What Changed This Quarter
Live Blog Update #7 Published
← Back to Full Coverage: Live: Will Cadence Design Systems (CDNS) Beat Q4 Earnings Tonight?
-
Backlog stepped higher (now $7.8B vs the ~$7.0B record level you referenced pre-print), reinforcing durability.
-
Margins stayed firm: Q4 non-GAAP op margin essentially flat YoY, while FY25 margin expanded meaningfully.
-
Guidance clarity improved: FY26 outlook presented cleanly and explicitly excludes Hexagon, reducing modeling noise tonight.
All Updates from Live Coverage
Live
Overall Grade: A-
Cadence delivered a strong finish to 2025 with execution across most key metrics, though revenue fell slightly short. The $1.99 EPS beat and robust FY26 guidance of $5.9B–$6.0B revenue drove the 7% after-hours surge—a meaningful reversal after the stock fell 10.3% over the past month.
| Category | Grade | Notes |
|---|---|---|
| Revenue Performance | B+ | Q4 revenue $1.44B missed estimates but grew 6.2% YoY; FY25 up 14% |
| Earnings Beat/Miss | A | EPS beat by 2%, extending 6-quarter beat streak |
| Guidance Quality | A | FY26 outlook implies 11–13% growth; record $7.8B backlog |
| Margin Trends | A- | Q4 non-GAAP operating margin 45.8%, stable vs guidance |
| Cash Flow | A+ | Operating cash flow $1.73B, up 37% YoY |
| Management Confidence | A | Repurchased $925M shares; planning ~50% of FCF for buybacks in FY26 |
Live
Cadence proved the AI design cycle is still in full force — and it’s converting into both growth and margins.
Revenue accelerated, EPS beat, margins held near peak levels, and backlog climbed to a new record. That combination matters more than any single metric. Investors were worried that hardware mix could pressure profitability or that AI enthusiasm might be peaking. Instead, Cadence delivered operating leverage and reinforced visibility into 2026.
The most important signal was not the Q4 beat — it was the clean FY26 setup. Revenue approaching $6 billion with mid-40% non-GAAP margins tells you the model remains structurally strong. And by excluding Hexagon from guidance, management avoided adding noise to what was otherwise a clear growth story.
The stock was weak into the print because the market was recalibrating expectations for the entire EDA space.
Live
| KPI | Latest | What it signals |
|---|---|---|
| Backlog | $7.8B (record) | Visibility remains a major pillar of the bull case |
| RPO expected to be recognized next 12 months | $3.8B | Near-term revenue support looks solid |
| Q4 Non-GAAP Op Margin | 45.8% | Margins held despite mix concerns |
| FY25 Non-GAAP Op Margin | 44.6% (up vs 2024) | Operating leverage remains intact |
-
Core EDA +13% (FY25) driven by hyperscaler adoption and AI-driven product proliferation.
-
Hardware: another record year, 30+ new customers, with “7 of top 10” buying both Palladium Z3 and Protium X3 — supports the “AI infrastructure buildout” narrative.
-
IP: grew ~25% YoY in 2025 (HBM/UCIe/PCIe/DDR/SerDes), which matters because IP is a key attach lever as advanced packaging ramps.
-
System Design & Analysis +13%, helped by 3D-IC and simulation demand for AI/HPC.
Live
Two quotes frame the quarter the way investors want to hear it:
-
CEO Anirudh Devgan: “Strong customer demand for our expanding AI-driven product portfolio… positions us well to capture the massive opportunities in the AI era.”
-
CFO John Wall: “With strong Q4 bookings, we began 2026 with a record backlog of $7.8 billion and excellent momentum.”
Translation: they’re leaning hard into (1) AI-driven product differentiation and (2) bookings/backlog visibility as the foundation for FY26.
Live
A big part of the huge after-hours jump comes from future guidance.
Cadence’s FY26 outlook:
| FY26 Guide | Company Outlook |
|---|---|
| Revenue | $5.9B–$6.0B |
| Non-GAAP Op Margin | 44.75%–45.75% |
| Non-GAAP EPS | $8.05–$8.15 |
| GAAP Op Margin | 31.75%–32.75% |
Guidance excludes the pending Hexagon D&E acquisition impact, keeping the core trajectory clean and easier to underwrite.
Live
Cadence delivered the clean “beat plus guide” combo investors were looking for, and the stock is responding accordingly.
The stock immediately up 7% after-hours.
| Metric | Reported | Consensus | Beat/Miss |
|---|---|---|---|
| Q4 Revenue | $1.440B | $1.42B | ✅ Beat |
| Q4 Non-GAAP EPS | $1.99 | $1.91 | ✅ Beat |
| FY25 Revenue | $5.297B | $5.28B | ✅ Beat |
| FY25 Non-GAAP EPS | $7.14 | $7.04 | ✅ Beat |
Why the stock is up: this wasn’t just a modest Q4 beat — Cadence paired it with strong FY26 guidance and reinforced visibility with record backlog.
Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
Top Gaining Stocks
Top Losing Stocks