Cadence Design Systems Reports Strong Q2 Earnings, Raises Outlook Amid AI-Driven Growth

These Analysts Boost Their Forecasts On Cadence Design Systems Following Upbeat Q2 Earnings - Cadence Design Systems (NASDAQ:CDNS)

Cadence Design Systems Inc CDNS reported better-than-expected second-quarter financial results and raised its FY25 adjusted EPS and revenue guidance on Monday. Cadence Design Systems reported second-quarter revenue of $1.28 billion, beating analyst estimates of $1.26 billion. The company reported second-quarter adjusted earnings of $1.65 per share, beating estimates of $1.58 per share, according to Benzinga Pro. Cadence Design Systems raised its 2025 revenue outlook to 13% year-over-year growth. The company now expects full-year revenue between $5.21 billion and $5.27 billion versus estimates of $5.19 billion. Cadence also raised its full-year adjusted earnings guidance from a range of $6.73 to $6.83 per share to a new range of $6.85 to $6.95 per share versus estimates of $6.79 per share. The company expects third-quarter adjusted earnings to be in between $1.75 and $1.81 per share versus estimates of $1.72 per share. "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," said Anirudh Devgan, president and CEO of Cadence Design Systems. Cadence Design shares gained 8.2% to trade at $361.21 on Tuesday. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started These analysts made changes to their price targets on Cadence Design following earnings announcement. Needham analyst Charles Shi maintained Cadence Design Systems with a Buy and raised the price target from $325 to $390. Mizuho analyst Siti Panigrahi maintained the stock with an Outperform rating and raised the price target from $360 to $375. Piper Sandler analyst Clarke Jeffries downgraded the stock from Overweight to Neutral and raised the price target from $328 to $355. Rosenblatt analyst Blair Abernethy maintained Cadence Design with a Neutral and raised the price target from $300 to $320. Stifel analyst Ruben Roy maintained the stock with a Buy and raised the price target from $350 to $395. Keybanc analyst Jason Celino maintained Cadence Design Systems with an Overweight rating and raised the price target from $358 to $405. Wells Fargo analyst Joe Quatrochi maintained the stock with an Overweight and raised the price target from $365 to $405. Considering buying CDNS stock? Here's what analysts think: Read This Next: Boeing, Procter & Gamble And 3 Stocks To Watch Heading Into Tuesday Photo via Shutterstock CDNSCadence Design Systems Inc$360.508.01%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum74.44Growth80.16Quality61.69Value7.13Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Cadence Beats Q2 Estimates, Lifts FY25 Outlook On AI, Overall Strength - Cadence Design Systems (NASDAQ:CDNS)

Cadence Design Systems Inc CDNS reported financial results for the second quarter after the market close on Monday. Here's a look at the key details from the quarter. Q2 Earnings: Cadence Design Systems reported second-quarter revenue of $1.28 billion, beating analyst estimates of $1.26 billion. The company reported second-quarter adjusted earnings of $1.65 per share, beating estimates of $1.58 per share, according to Benzinga Pro. Total revenue was up 20% year-over-year, driven by "broad-based strength" across all of the company's businesses. Cadence Design Systems said it saw strong-than-expected bookings during the period and ended the quarter with a backlog of $6.4 billion. The company ended the second quarter with approximately $2.82 billion in cash and cash equivalents. "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," said Anirudh Devgan, president and CEO of Cadence Design Systems. Outlook: Cadence Design Systems raised its 2025 revenue outlook to 13% year-over-year growth. The company now expects full-year revenue between $5.21 billion and $5.27 billion versus estimates of $5.19 billion. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started Cadence also raised its full-year adjusted earnings guidance from a range of $6.73 to $6.83 per share to a new range of $6.85 to $6.95 per share versus estimates of $6.79 per share. The company expects third-quarter adjusted earnings to be in between $1.75 and $1.81 per share versus estimates of $1.72 per share. Cadence Design Systems management will discuss the quarter on a conference call set for 5 p.m. ET. CDNS Price Action: Cadence Design Systems shares were up 7.56% after hours, trading at $359 at the time of publication on Monday, according to Benzinga Pro. Read Next: Enterprise Products Partners Posts Strong Cash Flow, Reaffirms Capex Plan Photo: JHVEPhoto/Shutterstock.com CDNSCadence Design Systems Inc$358.007.77%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum74.44Growth80.16Quality61.69Value7.13Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Cadence targets 13% revenue growth and 16% EPS growth for 2025 amid strong AI demand and expanded product portfolio (NASDAQ:CDNS)

Create a free Seeking Alpha account to access breaking news and valuable research tools " Earnings Call Insights: Cadence Design Systems (CDNS) Q2 2025 Management View * Anirudh Devgan, CEO, stated that "Cadence delivered exceptional financial results for the second quarter of 2025, exceeding our Q2 revenue and EPS guidance driven by ongoing broad-based strength across our AI-driven product portfolio." Devgan highlighted strong bookings, the raising of the financial outlook for 2025 to 13% revenue growth and 16% EPS growth, and the continued execution of the company's intelligent system design strategy. He underscored robust R&D investments by customers and growing demand for AI-driven tools, especially in advanced node and complex architectures, and pointed to multiple new product launches including the Millennium M2000 AI supercomputer and the Cadence Tensilica NeuroEdge 130 AI Co-Processor. * The CEO reported that Cadence entered settlements with the DOJ and BIS, resolving previously disclosed investigations into certain China transactions. He emphasized that "Cadence is deeply committed to the highest standards of compliance, and we have significantly enhanced our compliance processes over the last few years and continue to implement improvement measures to proactively address evolving trade restrictions." * John Wall, CFO, said, "Strength in other regions more than offset the impact of the export restrictions on China outlined in the BIS letter dated May 23, which was later rescinded. Robust design activity and customer demand, coupled with our strong execution, drove 20% revenue growth and 29% non-GAAP EPS growth year-over-year for Q2." * Wall also noted, "I'm pleased that we've reached a settlement with the DOJ and BIS, resolving previously disclosed investigations into certain China sales from 2015 to 2021, totaling approximately $45 million over the 6-year period. As part of the agreements, we will make a payment of approximately $141 million in our third fiscal quarter." Outlook * The updated 2025 outlook includes revenue in the range of $5.21 billion to $5.27 billion, GAAP operating margin between 28.5% and 29.5%, non-GAAP operating margin between 43.5% and 44.5%, GAAP EPS between $3.97 and $4.07, non-GAAP EPS between $6.85 and $6.95, and operating cash flow between $1.65 billion and $1.75 billion. Wall explained that the updated outlook incorporates the timing of the settlement penalty, the cash tax benefit of the OBBBA, and the assumption that current export control regulations remain substantially similar. * For Q3, guidance is for revenue between $1.305 billion and $1.335 billion, GAAP EPS between $1.14 and $1.20, and non-GAAP EPS between $1.75 and $1.81. Financial Results * Wall reported total Q2 revenue at $1.275 billion, GAAP operating margin at 19%, non-GAAP operating margin at 42.8%, GAAP EPS at $0.59, and non-GAAP EPS at $1.65. Cash balance at quarter end was $2.823 billion, principal value of debt outstanding was $2.5 billion, and operating cash flow was $378 million. Cadence used $175 million to repurchase shares. * China represented 9% of Q2 revenue, down from 11% in Q1. The CFO attributed broad-based demand and growth in bookings from AI, HPC, and system design workloads globally as key drivers. Q&A * Joseph Vruwink, Baird, asked about physical AI and bookings strength. Devgan explained that "physical AI will play a very key role for our products because the silicon required... is different than data center silicon," and emphasized that both data center and edge opportunities are benefiting Cadence. * Gianmarco Conti, Deutsche Bank, inquired about the increased growth outlook despite reduced China revenue. Wall said, "Strength in other regions more than offset any near-term softness related to China during Q2," and Devgan added that demand is "broad-based... hardware is doing phenomenally well." * Vivek Arya, Bank of America, asked about China headwinds and long-term exposure. Wall responded, "Our guidance reflects what we believe to be a prudent and well-calibrated view of the second half of the year... I know last quarter, we told you that we were expecting it to be flat. It's hard to see how China won't increase a little bit over last year, but we've been prudent with our guide." * Harlan Sur, JPMorgan, highlighted advanced packaging trends. Devgan replied that Cadence is "uniquely and very well positioned" in 3D-IC and advanced packaging, and that Allegro and Integrity are platforms of choice for major companies. * Lee Simpson, Morgan Stanley, asked about the business model for Agentic systems. Devgan explained customers are embracing both base tools and Agentic AI flows, citing Cerebrus AI Studio and LLM-based code generation as early successes. * Further analyst questions addressed recurring revenue mix, hardware demand, IP growth sustainability, China backlog, tax benefits from OBBBA, and medium-term recurring revenue trajectory, with management emphasizing broad-based global demand and strong product positioning. Sentiment Analysis * Analysts pressed for details on China, recurring revenue, and monetization strategies, reflecting a neutral to slightly positive tone, with focus on sustainability and risk management. * Management maintained a confident and optimistic tone, repeatedly emphasizing broad-based demand, strong execution, and product innovation. Devgan expressed confidence, saying, "the customer environment is, I feel personally is better than it was six months ago." * Compared to the previous quarter, management's tone was more upbeat, particularly regarding growth outlook and backlog strength, while analysts showed cautious optimism but probed for clarity around China and revenue durability. Quarter-over-Quarter Comparison * The Q2 outlook was raised from Q1, with revenue guidance increasing to $5.21-$5.27 billion from $5.15-$5.23 billion, and non-GAAP EPS guidance rising to $6.85-$6.95 from $6.73-$6.83. * The Q2 call featured more detailed discussion of the DOJ and BIS settlements and the OBBBA tax benefit, which were not present in Q1. * Both quarters highlighted strong AI-driven product demand, but Q2 included new product launches and deeper discussion of Agentic AI and physical AI, suggesting heightened focus on AI as a growth lever. * Analysts in Q2 continued to focus on China, recurring revenue, and advanced packaging, with management noting stronger backlog and broader geographic demand versus Q1. Risks and Concerns * Management identified the settlement with the DOJ and BIS as a resolved but notable challenge, involving a $141 million payment in Q3. * Export control regulations and geopolitical risks remain ongoing considerations, with the CFO noting that guidance assumes current regulations remain unchanged. * Analyst concerns centered on China revenue volatility, recurring revenue mix, and the pace of adoption for Agentic AI products. Management addressed these by emphasizing diversification and strong global demand. Final Takeaway Cadence management highlighted exceptional Q2 results, driven by broad-based global demand and robust adoption of AI-driven product offerings. With notable product launches, strong backlog, and growth across EDA, IP, and system design businesses, the company raised its full-year outlook to 13% revenue growth and 16% EPS growth. Management emphasized the resolution of regulatory investigations and the benefit from new tax legislation, while reiterating confidence in continued innovation and execution of its strategic roadmap. Read the full Earnings Call Transcript More on Cadence Design Systems Today's chaos. Tomorrow's opportunity Seeking Alpha helps you make sense of the headlines. New! Get unlimited breaking stock news for free -- so you can stay on track for a stronger financial future.