Cadence Design Systems Inc. (NASDAQ:CDNS)

The quarterly data reveals significant variability in both revenue and expense components over the observed periods, reflecting dynamic operational and market conditions.

Revenue Trends

Total revenue shows a generally upward trend from around $618 million in March 2020 to peaks exceeding $1.35 billion in late 2024, indicating strong growth. Revenue from the product and maintenance segment consistently dominates and exhibits substantial growth, particularly rising from $581 million in early 2020 to over $1.23 billion by mid-2025. Services revenue also increases, though more moderately and with more fluctuations, reaching over $130 million by mid-2025 from approximately $36 million initially.

Cost of Revenue and Gross Margin

Cost of revenue follows an increasing pattern roughly proportional to revenue growth, rising significantly from about $74 million to nearly $184 million in mid-2025. The cost components for product/maintenance and services display similar upward movement, with occasional variability in certain quarters. Despite rising costs, gross margin expands in absolute terms from $543 million in early 2020 to over $1.09 billion by the end of 2025, although some quarterly dips suggest fluctuating efficiency or cost management challenges.

Operating Expenses

Marketing and sales expenses steadily increase from roughly $126 million to about $201 million, reflecting aggressive market engagement or expansion efforts. Research and development (R&D) expenses remain consistently high throughout the periods, increasing from approximately $242 million to over $442 million, underlining a sustained investment in innovation and product development. General and administrative costs show variability but a rising trend, indicating growing operational complexity. Amortization of acquired intangibles remains relatively stable with a slight upward drift, which may reflect ongoing amortization schedules.

Profitability and Income Measures

Income from operations exhibits substantial growth, rising from around $139 million to peaks exceeding $456 million, indicating improving core operational profitability. Income before taxes mirrors this trend, although some quarters show a decline likely influenced by non-operating items. Provision for income taxes fluctuates significantly, with some quarters showing negative values (indicating tax benefits or adjustments) and others large positive provisions, reflecting variability in tax positions and possibly discrete tax events.

Net Income

Net income generally trends upward, ascending from approximately $124 million early on to highs over $340 million in late 2024. However, some quarters late in the timeline reveal sharp declines, illustrating volatility that may be linked to tax provisions, one-time expenses, or other non-operating factors.

Other Financial Insights

Interest expense remains present and somewhat variable, generally increasing over time, indicating elevated borrowing or financing costs. Notably, there is a significant loss recorded related to contingent liability in the most recent quarter, which impacts financial results negatively. Also, restructuring charges show minor sporadic impacts, usually small but with an outlier around Q3 2024, indicating occasional organizational or operational changes.

Overall, the company demonstrates strong revenue expansion, particularly in its core product segment, with cost growth largely in line with revenues. Investment in R&D and sales is robust, supporting growth but also exerting pressure on operating margins. Profitability is strong but subject to occasional volatility driven by tax effects, interest expenses, and exceptional items such as contingent liabilities and restructuring charges.