olivLaw · US equity research
Cadence Design Systems, Inc. CDNS
Services-Prepackaged Software · SIC 7372 · Vertical: Services-Prepackaged Software (SIC 7372)
Cadence Design Systems is a global supplier of EDA software, semiconductor IP and system design solutions, with revenue of 5296.8 million USD in fiscal 2025, up 14%. In the third quarter of 2026 revenue reached 1.633 billion USD, 22% above the prior year, and the company raised its 2026 revenue growth outlook to 21%.
The AI analysis may be outdated: new filings came after its sources (see the «AI analysis» section).
At the close of 04 Nov 2026, Cadence Design Systems, Inc. (CDNS) stock was 329.52 USD (+1.78% on the day), with market capitalisation 90.4 bn USD, P/E 65.5 on diluted EPS of 5.03 USD over the last 12 months, beta 1.48, 52-week range 265.66–416.39 USD. Latest reported quarter (Q3 2026): revenue of 1.6 bn USD (+22.0% YoY), net income of 289.7 m USD (+0.9% YoY), diluted EPS 1.05 USD.
Data as of · AI analysis dated · Source: SEC filings and closing prices, computed by olivLaw.
Price history
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Technical reading
- RSI (14)
- 50.5
- neutral
- Bollinger (20, 2)
- 307.65 – 354.02
- in the lower half of the band · %B 0.47 · band width 14.0%
- SMA 50 / 200
- 320.85 / 327.73
- mixed trend
- MACD (12, 26, 9)
- 1.08 / 1.79
- MACD below signal
Indicators describe past prices; on their own they do not predict direction. On our history the RSI ≤ 40 filter added no return (see the signals methodology).
Performance
| Company | S&P 500 | vs S&P 500 | Vertical median | |
|---|---|---|---|---|
| 1 month | −6.8% | −1.1% | −5.7 pp | — |
| 3 months | −2.2% | −0.5% | −1.8 pp | — |
| 6 months | −7.2% | +4.4% | −11.5 pp | — |
| Year to date | +5.4% | +12.3% | −6.9 pp | — |
| 1 year | −1.1% | +13.5% | −14.7 pp | −1.2% |
| 3 years | +32.1% | +76.4% | −44.4 pp | +25.4% |
| 5 years | +85.1% | +63.7% | +21.4 pp | — |
Price returns, dividends excluded.
Quarterly results
Latest quarter: Q3 2026 · 30 Sept 2026
Quarterly margins
Quarterly statements · USD
| Fiscal year | Q4 '24 | Q1 '25 | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 | Q3 '26 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 1.4 bn | 1.2 bn | 1.3 bn | 1.3 bn | 1.4 bn | 1.5 bn | 1.6 bn | 1.6 bn |
| Research & development | — | 439.1 m | 442.1 m | 423.0 m | — | 508.4 m | 531.3 m | 537.5 m |
| Operating income | 456.9 m | 361.5 m | 241.8 m | 425.4 m | 463.3 m | 431.3 m | 450.3 m | 428.7 m |
| Depreciation & amortisation | 54.7 m | 52.9 m | 53.7 m ≈ | 56.7 m ≈ | 64.6 m | 84.6 m | 117.0 m ≈ | 118.5 m ≈ |
| Interest expense | 29.9 m | 29.1 m | 28.9 m | 29.0 m | 29.4 m | 31.6 m | 35.1 m | 30.4 m |
| Pre-tax income | 436.7 m | 355.7 m | 280.6 m | 392.8 m | 493.0 m | 428.1 m | 510.2 m | 408.3 m |
| Income tax | 96.4 m | 82.1 m | 120.6 m | 105.7 m | 104.8 m | 92.4 m | 143.2 m | 118.6 m |
| Net income | 340.2 m | 273.6 m | 160.1 m | 287.1 m | 388.1 m | 335.7 m | 367.1 m | 289.7 m |
| Diluted EPS | 1.24 ≈ | 1.00 | 0.59 | 1.05 | 1.42 ≈ | 1.23 | 1.33 | 1.05 |
| Operating cash flow | 441.4 m | 487.0 m | 377.6 m ≈ | 310.7 m ≈ | 553.5 m | 355.8 m | 634.9 m ≈ | 423.7 m ≈ |
| Capex | 37.2 m | 23.1 m | 44.1 m ≈ | 33.7 m ≈ | 41.0 m | 48.8 m | 52.6 m ≈ | 61.8 m ≈ |
| Share repurchases | 150.0 m | 350.0 m | 175.0 m ≈ | 200.0 m ≈ | 200.0 m | 200.0 m | 200.0 m ≈ | 400.0 m ≈ |
≈ derived quarter (cumulative difference / share-days average)
E/P over time
E/P = trailing-12-month diluted EPS / price at quarter end. E/P is the inverse of P/E and stays defined when earnings are negative.
Today's P/E sits at the 61 percentile of its own 36-quarter history (min 19.9, median 57.2, max 90.5; quarters with earnings only).
Fiscal years
| Fiscal year | 2017 | 2018 | 2019 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 1.9 bn | 2.1 bn | 2.3 bn | 2.7 bn | 3.6 bn | 4.1 bn | 4.6 bn | 5.3 bn |
| Revenue YoY | +7.0% | +10.0% | +9.3% | unavailable | +32.8% | +14.8% | +13.5% | +14.1% |
| Net income | 204.1 m | 345.8 m | 989.0 m | 590.6 m | 849.0 m | 1.0 bn | 1.1 bn | 1.1 bn |
| Net income YoY | +0.5% | +69.4% | +186.0% | unavailable | +43.7% | +22.6% | +1.4% | +5.1% |
| Diluted EPS | 0.73 | 1.23 | 3.53 | 2.11 | 3.09 | 3.82 | 3.85 | 4.06 |
| Diluted EPS YoY | +4.3% | +68.5% | +187.0% | unavailable | +46.4% | +23.6% | +0.8% | +5.5% |
| net % | 10.5% | 16.2% | 42.3% | 22.0% | 23.8% | 25.5% | 22.7% | 20.9% |
| Free cash flow | 412.8 m | 543.2 m | 655.0 m | 810.1 m | 1.1 bn | 1.2 bn | 1.1 bn | 1.6 bn |
Reported results vs expectations
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Balance sheet & financial health
Fiscal year 2025 · 31 Dec 2025
- Cash
- 3.0 bn USD
- Financial debt
- 2.5 bn USD
- Net debt
- -521.2 m USD
- Equity
- 5.5 bn USD
- Total assets
- 10.2 bn USD
- Debt / equity
- 0.45x
- Current ratio
- 2.86x
- ROE
- 21.9%
- ROA
- 11.6%
- FCF margin
- 30.0%
Financial statements (source on every figure)
Revenue and net income (USD)
Margins
Income statement · USD
| Line | 2019 | 2021 | 2022 | 2023 | 2024 | 2025 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Revenue | 2.3 bn | 2.7 bn | 3.6 bn | 4.1 bn | 4.6 bn | 5.3 bn | SEC (XBRL)· 19 Feb 2026verified |
| Operating income | 491.8 m | 645.6 m | 1.1 bn | 1.3 bn | 1.4 bn | 1.5 bn | SEC (XBRL)· 19 Feb 2026verified |
| Depreciation & amortisation | 122.8 m | 145.7 m | 132.1 m | 145.3 m | 196.9 m | 227.8 m | SEC (XBRL)· 19 Feb 2026verified |
| EBITDA | 614.6 m ≈ | 791.2 m ≈ | 1.2 bn ≈ | 1.4 bn ≈ | 1.5 bn ≈ | 1.7 bn ≈ | SEC (XBRL)· 19 Feb 2026derived |
| Interest expense | 18.8 m | 20.7 m | 22.9 m | 36.2 m | 76.0 m | 116.5 m | SEC (XBRL)· 19 Feb 2026verified |
| Pre-tax income | 479.0 m | 632.7 m | 1.0 bn | 1.3 bn | 1.4 bn | 1.5 bn | SEC (XBRL)· 19 Feb 2026verified |
| Income tax | -510.0 m | 42.1 m | 196.4 m | 240.8 m | 340.3 m | 413.2 m | SEC (XBRL)· 19 Feb 2026verified |
| Net income | 989.0 m | 590.6 m | 849.0 m | 1.0 bn | 1.1 bn | 1.1 bn | SEC (XBRL)· 19 Feb 2026verified |
| Diluted EPS | 3.53 | 2.11 | 3.09 | 3.82 | 3.85 | 4.06 | SEC (XBRL)· 19 Feb 2026verified |
| Weighted average diluted shares | 280.5 m | 279.6 m | 275.0 m | 272.7 m | 273.8 m | 273.3 m | SEC (XBRL)· 19 Feb 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating income + Depreciation & amortisation.
Balance sheet · USD
| Line | 2019 | 2021 | 2022 | 2023 | 2024 | 2025 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Cash | 705.2 m | 928.4 m | 882.3 m | 1.0 bn | 2.6 bn | 3.0 bn | SEC (XBRL)· 19 Feb 2026verified |
| Inventories | 55.8 m | 76.0 m | 128.0 m | 181.7 m | 257.7 m | 303.5 m | SEC (XBRL)· 19 Feb 2026verified |
| Current assets | 1.2 bn | 1.5 bn | 1.7 bn | 2.0 bn | 4.0 bn | 4.7 bn | SEC (XBRL)· 19 Feb 2026verified |
| Property, plant & equipment, net | 275.9 m | 311.1 m | 371.5 m | 403.2 m | 458.2 m | 517.0 m | SEC (XBRL)· 19 Feb 2026verified |
| Goodwill | 661.9 m | 782.1 m | 1.4 bn | 1.5 bn | 2.4 bn | 2.7 bn | SEC (XBRL)· 19 Feb 2026verified |
| Intangibles (excl. goodwill) | 172.4 m | 210.6 m | 354.6 m | 336.8 m | 594.7 m | 718.2 m | SEC (XBRL)· 19 Feb 2026verified |
| Total assets | 3.4 bn | 4.0 bn | 5.1 bn | 5.7 bn | 9.0 bn | 10.2 bn | SEC (XBRL)· 19 Feb 2026verified |
| Accounts payable | 316.9 m | 350.0 m | 557.2 m | 576.6 m | 632.7 m | 856.9 m | SEC (XBRL)· 19 Feb 2026verified |
| Short-term debt | — | — | — | — | — | 0 | SEC (XBRL)· 28 Oct 2026verified |
| Long-term debt | — | — | — | — | — | 2.5 bn | SEC (XBRL)· 28 Oct 2026verified |
| Current liabilities | 672.4 m | 796.8 m | 1.3 bn | 1.6 bn | 1.4 bn | 1.6 bn | SEC (XBRL)· 19 Feb 2026verified |
| Equity | 2.1 bn † | 2.5 bn † | 2.7 bn † | 3.4 bn † | 4.7 bn † | 5.5 bn † | SEC (XBRL)· 19 Feb 2026verified |
† equity attributable to the parent's shareholders: in these years the issuer no longer reports the total including non-controlling interests.
Cash flow · USD
| Line | 2019 | 2021 | 2022 | 2023 | 2024 | 2025 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Operating cash flow | 729.6 m | 904.9 m | 1.2 bn | 1.3 bn | 1.3 bn | 1.7 bn | SEC (XBRL)· 19 Feb 2026verified |
| Capex | 74.6 m | 94.8 m | 123.2 m | 102.3 m | 142.5 m | 141.9 m | SEC (XBRL)· 19 Feb 2026verified |
| Free cash flow | 655.0 m ≈ | 810.1 m ≈ | 1.1 bn ≈ | 1.2 bn ≈ | 1.1 bn ≈ | 1.6 bn ≈ | SEC (XBRL)· 19 Feb 2026derived |
| Investing cash flow | -105.7 m | -292.2 m | -738.6 m | -412.2 m | -837.1 m | -460.5 m | SEC (XBRL)· 19 Feb 2026verified |
| Financing cash flow | -443.9 m | -415.3 m | -657.0 m | -803.6 m | 1.2 bn | -949.0 m | SEC (XBRL)· 19 Feb 2026verified |
| Share repurchases | 306.1 m | 380.1 m | 1.1 bn | 700.1 m | 550.0 m | 925.0 m | SEC (XBRL)· 19 Feb 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating cash flow − Capex.
Computed indicators
Growth
Profitability
Returns
Balance sheet
Liquidity
Cash
Efficiency
Market and valuation
4 indicators that do not apply to the sector.
Valuation
olivLaw classification
Score: 48 / 100
A scoring methodology on indicators and valuation, not investment advice.
(margin_of_safety <= -0.25 & agreement in ['high', 'medium'])
Closing price
04 Nov 2026Source: olivLaw, closing series
Market cap: 90.4 bn USD
Key indicators
Coverage and freshness
Score by group
- Balance sheet50
- Valuation21
- Quality89
- Growth51
- Returns52
Estimated value range
The combined range = the median of the valid methods' low, central and high values; it is not a probability interval and does not cover every result. Envelope of all methods: 99.30 – 185.10 USD.
Valuation assumptions are editorial choices, not measured; beta is not measured.
Method ranges (USD per share)
— — Mid · ▏ Price
Valuation methods
- DCF (discounted cash flow)107.59 – 167.42 (Mid 130.82)WACC 9.2% · starting FCFF 1.9 bn USD · terminal value share of EV 74%The WACC × g sensitivity gives the method's bounds; these are not probabilities.Reverse DCF: no growth between −30% and +40% justifies the price
- Peers: EV/Sales102.86 – 160.52 (Mid 129.66)11 companies used · median multiple 6.0x · quartiles 4.8x – 7.4xADBE, ADSK, CRM, INTU, NOW, PTC, RBLX, SNPS, SSNC, TTWO, TWLO
- Peers: EV/EBITDA99.30 – 185.10 (Mid 151.97)6 companies used · median multiple 19.8x · quartiles 13.1x – 24.0xADBE, ADSK, CRM, PTC, SNPS, SSNC
Classification (SIC) comparables group by industry code, not by economic activity; the direct group is an editorial selection by activity. Members' multiples are on their own trailing twelve months, at their own latest close.
Assumptions (illustrative, editorial)
- Risk-free rate
- 4.3%
- Equity risk premium
- 5.0%
- Beta (default)
- 1.00
- Cost of equity
- 9.3%
- Terminal growth
- 2.5%
Factor scorecard
Unattractive profile · Score 48/100
| Factor | Value | Score | Weight used |
|---|---|---|---|
| Gross margin · Quality | unavailable | unavailable | — |
| EBIT margin · Quality | 28.9% | 78 (vs peers) | 10% |
| FCF margin · Quality | 28.8% | 100 (on a fixed band) | 10% |
| Revenue CAGR 3Y · Growth | 14.1% | 57 (on a fixed band) | 19% |
| Revenue growth (YoY) · Growth | 14.1% | 39 (vs peers) | 10% |
| Net debt / EBITDA · Balance sheet | 0.5x | 67 (vs peers) | 7% |
| Current ratio · Balance sheet | 1.4x | 33 (on a fixed band) | 7% |
| EV/Sales · Valuation | 14.9x | 8 (vs peers) | 19% |
| FCF yield · Valuation | 2.0% | 39 (on a fixed band) | 14% |
| Shareholder yield (distributions) · Returns | 1.1% | 52 (on a fixed band) | 5% |
Factors without a value were dropped; the remaining weights were renormalised.
Score groups
- Balance sheet50/100 · 2/2 factors with a value
- Growth51/100 · 2/2 factors with a value
- Quality89/100 · 2/3 factors with a value
- Returns52/100 · 1/1 factors with a value
- Valuation21/100 · 2/2 factors with a value
Memo
Cadence Design Systems, Inc. (CDNS). Latest full fiscal year: 2025; data up to 2026-09-30.
Figures computed from the financial statements: revenue 5.3 bn USD in 2025; YoY growth 14.1%; net margin 22.5%; ROE 22.9%; net debt/EBITDA 0.5x.
The estimated value range is 102.86–167.42 USD per share (median of 3 methods, agreement: high); assumptions are illustrative. Against the central value of 130.82 USD, the price of 329.52 USD leaves a potential of -60.3% (value / price − 1) and a margin of safety of -151.9% (1 − price / value). The range is the median of the methods' low, central and high values, not a probability interval.
olivLaw score 48/100, methodological classification: unattractive profile (score, margin of safety and method agreement together; not a judgement of the right price). Not investment advice.
Text generated deterministically from the figures shown; no language model. Not investment advice.
What supports the thesis
- EBIT margin: 28.9%
- FCF margin: 28.8%
What contradicts it
- EV/Sales: 14.9x
- The price is above the estimated value range
Not assessed (insufficient data or a ratio without meaning): Gross margin.
Versus the vertical median
Services-Prepackaged Software (SIC 7372) · same industry (4-digit SIC) · compared with 23 companies
Only companies with a capitalisation between 10.7 bn and 683.3 bn (within 8× of the company's); 198 of the vertical were left out.
Multiples and returns vs the median
Price rebased to 100 (monthly, 5 years)
Companies in the vertical
| Market cap | P/E | ROE | Net margin | Revenue YoY | 1A / 3A | |
|---|---|---|---|---|---|---|
| PLTRPalantir Technologies Inc. | 413.7 bn | 120.4 | 41.2% | 50.3% | +56.2% | +2% / +756% |
| ORCLOracle Corporation | 374.1 bn | 19.3 | 41.6% | 26.4% | +17.3% | −39% / +6% |
| CRWDCrowdStrike Holdings, Inc. | 246.8 bn | 1,120.4 | 1.3% | 1.1% | +21.7% | +89% / +307% |
| CRMSalesforce, Inc. | 186.9 bn | 20.7 | 19.4% | 22.0% | +9.6% | −1% / −10% |
| NOWServicenow, Inc. | 112.9 bn | 78.1 | 11.8% | 9.4% | +20.9% | −33% / −21% |
| SNOWSnowflake Inc. | 102.5 bn | — | -48.2% | -20.1% | +29.2% | +16% / +55% |
| ADBEAdobe Inc. | 96.7 bn | 13.9 | 61.9% | 28.0% | +10.5% | −22% / −59% |
| INTUIntuit Inc. | 95.3 bn | 21.7 | 23.6% | 21.3% | +13.9% | −44% / −38% |
| CDNSCadence Design Systems, Inc. | 90.4 bn | 65.5 | 22.9% | 22.5% | +14.1% | −1% / +32% |
| SNPSSynopsys Inc | 88.7 bn | 81.8 | 3.7% | 11.4% | +15.1% | +11% / −15% |
| ADSKAutodesk, Inc. | 56.4 bn | 35.0 | 53.9% | 21.1% | +17.5% | −11% / +24% |
| VEEVVeeva Systems Inc. | 50.3 bn | 50.8 | 14.4% | 29.3% | +16.3% | +29% / +78% |
| TTWOTake-Two Interactive Software, Inc. | 39.1 bn | — | -9.0% | -4.8% | +18.2% | −15% / +32% |
| RBLXRoblox Corporation | 35.3 bn | — | -478.2% | -16.5% | +35.8% | −48% / +25% |
| TWLOTwilio Inc. | 33.0 bn | 26.8 | 14.9% | 21.8% | +13.7% | +65% / +230% |
| MDBMongodb, Inc. | 26.5 bn | 449.1 | 2.0% | 2.1% | +22.8% | −1% / −21% |
| PTCPTC Inc. | 21.2 bn | 19.0 | 35.1% | 41.4% | +19.2% | +11% / +24% |
| UUnity Software Inc. | 18.7 bn | — | -18.9% | -29.0% | +2.0% | −0% / +44% |
| SSNCSs&C Technologies Holdings, Inc. | 18.7 bn | 22.9 | 12.7% | 13.2% | +6.6% | −7% / +41% |
| NTNXNutanix, Inc. | 17.2 bn | 12.3 | 37,460.2% | 52.8% | +12.4% | +33% / +48% |
| TYLTyler Technologies, Inc. | 16.8 bn | 53.3 | 10.5% | 13.5% | +9.1% | −10% / +4% |
| DOCUDocusign, Inc. | 15.0 bn | 49.1 | 17.8% | 9.8% | +8.2% | +16% / +87% |
| GWREGuidewire Software, Inc. | 14.0 bn | 104.7 | 10.5% | 9.4% | +22.7% | −21% / +71% |
| DTDynatrace, Inc. | 13.4 bn | 87.0 | 6.4% | 7.4% | +18.8% | +5% / −13% |
1- and 3-year price returns: for CDNS from daily closes (the same as the performance table), for the other companies from month-end closes.
olivLaw engine forecast
The world engine ran after the company's latest material disclosure. Probabilities are of TOUCHING a level within the horizon (not closing there) and sit next to the random walk (p_rw), the no-information benchmark.
Valuation scenarios (editable assumptions)
Illustrative scenarios
Illustrative: not forecasts and without probabilities. Each case is one coherent set of assumptions, computed on today's figures.
Estimated price (USD)
| Estimated price | Bear | Base | Bull |
|---|---|---|---|
| 1 years | 213.64 Total return -35% · Per year -35% | 376.10 Total return 14% · Per year 14% | 564.33 Total return 71% · Per year 71% |
| 3 years | 249.48 Total return -24% · Per year -9% | 490.01 Total return 49% · Per year 14% | 801.07 Total return 143% · Per year 34% |
| 5 years | 291.33 Total return -12% · Per year -2% | 638.42 Total return 94% · Per year 14% | 1,137.13 Total return 245% · Per year 28% |
- Exit P/E± 122.50
- Net margin± 85.75
- Annual revenue growth± 64.44
- Annual dilution± 7.21
AI analysis
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
Possibly outdated: the newest document it read is from 26 Oct 2026; since then the company filed 10-Q (28 Oct 2026).
In brief
Cadence Design Systems is a global supplier of EDA software, semiconductor IP and system design solutions, with revenue of 5296.8 million USD in fiscal 2025, up 14% 1. In the third quarter of 2026 revenue reached 1.633 billion USD, 22% above the prior year 3, and the company raised its 2026 revenue growth outlook to 21% 3.
SWOT
Strengths
- The company has a high share of recurring revenue and a sizeable backlog, giving visibility into future revenue 13.
- An integrated portfolio of software, hardware and IP allows complete solutions for customers, and its position as an industry standard in analog design is a recognized advantage 1.
- Revenue and backlog growth in the third quarter of 2026 point to strong commercial momentum 3.
Weaknesses
- Hardware and IP revenue is hard to predict and is recognized on delivery, which can create variation between quarters 1.
- GAAP operating margin fell in the third quarter of 2026 compared with the prior year, and expenses can rise faster than revenue 3.
- The company carries debt and acquisition obligations, and integrating acquired businesses can be difficult 1.
Opportunities
- AI for data centers, autonomous systems and life sciences could open new markets for Cadence products 1.
- Expansion through the Hexagon D&E acquisition could strengthen the SD&A portfolio and its offering for complete systems 3.
- The launch of Maestro and the AI agents could create new revenue streams among customers adopting agentic AI 3.
Threats
- Export restrictions and trade tariffs could limit access to the Chinese market and raise the cost of imported components 12.
- Competition from large consolidated vendors could slow growth and pressure margins 1.
- Obligations under the BIS and DOJ settlements could create compliance costs and further exposure 13.
Risks
- Export controlshigh
Restrictions on EDA software sales to China could be reimposed, which could reduce sales in that region 1.
- BIS and DOJ settlement obligationsmedium
The company has audit and compliance obligations that could generate costs and additional exposure if new inquiries arise 13.
- Semiconductor cyclemedium
A decline in design activity in the semiconductor industry could reduce demand for Cadence products 1.
- Acquisition integrationmedium
Recent acquisitions could prove difficult to integrate and could affect operating results if expected benefits do not materialize 1.
- Tariffs and trade policylow
US tariffs and retaliatory measures by other countries could affect hardware costs and supply chains 2.
Investment thesis
What would need to be true (bull case)
- If growth seen in the third quarter is sustained, the raised 2026 outlook could be reached, supported by a record backlog and solid recurring revenue 3.
- Early adoption of agentic AI solutions and expansion into complete systems could strengthen the company's leadership in design 31.
- The share repurchase program and recurring revenue could support capital returns to shareholders during periods of growth 31.
What would break the thesis
- If export restrictions tighten, China revenue could fall again and weigh on overall growth 1.
- Lower GAAP margins and higher expenses could limit operating profit if revenue growth slows 31.
- Competition from large consolidated vendors could pressure pricing and limit the ability to sustain current growth 1.
What to watch
- Quarterly results and any update to the revenue and margin outlookQ4 2026
- Development of export restrictions on EDA software to ChinaNovember 2026
- Integration of the Hexagon D&E acquisition and its effect on SD&A2027
Products, market & competition
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
Possibly outdated: the newest document it read is from 26 Oct 2026; since then the company filed 10-Q (28 Oct 2026).
The business
Cadence develops computational AI-driven software, accelerated hardware and silicon IP, with customers including semiconductor companies and companies that design electromechanical systems 1. Its Intelligent System Design strategy rests on three pillars: Design Excellence, System Innovation and Pervasive Intelligence 1. The company is organized into three product categories: Core EDA, Semiconductor IP and System Design and Analysis, and in fiscal 2025 it completed several acquisitions including VLAB Works, the Arm Artisan foundation IP business and Secure-IC 1.
Recurring revenue made up 80% of fiscal 2025 revenue, with the remainder recognized up front, mainly from hardware and IP 1. In February 2026 the company completed the acquisition of Hexagon's design and engineering business, expanding its SD&A portfolio 2.
Management describes its AI opportunity across three horizons: Infrastructure AI for data centers, Physical AI for autonomous systems and robotics, and Life Sciences AI 1.
Segments
Market context
Demand for Cadence depends mainly on the semiconductor and electronic systems industries, which are cyclical and marked by rapid technological change 1. In fiscal 2025 United States revenue was 2311.0 million USD and China revenue was 680.0 million USD 1.
Revenue growth in fiscal 2025 was supported by Japan, other Americas and Asia, while China remains sensitive to export controls 1. The company said China revenue fell temporarily because of licence requirements, and tighter controls could be reimposed if US-China negotiations deteriorate 1.
Trends
- Agentic artificial intelligencetailwind
The company is integrating generative and agentic AI into its products, and the launch of Maestro and the AI Super Agents supports growth expectations if adoption continues 3. For customers, AI could shorten verification cycles, which could increase demand for Cadence tools 1.
- Expansion into electromechanical systemsmixed
Extending into complete system design through BETA CAE, VLAB Works and the Hexagon D&E business opens new markets such as software-defined vehicles 12. Integrating these acquisitions could, however, absorb resources and weigh on near-term margins 1.
- Export controls and tariffsheadwind
Export restrictions on China and new US tariffs could affect hardware sales and the cost of imported components, and the US could reimpose restrictions on EDA software 12. The impact could be limited, but remains uncertain 2.
- Semiconductor design investment cyclemixed
Demand depends on the start of new design projects, and a slowdown in the semiconductor industry could reduce design activity 1. Rising design complexity could, however, sustain demand for advanced tools 1.
Competitive position
The EDA market has matured, and competition has grown from companies able to compete as sole source vendors, which could pressure growth and margins 1. Competition is substantial across the industries in which Cadence operates 1.
In hardware and IP, customers can choose a competitor's product on cost or performance, and rivals can win new projects 1. Maintaining technological leadership is needed to defend market share 1.
- SynopsysSNPS
Direct competitor in EDA software and IP, cited as part of the substantial competition in the industry 1.
- Siemens EDA
Provider of EDA and system analysis solutions, mentioned in the context of industry competition 1.
- Ansys
Multiphysics simulation provider, relevant to the electronic system analysis segment 1.
- Large consolidated EDA vendors
Larger companies able to compete as sole source vendors, increasing competitive pressure in the sector 1.
Links, dependencies and risks
Who the company is tied to, from its own SEC filings (customers, suppliers, production, partners, competitors, countries, regulation), from the 5 %+ holders' statements (13D/13G) and from what other companies say about it. Click a node for its evidence; on a listed company the graph moves to it.
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News & filings
In the press
- How Is Cadence Design Systems’ Stock Performance Compared to Other Application Software StocksYahoo Finance — News · 03 Sept 2026 · EN
- Cadence Design Systems Sees AI Agents Driving Chip Design Boom and GrowthYahoo Finance — News · 26 Aug 2026 · EN
The latest news item in our archive is from 03 Sept 2026; the newest SEC filing is from 28 Oct 2026. The press archive comes from the RSS feeds we follow and does not necessarily cover the latest event — the filings alongside do.
SEC filings
- Quarterly report28 Oct 2026
- Current report26 Oct 2026Results of operations · Other events · Financial statements and exhibits
- Quarterly report29 Jul 2026
- Current report27 Jul 2026Results of operations · Financial statements and exhibits
- Current report12 May 2026Departure or appointment of officers · Shareholder vote
- Current report (amendment)12 May 2026Departure or appointment of officers
- Quarterly report01 May 2026
- Current report27 Apr 2026Results of operations · Financial statements and exhibits
- Proxy statement25 Mar 2026
- Current report23 Feb 2026Item 3.02
Sources
- [1] Form 10-K, fiscal year ended 2025-12-31 · SEC / Cadence Design Systems, Inc. · 19 Feb 2026
- [2] Form 10-Q, quarter ended 2026-06-30 · SEC / Cadence Design Systems, Inc. · 29 Jul 2026
- [3] Form 8-K, results release (exhibit 99.1) · SEC / Cadence Design Systems, Inc. · 26 Oct 2026
Figures computed by olivLaw from SEC filings and closing prices; the qualitative analysis is AI-generated from cited sources. Not investment advice.