Cadence Design Systems (CDNS) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue reached $1.28 billion, up 20% year-over-year, surpassing guidance and driven by strong AI-driven product demand, broad-based customer adoption, and robust bookings, with temporary China export restrictions offset by strength in other regions.

• Non-GAAP EPS was $1.65, up 29% year-over-year; GAAP EPS was $0.59, down from $0.84 due to a one-time legal settlement charge.

• Net income for Q2 2025 was $160.1 million, primarily impacted by a $140.6M–$141M legal settlement with DOJ and BIS over export violations related to China transactions from 2015–2021.

• The company completed the acquisition of VLAB Works to enhance system verification and pre-silicon software validation capabilities.

• Launched new AI-driven products, including Millennium M2000 AI Supercomputer and expanded partnerships with major semiconductor companies.

Financial highlights

• Q2 2025 revenue: $1.28 billion (+20% YoY); non-GAAP EPS: $1.65 (+29% YoY); GAAP EPS: $0.59; GAAP operating margin: 19%; non-GAAP operating margin: 42.8%.

• Q2 2025 net income: $160.1 million; cash and cash equivalents at quarter-end: $2.82–$2.823 billion; principal value of debt: $2.5 billion.

• Operating cash flow was $378 million for Q2 and $864.6 million for the first six months of 2025.

• Used $175 million for share repurchases in Q2; $525 million repurchased in the first half of 2025.

• Gross margin for Q2 2025 was 87.2%–89%.

Outlook and guidance

• FY2025 revenue guidance raised to $5.21–$5.27 billion (13% growth at midpoint); GAAP EPS expected at $3.97–$4.07; non-GAAP EPS at $6.85–$6.95.

• FY2025 GAAP operating margin projected at 28.5%–29.5%; non-GAAP at 43.5%–44.5%.

• FY2025 operating cash flow expected at $1.65–$1.75 billion; at least 50% of annual free cash flow to be used for share repurchases.

• Q3 2025 revenue guidance: $1.305–$1.335 billion; non-GAAP EPS: $1.75–$1.81.

• The One Big Beautiful Bill Act is expected to reduce 2025 U.S. federal tax payments by ~$140 million.