Income Statement
The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.
Cadence Design Systems Inc., consolidated income statement
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The income statement reveals a consistent pattern of growth across key financial items from 2021 through 2025. Revenue demonstrates a steady increase, driven primarily by growth in product and maintenance revenue, with a notable acceleration in services revenue from 2023 onwards. While cost of revenue also increased over the period, the gross margin expanded, indicating improved profitability from core operations. Operating income followed a similar upward trajectory, though the rate of increase slowed slightly in later years. Net income also exhibited consistent growth, though impacted by fluctuations in provision for income taxes.
- Revenue Growth
- Total revenue increased from US$2,988,244 thousand in 2021 to US$5,296,759 thousand in 2025, representing a compound annual growth rate of approximately 15.7%. Product and maintenance revenue consistently contributed the largest portion of revenue, while services revenue experienced a more rapid growth rate, particularly between 2022 and 2024.
- Cost of Revenue and Gross Margin
- Cost of revenue increased year-over-year, from US$-307,006 thousand in 2021 to US$-722,249 thousand in 2025. However, the growth in cost of revenue was outpaced by revenue growth, resulting in an expanding gross margin. The gross margin increased from US$2,681,238 thousand in 2021 to US$4,574,510 thousand in 2025.
- Operating Expenses
- Operating expenses, including marketing and sales, research and development, and general and administrative expenses, all increased over the five-year period. Research and development experienced the largest absolute increase, reflecting a continued investment in innovation. While these expenses grew, the growth in operating income was sufficient to maintain a healthy operating margin.
- Non-Operating Items
- Several non-operating items impacted net income. Interest expense increased significantly over the period, while interest income also showed substantial growth, partially offsetting the expense. Gains (losses) on investments and securities in NQDC trust were volatile, contributing both positive and negative impacts on income. A significant loss related to contingent liability was recorded in 2025, negatively impacting income before taxes. Losses on foreign exchange also became more pronounced in 2025.
- Net Income and Tax Rate
- Net income increased from US$695,955 thousand in 2021 to US$1,108,888 thousand in 2025. The provision for income taxes also increased substantially, reflecting the higher levels of income. The effective tax rate fluctuated, ranging from approximately 10.4% in 2021 to 38.8% in 2025, indicating potential changes in tax planning or jurisdictional mix.
Overall, the financial performance demonstrates a positive trend of revenue and profit growth. The company appears to be effectively managing its cost structure, as evidenced by the expanding gross margin. However, increasing operating expenses and fluctuations in non-operating items warrant continued monitoring. The substantial increase in the provision for income taxes and the contingent liability loss in 2025 are areas that require further investigation.
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