Cadence Design Systems (CDNS) Q4 2025 earnings summary

Executive summary

• Achieved 14% revenue growth in FY 2025, reaching $5.297B, with a record $7.8B backlog entering 2026, driven by broad-based portfolio strength and AI solutions.

• Non-GAAP EPS rose 20% to $7.14, with GAAP EPS at $4.06 for the year.

• AI-driven products and agentic AI workflows, including ChipStack AI Super Agent, are accelerating 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

• Total revenue reached $1.44B for Q4 and $5.297B for the year, up 14% year-over-year.

• GAAP operating margin was 32.2% for Q4 and 28.2% for the year; Non-GAAP operating margin was 45.8% for Q4 and 44.6% for the year.

• GAAP EPS was $1.42 for Q4 and $4.06 for the year; Non-GAAP EPS was $1.99 for Q4 and $7.14 for the year.

• Operating cash flow was $553M in Q4 and $1.729B for the year; cash balance at year-end: $3.0B; debt outstanding: $2.5B.

• Recurring revenue comprised 80% of total revenue in FY 2025.

Outlook and guidance

• FY 2026 revenue expected between $5.9B-$6B, representing 11%-13% growth; GAAP operating margin 31.75%-32.75%; Non-GAAP operating margin 44.75%-45.75%.

• GAAP EPS guidance: $4.95-$5.05; Non-GAAP EPS: $8.05-$8.15; operating cash flow projected at ~$2B.

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

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

• Plan to use about 50% of free cash flow for share repurchases in 2026.