revenue$1.34B
R&D Expenses$423.03M
Operating Expenses$913.45M
Operating Income$425.39M
Interest Expense$29.04M
Net Income$287.12M
EPS (Basic)$1.06
EPS (Diluted)$1.05
Shares Outstanding (Basic)271.15M
Shares Outstanding (Diluted)273.80M

Key Highlights

  • 1Total revenue grew 10% year-over-year to $1.34 billion in Q3 2025 and 17% year-over-year to $3.86 billion for the first nine months of 2025.
  • 2Net income increased to $287.1 million in Q3 2025 from $238.1 million in Q3 2024, and for the nine-month period, net income was $720.8 million compared to $715.3 million in the prior year.
  • 3Operating margin improved to 32% in Q3 2025 from 29% in Q3 2024, indicating enhanced profitability.
  • 4The company settled a $140.6 million penalty with BIS and DOJ related to export violations, which was recorded as a charge in the nine-month period.
  • 5Cadence announced a pending acquisition of Hexagon's design and engineering business for approximately €2.70 billion, expected to close in Q1 2026.
  • 6A significant increase in cash from operations to $1.18 billion for the first nine months of 2025, up from $819.2 million in the prior year, reflects strong business performance.
  • 7The Board of Directors authorized an additional $1.5 billion for share repurchases, with $1.6 billion remaining under the program as of September 30, 2025.

Frequently Asked Questions

Cadence reported strong revenue growth, with total revenue increasing by 10% year-over-year to $1.34 billion for the third quarter ended September 30, 2025. For the first nine months of 2025, total revenue grew by 17% year-over-year to $3.86 billion, driven by demand across its product categories.

Cadence has integrated its acquisitions of VLAB Works and the Arm Artisan foundation IP business, which are contributing to revenue growth. The company has also entered into a definitive agreement to acquire Hexagon's design and engineering business for approximately €2.70 billion, a move expected to significantly enhance its System Design & Analysis portfolio. Acquisition-related transaction costs were $17.0 million and $23.0 million for the three and nine months ended September 30, 2025, respectively.

Cadence settled matters relating to export control violations with the U.S. Department of Justice (DOJ) and the Bureau of Industry and Security (BIS) for an aggregate of $140.6 million. This amount was paid during the three months ended September 30, 2025, and a charge of $128.5 million was recorded in 'Loss related to contingent liability' for the nine-month period. The settlement includes ongoing compliance and audit obligations.

Cadence maintained a strong liquidity position with $2.75 billion in cash and cash equivalents as of September 30, 2025. Cash flows from operating activities were robust, increasing to $1.18 billion for the first nine months of 2025. The company also has a significant authorization of $1.6 billion remaining for share repurchases and has sufficient resources to fund its operating activities, acquisitions, and capital expenditures.