Cadence(US:CDNS) ZACKS·2026-02-18 14:46Core Insights - Cadence Design Systems (CDNS) reported Q4 2025 non-GAAP EPS of $1.99, exceeding estimates by 4.7% and up 5.9% year over year, surpassing management's guidance of $1.88-$1.94 [1][3] - Revenues for Q4 reached $1.44 billion, beating estimates by 1.1% and increasing 6.2% year over year, driven by strong demand for AI-driven solutions [2][9] - For the full year 2025, revenues surged 14% to $5.297 billion, with non-GAAP EPS rising 20% to $7.14 [3] Revenue and Earnings Outlook - For 2026, CDNS estimates revenues between $5.9 billion and $6 billion, with a consensus estimate of $5.95 billion, indicating a 12.6% growth from the previous year [4] - Non-GAAP EPS for 2026 is projected to be between $8.05 and $8.15, with a consensus estimate of $8.03, reflecting a 13.8% increase from the prior year [4] Stock Performance - CDNS stock rose 4.7% in after-market trading and 6.9% in pre-market shares, outperforming the Computer - Software industry, which declined by 11.3% over the past year [7] Segment Performance - Product & Maintenance revenues, accounting for 92.5% of total revenues, increased 7.5% year over year to $1.332 billion, while Services revenues fell 7.7% to $108 million [8] - Core EDA revenue grew 13% in 2025, driven by AI-driven solutions, while the IP business rose 25% due to increased demand across various sectors [10][13] Margin and Cost Performance - Total non-GAAP costs and expenses rose 6.5% year over year to $781 million, with non-GAAP gross margin expanding by 300 basis points to 88.5% [14] - Non-GAAP operating margin contracted by 20 basis points year over year to 45.8% [14] Balance Sheet and Cash Flow - As of December 31, 2025, CDNS had cash and cash equivalents of $3 billion, up from $2.753 billion in the previous quarter [15] - Operating cash flow for Q4 was $553 million, with free cash flow at $512 million, compared to $311 million and $277 million in the prior quarter, respectively [16] Future Guidance - For Q1 2026, revenues are estimated to be between $1.42 billion and $1.46 billion, with a consensus estimate of $1.38 billion [17] - Non-GAAP EPS for Q1 is anticipated to be between $1.89 and $1.95, compared to $1.57 in the year-ago quarter [18]