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Core Insights - Cadence Design Systems (CDNS) reported revenue of $1.44 billion for the quarter ended December 2025, marking a year-over-year increase of 6.2% and exceeding the Zacks Consensus Estimate by 1.12% [1] - The earnings per share (EPS) for the same period was $1.99, compared to $1.88 a year ago, resulting in an EPS surprise of 4.57% over the consensus estimate of $1.90 [1] Financial Performance Metrics - The backlog for Cadence stood at $7.8 billion, surpassing the two-analyst average estimate of $7.42 billion [4] - Revenue from product and maintenance was reported at $1.33 billion, exceeding the average estimate of $1.29 billion from six analysts, reflecting a year-over-year increase of 7.5% [4] - Revenue from services was reported at $107.59 million, which fell short of the six-analyst average estimate of $128.33 million, indicating a year-over-year decline of 7.8% [4] Stock Performance - Over the past month, shares of Cadence have returned -5.7%, compared to a -1.4% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Insights - Cadence Design Systems (CDNS) reported quarterly earnings of $1.99 per share, exceeding the Zacks Consensus Estimate of $1.90 per share and up from $1.88 per share a year ago [1] - The earnings surprise for this quarter was +4.57%, following a previous surprise of +7.82% when earnings were $1.93 per share against an expectation of $1.79 per share [2] - The company achieved revenues of $1.44 billion for the quarter, surpassing the Zacks Consensus Estimate by 1.12% and increasing from $1.36 billion year-over-year [3] Earnings Performance - Cadence has consistently surpassed consensus EPS estimates for the last four quarters [2] - The company has also topped consensus revenue estimates four times over the last four quarters [3] Stock Performance and Outlook - Cadence shares have declined approximately 4.2% since the beginning of the year, while the S&P 500 has only declined by 0.1% [4] - The current Zacks Rank for Cadence is 4 (Sell), indicating expectations of underperformance in the near future [7] Future Earnings Expectations - The consensus EPS estimate for the upcoming quarter is $1.82 on revenues of $1.38 billion, and for the current fiscal year, it is $8.03 on revenues of $5.95 billion [8] - The estimate revisions trend for Cadence was unfavorable prior to the earnings release, but this may change following the recent results [7] Industry Context - The Computer - Software industry, to which Cadence belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9] - Another company in the same industry, Oracle, is expected to report quarterly earnings of $1.70 per share, reflecting a year-over-year increase of +15.7% [10]

Financial Data and Key Metrics Changes - Cadence reported a 14% revenue growth for the fourth quarter and a 45% operating margin for the year 2025, with total revenue reaching $1.44 billion for the quarter and $5.297 billion for the year [5][16] - The company achieved a GAAP operating margin of 32.2% for the quarter and 28.2% for the year, while the non-GAAP operating margin was 45.8% for the quarter and 44.6% for the year [17] - GAAP EPS was $1.42 for the quarter and $4.06 for the year, with non-GAAP EPS at $1.99 for the quarter and $7.14 for the year [17] Business Line Data and Key Metrics Changes - The core EDA business grew by 13% in 2025, with the recurring software business re-accelerating to double-digit growth in Q4 [10] - The IP business saw nearly 25% revenue growth in 2025, reflecting the strength of the expanding IP portfolio [12] - The hardware business had over 30 new customers and significantly higher repeat demand from AI and hyperscalers, with expectations for another record year in 2026 [10] Market Data and Key Metrics Changes - The company finished 2025 with a record backlog of $7.8 billion, indicating strong demand across all business lines [5][16] - China accounted for 12%-13% of revenue in 2025, with expectations to maintain this range in 2026 [31] - The semiconductor industry is projected to reach $1 trillion in revenue, indicating a robust market environment for Cadence [62] Company Strategy and Development Direction - Cadence is focusing on AI-driven solutions, with the launch of ChipStack AI Super Agent, which automates chip design and verification, providing up to 10x productivity improvement [7] - The company is expanding its partnerships with leading foundries, including TSMC and Intel, to enhance its AI capabilities [9] - Cadence aims to capture opportunities in the emerging physical AI market, particularly in autonomous driving and robotics [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for Cadence's engineering software, emphasizing that AI tools are increasing the usage of their software rather than displacing it [27] - The outlook for 2026 includes expected revenue in the range of $5.9 billion to $6 billion, with GAAP EPS projected between $4.95 and $5.05 [19] - Management noted that the design activity is accelerating across both semiconductor and system companies, indicating a healthier environment for 2026 compared to the previous year [62] Other Important Information - The company plans to use approximately 50% of its free cash flow for share repurchases in 2026 [19] - Cadence's AI workflows are expected to enhance productivity significantly, with customers reporting improvements of up to 10x in certain areas [43] Q&A Session Summary Question: Disruption in AI affecting EDA demand - Management indicated that there has been no discussion among customers about reducing the usage of EDA tools due to AI; instead, AI is increasing the usage of Cadence's tools [27] Question: Recurring revenue outlook for 2026 - Management highlighted that 67% of 2026 revenue is expected to come from beginning backlog, providing strong visibility into recurring revenue growth [32] Question: Verification and emulation hardware cycle - Management expects continued strong demand for hardware systems, which are essential for designing complex chips, and anticipates that this trend will continue [35] Question: Benefits of AI workflows - Management reported significant productivity improvements from AI workflows, with customers achieving up to 4x productivity gains in certain tasks [43] Question: Transition to one-year license terms for SDA - Management acknowledged that the transition to annual subscription arrangements has impacted SDA revenue growth but remains optimistic about its strategic trajectory [51]

Financial Data and Key Metrics Changes - Cadence reported a 14% revenue growth for the fourth quarter and a 45% operating margin for the year, finishing 2025 with a record backlog of $7.8 billion [5][16] - Total revenue for Q4 was $1.44 billion and $5.297 billion for the year, with GAAP operating margin at 32.2% for the quarter and 28.2% for the year [16][17] - Non-GAAP operating margin was 45.8% for the quarter and 44.6% for the year, with GAAP EPS at $1.42 for the quarter and $4.06 for the year [17] Business Line Data and Key Metrics Changes - The core EDA business grew by 13% in 2025, with the recurring software business re-accelerating to double-digit growth in Q4 [10] - The IP business saw nearly 25% revenue growth in 2025, reflecting strong demand in AI, HPC, and automotive verticals [12][13] - The System Design and Analysis (SDA) business delivered 13% revenue growth in 2025, with a strategic shift towards annual subscription arrangements impacting year-over-year comparisons [51] Market Data and Key Metrics Changes - The semiconductor industry is projected to reach $1 trillion this year, indicating a healthier environment for Cadence's solutions [61] - China accounted for 12%-13% of revenue in 2024 and 2025, with expectations to maintain this range in 2026 [31] Company Strategy and Development Direction - Cadence is focusing on AI-driven solutions, with the launch of ChipStack AI Super Agent aimed at automating chip design and verification, providing up to 10x productivity improvements [7][8] - The company is expanding partnerships with leading foundries, including TSMC and Intel, to enhance AI flows and support next-generation designs [9] - The strategy includes a strong emphasis on agentic AI workflows, which are expected to increase the usage of Cadence's tools rather than displace them [25][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for Cadence's engineering software, emphasizing that AI tools are increasing the usage of their products [27] - The outlook for 2026 includes expected revenue in the range of $5.9 billion to $6 billion, with a GAAP operating margin of 31.75%-32.75% and non-GAAP EPS in the range of $8.05-$8.15 [19][20] Other Important Information - The company plans to use approximately 50% of its free cash flow for share repurchases in 2026 [19] - Cadence's AI-driven EDA, SDA, and IP portfolio positions the company well to capture significant opportunities in the evolving market landscape [15] Q&A Session Summary Question: Disruption in AI affecting demand for EDA or IP tools - Management clarified that there has been no discussion from customers about reducing the usage of Cadence's tools; instead, AI tools are increasing the usage of their software [24][27] Question: Key contributors to recurring revenue improvements - Management noted that strong backlog and broad portfolio proliferation across EDA, IP, hardware, and SDA are driving recurring revenue growth [30][32] Question: Verification and emulation hardware cycle - Management indicated that demand for hardware systems remains strong, with expectations for continued growth in this segment [34][36] Question: Benefits from AI workflows - Management highlighted significant productivity improvements from AI, with customers reporting up to 10x productivity gains in certain areas [43][44] Question: Transition to one-year license terms for SDA - Management acknowledged that the shift to annual subscriptions impacted SDA revenue growth but remains optimistic about its strategic trajectory [51] Question: COT chip proliferation among hyperscalers - Management confirmed that the trend of hyperscalers designing their own chips is accelerating, with expectations for increased EDA consumption [56][59]

Financial Data and Key Metrics Changes - Cadence reported a 14% revenue growth for Q4 2025, with total revenue reaching $1.44 billion for the quarter and $5.297 billion for the year [14][15] - The company achieved a 45% operating margin for the year, with a non-GAAP operating margin of 44.6% [4][15] - GAAP EPS was $1.42 for the quarter and $4.06 for the year, while non-GAAP EPS was $1.99 for the quarter and $7.14 for the year [15] Business Line Data and Key Metrics Changes - The core EDA business grew by 13% in 2025, driven by strong demand from AI and hyperscaler customers [9] - The IP business saw nearly 25% revenue growth in 2025, reflecting the strength of the expanding IP portfolio [11] - The hardware business had a record year with over 30 new customers and significantly higher repeat demand [9] Market Data and Key Metrics Changes - The company finished 2025 with a record backlog of $7.8 billion, indicating strong demand across all business lines [4][14] - China accounted for approximately 12%-13% of revenue in 2025, with expectations to maintain this range in 2026 [28] Company Strategy and Development Direction - Cadence is focusing on AI-driven solutions, emphasizing the integration of AI into their engineering software to enhance design exploration and accelerate time to market [5][6] - The company is expanding partnerships with leading foundries, including TSMC and Intel, to develop next-generation AI flows [8] - The strategic collaboration with Broadcom aims to develop pioneering agentic AI workflows for next-generation products [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for EDA tools, stating that AI tools are increasing the usage of their software rather than displacing it [24] - The outlook for 2026 includes expected revenue in the range of $5.9 billion to $6 billion, with a strong emphasis on recurring revenue growth [16][17] - Management highlighted a healthier environment for the semiconductor industry in 2026 compared to the previous year, with broad-based strength across various sectors [60][61] Other Important Information - The company is actively applying AI internally to improve efficiency across engineering, go-to-market, and operations [8] - Cadence launched several new products, including the ChipStack AI Super Agent, which provides significant productivity improvements for chip design tasks [5][12] Q&A Session Summary Question: Disruption in AI affecting demand for EDA tools - Management clarified that there has been no discussion from customers about reducing the use of EDA tools due to AI; instead, AI is increasing the usage of their tools [24] Question: Outlook for 2026 and recurring revenue improvements - Management indicated that strong backlog supports expectations for recurring revenue growth, with 67% of 2026 revenue coming from beginning backlog [29] Question: Verification and emulation hardware cycle - Management expects continued strong demand for hardware systems, emphasizing their importance in designing complex chips [33] Question: Benefits of AI workflows for customers - Management reported significant productivity improvements for customers using AI, with examples of 4x and 7-10x productivity gains [41][42] Question: Transition to one-year license terms for SDA - Management acknowledged that moving to annual subscription arrangements impacted year-over-year numbers but remains optimistic about SDA's growth trajectory [49] Question: COT proliferation among hyperscaler customers - Management noted that the trend of hyperscalers designing their own chips is accelerating, with expectations for increased COT adoption [56][57]

Cadence beats quarterly profit and revenue estimates on strong AI-linked demand | ReutersSkip to main content[Exclusive news, data and analytics for financial market professionalsLearn more aboutRefinitiv]The logo of Cadence Design Systems is pictured outside the company's offices in San Jose, California, U.S., January 31, 2020. Picture taken January 31, 2020. REUTERS/Stephen Nellis [Purchase Licensing Rights, opens new tab]Feb 17 (Reuters) - Cadence Design Systems [(CDNS.O), opens new tab] beat quarterly r ...

Market Overview - U.S. equity markets ended a volatile session on February 17th, 2026, with major indexes achieving modest gains despite significant intraday fluctuations, driven by optimism in financial sectors and concerns over the sustainability of the AI boom [1] - The S&P 500 rose 7.05 points (0.1%) to 6,843.22, the Dow Jones Industrial Average added 32.26 points (0.1%) to 49,553.19, and the Nasdaq Composite gained 31.71 points (0.1%) to 22,578.38 [2] Market Volatility - The CBOE Volatility Index (VIX) declined by 1.1% to 20.60, indicating elevated volatility compared to earlier in the year, with trading volume slightly below the 20-session average, reflecting caution among institutional investors ahead of key earnings reports [3] Corporate News and Stock Movements - Nvidia (NVDA) had a volatile session but stabilized after Citi reiterated its "Buy" rating ahead of its earnings release on February 25th [4] - Alphabet (GOOGL) fell 1.2% due to concerns about AI disrupting traditional software and search markets [4] - General Mills (GIS) shares dropped 7% after the company warned of increasing consumer unease due to inflation, cutting its 2026 profit forecast [5] - Genuine Parts (GPC) plunged 14.6% following a disappointing quarterly report and plans to split into two publicly traded companies by early 2027 [5] - Paramount Global (PARA) rose 4.9% amid M&A activity, while Warner Bros. Discovery (WBD) shares gained 2.7% as Paramount was allowed to submit a counter bid against Netflix [6] - Albemarle (ALB) saw an increase after Bank of America upgraded the lithium producer to "Buy," citing stabilized spot prices for lithium [6] Economic Data - The Consumer Price Index (CPI) rose 0.2% in January, slightly better than the 0.3% consensus estimate, with year-over-year inflation at 2.4% [7] - Food inflation spiked 7.3% in January, continuing to pressure consumer sentiment, while the Homebuilders Confidence survey improved to 38 for February, still below historical averages [7] Upcoming Events - Investors are monitoring upcoming earnings reports from Palo Alto Networks (PANW) and Toll Brothers (TOL), with Walmart (WMT) set to report on Thursday, which will provide insights into consumer health [8] - The market is also awaiting the Personal Consumption Expenditures (PCE) price index, which is expected to influence future interest rate policy decisions [8]

Exhibit 99.02 CADENCE REPORTS FOURTH QUARTER AND FISCAL YEAR 2025 CADENCE DESIGN SYSTEMS, INC. CFO COMMENTARY Key Takeaways for 2025 FY 2026 Outlook Financial Results Webcast FY 2025 KEY Our Q4 2025 financial results webcast will begin February 17, 2026 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on February 17, 2026 until 5:00 p.m. (Pacific) on March 17, 2026. METRICS February 17, 2026 Cadence Q4 and Fiscal Y ...

Market Overview - The U.S. markets closed with a narrow majority of stocks declining, with 51.7% (2,868 issues) down, while major indexes saw modest gains: Nasdaq (+0.14%), S&P 500 (+0.10%), and Dow (+0.07%) [2] - The Russell 2000 experienced a slight decline of about a tenth of a point [2] Sector Performance - Only three S&P 500 sectors finished in the green: real estate (+1%), financials (+0.99%), and industrials (+0.45%) [3] Earnings Reports - A number of companies reported earnings, with many showing declines in stock prices despite the market being balanced between advancers and decliners. Notable companies and their performance include: - Palo Alto Networks Inc. (PANW): Market Cap $131.61 billion, P/E 103.30, Price $162.87, Change -2.44% [4] - Cadence Design Systems, Inc (CDNS): Market Cap $77.53 billion, P/E 73.49, Price $284.81, Change -4.89% [4] - Republic Services, Inc. (RSG): Market Cap $68.98 billion, P/E 33.12, Price $222.84, Change -0.15% [4] - EQT Corp (EQT): Market Cap $36.07 billion, P/E 19.72, Price $57.80, Change -1.53% [4] - Kenvue Inc. (KAUE): Market Cap $35.52 billion, P/E 24.92, Price $18.54, Change -0.86% [4] Notable Movers - Masimo Corp was the top performer, increasing by 34.5% after Danaher announced an acquisition for $9.9 billion, or $180 per share [6] - IPG Photonics Corp saw a decline of 14.7% following a strong earnings report, indicating a pullback from recent highs [7]