Cadence Reports Third Quarter 2025 Financial Results

Record Backlog of $7.0 Billion
Raising 2025 Revenue Outlook to ~14% Growth YoY

SAN JOSE, Calif. -- October 27, 2025 — Cadence (Nasdaq: CDNS) today announced results for the third quarter of 2025.

Third Quarter 2025 Financial Results

• Revenue of $1.339 billion, compared to revenue of $1.215 billion in Q3 2024
• GAAP operating margin of 31.8%, compared to 28.8% in Q3 2024
• Non-GAAP operating margin of 47.6%, compared to 44.8% in Q3 2024
• GAAP diluted net income per share of $1.05, compared to $0.87 in Q3 2024
• Non-GAAP diluted net income per share of $1.93, compared to $1.64 in Q3 2024
• Quarter-end backlog was $7.0 billion and revenue expected to be recognized in the next 12 months from remaining performance obligations was $3.5 billion

“Cadence delivered excellent results for the third quarter of 2025. With a record backlog and ongoing broad-based strength of our business, we are raising our full year revenue outlook to ~14% growth year-over-year,” said Anirudh Devgan, president and chief executive officer. “With deepening strategic relationships across the AI ecosystem, Cadence is uniquely positioned to be the trusted partner to deliver AI-centric transformational solutions.”

“I am pleased to report that Cadence delivered strong results for the third quarter of 2025, with broad-based momentum across all our businesses,” said John Wall, senior vice president and chief financial officer. “Strong financial and operational performance resulted in Q3 backlog of $7.0 billion, putting us on track to deliver a strong 2025.”

CFO Commentary

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

Business Outlook

For fiscal year 2025, the company expects:

• Revenue in the range of $5.262 billion to $5.292 billion
• GAAP operating margin in the range of 27.9% to 28.9%
• Non-GAAP operating margin in the range of 43.9% to 44.9%
• GAAP diluted net income per share in the range of $3.80 to $3.86
• Non-GAAP diluted net income per share in the range of $7.02 to $7.08

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. Revenue growth outlook is based on the midpoint of the range.

Business Highlights

• IP business maintained strong momentum, driven by global accelerating IP demand and increasing customer proliferation of Cadence's expanding IP portfolio
• Completed acquisition of the Arm Artisan foundation IP that augments Cadence's Design IP portfolio with standard cell libraries, memory compilers, and I/Os
• Hardware had a record Q3 with several significant expansions, especially at AI and HPC customers
• Signed a definitive agreement to acquire Hexagon’s D&E business, which will expand Cadence’s portfolio with leading structural analysis and multi-body dynamics technologies

Audio Webcast Scheduled

Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the third quarter 2025 financial results audio webcast today, October 27, 2025, 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 October 27, 2025 at 5 p.m. (Pacific) and ending December 17, 2025 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.