Cadence's Q2 2025 Earnings Call: Navigating Contradictions in China Revenue, Tariffs, and Recurring Revenue Growth

China revenue growth expectations, Cadence's exposure to U.S. tariffs, recurring revenue growth, hardware revenue and visibility, and China revenue impact are the key contradictions discussed in Cadence Design Systems' latest 2025Q2 earnings call.



Revenue Growth and AI-Driven Product Demand:
- Cadence Design Systems reported 20% revenue growth and 29% non-GAAP EPS growth year-over-year for Q2 2025.
- Growth was driven by strong demand for their AI-driven product portfolio and strategic relevance across their customer base.

Core EDA Revenue and Proliferation:
- Cadence's core EDA revenue grew 16% year-over-year in Q2 2025.
- This increase was due to the proliferation of their digital full flow at advanced nodes and the use of Cadence Cerebrus in over 50% of advanced nodes designs.

Hardware Systems Momentum:
- The company's hardware systems revenue reached its best quarter ever, with strong demand from AI, HPC, and automotive customers.
- This momentum was driven by the essential role of Palladium and Protium X3 platforms in designing major AI chips.

IP and System Design Growth:
- IP business grew by more than 25% year-over-year in Q2 2025, driven by AI and HPC use cases.
- The growth was supported by partnerships with advanced foundries and the introduction of new memory solutions like LPDDR6.

Settlement with U.S. Government Agencies:
- Cadence entered into a settlement with the U.S. DOJ and BIS, resolving investigations into China sales from 2015 to 2021.
- This settlement allows the company to move forward with a focus on innovation and shareholder value creation.