Cadence(US:CDNS)2025-10-28 21:36Revenue Performance - For the three months ended September 30, 2025, recurring revenue was 82%, down from 83% in the same period of 2024, while up-front revenue increased to 18% from 17%[141] - Total revenue for the three months ended September 30, 2025, was $1,338.8 million, a 10% increase from $1,215.5 million in the same period of 2024[143] - Product and maintenance revenue increased by 10% to $1,207.7 million for the three months ended September 30, 2025, compared to $1,100.4 million in 2024[143] - Services revenue rose by 14% to $131.1 million for the three months ended September 30, 2025, up from $115.1 million in 2024[143] - Total revenue for the nine months ended September 30, 2025, was $3,856.6 million, a 17% increase from $3,285.3 million in 2024[149] - Revenue from the United States decreased by 8% to $532.1 million for the three months ended September 30, 2025, compared to $580.5 million in 2024[147] - Revenue from China increased by 56% to $245.0 million for the three months ended September 30, 2025, up from $156.7 million in 2024[147] Acquisitions and Business Expansion - The company completed the acquisition of BETA CAE Systems International AG in Q2 2024, contributing to revenue classified as product and maintenance in the System Design and Analysis category[124] - The acquisition of VLAB Works in Q2 2025 and the Artisan foundation IP business from Arm Limited in Q3 2025 further expanded the company's IP offerings, with revenue from these acquisitions classified under Core EDA and IP product categories respectively[125] - The company is in the process of acquiring Hexagon's design and engineering business, which is expected to enhance its System Design & Analysis portfolio[126] - Revenue associated with contracts from the acquisition of BETA CAE was primarily classified as product and maintenance revenue in the System Design and Analysis category for the nine months ended September 30, 2025[124] - The company has entered into a definitive agreement to acquire Hexagon's design and engineering business for approximately €2.70 billion, with €1.89 billion to be paid in cash[196] Financial Position and Cash Flow - As of September 30, 2025, the company reported cash and cash equivalents of $2,753.2 million, an increase of $109.2 million from $2,644.0 million as of December 31, 2024[182] - The net working capital as of September 30, 2025, was $2,880.5 million, reflecting a change of $234.5 million from $2,646.0 million as of December 31, 2024[182] - Cash provided by operating activities for the nine months ended September 30, 2025, was $1,175.3 million, an increase of $356.1 million compared to $819.2 million for the same period in 2024[187] - Cash used for investing activities decreased to $(371.7) million for the nine months ended September 30, 2025, from $(797.1) million in the prior year, primarily due to a decrease in payments for business combinations[189] - Cash flows from financing activities showed a net outflow of $(735.1) million for the nine months ended September 30, 2025, a decrease of $2,485.5 million compared to a net inflow of $1,750.4 million in the same period in 2024[190] - Approximately 39% of the company's cash and cash equivalents were held by foreign subsidiaries as of September 30, 2025[185] - The company has $1.6 billion remaining available under its share repurchase authorization as of September 30, 2025[194] Operating Expenses and Profitability - Total operating expenses for the three months ended September 30, 2025, were $693.6 million, an increase of $24.8 million (4%) compared to $668.8 million in the same period of 2024[157] - For the nine months ended September 30, 2025, total operating expenses were $2,110.3 million, up $192.4 million (10%) from $1,917.9 million in 2024[157] - Operating margin for the three months ended September 30, 2025, improved to 32%, compared to 29% in the same period of 2024[167] - Research and development expenses increased by $15.6 million (4%) for the three months ended September 30, 2025, totaling $423.0 million, and by $147.1 million (13%) for the nine months, totaling $1,304.2 million[159] - Marketing and sales expenses rose by $2.8 million (1%) for the three months ended September 30, 2025, totaling $192.6 million, and by $38.8 million (7%) for the nine months, totaling $595.9 million[158] - General and administrative expenses increased by $6.4 million (9%) for the three months ended September 30, 2025, totaling $78.0 million, and by $6.5 million (3%) for the nine months, totaling $210.2 million[162] Tax and Compliance - The provision for income taxes for the three months ended September 30, 2025, was $105.7 million, with an effective tax rate of 26.9%, compared to $95.3 million and 28.6% in 2024[177] - The company expects its fiscal 2025 effective tax rate to be approximately 29%[181] - The enactment of the OBBBA is estimated to decrease the company's remaining fiscal 2025 cash tax payments by approximately $134 million[195] - The company reached a settlement with BIS and DOJ regarding export control violations involving sales valued at $45.3 million from 2015 to 2021[130] - The company has ongoing audit and compliance obligations following a settlement with BIS and DOJ regarding export control violations involving sales valued at $45.3 million[130] Macroeconomic Factors - The company is monitoring the impact of macroeconomic factors, including inflation and geopolitical conflicts, on its business operations[127][132] - The company faced a decrease in revenue in China due to export control regulations, which were later rescinded, restoring access to EDA Software and Technology for affected customers[129]