Cadence(US:CDNS)2025-07-29 21:39Revenue Performance - For the three months ended June 30, 2025, recurring revenue was 78%, down from 88% in the same period of 2024, while up-front revenue increased to 22% from 12%[131]. - Total revenue for the three months ended June 30, 2025, was $1,275.4 million, representing a 20% increase from $1,060.7 million in the same period of 2024[134]. - Product and maintenance revenue increased by 22% to $1,170.5 million for the three months ended June 30, 2025, compared to $960.5 million in 2024[134]. - Services revenue rose by 5% to $104.9 million for the three months ended June 30, 2025, up from $100.2 million in 2024[135]. - Revenue from the United States for the three months ended June 30, 2025, was $591.2 million, a 17% increase from $507.2 million in 2024[138]. - Revenue from Other Americas surged by 234% to $39.1 million for the three months ended June 30, 2025, compared to $11.7 million in 2024[138]. - Revenue in China decreased by 6% to $120.7 million for the three months ended June 30, 2025, down from $127.8 million in 2024, primarily due to export license requirements[138]. - Revenue growth in Japan was driven by continued customer demand for software product offerings during the three months ended June 30, 2025[141]. Expenses and Costs - Total operating expenses for the three months ended June 30, 2025, were $711.7 million, an increase of 15% compared to $620.8 million for the same period in 2024[150]. - Cost of product and maintenance for the three months ended June 30, 2025, was $139.3 million, an increase of 48% from $94.4 million in 2024[143]. - Total cost of services remained unchanged at $44.9 million for the three months ended June 30, 2025, compared to the same period in 2024[143]. - Marketing and sales expenses increased by 7% to $200.6 million for the three months ended June 30, 2025, and by 10% to $403.3 million for the six months ended June 30, 2025[150][151]. - Research and development expenses rose by 19% to $442.1 million for the three months ended June 30, 2025, and by 18% to $881.2 million for the six months ended June 30, 2025[150][151]. - Operating expenses as a percentage of total revenue decreased from 59% in Q2 2024 to 55% in Q2 2025[151]. Financial Performance - The operating margin decreased to 19% for the three months ended June 30, 2025, down from 28% in 2024, and to 24% for the six months ended June 30, 2025, compared to 26% in 2024[159]. - Interest expense increased to $28.9 million for the three months ended June 30, 2025, compared to $12.9 million in 2024, and to $58.1 million for the six months ended June 30, 2025, from $21.6 million in 2024[160][163]. - The provision for income taxes for the three months ended June 30, 2025, was $120.6 million, with an effective tax rate of 43.0%, compared to $86.2 million and 27.3% in 2024[167]. - The company expects its fiscal 2025 effective tax rate to be approximately 28%[171]. Acquisitions and Strategic Initiatives - The acquisition of BETA CAE Systems International AG was completed in Q2 2024, contributing to revenue classified as product and maintenance in the System Design and Analysis category[117]. - The acquisition of VLAB Works was completed in Q2 2025, with revenue associated classified as product and maintenance in the Core EDA category[118]. - The company initiated restructuring plans in August 2024 to align resources with its business strategy[158]. - The company expects to continue attracting and retaining talent through hiring and acquisitions in both marketing and sales, as well as research and development[152][154]. Cash Flow and Liquidity - As of June 30, 2025, cash and cash equivalents totaled $2,822.8 million, an increase of $178.8 million from $2,644.0 million as of December 31, 2024[172]. - Cash flows from operating activities for the six months ended June 30, 2025, were $864.6 million, up $455.4 million from $409.2 million for the same period in 2024[177]. - Cash used for investing activities decreased to $(197.4) million for the six months ended June 30, 2025, compared to $(757.9) million in 2024, a change of $560.5 million[178]. - Cash flows used for financing activities were $(541.0) million for the six months ended June 30, 2025, a decrease of $956.4 million from $415.4 million in 2024[179]. - The company has $1.8 billion remaining under its share repurchase authorization as of June 30, 2025[183]. - The company issued $2.5 billion in senior notes in September 2024, with various due dates and interest rates[180]. - A new five-year revolving credit facility was established in August 2024, allowing borrowings up to $1.25 billion, with a potential increase to $1.75 billion, and no outstanding borrowings as of June 30, 2025[181]. Geopolitical and Economic Factors - The impact of expanded trade control laws on revenue in China was noted, with a decrease in revenue due to license requirements, which have since been lifted[121][120]. - The company continues to monitor geopolitical conflicts, which have not materially impacted operations or financial results to date[123]. - The company continues to monitor macroeconomic and geopolitical factors that may impact its business, but has not seen a material effect on operations to date[123].