Cadence Design Systems (CDNS) Q3 2025 earnings summary

Executive summary

• Delivered strong Q3 2025 results, exceeding guidance for revenue, operating margin, and EPS, with broad-based momentum across all product categories and geographies.

• Q3 2025 revenue was $1.339 billion, up 10% year-over-year, driven by growth in software, hardware, and IP, with record backlog of $7 billion and robust demand across AI, HPC, and automotive sectors.

• Raised full-year 2025 outlook to approximately 14% revenue growth and 18%–19% EPS growth, citing accelerating AI-driven design activity and strong segment performance.

• Expanded partnerships with Samsung, TSMC, and OpenAI, completed the acquisition of Arm Artisan foundation IP, and announced agreement to acquire Hexagon's D&E business.

• Settled export control violations with BIS and DOJ, paying $140.6 million in penalties and entering ongoing compliance obligations.

Financial highlights

• Q3 2025 revenue: $1.339 billion (+10% YoY); GAAP operating margin: 31.8%; non-GAAP: 47.6%.

• GAAP EPS was $1.05; non-GAAP EPS was $1.93; GAAP net income was $287.1 million (+21% YoY).

• Operating cash flow for Q3 was $311 million; cash and cash equivalents at quarter end were $2.75 billion; principal value of debt was $2.5 billion.

• Used $200 million to repurchase shares in Q3; $725 million repurchased in the first nine months of 2025.

• Q3 gross margin: 86.4% GAAP; non-GAAP: 88.0%.

Outlook and guidance

• Full-year 2025 revenue outlook raised to $5.262 billion–$5.292 billion (~14% YoY growth).

• Full-year GAAP EPS expected at $3.80–$3.86; non-GAAP EPS at $7.02–$7.08 (up 18%–19% YoY).

• Q4 2025 revenue expected in the range of $1.405 billion–$1.435 billion; GAAP EPS at $1.17–$1.23; non-GAAP EPS at $1.88–$1.94.

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

• Fiscal 2025 effective tax rate expected to be approximately 29%.