Cadence(CDNS) - 2025 Q4 - Annual Report

Financial Performance - Product and maintenance revenue for fiscal 2025 was $4,822 million, accounting for 91% of total revenue, compared to $4,214 million (91%) in 2024 and $3,834 million (94%) in 2023[53] - Services revenue increased to $475 million (9% of total revenue) in 2025 from $428 million (9%) in 2024 and $256 million (6%) in 2023[53] - Total revenue for fiscal 2025 reached $5,297 million, up from $4,642 million in 2024 and $4,090 million in 2023[53] - In fiscal 2025, total revenue reached $5,297 million, a 14.1% increase from $4,642 million in fiscal 2024[53] - Revenue from services increased to $475 million in fiscal 2025, representing 9% of total revenue, compared to 6% in fiscal 2023[53] Performance Obligations - Contracted but unsatisfied performance obligations amounted to $7.8 billion as of December 31, 2025, with 53% expected to be recognized as revenue over the next 12 months[55][56] - As of December 31, 2025, contracted but unsatisfied performance obligations were $7.8 billion, including $0.6 billion of non-cancelable commitments[55] - The company expects to recognize 53% of the contracted but unsatisfied performance obligations as revenue over the next 12 months, and 43% over the next 13 to 36 months[56] Research and Development - The company plans to continue significant investments in R&D to innovate and enhance current products, addressing increasing complexity in semiconductor design[58] - The company emphasizes significant investments in Research and Development (R&D) to support advancements in AI-driven computational software and hardware, essential for managing design complexity[21] - The company continues to make significant investments in R&D to innovate and enhance current products, aligning with the complexity of semiconductor and systems design[58] Product and Service Offerings - The Cadence Cloud portfolio is expanding with additional cloud-based and SaaS products, enhancing service offerings for customers[50] - Cadence's product categories include Core EDA, Semiconductor IP, and System Design and Analysis (SD&A), which are tightly integrated to support the electronic product design process[24] - The company integrates advanced AI technologies into its design platforms, enabling the creation of highly accurate digital twins for improved design efficiency and reliability[23] - Cadence's solutions are critical for optimizing performance, power, and area (PPA) of semiconductors, while also accelerating time-to-market for customers[21] - The company offers a comprehensive suite of functional verification tools, including the Jasper Formal Verification Platform and Xcelium™ Parallel Logic Simulation Platform, enhancing design quality and productivity[28] Competition and Market Environment - The company faces competition from both established firms and emerging players, with key competitors including Synopsys, Siemens EDA, and various international companies[72] - The company is subject to various governmental regulations, including trade controls and data privacy laws, which may impact its operations and financial condition[61] - The regulatory framework governing AI technologies is rapidly evolving, impacting the company's ability to develop and commercialize these technologies[69] - Regulatory changes, particularly concerning AI technologies and trade restrictions, may impact the company's ability to operate and innovate[68][63] Employee Engagement and Corporate Responsibility - The company emphasizes employee engagement and talent development as central to its success, regularly conducting surveys to measure engagement[74] - Cadence offers competitive compensation and benefits programs, linking employee compensation to business and individual performance[77] - The company aims to reduce its environmental footprint through corporate responsibility initiatives, appealing to top talent seeking to build careers with responsible organizations[81] - The Cadence Giving Foundation, established in 2021, focuses on community outreach and social impact through volunteer activities and charitable contributions[80] Leadership - Anirudh Devgan has been the CEO of Cadence since December 2021, with prior roles including Executive Vice President of Research and Development[85] - John M. Wall has served as CFO since October 2017, previously holding positions such as Corporate Vice President and Corporate Controller[86] - Paul Cunningham has been the Senior Vice President and General Manager of the System Verification Group since March 2021, previously co-founding Azuro, Inc. which Cadence acquired[87] - Paul Scannell has been with Cadence since 2005, currently serving as Senior Vice President of the Customer Success Team since May 2024[88] - Marc Taxay has been the Senior Vice President, General Counsel, and Corporate Secretary since May 2025, overseeing global legal operations[89] - Chin-Chi Teng has served as Senior Vice President and General Manager of the Digital and Signoff Group since September 2018, with a strong background in research and development[90] Acquisitions and Strategic Initiatives - The company expanded its AI-driven design and verification capabilities with the acquisition of advanced agentic AI technology, reducing verification cycles from weeks to days[30] - The acquisition of VLAB Works enhanced automotive electronic software and hardware development capabilities, addressing challenges in software-defined vehicles and systems[31] - The design IP portfolio was strengthened by acquiring the Arm Artisan foundation IP business, optimizing for advanced process nodes and enhancing time to market[33] - The acquisition of Secure-IC improved embedded security capabilities, addressing critical challenges in markets such as automotive and data centers[34] - The Millennium™ Multiphysics Enterprise Platform, co-developed with NVIDIA, aims to accelerate complex simulations in various fields, including semiconductor design[39]