Core Insights - Cadence Design Systems reported strong Q1 results, exceeding Wall Street's earnings expectations and raising its full-year guidance [1][2][4] Financial Performance - The company posted non-GAAP earnings per share of $1.57 on sales of $1.24 billion, representing a year-over-year revenue increase of approximately 23% [2] - Cadence beat Wall Street's earnings target by $0.07 per share and achieved an adjusted operating income margin of 41.7%, up from 37.8% in the same quarter last year [2] - The company ended the quarter with $6.4 billion in remaining performance obligations, with an expectation that $3.2 billion will be recognized as revenue within the next year [2] Future Guidance - For the current year, Cadence is guiding for sales between $5.15 billion and $5.23 billion, aligning with Wall Street's target of $5.19 billion [3] - The adjusted earnings target for the year is set between $6.73 and $6.83 per share, which is better than the average analyst estimate of $6.72 [4] - The company also anticipates an adjusted operating income margin between 43.25% and 44.25%, indicating a significant improvement over last year's margin of 42.5% [4] Market Context - Prior to the Q1 report, Cadence had previously guided for adjusted earnings per share between $6.65 and $6.75, and sales between $5.14 billion and $5.22 billion [5] - Demand remains strong despite macroeconomic uncertainties, suggesting that the company may have achieved sustained margin improvements ahead of schedule [5]

Core Insights - Cadence Design Systems (CDNS) reported strong first-quarter 2025 results, with non-GAAP EPS of $1.57, exceeding estimates by 5.4% and showing a year-over-year increase of 34.2% [1] - Revenues reached $1.242 billion, surpassing estimates by 0.3% and increasing 23% year over year, driven by robust demand for solutions [2] Financial Performance - The company ended the quarter with a backlog of $6.4 billion and current-remaining performance obligations of $3.2 billion, indicating stable customer investment in next-generation designs [3] - Management upgraded its 2025 revenue outlook to $5.15-$5.23 billion, reflecting an 11.8% growth from the previous year, with non-GAAP EPS expected between $6.73 and $6.83, a 12.2% increase [5] Segment Performance - Product & Maintenance revenues, accounting for 89.5% of total revenues, rose 21.7% year over year to $1.11 billion, while Services revenues increased 36.5% to $131 million [6] - Core EDA, Intellectual Property (IP), and Systems Design & Analysis contributed 71%, 14%, and 15% to total revenues, respectively, with the Systems Design & Analysis segment seeing a 50% revenue increase [7] Strategic Developments - The Cadence.ai portfolio is gaining traction, with over 1000 tapeouts year to date and a partnership expansion with NVIDIA to enhance AI solutions [4] - Recent acquisitions, including BETA CAE and Secure-IC, are expected to bolster the company's offerings in design and IP solutions [9][10][11] Margin and Cash Flow - Non-GAAP gross margin contracted slightly to 88.4%, while non-GAAP operating margin expanded to 41.7% [12] - The company generated an operating cash flow of $487 million and free cash flow of $464 million, with plans for $175 million in share repurchases in the second quarter [14] Outlook - For Q2 2025, revenues are estimated between $1.25-$1.27 billion, with non-GAAP EPS anticipated between $1.55 and $1.61 [16][17] - The company expects to utilize at least 50% of its free cash flow for share repurchases in 2025 [15]

Financial Data and Key Metrics Changes - Cadence reported a 23% year-over-year revenue growth, achieving total revenue of $1.242 billion for Q1 2025 [6][19] - Non-GAAP EPS increased by 34%, reaching $1.57, while GAAP EPS was $1.00 [6][19] - Non-GAAP operating margin was 42%, with GAAP operating margin at 29.1% [17][19] - Cash balance at the end of the quarter was $2.778 billion, with $2.5 billion in outstanding debt [19] Business Line Data and Key Metrics Changes - The IP business grew by 40% year-over-year, driven by strong market opportunities in AI and chiplet-based architectures [11] - Core EDA revenue increased by 16% year-over-year, with significant demand from AI and HPC customers [12][14] - The system design and analysis business saw over 50% year-over-year revenue growth, benefiting from AI-driven optimization solutions [15] Market Data and Key Metrics Changes - The China business experienced a year-over-year growth acceleration to 13% in Q1, up from 10% in the previous quarter [23] - The company remains prudent in its outlook for China, assuming flat revenue for the year despite positive trends [26][27] Company Strategy and Development Direction - Cadence is focusing on expanding its AI portfolio and enhancing its end-to-end solutions to meet the growing demand in the semiconductor industry [8][16] - The company is actively pursuing partnerships, including a collaboration with NVIDIA to develop AI solutions [8][11] - Cadence is also expanding its design IP portfolio through acquisitions, including the pending acquisition of Arms Artisan Foundation IP business [12][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model, citing strong customer demand and ongoing investments in R&D [7][21] - The company raised its financial outlook for 2025, projecting revenue between $5.15 billion and $5.23 billion [20][21] - Management noted that the macroeconomic environment remains uncertain, but customer behavior has not shifted significantly [7][34] Other Important Information - Cadence was recognized as one of the "100 Best Companies to Work For," ranking 11th [16] - The company repurchased $350 million worth of shares in Q1, reducing the share count [19] Q&A Session Summary Question: Growth in China Business - Management acknowledged the strong performance in China but remains cautious, maintaining a flat revenue assumption for the year [26][27] Question: Tariff Exposure - Management confirmed that software and services are not subject to tariffs, and the diversified supply chain mitigates risks from tariffs on hardware [32][34] Question: Hardware Demand and Capacity - Demand for hardware continues to exceed supply, but the company has a resilient supply chain to manage production [52] Question: Technical Enhancements and Investments - Key areas of focus include AI integration, 3D IC technology, and enhancing hardware capabilities [60][62] Question: IP Acquisition Strategy - Management emphasized the importance of expanding the IP portfolio to meet customer demand and adapt to the evolving foundry landscape [68][112] Question: Data Center Digital Twins - The acquisition of Future Facilities is expected to enhance capabilities in data center design and optimization, presenting significant market opportunities [120][121]

Core Insights - Cadence Design Systems reported revenue of $1.24 billion for the quarter ended March 2025, reflecting a year-over-year increase of 23.1% [1] - The earnings per share (EPS) for the quarter was $1.57, up from $1.17 in the same quarter last year, exceeding the consensus estimate of $1.49 by 5.37% [1] Financial Performance - The reported revenue matched the Zacks Consensus Estimate of $1.24 billion, resulting in a surprise of +0.34% [1] - The company’s stock has returned +12.8% over the past month, outperforming the Zacks S&P 500 composite, which declined by -4.3% [3] Revenue Breakdown - Revenue from System Design and Analysis was 15%, slightly below the five-analyst average estimate of 15.3% [4] - Revenue from Intellectual Property (IP) was 14%, exceeding the five-analyst average estimate of 12.1% [4] - Core Electronic Design Automation (EDA) revenue was 71.3%, compared to the average estimate of 73.76% [4] Order Backlog and Revenue Components - The order backlog stood at $6.40 billion, slightly below the average estimate of $6.45 billion [4] - Revenue from products and maintenance was $1.11 billion, representing a year-over-year increase of +21.6%, but below the average estimate of $1.13 billion [4] - Revenue from services was $131.52 million, significantly above the average estimate of $105.39 million, with a year-over-year change of +37.4% [4]

Company Performance - Cadence Design Systems (CDNS) reported quarterly earnings of $1.57 per share, exceeding the Zacks Consensus Estimate of $1.49 per share, and up from $1.17 per share a year ago [1] - The company achieved revenues of $1.24 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.34% and increasing from $1.01 billion year-over-year [3] - Over the last four quarters, Cadence has consistently surpassed consensus EPS and revenue estimates [2][3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.58 on revenues of $1.25 billion, and for the current fiscal year, it is $6.70 on revenues of $5.19 billion [8] - The estimate revisions trend for Cadence is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Computer - Software industry, to which Cadence belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [6]

Financial Data and Key Metrics Changes - Cadence reported a 23% year-over-year revenue growth and a 34% increase in non-GAAP EPS for Q1 2025, exceeding guidance on all key financial metrics [6][7] - Total revenue for Q1 was $1.242 billion, with a GAAP operating margin of 29.1% and a non-GAAP operating margin of 41.7% [19] - GAAP EPS was $1.00, while non-GAAP EPS was $1.57 [19] - The cash balance at quarter end was $2.778 billion, with $2.5 billion in outstanding debt [19] Business Line Data and Key Metrics Changes - The IP business grew 40% year-over-year in Q1, benefiting from strong market opportunities in AI and chiplet-based architectures [11] - Core EDA revenue increased by 16% year-over-year, with significant demand from AI, HPC, and hyperscaler customers [12][14] - The system design and analysis business delivered over 50% year-over-year revenue growth in Q1 [16] Market Data and Key Metrics Changes - The China business saw a year-over-year growth acceleration to 13% in Q1, up from 10% in the previous quarter [24] - Despite the growth, management remains prudent, assuming flat revenue for China for the year [27][28] Company Strategy and Development Direction - Cadence is focusing on expanding its differentiated end-to-end portfolio to serve a growing and diversified customer base, particularly in AI-driven solutions [9] - The company is raising its financial outlook for 2025, with projected revenue in the range of $5.15 to $5.23 billion [20] - Cadence is actively pursuing acquisitions to enhance its IP portfolio, including the pending acquisition of Arms Artisan Foundation IP business [12][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing customer demand for innovative technologies, particularly in the semiconductor sector driven by AI megatrends [8] - The company noted that customers continue to invest in R&D for next-generation designs, indicating strong design activity [26] - Management highlighted the resilience of its ratable software business model and recurring revenue mix in navigating macroeconomic uncertainties [8][36] Other Important Information - Cadence was recognized by Fortune and Great Place to Work as one of the 100 best companies to work for, ranking number 11 [17] - The company repurchased $350 million worth of shares in Q1, reducing its share count [18] Q&A Session Summary Question: Growth in China Business - Analyst inquired about the potential tailwind for Cadence's China business due to increased domestic chip design programs [24] - Management acknowledged strong design activity in China but maintained a prudent outlook, assuming flat revenue for the year [27][28] Question: Tariff Exposure - Analyst asked about Cadence's exposure to U.S. tariffs and its impact on the business [32] - Management confirmed that software and services are not subject to tariffs and emphasized the diversified supply chain's resilience [34][36] Question: Licensing Model Impact - Analyst questioned how the shift to GPU-based servers impacts Cadence's licensing model [40] - Management explained that they maintain traditional licensing while also offering cloud solutions, indicating a shift in business model [42] Question: Share Gain Opportunities with Intel - Analyst inquired about Cadence's exposure to Intel and potential share gains [46] - Management expressed optimism about improving relationships with Intel and the opportunity for growth in that segment [48] Question: Hardware Deliveries and Tariff Impact - Analyst asked about hardware deliveries and potential tariff impacts on production capacity [51] - Management stated that hardware revenue is limited by production capacity and confirmed no direct impact from tariffs [52] Question: Key Technical Enhancements - Analyst requested insights on important technical enhancements for the year [56] - Management highlighted significant investments in AI, 3D IC, and hardware-software co-optimization as critical focus areas [60][61] Question: IP Acquisition Strategy - Analyst asked about the recent focus on IP acquisitions and the long-term growth outlook for that segment [110] - Management confirmed that customer demand is driving the need to broaden the IP portfolio, with expectations for IP growth to exceed the company's average [116]

Financial Performance - Q1 2025 revenue reached $1.242 billion, with a GAAP operating margin of 29.1% and a non-GAAP operating margin of 41.7%[4] - For FY 2025, the revenue outlook is raised to between $5.150 billion and $5.230 billion, with a GAAP EPS forecast of $4.21 to $4.31[5] - The company reported a backlog of $6.4 billion in Q1 2025, indicating strong future revenue potential[12] - Recurring revenue for Q1 2025 accounted for 80% of total revenue, reflecting a stable revenue model[14] - The company expects to maintain a revenue growth rate of 11% to 13% for FY 2025[6] - Core EDA revenue accounted for 71% of total revenue in Q1 2025, down from 76% in Q1 2024, while Semiconductor IP and System Design and Analysis increased to 14% and 15% respectively[17] Operating Margins - The GAAP operating margin for FY 2025 is projected to be between 30.25% and 31.25%[11] - GAAP Operating Margin for Q1 2025 was 29.1%, a decrease from 33.7% in Q4 2024, while Non-GAAP Operating Margin was 41.7%, down from 46.0% in Q4 2024[20] - GAAP gross margin for Q1 2025 was 86.5%, with a non-GAAP gross margin of 88.4%[41] - The company anticipates a non-GAAP operating margin of 43.25% to 44.25% by 2025[48] Earnings Per Share - Non-GAAP EPS for Q1 2025 was $1.57, with a forecast of $1.55 to $1.61 for Q2 2025[10] - Diluted net income per share on a GAAP basis for Q1 2025 was $1.00, with a non-GAAP basis projected at $1.57 to $1.61[51] - Diluted net income per share on a GAAP basis for 2023 was $3.82, with a projected range of $4.21 - $4.31 for 2025[55] - Non-GAAP diluted net income per share for 2023 was $5.15, with a projected range of $6.73 - $6.83 for 2025[55] Cash Flow and Expenses - The operating cash flow for Q1 2025 was $487 million, with an expected annual cash flow from operations of $1.6 billion to $1.7 billion[4][11] - Free Cash Flow for Q1 2025 was $464 million, an increase from $404 million in Q4 2024[22] - Total GAAP Costs and Expenses for Q1 2025 were $881 million, a decrease from $899 million in Q4 2024, while Non-GAAP Costs and Expenses were $724 million, down from $733 million in Q4 2024[19] Stock Repurchase and Shareholder Returns - The company repurchased $350 million of its stock in Q1 2025 and plans to use approximately $175 million for share repurchases in Q2 2025[4] - The company repurchased $350 million worth of shares in Q1 2025, bringing the total number of shares repurchased to 1.361 million[25] Future Projections - GAAP operating income for 2023 was $1,251 million, projected to reach $1,621 million by 2025[38] - Non-GAAP operating income for 2023 was $1,717 million, expected to grow to $2,271 million by 2025[38] - Stock-based compensation expense for 2023 was $326 million, expected to increase to $466 million by 2025[38] - Amortization of acquired intangibles for 2023 was $62 million, projected to rise to $98 million by 2025[38] - Acquisition and integration-related costs for 2023 were $56 million, with an estimate of $86 million for 2025[38] Geographic Revenue Distribution - The revenue mix by geography shows that the Americas contributed 48% of total revenue in Q1 2025[16] Other Financial Metrics - Days Sales Outstanding (DSO) improved to 44 days in Q1 2025, down from 48 days in Q4 2024[22] - Cash and Cash Equivalents totaled $2,778 million in Q1 2025, with approximately 67% held in the U.S.[23] - In September 2024, the company issued $2.5 billion of Senior Notes at a weighted average interest rate of 4.44%[24] - Total other income and expense on a GAAP basis for FY 2023 was $31 million, projected to increase to $45 million in FY 2024[59] - Non-GAAP total other income and expense for FY 2023 was $(15) million, with projections of $(40) - $(54) million for FY 2025[59] Special Charges and Legal Liabilities - Special charges in 2024 are expected to include costs related to adjustments to estimated legal liabilities and executive severance[57]

由于基本面强劲且估值具有吸引力，摩根大通对Cadence Design Systems（CDNS）的看法变得更加乐 观。 摩根大通将这只软件和芯片设计股的评级从"中性"上调至"增持"，并将目标价从每股300美元上调至325 美元。新的目标价较周三的收盘价高出约22%。 分析师Harlan Sur指出，考虑到该股今年迄今已回调近12%，投资者现在正是逢低买入的好时机。 Sur表示："该公司未来一年（CY）的估值为34倍市盈率，处于过去五年28至53倍之间的低端，估值既 具吸引力也不过高。在宏观经济环境趋缓、贸易/关税影响有限的背景下，投资者会越来越看重Cadence 具有防御性的增长特性。" 他预计，Cadence很可能会超出其全年保守展望，因为该展望并未充分计入"随着时间推移，由于先进芯 片设计活动的强劲，以及市场份额提升带来的订单、营收和每股收益上行潜力"。 该分析师还提到，早在2018年特朗普总统首次实施关税政策时，芯片设计软件板块就表现出较强的韧 性。当时Cadence的股价跌幅也小于整体的费城半导体指数（SOX）。 Sur补充道："在过去两年，该团队的年营收增长实际表现平均超出预期150到200个基点 ...

Core Insights - Cadence Design Systems, Inc. has expanded its collaboration with Taiwan Semiconductor Manufacturing Company (TSMC) to accelerate time to silicon for advanced-node and 3D-IC technologies [1][2] - The partnership focuses on leveraging certified design flows, silicon-proven IP, and ongoing technical collaboration to drive innovation across TSMC's advanced process technologies, including N2P, N3, and N5 nodes [1][2] Company Developments - Cadence is delivering AI-driven design solutions for applications such as chiplets, system-on-chips (SoCs), and advanced packaging, specifically for TSMC's N2P, N3, and N5 platforms [2] - The collaboration includes certified tools and flows for TSMC's N2P and A16 nodes, with future support planned for the A14 node [2] - Cadence is enhancing its support for TSMC's 3DFabric technology, which improves design and packaging possibilities [2] Technology Advancements - Cadence is advancing chip design with certified tools and optimized IP for TSMC's N2P and A16 processes, including pre-silicon-certified DDR5 12.8G IP for N2P [3] - The company is integrating large language models (LLMs) into digital design flows to enhance automation and efficiency for future process nodes [3] - In the 3D-IC space, Cadence offers a comprehensive chiplet design and packaging solution, expanding its IP portfolio for AI training applications [4] Product Innovations - Cadence's Integrity 3D-IC Platform has been enhanced for improved quality of results (QoR), featuring AI-powered planning and optimization for multi-chiplet systems [5] - The integration of Sigrity X technologies and Clarity 3D Solver with the Integrity 3D-IC Platform supports compliance automation for 3D-IC ecosystems [6] - Cadence launched the industry's first DDR5 12.8Gbps MRDIMM Gen2 memory IP system solution on the advanced TSMC N3 process node, addressing the growing demand for memory bandwidth driven by AI and high-performance computing [8] Market Performance - Cadence currently holds a Zacks Rank 3 (Hold), with shares increasing by 11.5% over the past six months, contrasting with an 8.4% decline in the Zacks Computer – Software industry [9]

Core Insights - Cadence Design Systems, Inc (CDNS) is set to release its first-quarter 2025 results on April 28, with earnings expected at $1.49 per share, reflecting a 27.4% increase year-over-year, and revenues estimated at $1.24 billion, indicating a 22.7% growth from the previous year [1][2] - The company anticipates revenues between $1.23 billion and $1.25 billion for the quarter, compared to $1.01 billion in the same quarter last year [2] Earnings Performance - CDNS has a strong earnings surprise history, exceeding the Zacks Consensus Estimate in the last four quarters with an average beat of 6.2% [3] - The stock has experienced a slight decline of 0.2% over the past year, while the Computer-Software industry has decreased by 3.9% [3] Market Trends and Drivers - Robust design activity in sectors like data centers and automotive is driven by trends such as AI, hyperscale computing, 5G, and autonomous driving, leading to increased R&D budgets in AI-driven automation [4] - The AI super cycle is entering a new phase, with a focus on Generative AI and Physical AI, resulting in heightened demand for computing and semiconductor innovation, benefiting CDNS [5] Product and Solution Demand - CDNS's Cadence.AI portfolio and solutions like Cerebrus, Verisium AI, Sim AI, and Allegro X AI are expected to see rapid adoption as companies develop next-gen AI products [6] - The core electronic design automation (EDA) business is projected to grow due to demand for new hardware systems, particularly from AI and automotive clients [7] Revenue Estimates - Revenue from the Core EDA segment is estimated at $901.7 million, reflecting a year-over-year growth of 17.6% [9] - The System Design and Analysis division is expected to generate $182.5 million in revenue, indicating a significant year-over-year growth of 50.7% [9] Intellectual Property Business - The IP business division is anticipated to see revenues increase by 23.6% to $149.6 million, driven by demand for solutions in AI and high-performance computing [10] Recent Developments - On April 21, 2025, CDNS launched the first DDR5 12.8Gbps MRDIMM Gen2 memory IP system solution, addressing the growing demand for memory bandwidth in AI and enterprise data processing [11] - On April 16, 2025, CDNS announced an agreement to acquire Arm Holdings' Artisan foundation IP business, enhancing its IP portfolio [12]