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].

Core Viewpoint - Cadence Design Systems has forecasted fourth-quarter profit that is slightly below market estimates due to concerns over Sino-U.S. trade tensions impacting demand for its chip design software in China [1] Company Summary - The company is facing challenges in its key market, China, as trade tensions between the U.S. and China threaten to reduce demand for its products [1] Industry Summary - The chip design software industry may experience fluctuations in demand as geopolitical factors, particularly Sino-U.S. relations, continue to evolve [1]

Core Insights - Cadence Design Systems reported strong third-quarter earnings, with earnings per share of $1.93, surpassing the Street estimate of $1.79 [1] - The company achieved quarterly revenue of $1.38 billion, exceeding the analyst consensus estimate of $1.32 billion and showing a year-over-year increase from $1.21 billion [2] - CEO Anirudh Devgan highlighted a record backlog and broad-based business strength, raising the full-year revenue outlook to approximately 14% growth year-over-year [3] Financial Performance - 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 [4] - Revenue outlook for fiscal 2025 was raised to between $5.26 billion and $5.29 billion, against the prior estimate of $5.24 billion [4] Market Reaction - Following the earnings report, Cadence Design Systems stock was down 1.11% at $347.50 in extended trading [5]

Market Performance - Major U.S. stock indices, including the S&P 500, Nasdaq, and Dow Jones, closed at record highs for the second consecutive day, reflecting robust market performance [2][9] - The Dow Jones surged 324 points, or 0.69%, closing at 47,531.10, while the Nasdaq climbed 439 points, or 1.89%, reaching 23,644.20, and the S&P 500 advanced 83.72 points, or 1.23%, closing at 6,875.41 [2][9] Corporate Earnings - Cadence Design Systems (CDNS) reported strong Q3 results with adjusted earnings per share of $1.93, exceeding analyst estimates of $1.79, and revenue of $1.34 billion, surpassing expectations of $1.32 billion [3][9] - NXP Semiconductors (NXP) presented a mixed Q3 earnings report, with reported EPS of $2.48 lower than last year's $2.79, while revenue of $3.17 billion slightly exceeded the estimated $3.16 billion [4][9] - Welltower (WELL) announced solid Q3 results, with rental income reaching $499.48 million and declared a dividend of $0.74 per share, reaffirming its full-year adjusted FFO per share guidance between $5.24 and $5.30 [5][9] Strategic Developments - IBM (IBM) launched a new platform aimed at supporting financial institutions in navigating the evolving digital asset economy, positioning itself to capitalize on the growing interest in blockchain and digital currencies [6][9]

CADENCE REPORTS THIRD QUARTER 2025 CADENCE DESIGN SYSTEMS, INC. CFO COMMENTARY Key Takeaways Exhibit 99.02 Our Q3 2025 financial results webcast will begin October 27, 2025 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on October 27, 2025 until 5:00 p.m. (Pacific) on December 17, 2025. October 27, 2025 Cadence Q3 2025 Financial Results 1 Q4 2025 Outlook Q3 2025 KEY METRICS FY 2025 Outlook Financial Results Webca ...

Market Overview - All three major stock benchmarks (Dow, S&P 500, Nasdaq) reached new all-time intraday highs, driven by a cooling of trade tensions between the U.S. and China, which agreed on a framework to avoid increased tariffs [1] - A surge in mergers and acquisitions across various industries and an anticipated 25-basis-point interest rate cut by the Federal Reserve further enhanced market sentiment [1] - The S&P Short Range Oscillator has moved into overbought territory, prompting a cautious approach to selling and increasing cash positions [1] Retail Sector Insights - JPMorgan's analyst Matt Boss expressed optimism for the retail sector heading into earnings season, supported by Chase Credit Card data indicating sequential growth in U.S. spending, particularly among higher-income consumers [1] - The retail sector benefited from a strong start to August, attributed to the Back-to-School season and early cold weather, alongside conservative expectations set by management teams in the previous earnings season [1] - Boss highlighted off-price retailers, particularly TJX, increasing its price target to $150 while maintaining an overweight buy rating, noting that TJX stores had significant inventory from well-known brands at prices averaging 70% below original [1] Upcoming Earnings Reports - The week marks a significant period for third-quarter earnings, with companies like Nucor, Whirlpool, and Corning set to report their results [1] - The Conference Board is expected to release its latest consumer confidence data, which will provide further insights into consumer sentiment [1]

Market Overview - U.S. markets opened with significant gains, with the Nasdaq rising by 1.47% to reach 8,532.62 and the S&P 500 increasing by 0.91% to 23,546.16, both setting new records [2] - The Dow Jones Industrial Average jumped 310 points, or 0.66%, to 47,517.13 [2] - Small caps, represented by the Russell 2000, initially rose by 0.53% before pulling back [2] Premarket Movers - Notable gainers in premarket trading included Janus Henderson (+14% on buyout rumors), Darling Ingredients (+14%), and Keurig Dr. Pepper (+9.7% following earnings) [4] - Major losers included Organon & Co (-21% due to CEO resignation amid controversy), Carter's Inc. (-9.4% after earnings), and Newmont Corp (-5.1% linked to declining gold prices) [4] Economic Context - U.S. stock futures were on the rise, buoyed by strong earnings reports and a softer-than-expected inflation report from the previous week [5] - The S&P 500 and Nasdaq Composite reached new intraday records, surpassing 6.8K and 23.2K, respectively, while the Dow Jones also exceeded 47.2K [5] - Hopes for a U.S.-China trade deal have increased, with a framework being discussed that includes issues like fentanyl, rare earth metals, and tariffs, as President Trump and President Xi are expected to meet at the APEC [6] Earnings Reports - The week is anticipated to be busy for earnings, with reports from Keurig Dr. Pepper and others, including Welltower, Cadence Design, and Waste Management, expected later in the day [7]

Core Insights - Cadence Design Systems, Inc. (CDNS) is set to release its third-quarter 2025 results on October 27, with earnings estimated at $1.79 per share, reflecting a 9.2% increase year-over-year, and revenues projected at $1.32 billion, indicating a nearly 9% growth from the previous year [1][2][8] Financial Performance Expectations - Management anticipates revenues between $1.305 billion and $1.335 billion for Q3, compared to $1.215 billion in the same quarter last year. Non-GAAP EPS is expected to range from $1.75 to $1.81, up from $1.64 year-over-year [2] - The company has a strong earnings surprise history, beating the Zacks Consensus Estimate in the last four quarters with an average surprise of 6.9% [2] Stock Performance - CDNS stock has appreciated by 31.1% over the past year, outperforming the Computer-Software industry, which grew by 19.5%, and the S&P 500 composite, which rose by 17.5% [3] Market Drivers - The ongoing AI transformation in semiconductor and system design is a significant driver for Cadence, with robust design activity noted in data centers and automotive sectors due to advancements in AI, hyperscale computing, and 5G [4] - Increased R&D budgets from customers in AI-driven automation are expected to enhance demand for Cadence's solutions, particularly its AI portfolio [5][6] Product and Service Developments - Recent product launches, including the Cerebrus AI Studio and Millennium M2000 AI Supercomputer, are anticipated to contribute positively to quarterly performance amid rising chip complexity [12] - The Core EDA business is projected to generate revenues of $962.4 million, reflecting a year-over-year growth of 13.1% [11] Strategic Acquisitions - Cadence's acquisition of Hexagon AB's Design & Engineering division for €2.7 billion and the completion of the acquisition of Arm's Artisan foundation IP business are significant steps in enhancing its Intelligent System Design strategy [16][17] Segment Performance - The System Design and Analysis division is expected to see revenues of $187.9 million, a decline of 3.4% year-over-year, while the IP business division is projected to grow by 1.5% to $172.7 million [14][15] Collaborations and Partnerships - Cadence is collaborating with major tech companies like Qualcomm and NVIDIA on next-generation AI designs, which is expected to bolster its market position [10]

Core Viewpoint - A new wave of trade tensions between the U.S. and China has emerged, primarily driven by President Trump's hints at imposing restrictions on technology exports that utilize American software, leading to a decline in tech stocks [1][2]. Trade Policy Developments - The Trump administration is considering a proposal to limit a wide range of software-powered exports to China, including laptops and jet engines, in response to China's recent restrictions on rare earth exports [2][5]. - If enacted, the policy would extend U.S. influence beyond its borders, affecting global supply chains reliant on American software, which encompasses semiconductors, AI processors, aerospace systems, and consumer electronics [3][6]. Market Reactions - Following the news, the S&P 500 fell by 0.6% to below 6,700 points, while the Nasdaq 100 dropped 1.2% to 24,820 points, with chipmakers and electronic design automation firms experiencing significant declines [8]. - The iShares Semiconductor ETF (NYSE:SMH) decreased by 2.8% during the session, reflecting the negative sentiment in the tech sector [8]. Impacted Companies - Notable declines in stock prices were observed among several companies, including: - Synopsys Inc. (NASDAQ:SNPS) down 1.97% to $452.70 - Cadence Design Systems Inc. (NASDAQ:CDNS) down 1.54% to $329.94 - Robinhood Markets Inc. (NASDAQ:HOOD) down 7.10% to $123.49 - ARM Holdings plc (NASDAQ:ARM) down 2.97% to $164.36 [9][11].