A Business at a Glance
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CADENCE DESIGN SYSTEMS INC
CDNS
$89.1B
Mkt Cap
$326.24
-1.28%
CADENCE DESIGN SYSTEMS INC (CDNS) has a current P/E ratio of 80.4, compared to its historical median P/E of 63.3. The stock is currently considered Fair based on its historical valuation range.
CADENCE DESIGN SYSTEMS INC (CDNS) has a 5-year average return on invested capital (ROIC) of 32.1%. This indicates strong capital allocation and a potential competitive advantage.
CADENCE DESIGN SYSTEMS INC (CDNS) has a market capitalization of $90.0B. It is classified as a large-cap stock.
CADENCE DESIGN SYSTEMS INC (CDNS) does not currently pay a regular dividend. However, the company returns capital to shareholders through share buybacks, with a buyback yield of 0.86%.
Based on historical P/E analysis, CADENCE DESIGN SYSTEMS INC (CDNS) appears fair. The current P/E of 80.4 is 27% above its historical median of 63.3. The estimated fair value CAGR (P/E method) is 10.5%.
CADENCE DESIGN SYSTEMS INC (CDNS) operates in the Services-Prepackaged Software industry, within the Technology sector.
Cadence is a global computational software and hardware company that develops AI-driven electronic design automation (EDA) tools, semiconductor intellectual property (IP), and system design and analysis solutions for semiconductor companies and systems manufacturers worldwide. The company operates through three integrated product categories: Core EDA, which provides design and verification software for analog, digital, mixed-signal, memory, and RF semiconductors; Semiconductor IP, which offers design architectures, controllers, interfaces, and configurable processors embedded in high-volume chips across automotive, hyperscale, mobile, and consumer markets; and System Design and Analysis, which enables verification of complete electronic systems from printed circuit boards to complex assemblies. Cadence's business model is predominantly subscription-based with recurring revenue, supported by a strong backlog of multi-year customer commitments, and generates value through helping customers optimize performance, power, and area of semiconductors while accelerating time-to-market. The company's competitive differentiation rests on its integrated portfolio of AI-driven computational tools, deep expertise in design complexity management, and strategic acquisitions that expand capabilities into new verticals such as life sciences and automotive software development. Cadence serves semiconductor design companies, hyperscalers, automotive OEMs, and Tier 1 suppliers globally, with particular strength in infrastructure AI, physical AI, and life sciences applications.
【AI-driven portfolio momentum】 Management expects continued strong demand driven by accelerating AI infrastructure buildout and increasing semiconductor design complexity, with record backlog of $8 billion entering 2026 reflecting broad-based customer confidence in the company's AI-driven solutions. The company anticipates agentic AI technology will materially expand EDA consumption and drive higher usage across platforms, though management is exercising discipline in not assuming a sudden step function in AI monetization in near-term guidance. Cadence expects hardware platforms to remain strong with record demand continuing into 2026, supported by the essential nature of its engineering software for complex chip design, while the company pursues strategic opportunities including the integration of the Hexagon Design and Engineering business acquisition and monetization of new tools through subscription-plus-consumption models. Management remains prudent regarding China revenue, expecting it to represent approximately 12-13% of annual revenue, and plans to maintain balanced capital allocation with approximately 50% of free cash flow directed toward share repurchases.
| Metric | Target | Period |
|---|---|---|
| Revenue | $6.125 billion–$6.225 billion | FY2026 |
| GAAP Operating Margin | 27.5%–28.5% | FY2026 |
| Operating Cash Flow | $1.875 billion–$1.975 billion | FY2026 |
| Q2 FY2026 Revenue | $1.555 billion–$1.595 billion | Q2 FY2026 |
| Q2 FY2026 GAAP Operating Margin | 28.5%–29.5% | Q2 FY2026 |
| Revenue Growth | 17% | FY2026 |
| Hexagon Design and Engineering Revenue | $160 million | FY2026 |
Revenue (FY2026): “For our updated outlook for 2026, we expect revenue in the range of $6.125 billion-$6.225 billion.”
GAAP Operating Margin (FY2026): “GAAP operating margin in the range of 27.5%-28.5%.”
Operating Cash Flow (FY2026): “Operating cash flow in the range of $1.875 billion-$1.975 billion”
Q2 FY2026 Revenue (Q2 FY2026): “For Q2, we expect revenue in the range of $1.555 billion-$1.595 billion.”
Q2 FY2026 GAAP Operating Margin (Q2 FY2026): “GAAP operating margin in the range of 28.5%-29.5%.”
Generated solely from the company's own reports listed below — not from third-party data. Hallucination risk is low. · Sources: 10-K, Q4 FY2025 Earnings Call, Q3 FY2025 Earnings Call, Q2 FY2025 Earnings Call, Q1 FY2025 Earnings Call
| Metric | TTM | FY2025 | FY2024 | FY2023 | FY2022 | FY2021 |
|---|---|---|---|---|---|---|
| Revenue | 5.5B | 5.3B | 4.6B | 4.1B | 3.6B | 2.7B |
| Net Income | 1.2B | 1.1B | 1.1B | 1.0B | 849M | 591M |
| EPS | $4.29 | $4.06 | $3.85 | $3.82 | $3.09 | $2.11 |
| Free Cash Flow | 1.4B | 1.6B | 1.1B | 1.2B | 1.1B | 810M |
| ROIC | 15.2% | 23.7% | 28.1% | 37.5% | 39.5% | 31.5% |
| Gross Margin | - | 74.0% | 74.3% | 76.2% | 76.4% | 74.6% |
| Debt/Equity | 0.38 | 0.45 | 0.53 | 0.19 | 0.24 | 0.14 |
| Dividends/Share | $0.00 | - | - | - | - | - |
| Operating Income | 1.6B | 1.5B | 1.4B | 1.3B | 1.1B | 646M |
| Operating Margin | 28.3% | 28.2% | 29.1% | 30.6% | 30.1% | 24.1% |
| ROE | 17.8% | 21.9% | 26.1% | 33.9% | 32.4% | 23.7% |
| Shares Outstanding | 276M | 273M | 274M | 273M | 275M | 280M |
| Metric | 2014 | 2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement | |||||||||||||
| Revenue | 1.6B | 1.6B | 1.8B | 1.9B | 2.1B | 2.3B | 2.7B | 2.7B | 3.6B | 4.1B | 4.6B | 5.3B | 5.5B |
| Gross Margin | N/A | 67.9% | 68.8% | 72.2% | 72.8% | 73.2% | N/A | 74.6% | 76.4% | 76.2% | 74.3% | 74.0% | N/A |
| R&D | 603M | 603M | 735M | 804M | 885M | 936M | 1.0B | 1.0B | 1.3B | 1.4B | 1.5B | 1.8B | 1.8B |
| SG&A | 114M | 114M | 125M | 134M | 133M | 140M | 154M | 154M | 242M | 242M | 274M | 313M | 339M |
| EBIT | 207M | 207M | 245M | 324M | 396M | 492M | 646M | 646M | 1.1B | 1.3B | 1.4B | 1.5B | 1.6B |
| Op. Margin | 13.1% | 13.1% | 13.5% | 16.7% | 18.5% | 21.1% | 24.1% | 24.1% | 30.1% | 30.6% | 29.1% | 28.2% | 28.3% |
| Net Income | 159M | 159M | 203M | 204M | 346M | 989M | 591M | 591M | 849M | 1.0B | 1.1B | 1.1B | 1.2B |
| Net Margin | 10.1% | 10.1% | 11.2% | 10.5% | 16.2% | 42.3% | 22.0% | 22.0% | 23.8% | 25.5% | 22.7% | 20.9% | 21.2% |
| Non-Recurring | 12M | 12M | 42M | 9.4M | 11M | 8.6M | 9.2M | 9.2M | 55K | 11M | 24M | 29M | 29M |
| Returns on Capital | |||||||||||||
| ROIC | 19.6% | 18.1% | 25.2% | 22.6% | 35.6% | 34.6% | 33.0% | 31.5% | 39.5% | 37.5% | 28.1% | 23.7% | 15.2% |
| ROE | 12.8% | 11.9% | 19.6% | 23.6% | 30.4% | 58.3% | 25.7% | 23.7% | 32.4% | 33.9% | 26.1% | 21.9% | 17.8% |
| ROA | 5.6% | 5.0% | 7.7% | 9.0% | 14.1% | 34.0% | 16.2% | 15.0% | 18.7% | 19.3% | 14.4% | 11.6% | 9.7% |
| Cash Flow | |||||||||||||
| Op. Cash Flow | 317M | 317M | 445M | 471M | 605M | 730M | 905M | 905M | 1.2B | 1.3B | 1.3B | 1.7B | 1.6B |
| Free Cash Flow | 277M | 277M | 391M | 413M | 543M | 655M | 810M | 810M | 1.1B | 1.2B | 1.1B | 1.6B | 1.4B |
| Owner Earnings | 117M | 117M | 216M | 225M | 318M | 425M | 562M | 562M | 839M | 878M | 672M | 1.0B | 852M |
| CapEx | 40M | 40M | 54M | 58M | 62M | 75M | 95M | 95M | 123M | 102M | 143M | 142M | 168M |
| Maint. CapEx | 116M | 116M | 120M | 116M | 119M | 123M | 146M | 146M | 132M | 145M | 197M | 228M | 260M |
| Growth CapEx | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| D&A | 116M | 116M | 120M | 116M | 119M | 123M | 146M | 146M | 132M | 145M | 197M | 228M | 260M |
| CapEx/OCF | N/A | 12.6% | 11.8% | 12.3% | 10.2% | 10.2% | N/A | 10.5% | 5.9% | 7.6% | 11.3% | 8.2% | 10.5% |
| Capital Allocation | |||||||||||||
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Dividend Yield | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Share Buybacks | 100M | 100M | 960M | 100M | 250M | 306M | 380M | 380M | 1.1B | 700M | 550M | 925M | 775M |
| Buyback Yield | 0.0% | 1.5% | 4.2% | 0.8% | 2.1% | 1.6% | 0.0% | 0.7% | 1.4% | 0.9% | 0.7% | 1.1% | 0.9% |
| Stock-Based Comp | 84M | 84M | 109M | 130M | 168M | 182M | 197M | 197M | 270M | 326M | 391M | 455M | 486M |
| Debt Repayment | 1K | 6.5M | 350M | 793K | 0 | 0 | 0 | 0 | 425K | 0 | 24M | 0 | 0 |
| Balance Sheet | |||||||||||||
| Net Debt | -331M | -331M | 175M | -48M | -187M | -359M | -582M | -582M | -239M | -489M | -308M | -675M | 995M |
| Cash & Equiv. | 932M | 932M | 465M | 688M | 533M | 705M | 928M | 928M | 882M | 1.0B | 2.6B | 3.0B | 1.5B |
| Long-Term Debt | 349M | 349M | 643M | 644M | 345M | 346M | 347M | 347M | 648M | 300M | 2.5B | 2.5B | 2.5B |
| Debt/Equity | 0.52 | 0.52 | 0.87 | 0.65 | 0.27 | 0.16 | 0.14 | 0.14 | 0.24 | 0.19 | 0.53 | 0.45 | 0.38 |
| Interest Coverage | 6.1 | 6.1 | 10.3 | 12.6 | 17.1 | 26.1 | 31.1 | 31.1 | 46.8 | 34.6 | 17.8 | 12.8 | 13.1 |
| Equity | 1.3B | 1.3B | 742M | 989M | 1.3B | 2.1B | 2.5B | 2.5B | 2.7B | 3.4B | 4.7B | 5.5B | 6.6B |
| Total Assets | 3.2B | 3.2B | 2.1B | 2.4B | 2.5B | 3.4B | 4.0B | 4.0B | 5.1B | 5.7B | 9.0B | 10.2B | 12.1B |
| Total Liabilities | 1.9B | 1.9B | 1.4B | 1.4B | 1.2B | 1.3B | 1.5B | 1.5B | 2.4B | 2.3B | 4.3B | 4.7B | -233M |
| Intangibles | 554M | 361M | 259M | 279M | 225M | 172M | 782M | 211M | 355M | 337M | 595M | 718M | 1.9B |
| Retained Earnings | -326M | -326M | 137M | 427M | 773M | 1.8B | 2.4B | 2.4B | 3.9B | 4.9B | 6.0B | 7.1B | 7.4B |
| Working Capital | 459M | 459M | 116M | 338M | 242M | 497M | 682M | 682M | 359M | 385M | 2.6B | 3.0B | 1.0B |
| Current Assets | 1.9B | 1.9B | 702M | 980M | 951M | 1.2B | 1.5B | 1.5B | 1.7B | 2.0B | 4.0B | 4.7B | 3.2B |
| Current Liabilities | 1.4B | 1.4B | 586M | 642M | 709M | 672M | 797M | 797M | 1.3B | 1.6B | 1.4B | 1.6B | 2.2B |
| Per Share Data | |||||||||||||
| EPS | 0.52 | 0.52 | 0.70 | 0.73 | 1.23 | 3.53 | 2.11 | 2.11 | 3.09 | 3.82 | 3.85 | 4.06 | 4.29 |
| Owner EPS | 0.38 | 0.38 | 0.74 | 0.81 | 1.13 | 1.52 | 2.01 | 2.01 | 3.06 | 3.22 | 2.45 | 3.83 | 3.09 |
| Book Value | 4.36 | 4.36 | 2.56 | 3.54 | 4.58 | 7.51 | 8.91 | 8.91 | 9.99 | 12.49 | 17.05 | 20.04 | 23.79 |
| Cash Flow/Share | 1.04 | 1.04 | 1.53 | 1.68 | 2.15 | 2.60 | 3.23 | 3.23 | 4.52 | 4.95 | 4.60 | 6.33 | 5.19 |
| Dividends/Share | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 0.00 |
| Shares Out. | 305.6M | 305.6M | 290.1M | 279.6M | 281.1M | 280.2M | 279.9M | 279.9M | 274.7M | 272.6M | 274.2M | 273.1M | 275.8M |
| Valuation | |||||||||||||
| P/E Ratio | N/A | 40.8 | 31.3 | 57.9 | 35.2 | 19.9 | N/A | 90.1 | 63.3 | 71.5 | 79.2 | 78.5 | 76.1 |
| P/FCF | N/A | 23.4 | 18.8 | 28.6 | 22.4 | 30.1 | N/A | 65.7 | 38.9 | 59.7 | 74.8 | 54.9 | 62.9 |
| EV/EBIT | N/A | 31.4 | 28.5 | 34.5 | 29.2 | 37.9 | N/A | 80.1 | 55.3 | 58.7 | 59.8 | 56.0 | 58.2 |
| Price/Book | N/A | 4.9 | 10.7 | 12.0 | 9.5 | 9.4 | N/A | 21.3 | 16.1 | 21.9 | 17.9 | 15.9 | 13.7 |
| Price/Sales | N/A | 3.8 | 4.4 | 5.1 | 5.6 | 7.7 | N/A | 15.4 | 14.9 | 14.9 | 17.1 | 16.0 | 16.3 |
| FCF Yield | N/A | 4.3% | 4.9% | 3.5% | 4.5% | 3.3% | N/A | 1.5% | 2.5% | 1.7% | 1.3% | 1.8% | 1.6% |
| Market Cap | 0 | 6.5B | 7.9B | 11.8B | 12.2B | 19.7B | 0 | 53.2B | 44.1B | 74.5B | 83.6B | 87.1B | 90.0B |
| Avg. Price | 0.00 | 19.92 | 23.89 | 35.45 | 42.71 | 64.22 | 0.00 | 147.90 | 159.61 | 223.84 | 289.50 | 310.32 | 326.24 |
| Year-End Price | 0.00 | 21.21 | 25.39 | 42.29 | 43.34 | 70.29 | 0.00 | 190.08 | 158.34 | 273.24 | 305.03 | 318.89 | 326.24 |
CADENCE DESIGN SYSTEMS INC passes 6 of 9 quality checks, suggesting mixed fundamentals.
CADENCE DESIGN SYSTEMS INC trades at 80.4x trailing earnings, compared to its 15-year median P/E of 63.3x, suggesting it is currently Fair relative to its historical range. On a free-cash-flow basis, the stock trades at 56.1x vs a median of 38.9x. The company's 5-year average ROIC is 32.1% with a gross margin of 75.1%. Total shareholder yield (buybacks) is 0.9%. At current prices, the estimated annualized return to fair value is +13.9%.
CADENCE DESIGN SYSTEMS INC (CDNS) reported annual revenue of $5.3 billion in its most recent fiscal year, based on SEC EDGAR filings.
CADENCE DESIGN SYSTEMS INC (CDNS) has a net profit margin of 20.9%. This is a strong margin indicating high profitability.
CADENCE DESIGN SYSTEMS INC (CDNS) generated $1.6 billion in free cash flow in its most recent fiscal year. Positive free cash flow supports dividends, buybacks, and debt reduction.
CADENCE DESIGN SYSTEMS INC (CDNS) has a debt-to-equity ratio of 0.45. This indicates a conservatively financed balance sheet.
CADENCE DESIGN SYSTEMS INC (CDNS) reported earnings per share (EPS) of $4.06 in its most recent fiscal year.
CADENCE DESIGN SYSTEMS INC (CDNS) has a return on equity (ROE) of 21.9%. This indicates the company generates strong returns for shareholders.
CADENCE DESIGN SYSTEMS INC (CDNS) has a 5-year average gross margin of 75.1%. This high margin suggests strong pricing power and a potential competitive moat.
The Ledger Terminal provides 17 years of financial data for CADENCE DESIGN SYSTEMS INC (CDNS), sourced directly from SEC EDGAR filings. This includes income statements, balance sheets, cash flow statements, and key financial ratios.
CADENCE DESIGN SYSTEMS INC (CDNS) has a book value per share of $20.04, based on its most recent annual SEC filing.
Based on recent SEC filings and earnings disclosures, Management expects continued strong demand driven by accelerating AI infrastructure buildout and increasing semiconductor design complexity, with record backlog of $8 billion entering 2026 reflecting broad-based customer confidence in the company's AI-driven solutions. The company anticipates agentic AI technology will materially expand EDA consumption and drive higher usage across platforms, though management is exercising discipline in not assuming a sudden step function in AI monetization in near-term guidance. Cadence expects hardware platforms to remain strong with record demand continuing into 2026, supported by the essential nature of its engineering software for complex chip design, while the company pursues strategic opportunities including the integration of the Hexagon Design and Engineering business acquisition and monetization of new tools through subscription-plus-consumption models. Management remains prudent regarding China revenue, expecting it to represent approximately 12-13% of annual revenue, and plans to maintain balanced capital allocation with approximately 50% of free cash flow directed toward share repurchases.
Based on recent SEC filings and earnings calls, CADENCE DESIGN SYSTEMS INC (CDNS) has provided the following forward guidance: Revenue: $6.125 billion–$6.225 billion (FY2026); GAAP Operating Margin: 27.5%–28.5% (FY2026); Operating Cash Flow: $1.875 billion–$1.975 billion (FY2026); Q2 FY2026 Revenue: $1.555 billion–$1.595 billion (Q2 FY2026); Q2 FY2026 GAAP Operating Margin: 28.5%–29.5% (Q2 FY2026), plus 2 additional metrics.
Revenue Growth (FY2026): “we are raising our 2026 revenue growth outlook to 17%”
Hexagon Design and Engineering Revenue (FY2026): “We announced in the press release when we closed the deal that we expect $160 million of revenue this year.”