Live: Will Cadence Design Systems Jump After Releasing Q2 Earnings?

CDNS | Cadence Q2’25 Earnings Highlights:

• Adj. EPS: $1.65 ; UP +29% YoY
• Revenue: $1.275B []; UP +20% YoY
• GAAP Diluted Net Income per Share: $0.59; DOWN -30% YoY
• GAAP Operating Margin: 19.0% []; DOWN -770 bps YoY
• Non-GAAP Operating Margin: 42.8% []; UP +270 bps YoY
• Quarter-end Backlog: $6.4B
• Current Remaining Performance Obligations (cRPO): $3.1B

Outlook:

• Revenue: $5.21B to $5.27B []
  • Cadence is raising its 2025 revenue outlook to 13% growth year-over-year, driven by strong demand for its AI-driven portfolio.
  • The company anticipates a $140.6 million cash outflow related to legal settlements but expects to benefit from reduced cash tax payments due to the immediate expensing of U.S. R&D expenditures.

Q2 Segment Performance:

• Core EDA Revenue: UP +16% YoY
• IP Business Revenue: +25% YoY
• System Design & Analysis Revenue: UP +35% YoY

Other Key Q2 Metrics:

• Adj. Operating Income: $241.8M; DOWN -17.7% YoY
• R&D Expenses: $442.1M; UP +19% YoY
• Free Cash Flow: $864.6M; UP +111% YoY
• Cash and Cash Equivalents: $2.82B; UP +6.7% YoY

CEO Commentary:

• Anirudh Devgan: “Cadence delivered an exceptional Q2, with 20% year-over-year revenue growth and stronger than expected bookings. This highlighted the strategic relevance of our AI-driven portfolio and the depth of our customer relationships. The strength and breadth of our products are enabling us to lead through the accelerating waves of the AI Supercycle, from AI infrastructure build-out, to physical AI in autonomous systems, to the emerging frontier of science AI.”

CFO Commentary:

• John Wall: “I am pleased to report that Cadence delivered excellent results for Q2, with broad-based strength across all businesses, more than offsetting the impact of the temporary restrictions on exports to China imposed on May 23rd. We are raising our 2025 revenue outlook to 13% growth year-over-year, and non-GAAP operating margin to 44%.”

Strategic Updates:

• Launched Cadence Cerebrus AI Studio, an agentic AI implementation platform delivering up to 20% PPA improvement and 5x to 10x faster chip delivery time.
• Launched Millennium M2000 AI Supercomputer featuring Nvidia Blackwell, delivering AI-accelerated simulation at unprecedented speed and scale across engineering and science workloads.

Beyond Cadence its a good night for tech/AI earnings. Amkor is soaring and now Celestica has just released earnings and is up 6%.

Its beat and raises across the board.

We made a mistake and thought Cadence had lowered their full year EPS, but they raised it.

They’re now expecting $6.85 to $6.95 versus prior guidance of $6.73 to $6.83.

So, this is a proper beat and raise with revenue and earnings beating both last quarter and for the full year.

It appears Wall Street really likes what it sees from Cadence. Shares are now up 7%. We’re continuing to analyze earnings and will keep updating this live blog.

Here’s what Cadence is now projecting for 2025:

• Revenue in the range of $5.21 billion to $5.27 billion
• GAAP operating margin in the range of 28.5% to 29.5%
• Non-GAAP operating margin in the range of 43.5% to 44.5%
• GAAP diluted net income per share in the range of $3.97 to $4.07
• Non-GAAP diluted net income per share in the range of $6.85 to $6.95
• Operating cash flow in the range of $1.65 billion to $1.75 billion

As a reminder, here is what they had guided to last quarter:

• Revenue in the range of $5.15 billion to $5.23 billion
• GAAP operating margin in the range of 30.25% to 31.25%
• Non-GAAP operating margin in the range of 43.25% to 44.25%
• GAAP diluted net income per share in the range of $4.21 to $4.31
• Non-GAAP diluted net income per share in the range of $6.73 to $6.83

So revenue guidance is raised, but non-GAAP EPS is slightly lowered.

We’ll have to monitor how Wall Street reacts to that.

Revenue: $1.275 billion (beats expectations of $1.251 billion)

Adjusted EPS of $1.65 (beats expectations of $1.56)

Earnings just hit and Cadence shares are immediately up 5%. We’ll keep posting analysis.

The closing bell has rung and Cadence finishes the day up .47%.

The moment their earnings hit the bell we’ll begin updating this live blog with analysis.

We’re a little more than 30 minutes from Cadence’s earnings.

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Last week, we broke down Meta’s massive AI ‘all-in’ play and new developments in the rising tech Cold War between the United States and China. If you’re an investor in Cadence, following developments in this space is absolutely essential. 

Want to hear more, including updates on the $500,000 AI stock portfolio – which includes shares of Cadence – that’s managed on the show? Simply pull up the latest episode in either Spotify or Apple Podcasts below while you wait for earnings after the bell!

We’re now just one hour to the closing bell and Cadence is trading up for the day. The stock is up about .35%, but its worth noting it was down 1% at 11:20 a.m., so Cadence shares have jumped about 1.35% since earlier this morning.