Common-Size Income Statement
Quarterly Data
Cadence Design Systems Inc., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2026-06-30), 10-Q (reporting date: 2026-03-31), 10-K (reporting date: 2025-12-31), 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-10-01), 10-Q (reporting date: 2022-07-02), 10-Q (reporting date: 2022-04-02), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-02), 10-Q (reporting date: 2021-07-03), 10-Q (reporting date: 2021-04-03).
The financial performance exhibits a gradual shift in revenue composition and a compression of gross margins over the analyzed period, though overall profitability remains robust despite periodic non-recurring expenses.
- Revenue Mix and Cost of Sales
- A structural transition in revenue sources is evident. Product and maintenance revenue, which initially represented approximately 95% of total revenue, experienced a decline to a range between 89% and 92% by 2025 and 2026. Conversely, services revenue increased from roughly 5% to peaks above 10%. This shift correlates with an increase in the cost of revenue; gross margins, which peaked at 90.98% in December 2021, trended downward to 84.90% by June 2026. This erosion is primarily driven by a rise in the cost of product and maintenance and an increase in the cost of services as a percentage of revenue.
- Operating Expense Trends
- Research and development (R&D) remains the most significant operating expenditure, consistently consuming between 28% and 39% of revenue. While R&D spending showed periodic fluctuations, it generally maintained a high baseline to support innovation. Marketing and sales expenses demonstrated relative stability, typically ranging from 14% to 19%, with a slight downward trend in the latter half of the period. General and administrative costs remained lean, generally fluctuating between 5% and 8% of revenue.
- Operating Income and Anomalies
- Income from operations has remained strong, generally fluctuating between 23% and 35%. However, a significant outlier occurred on June 30, 2025, where operating income dropped to 18.96%. This decline is directly attributable to a non-recurring loss related to a contingent liability, which impacted the result by 10.08% of revenue. Outside of this event, the company maintained a consistent ability to convert revenue into operating profit.
- Net Profitability and Bottom Line
- Net income as a percentage of revenue typically fluctuated between 19% and 30%. The volatility in the bottom line is influenced by varying tax provisions and other net income/expenses. The impact of the aforementioned contingent liability in mid-2025 also resulted in the lowest net income margin of the period at 12.55%. Recovery was observed in subsequent quarters, with net income returning to a range of 21% to 27%.
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