Cadence's Q1 Earnings & Revenues Surpass Estimates, Surge Y/Y

Core Insights - Cadence Design Systems (CDNS) reported strong first-quarter 2025 results, with non-GAAP EPS of $1.57, exceeding estimates by 5.4$1.242 billion, surpassing estimates by 0.3% and increasing 23% year over year, driven by robust demand for solutions [2] Financial Performance - The company ended the quarter with a backlog of $6.4 billion and current-remaining performance obligations of$3.2 billion, indicating stable customer investment in next-generation designs [3] - Management upgraded its 2025 revenue outlook to $5.15-$5.23 billion, reflecting an 11.8% growth from the previous year, with non-GAAP EPS expected between $6.73 and$6.83, a 12.2% increase [5] Segment Performance - Product & Maintenance revenues, accounting for 89.5% of total revenues, rose 21.7% year over year to $1.11 billion, while Services revenues increased 36.5$131 million [6] - Core EDA, Intellectual Property (IP), and Systems Design & Analysis contributed 71%, 14%, and 15% to total revenues, respectively, with the Systems Design & Analysis segment seeing a 50% revenue increase [7] Strategic Developments - The Cadence.ai portfolio is gaining traction, with over 1000 tapeouts year to date and a partnership expansion with NVIDIA to enhance AI solutions [4] - Recent acquisitions, including BETA CAE and Secure-IC, are expected to bolster the company's offerings in design and IP solutions [9][10][11] Margin and Cash Flow - Non-GAAP gross margin contracted slightly to 88.4%, while non-GAAP operating margin expanded to 41.7% [12] - The company generated an operating cash flow of $487 million and free cash flow of$464 million, with plans for $175 million in share repurchases in the second quarter [14] Outlook - For Q2 2025, revenues are estimated between$1.25-$1.27 billion, with non-GAAP EPS anticipated between$1.55 and $1.61 [16][17] - The company expects to utilize at least 50% of its free cash flow for share repurchases in 2025 [15]