Cadence Design Systems (CDNS) Q4 2025 earnings summary

Executive summary

• Achieved 14% year-over-year revenue growth in 2025, reaching $5.297 billion, with a record $7.8 billion backlog entering 2026 and strong demand for AI-driven products and broad-based business strength.

• Non-GAAP operating margin improved to 44.6% for 2025, reflecting productivity-driven profitability and business momentum.

• AI-driven solutions, including ChipStack AI Super Agent, accelerated customer productivity and engagement, with strong endorsements from major industry players.

• Expanded partnerships with leading foundries (TSMC, Intel, Rapidus, Samsung) and hyperscalers, deepening market reach and technology leadership.

• Hardware, IP, and system design businesses all delivered double-digit growth, with hardware and IP segments showing particularly strong momentum.

Financial highlights

• FY 2025 revenue: $5.297 billion; Q4 2025 revenue: $1.44 billion, up 14% year-over-year.

• FY 2025 GAAP operating margin: 28.2%; non-GAAP: 44.6%.

• FY 2025 GAAP EPS: $4.06; non-GAAP EPS: $7.14; Q4 2025 GAAP EPS: $1.42; non-GAAP EPS: $1.99.

• Operating cash flow for 2025: $1.729 billion; Q4 2025: $553 million; $925 million used for share repurchases.

• Cash and cash equivalents at year-end: $3.001 billion; debt outstanding: $2.5 billion.

Outlook and guidance

• FY 2026 revenue expected between $5.9 billion and $6.0 billion; GAAP operating margin 31.75%–32.75%; non-GAAP operating margin 44.75%–45.75%.

• FY 2026 GAAP EPS guidance: $4.95–$5.05; non-GAAP EPS: $8.05–$8.15; operating cash flow projected at ~$2.0 billion.

• Q1 2026 revenue expected between $1.42 billion–$1.46 billion; recurring revenue to remain ~80% of total.

• 67% of 2026 revenue visibility from beginning backlog, supporting strong recurring base.

• Approximately 50% of free cash flow to be used for share repurchases in 2026.