Cadence Design (CDNS) Q2 Earnings: Outlook and Potential

by MarketNewsData

Earnings Date: Monday, July 29, 2025 (After Market Close)
Expected EPS: $1.22
Expected Revenue: $1.06 billion

Performance Recap:

  • Q1 2025:
    • Revenue: $1.01B (+5.6% YoY)
    • EPS: $1.17 (+5.4% YoY)
    • Guidance for Q2: Revenue $1.05B–$1.07B, EPS $1.20–$1.24

Key Theme: Export Restrictions Volatility

Cadence’s stock faced notable pressure earlier in 2024 when the U.S. government expanded export restrictions on EDA tools to China, leading to fears of revenue disruption. On March 18, 2024, following the Commerce Department’s tighter rules, CDNS dropped sharply:

  • CDNS stock fell over 9%, closing around $275 from prior levels near $302.

However, in late May 2024, the U.S. clarified the rules and eased some restrictions, especially for legacy nodes and mature design software. The market viewed this as a positive signal:

  • CDNS rebounded, rallying back to $307+ by early June.

The stock has since recovered to around $312, though volatility remains tied to geopolitical headlines and AI/chip policy updates.

What to Watch in Q2:

  • China exposure commentary: Any updated commentary on licensing/export headwinds
  • AI-driven demand: Cadence’s tools are critical to AI chip design — look for updates on hyperscaler and foundry customers
  • Gross margin stability: Margins last quarter were 91.5%, flat YoY
  • Outlook for FY25: Any raise in full-year guide could fuel upside

Stock Performance YTD:

  • CDNS is up ~16% YTD, outperforming some semiconductor design peers, but lagging behind the broader AI hardware plays.

Bottom Line:
Cadence is expected to report modest QoQ growth, with the Street looking for a steady performance amid past regulatory pressures. A beat with an upward guidance revision could send the stock toward its all-time highs ($327). However, any caution around China or enterprise demand could weigh on sentiment.

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