Total Revenue

+23%

Total Revenue increased from $1,009.10 million in Q1 2024 to $1,242.37 million in Q1 2025. This robust increase is driven by stronger demand across both product & maintenance and services segments, building on prior-period momentum fueled by investments in complex designs and successful acquisitions. " "

Product & Maintenance Revenue

+21%

Product & Maintenance Revenue grew from $913.39 million to $1,110.85 million YoY. This reflects continued customer investments in complex designs, an area that has historically driven growth, echoing previous period trends and reinforcing a stable recurring revenue base. " "

Services Revenue

+37%

Services Revenue jumped from $95.72 million to $131.52 million, a substantial YoY increase. This boost is attributed to an expansion in design service offerings and ongoing post-acquisition benefits, consistent with the strong growth seen in FY 2024 where services revenue had risen sharply due to similar drivers. " "

Operating Income

+45%

Operating Income increased from $249.96 million to $361.52 million YoY. The improvement reflects a combination of higher revenues and tighter cost management, building on earlier period efforts to optimize the product-service mix and control acquisition-related and operational expenses. " "

Net Income

+10.5%

Net Income rose moderately from $247.64 million to $273.58 million. Despite solid revenue and operating margin improvements, the increase is smaller due to persistent higher expenses, including stock-based compensation and amortization charges that continued from the previous period. " "

Net Cash Provided by Operating Activities

+92%

Net Cash Provided by Operating Activities surged from $253.23 million to $487.02 million YoY. This significant increase is driven by higher net income combined with favorable changes in non-cash adjustments and operating working capital—such as improved receivables, reduced negative impacts from inventories, and better timing of cash disbursements compared to Q1 2024. " "

Geographic Revenue Diversification

N/A

Q1 2025 revenue contributions from key regions such as the United States ($569.0 million), China ($139.4 million), Other Asia ($240.5 million), and EMEA ($195.7 million) indicate a diversified revenue base. This geographical spread helps mitigate regional risks and supports robust growth, reflecting an ongoing trend from previous periods. " "

Revenue

FY 2025

$5.14 billion to $5.22 billion "

$5.15 billion to $5.23 billion "

raised

GAAP Operating Margin

FY 2025

30.3% to 31.3% "

30.25% to 31.25% "

lowered

Non-GAAP Operating Margin

FY 2025

43.25% to 44.25% "

43.25% to 44.25% "

no change

GAAP EPS

FY 2025

$4.19 to $4.29 "

$4.21 to $4.31 "

raised

Non-GAAP EPS

FY 2025

$6.65 to $6.75 "

$6.73 to $6.83 "

raised

Operating Cash Flow

FY 2025

$1.6 billion to $1.7 billion "

$1.6 billion to $1.7 billion "

no change

Share Repurchases

FY 2025

Approximately 50% of free cash flow "

At least 50% of annual free cash flow will be used to repurchase Cadence shares "

no change

Revenue

Q2 2025

no prior guidance

$1.25 billion to $1.27 billion "

no prior guidance

GAAP Operating Margin

Q2 2025

no prior guidance

27.5% to 28.5% "

no prior guidance

Non-GAAP Operating Margin

Q2 2025

no prior guidance

41.5% to 42.5% "

no prior guidance

GAAP EPS

Q2 2025

no prior guidance

$0.89 to $0.95 "

no prior guidance

Non-GAAP EPS

Q2 2025

no prior guidance

$1.55 to $1.61 "

no prior guidance

Recurring Revenue Trends

Q4 2024 earnings highlighted a deceleration caused by China revenue declines and a shift toward upfront revenue. " In Q2 2024, sequential recurring revenue growth was noted with strong bookings supporting an uplift. " "

Q1 2025 earnings emphasized a small beat in recurring revenue with stronger-than-expected recurring revenue bookings and a robust outlook for subsequent quarters. " " " "

Improved sentiment and performance with recurring revenue rebounding from earlier deceleration.

Changing Sentiment

Q4 2024 featured a cautious tone with prudent assumptions especially regarding China. " " Q2 2024 exhibited positive sentiment supported by strong bookings despite a unique revenue curve. " "

In Q1 2025, sentiment was optimistic with confidence in robust business performance, raised guidance, and resilient outlook despite macro uncertainties. " "

Sentiment has shifted upward from caution to optimism, reflecting improved performance expectations.

China Revenue Exposure and Flat Revenue Outlook

Q4 2024 called for a flat revenue outlook for China due to macro uncertainties and a decline in hardware sales, with cautious guidance. " " " In Q2 2024, a cautious approach was also taken with reduced expectations for China revenue, though strong design activity was noted. " "

In Q1 2025, while design activity in China accelerated (13% growth), the outlook remains conservatively flat due to ongoing macro headwinds. " "

A consistent cautious tone persists, though improved design activity is emerging against a flat revenue assumption.

Hardware Demand Versus Production Capacity Constraints

Q4 2024 discussed strong hardware demand and record hardware performance without explicit production capacity constraints. " " Q2 2024 explicitly mentioned capacity constraints leading to longer lead times and a plan for raw material purchases. " "

In Q1 2025, strong hardware demand is again emphasized but is clearly constrained by production capacity, with diversified manufacturing noted to mitigate risks. " "

Production constraints remain a recurring challenge despite strong demand; capacity issues continue to be addressed with diversified strategies.

IP Business Expansion Coupled with Acquisition Integration Risks

Q4 2024 highlighted strong IP growth (28% year-over-year) with acquisition of Secure-IC and little emphasis on integration risks. " Q2 2024 noted 25% year-over-year IP growth alongside integration challenges with the beta CAE acquisition. " "

Q1 2025 reported even stronger IP business growth (40% year-over-year) and ongoing acquisitions (e.g. pending Arm’s Artisan Foundation) while acknowledging associated integration risks. " " "

The IP portfolio continues to expand robustly with integration risks remaining as an inherent challenge; growth now appears even more accelerated.

Advancements in AI-Driven Design Solutions

Q4 2024 discussed the AI super cycle with Agentic AI, generative AI applications, and significant product announcements like Cadence Cerebrus and SimAI. " " In Q2 2024, strong customer adoption of Cadence.AI, Verisium, and Allegro X platforms was noted, supporting rapid AI integration. " "

In Q1 2025, advanced AI solutions including Agentic AI and Cadence AI were emphasized with substantial performance improvements (e.g. 5x–20x gains in verification) and key partnerships with NVIDIA, indicating deep market penetration. " " " "

Continuous advancement and deeper integration of AI-driven design solutions with increasingly strategic partnerships, signaling maturity and broader adoption.

Emerging Technologies

Q4 2024 focused on 3D-IC, chiplet design, and memory integration (including a collaboration with Rapidus) but did not mention digital twins. " " Q2 2024 reiterated progress in 3D-IC and memory integration while digital twins were absent from the discussion. " "

Q1 2025 introduced digital twins for data centers alongside continued emphasis on 3D-IC and memory integration, expanding the scope of emerging technologies. " " "

New emerging technologies such as digital twins have emerged in Q1 2025, broadening the technological portfolio beyond the previously emphasized 3D-IC and memory integration.

Record Backlog and Strong Pipeline Momentum

Q4 2024 highlighted a record backlog of $6.8 billion and strong pipeline momentum driven by broad-based strength from multiple segments. " " " Q2 2024 also reported a record backlog (~$6 billion) and stressed a healthy book-to-bill ratio. " " "

Q1 2025 did not explicitly mention “record backlog” but referred to a robust Q1 exit backlog and strong recurring revenue bookings that signal strong pipeline momentum. " "

While explicit record backlog figures are less emphasized in Q1 2025, overall pipeline strength and booking performance remain strong, suggesting continued robust momentum.

Automotive Sector Expansion and Enhanced System Analysis

Q4 2024 detailed significant automotive design activity, especially in China, and robust growth in system analysis (over 40% growth) with multiphysics platforms. " " Q2 2024 also noted strategic automotive partnerships and 20% year-over-year growth in system analysis solutions. " "

In Q1 2025, Cadence highlighted further automotive sector expansion (notably through Tensilica DSP and BETA CAE contributions) and exceptional system design & analysis growth (over 50% year-over-year), reinforcing momentum in these sectors. " "

Continued expansion in automotive coupled with even stronger system analysis growth, reflecting a strategic and accelerating emphasis on these sectors.

Supply Chain and Raw Material Management Challenges

Q2 2024 discussed significant raw material purchases, extended lead times for new hardware systems, and resultant inventory buildup as a proactive response to high demand. " " " Q4 2024 did not address these challenges.

Q1 2025 revisited the supply chain discussion, with emphasis on production capacity constraints, diversified manufacturing lines (domestic for U.S. and international), and an agile supply chain mitigating tariff impacts. " "

Supply chain challenges persist, with a continued focus on diversified manufacturing and proactive raw material management, although mitigation strategies appear to be more refined in Q1 2025.

Core EDA Business Growth Slowdown and Shifts in Revenue Mix

Q4 2024 noted a slowdown in Core EDA growth to high single-digit percentages, attributed partly to challenges in China, along with a revenue mix shift favoring stronger hardware and IP segments. " " Q2 2024 did not explicitly mention these issues.

Q1 2025 did not mention any slowdown; instead, the focus was on strong mid-teens (16%) growth in the core EDA segment, suggesting a rebound or stabilization compared to prior period concerns. " "

Earlier concerns of a slowdown and revenue mix shifts in the core EDA business appear to be resolving in Q1 2025, reflecting improved performance and a potential rebound in the segment.