Cadence Design Systems (CDNS) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue grew 23% year-over-year to $1.242 billion, with non-GAAP EPS up 34% to $1.57, exceeding guidance on all key financial metrics and driven by strong demand for AI-driven technologies, software, hardware, and IP offerings.

• Net income increased 10% year-over-year to $273.6 million, with GAAP EPS of $1.00 diluted.

• 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 and Rapidus.

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

Financial highlights

• GAAP operating margin improved to 29.1% from 24.8% in Q1 2024; non-GAAP operating margin rose to 41.7% from 37.8%.

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

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

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

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

Outlook and guidance

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

• GAAP operating margin expected 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%.