Core Insights - Cadence Design Systems, Inc. reported better-than-expected third-quarter earnings with earnings per share of $1.93, surpassing the Street estimate of $1.79 [1] - Quarterly revenue reached $1.38 billion, exceeding the analyst consensus estimate of $1.32 billion and showing an increase from $1.21 billion in the same period last year [1] Financial Outlook - The CEO announced a revised full-year revenue outlook projecting approximately 14% year-over-year growth, supported by a record backlog and strong business performance [2] - The company adjusted its fiscal 2025 GAAP EPS guidance to a range of $3.80 to $3.86 per share, lower than the previous analyst estimate of $4.30, while raising its revenue outlook to between $5.26 billion and $5.29 billion, compared to the $5.24 billion estimate [2] Stock Performance - Following the earnings announcement, Cadence Design shares fell by 4.5% to $335.46 [3] - Analysts have adjusted their price targets for Cadence Design after the earnings report [3] Analyst Ratings - Rosenblatt analyst maintained a Neutral rating and raised the price target from $320 to $335 [5] - JP Morgan analyst kept an Overweight rating and increased the price target from $390 to $405 [5] - Baird analyst maintained an Outperform rating and raised the price target from $390 to $418 [5]

Core Insights - Cadence Design Systems, Inc. reported better-than-expected third-quarter earnings with earnings per share of $1.93, surpassing the Street estimate of $1.79 [1] - The company's quarterly revenue reached $1.38 billion, exceeding the analyst consensus estimate of $1.32 billion and showing an increase from $1.21 billion in the same period last year [1] Financial Performance - The CEO, Anirudh Devgan, announced a record backlog and broad-based strength in the business, raising the full-year revenue outlook to approximately 14% growth year-over-year [2] - The fiscal 2025 GAAP EPS guidance was lowered to a range of $3.80 to $3.86 per share, compared to the previous analyst estimate of $4.30 [2] - Revenue outlook for fiscal 2025 was raised to between $5.26 billion and $5.29 billion, slightly above the $5.24 billion estimate [2] Stock Performance - Following the earnings announcement, Cadence Design shares fell by 4.5% to $335.46 [3] - Analysts adjusted their price targets for Cadence Design after the earnings report [3] Analyst Ratings - Rosenblatt analyst Blair Abernethy maintained a Neutral rating and raised the price target from $320 to $335 [5] - JP Morgan analyst Harlan Sur maintained an Overweight rating and increased the price target from $390 to $405 [5] - Baird analyst Joe Vruwink maintained an Outperform rating and raised the price target from $390 to $418 [5]

Core Insights - Cadence Design Systems (NASDAQ: CDNS) reported a significant beat on both earnings and revenue for Q3, which led to an increase in full-year guidance and indicated strong momentum that was positively received by investors [1] Financial Performance - The company delivered better-than-expected earnings and revenue figures in Q3, showcasing its robust financial health [1] - The raised full-year guidance reflects confidence in continued growth and performance [1] Market Reaction - Investors responded favorably to the company's strong performance and revised outlook, indicating positive market sentiment towards Cadence Design Systems [1]

Core Insights - Cadence Design Systems (CDNS) reported $1.34 billion in revenue for the quarter ended September 2025, marking a year-over-year increase of 10.2% [1] - The earnings per share (EPS) for the same period was $1.93, up from $1.64 a year ago, indicating a positive trend in profitability [1] - The reported revenue exceeded the Zacks Consensus Estimate of $1.33 billion by 0.94%, while the EPS surpassed the consensus estimate of $1.79 by 7.82% [1] Financial Performance Metrics - The order backlog for Cadence stood at $7 billion, exceeding the average estimate of $6.11 billion from two analysts [4] - Revenue from product and maintenance was reported at $1.21 billion, matching the average estimate based on five analysts, with a year-over-year change of +9.8% [4] - Revenue from services reached $131.14 million, surpassing the average estimate of $117.2 million from five analysts, reflecting a year-over-year increase of +13.9% [4] Stock Performance - Over the past month, shares of Cadence have returned -1.4%, in contrast to the Zacks S&P 500 composite's +2.5% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Financial Performance - Cadence Design Systems reported quarterly earnings of $1.93 per share, exceeding the Zacks Consensus Estimate of $1.79 per share, and up from $1.64 per share a year ago [1] - The earnings surprise for the quarter was +7.82%, following a previous surprise of +5.1% with earnings of $1.65 per share against an expectation of $1.57 [2] - The company posted revenues of $1.34 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.94%, and up from $1.22 billion year-over-year [3] Market Performance - Cadence shares have increased approximately 14.9% since the beginning of the year, compared to the S&P 500's gain of 15.5% [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for it to outperform the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.95 on revenues of $1.41 billion, and for the current fiscal year, it is $6.91 on revenues of $5.25 billion [8] - The Computer - Software industry, to which Cadence belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable outlook for the sector [9]

Financial Data and Key Metrics Changes - Cadence reported total revenue of $1.339 billion for Q3 2025, with a GAAP operating margin of 31.8% and a non-GAAP operating margin of 47.6% [14] - GAAP EPS was $1.05, while non-GAAP EPS was $1.93 [14] - The company raised its full-year outlook to approximately 14% revenue growth and 18% EPS growth [6][14] Business Line Data and Key Metrics Changes - The IP business is tracking over 20% growth for the second consecutive year, driven by demand in AI and HPC at advanced nodes [19][21] - The core EDA business saw strong results, with significant adoption of AI-driven design and verification solutions [10] - Hardware had a record Q3, with notable expansions at AI and HPC customers [11] Market Data and Key Metrics Changes - Bookings exceeded expectations, resulting in a backlog of over $7 billion [5][14] - China experienced a year-on-year growth of approximately 53%, indicating a return to normal business activity post-regulations [39][41] - The company noted broad-based strength across all geographies, with strong design activity in China [41][82] Company Strategy and Development Direction - Cadence is focusing on the AI megatrend, positioning itself to capture opportunities in AI infrastructure, physical AI, and science's AI [6][7] - The company is expanding partnerships with major players like Samsung and TSMC to enhance its EDA and IP offerings [8][12] - Recent acquisitions, including Hexagon's D&E business, aim to strengthen Cadence's position in the system design and analysis market [12][46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing strength of the business and the AI-driven market opportunities [5][13] - The company anticipates continued growth in its IP business, supported by strong customer demand and partnerships with foundries [21][23] - Management remains prudent in its outlook for 2026, emphasizing the importance of maintaining a disciplined approach to growth [36][64] Other Important Information - The company plans to use at least 50% of its annual free cash flow for share repurchases [16] - Operating cash flow for Q3 was reported at $311 million, with a cash balance of $2.753 billion at quarter-end [15] Q&A Session Summary Question: What is driving the growth in the IP business? - Management highlighted that the IP business is performing well due to its focus on AI, HPC, and chiplet-based architecture, with strong customer demand and partnerships with foundries [21][23] Question: Are there still renewals expected in Q4? - Management confirmed that strong demand for AI infrastructure is driving performance, and they expect continued strength in renewals [27][30] Question: What is the outlook for China? - Management noted that design activity in China is strong and returning to normal, with expectations for year-over-year growth [41][81] Question: How is the company positioning itself in the system design market? - Management discussed the strategic acquisitions aimed at enhancing capabilities in simulation and analysis, particularly in the context of physical AI [46][50] Question: What tailwinds are expected from AI features in EDA products? - Management indicated that AI integration is expected to significantly improve productivity metrics, with examples of substantial efficiency gains from AI-driven tools [55][58] Question: What is the demand outlook for hardware platforms? - Management expressed confidence in continued strong demand for hardware, particularly in AI and HPC markets, with expectations for growth in 2026 [62][66]

Financial Data and Key Metrics Changes - Cadence reported total revenue of $1.339 billion for Q3 2025, with a GAAP operating margin of 31.8% and a non-GAAP operating margin of 47.6% [14] - GAAP EPS was $1.05, while non-GAAP EPS was $1.93 [14] - The company raised its full-year outlook to approximately 14% revenue growth and 18% EPS growth [6][14] Business Line Data and Key Metrics Changes - The IP business is tracking over 20% growth for the second consecutive year, driven by demand in AI and HPC at advanced nodes [21][22] - The core EDA business saw strong results, particularly with the adoption of AI-driven design and verification solutions [10] - Hardware had a record Q3, with significant expansions at AI and HPC customers [11] Market Data and Key Metrics Changes - Bookings exceeded expectations, resulting in a backlog of over $7 billion [5][14] - China experienced a year-on-year growth of approximately 53%, indicating a return to normal business activity post-regulations [39][41] - The company noted broad-based strength across all geographies, with strong design activity in China [41][81] Company Strategy and Development Direction - Cadence is focusing on the AI megatrend, positioning itself to capture opportunities in AI infrastructure, physical AI, and science's AI [6][7] - The company is expanding partnerships with major players like Samsung and TSMC to enhance its EDA and IP offerings [8][12] - Recent acquisitions, including Hexagon's T&E business, aim to strengthen Cadence's position in the growing market of system design and analysis [12][46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing strength of the business and the AI megatrend driving design complexity [6][13] - The company expects to maintain double-digit growth across all product categories for 2025 [14][36] - Management highlighted the importance of strategic partnerships and the need for continued investment in AI capabilities [36][46] Other Important Information - The company plans to use at least 50% of its annual free cash flow for share repurchases [16] - Operating cash flow for Q3 was reported at $311 million, with a cash balance of $2.753 billion at quarter-end [15] Q&A Session Summary Question: What is driving the growth in the IP business? - Management attributed the growth to a focus on AI and HPC, partnerships with foundries, and strong customer demand [21][22] Question: Are there still renewals expected in Q4? - Management confirmed that strong demand for AI infrastructure is driving performance and that renewals are anticipated [27][30] Question: What is the outlook for China? - Management noted that design activity in China is strong and returning to normal, with expectations for continued growth [41][81] Question: How is the company positioned in the system design market? - Management discussed the strategic acquisitions aimed at enhancing capabilities in simulation and analysis, positioning Cadence well for future growth [46][49] Question: What are the expectations for hardware demand? - Management expressed confidence in continued strong demand for hardware, particularly in AI and HPC markets [62][66] Question: How will the partnership between Nvidia and Intel affect demand? - Management indicated that the collaboration would likely increase demand for EDA tools and enhance performance through optimized CPU-GPU systems [72][76] Question: What are the operational expense dynamics? - Management explained that Q3 performance was aided by a restructure, while Q4 may see increased expenses due to new acquisitions [89]

Financial Data and Key Metrics Changes - Cadence reported total revenue of $1.339 billion for Q3 2025, with a GAAP operating margin of 31.8% and a non-GAAP operating margin of 47.6% [14] - GAAP EPS was $1.05, while non-GAAP EPS was $1.93 [14] - The company raised its full-year outlook to approximately 14% revenue growth and 18% EPS growth [4][12] Business Line Data and Key Metrics Changes - The IP business is tracking over 20% growth for the second consecutive year, driven by demand in AI, HPC, and chiplet architectures [20][21] - The core EDA business saw strong results, with significant adoption of AI-driven design and verification solutions [9] - Hardware had a record Q3, with notable expansions at AI and HPC customers [10] Market Data and Key Metrics Changes - Bookings exceeded expectations, resulting in a backlog of over $7 billion [4][13] - China experienced a year-over-year growth of approximately 53%, indicating a return to normal business activity post-regulatory changes [35][36] Company Strategy and Development Direction - Cadence is focusing on the AI megatrend, positioning itself to capture opportunities across various industries with a comprehensive portfolio [5][12] - The company is expanding partnerships with major semiconductor companies, including TSMC and Samsung, to support next-generation AI flows [6][10] - Recent acquisitions, such as Hexagon's T&E business, are aimed at enhancing capabilities in structural analysis and multi-body dynamics [11][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing strength of the business and the AI infrastructure build-out, which is expected to drive future growth [25][26] - The company anticipates continued strong demand across all business lines and geographies, with a disciplined approach to growth [30][32] Other Important Information - The company plans to use at least 50% of its annual free cash flow for share repurchases [16] - Operating cash flow for Q3 was reported at $311 million, with a cash balance of $2.753 billion at quarter-end [15] Q&A Session Summary Question: What is driving the growth in the IP business? - Management highlighted that the IP business is focused on AI and HPC at advanced nodes, with strong customer demand and partnerships with major foundries [20][21][23] Question: Are there still renewal opportunities in Q4? - Management confirmed that strong demand continues, particularly in AI infrastructure, and that renewals are expected to contribute positively [24][25][27] Question: What is the outlook for hardware demand? - Management indicated that hardware demand remains strong, with expectations for continued growth into 2026 [56][58] Question: How is the company positioned in the system design market? - Management emphasized the strategic acquisitions aimed at enhancing capabilities in simulation and analysis, positioning the company well for future growth [40][44] Question: What are the expectations for China’s growth? - Management noted that design activity in China is back to normal, with expectations for continued growth, contingent on geopolitical stability [73][74] Question: What are the OpEx dynamics for Q3 and Q4? - Management explained that Q3 performance was better than expected due to a small restructure, while Q4 may see some new expenses from acquisitions [76][78]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $1,339,000,000, with GAAP operating margin at 31.8% and non-GAAP operating margin at 47.6% [20] - GAAP EPS was $1.05, while non-GAAP EPS was $1.93 [20] - The company raised its full-year outlook to approximately 14% revenue growth and 18% EPS growth [6][19] Business Line Data and Key Metrics Changes - The IP business is tracking over 20% growth for the second consecutive year, driven by demand in AI, HPC, and chiplet architectures [23][26] - The core EDA business delivered strong results, with significant adoption of AI-driven design and verification solutions [12][19] - The System Design and Analysis (SDA) business saw growth due to innovative solutions and expanding customer adoption [15][17] Market Data and Key Metrics Changes - Backlog grew to over $7,000,000,000, indicating strong demand across all product categories [6][19] - China experienced a year-over-year growth of approximately 53%, with design activity returning to normal following regulatory changes [47][49] Company Strategy and Development Direction - The company is focused on capitalizing on the AI megatrend, positioning itself as a leader in EDA, IP, and system analysis [7][17] - Recent partnerships with major players like Samsung and TSMC aim to enhance AI infrastructure and support next-generation technologies [8][9] - The acquisition of Hexagon's T and E business is expected to strengthen the company's position in structural analysis and multi-body dynamics technologies [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing strength of the business and the potential for sustained growth in the AI era [6][17] - The company anticipates continued demand for its products, particularly in AI infrastructure and physical AI [34][44] - Management remains prudent in its outlook, considering potential regulatory changes and geopolitical factors [100][102] Other Important Information - The company plans to use at least 50% of its annual free cash flow for share repurchases [20] - Operating cash flow for Q3 was $311,000,000, with a cash balance of $2,753,000,000 at quarter-end [20] Q&A Session Summary Question: What is driving the growth in the IP business? - The IP business is performing well due to its focus on AI and HPC at advanced nodes, strong partnerships with foundries, and improved customer demand [23][26][29] Question: Are there still renewals expected in Q4? - There are ongoing renewals, and the strong demand for AI infrastructure is a primary driver of performance [32][34] Question: What is the outlook for China? - Design activity in China is strong, and the region is expected to grow year-over-year, contingent on geopolitical stability [47][49][100] Question: How is the company positioned in the system design market? - The company is optimistic about its SDA business, especially with recent acquisitions that enhance its capabilities in physical AI and multibody dynamics [53][60] Question: What are the expectations for hardware demand? - Demand for hardware remains strong, particularly in AI and HPC markets, with expectations for continued growth into 2026 [77][82] Question: How will the partnership between NVIDIA and Intel affect demand? - The partnership is expected to increase demand for EDA tools as the industry moves towards CPU and GPU integration [88][90]

Core Insights - Cadence Design Systems (CDNS) reported better-than-expected earnings for Q3 but provided a disappointing outlook for Q4, leading to a decline in stock price in after-hours trading [1][3]. Financial Performance - For the September quarter, Cadence earned an adjusted $1.93 per share on sales of $1.34 billion, surpassing analyst expectations of $1.79 per share on $1.32 billion in sales [2]. - Year-over-year, Cadence's earnings increased by 18% and sales rose by 10% [2]. Guidance and Forecasts - The company's Q4 guidance indicated adjusted earnings of $1.78 per share on sales of $1.39 billion, missing Wall Street's expectations of $1.92 per share on $1.41 billion in sales [3]. - For the full year, Cadence forecasted adjusted earnings of $7.05 per share on sales of $5.28 billion, which is above analyst expectations of $6.93 per share on $5.25 billion in sales [4]. Market Position - Cadence ended Q3 with a record backlog of $7 billion, indicating strong demand for its products [4]. - The CEO highlighted the company's strategic relationships within the AI ecosystem, positioning Cadence as a key player in delivering AI-centric solutions [4]. Stock Performance - In after-hours trading, CDNS stock fell nearly 2% to $345, following a 1.8% increase during regular trading hours, closing at $351.40 [5].