Cadence Design Systems (CDNS) delivered an exceptional start to fiscal 2025, surpassing expectations across all key financial metrics in the first quarter and raising its full-year outlook. Revenue climbed 23% year-over-year to $1.242 billion, reflecting strong demand across its AI-driven product portfolio. Profitability improved meaningfully, with GAAP operating margin expanding to 29.1% and non-GAAP operating margin reaching 41.7%, both up several points from the prior year. Earnings saw solid gains, with GAAP diluted EPS rising to $1.00 and non-GAAP EPS surging to $1.57, up from $0.91 and $1.17 respectively. The company also generated a healthy $487 million in operating cash flow during the quarter.

Segment performance was notably robust. The Semiconductor IP business led with 40% revenue growth, fueled by accelerating demand for AI, chiplet technologies, and ecosystem partnerships. Core EDA rose 16%, bolstered by expanding adoption of the Cadence Cerebrus platform, which added nearly 50 new customers and exceeded 1,000 total tapeouts. Meanwhile, the System Design and Analysis segment soared over 50%, reflecting broad traction for its AI-powered and physics-based design tools.

Cadence exited the quarter with a $6.4 billion backlog and $3.2 billion in current remaining performance obligations set to convert to revenue over the next 12 months—strong indicators of sustained momentum.

Looking ahead, Cadence projects Q2 revenue between $1.25 billion and $1.27 billion, with non-GAAP EPS expected between $1.55 and $1.61. For the full year, guidance was raised slightly, with revenue now forecast between $5.15 billion and $5.23 billion and non-GAAP EPS guided to $6.73–$6.83. Operating cash flow for 2025 is expected to land between $1.6 billion and $1.7 billion, with the company committing to return at least 50% of free cash flow via share repurchases. $350 million of stock was repurchased in Q1, and an additional $175 million is planned for Q2.

CEO Anirudh Devgan cited continued R&D investment and strong customer demand as core drivers, emphasizing the strength of Cadence’s recurring software business model. CFO John Wall noted the company is outperforming its original 2025 plan, with broad-based growth enabling the upward revision to guidance.

Cadence’s AI-driven platforms—Cerebrus, Verisium, and Allegro X AI—continue to drive competitive wins, especially in hyperscale, automotive, and advanced chip markets. Partnerships with industry leaders like NVIDIA further bolster its position. With approximately 80% recurring revenue and 70% of annual revenue expected from beginning backlog, Cadence is well-positioned to sustain its growth trajectory through the year.