Cadence Design Systems (CDNS) Q1 2025 earnings summary

Executive summary

• Achieved 23% year-over-year revenue growth in Q1 2025, surpassing guidance on all key financial metrics, with non-GAAP EPS up 34% to $1.57 and GAAP EPS at $1.00.

• Raised full-year 2025 outlook for revenue and EPS due to robust customer demand, resilient recurring revenue, and strong backlog.

• Continued expansion of AI-driven product portfolio and strategic partnerships, including NVIDIA, Rapidus, Socionext, and Intel Foundry.

• Maintained prudent guidance for China, assuming flat revenue despite strong Q1 performance.

• No single customer accounted for more than 10% of revenue or receivables.

Financial highlights

• Q1 2025 revenue reached $1.242 billion, up 23% year-over-year, with GAAP operating margin at 29.1% and non-GAAP at 41.7%.

• GAAP EPS was $1.00; non-GAAP EPS was $1.57, up 34% year-over-year; net income was $273.6 million.

• Operating cash flow was $487 million; cash and cash equivalents at quarter end were $2.78 billion.

• Repurchased $350 million in shares, reducing share count.

• Product and maintenance revenue rose 22% to $1.11 billion; services revenue up 37% to $131.5 million.

Outlook and guidance

• FY 2025 revenue guidance raised to $5.15–$5.23 billion; GAAP EPS expected at $4.21–$4.31; non-GAAP EPS at $6.73–$6.83.

• GAAP operating margin projected at 30.25%–31.25%; non-GAAP at 43.25%–44.25%.

• Q2 2025 revenue expected at $1.25–$1.27 billion; non-GAAP EPS $1.55–$1.61.

• At least 50% of annual free cash flow to be used for share repurchases.

• Fiscal 2025 effective tax rate expected to be approximately 26%.