Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Cadence Design Systems Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2025	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Net income	1,108,888)	1,055,484)	1,041,144)	848,952)	695,955)
Depreciation and amortization	227,828)	196,935)	145,292)	132,088)	142,308)
Stock-based compensation	455,175)	391,219)	325,611)	270,439)	210,090)
(Gain) loss on divestitures and investments, net	(69,089)	(49,593)	(34,602)	5,425)	(580)
Deferred income taxes	66,048)	(128,737)	(36,512)	(107,606)	(43,178)
ROU asset amortization and change in operating lease liabilities	6,016)	(1,920)	451)	3,342)	(11,606)
Other non-cash items	7,166)	6,138)	6,570)	1,709)	2,171)
Receivables	(274,894)	(180,287)	(11,748)	(138,471)	2,014)
Inventories	(91,029)	(82,771)	(65,895)	(23,073)	(39,027)
Prepaid expenses and other	43,382)	(81,529)	39,015)	(38,927)	(34,342)
Other assets	(18,569)	11,866)	(45,784)	(933)	(7,133)
Accounts payable and accrued liabilities	184,897)	33,676)	5,415)	113,945)	67,356)
Deferred revenue	69,411)	66,478)	(21,583)	131,462)	100,731)
Other long-term liabilities	13,551)	23,592)	1,802)	43,542)	16,199)
Changes in operating assets and liabilities, net of effect of acquired businesses	(73,251)	(208,975)	(98,778)	87,545)	105,798)
Adjustments to reconcile net income to net cash provided by operating activities	619,893)	205,067)	308,032)	392,942)	405,003)
Net cash provided by operating activities	1,728,781)	1,260,551)	1,349,176)	1,241,894)	1,100,958)
Purchases of investments	(40,895)	(4,982)	(176,170)	(1,000)	—)
Proceeds from the sale and maturity of investments	140,281)	47,980)	64,775)	366)	128)
Proceeds from the sale of IP and other assets	11,500)	—)	—)	—)	—)
Purchases of property, plant and equipment	(141,871)	(142,542)	(102,337)	(123,215)	(65,298)
Purchases of intangible assets	—)	—)	(166)	(1,000)	(1,583)
Cash paid in business combinations, net of cash acquired	(429,538)	(737,574)	(198,351)	(613,785)	(226,201)
Net cash used for investing activities	(460,523)	(837,118)	(412,249)	(738,634)	(292,954)
Proceeds from revolving credit facility	—)	—)	50,000)	585,000)	—)
Payments on revolving credit facility	—)	—)	(150,000)	(485,000)	—)
Proceeds from the issuance of debt	—)	3,196,595)	—)	300,000)	—)
Payments of debt	—)	(1,350,000)	—)	—)	—)
Payments of debt issuance costs	—)	(23,828)	—)	(425)	(1,285)
Proceeds from issuance of common stock	145,901)	204,237)	132,957)	105,331)	87,772)
Stock received for payment of employee taxes on vesting of restricted stock	(169,842)	(237,737)	(136,396)	(111,864)	(117,982)
Payments for repurchases of common stock	(925,034)	(550,026)	(700,134)	(1,050,091)	(612,297)
Net cash provided by (used for) financing activities	(948,975)	1,239,241)	(803,573)	(657,049)	(643,792)
Effect of exchange rate changes on cash and cash equivalents	38,004)	(26,796)	(7,527)	(52,826)	(3,704)
Increase (decrease) in cash and cash equivalents	357,287)	1,635,878)	125,827)	(206,615)	160,508)
Cash and cash equivalents at beginning of year	2,644,030)	1,008,152)	882,325)	1,088,940)	928,432)
Cash and cash equivalents at end of year	3,001,317)	2,644,030)	1,008,152)	882,325)	1,088,940)

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 cash flow statement reveals a generally positive trend in net cash provided by operating activities over the five-year period, although with some fluctuation. Net income consistently increased from 2021 to 2025, contributing to this positive trend. However, investing and financing activities demonstrate more complex patterns, significantly impacting overall cash position.

Operating Activities: Net cash provided by operating activities increased from US$1,100,958 thousand in 2021 to US$1,728,781 thousand in 2025. This growth was not linear, with a slight decrease in 2024. Adjustments to reconcile net income to net cash provided by operating activities were substantial, peaking in 2021 at US$405,003 thousand and again in 2025 at US$619,893 thousand. These adjustments are largely driven by non-cash items such as stock-based compensation, depreciation, and changes in working capital. A notable increase in stock-based compensation is observed throughout the period, rising from US$210,090 thousand in 2021 to US$455,175 thousand in 2025. Changes in operating assets and liabilities were initially positive, contributing to cash flow, but became significantly negative in 2023, 2024, and 2025, offsetting some of the gains from net income and non-cash adjustments.
Investing Activities: Net cash used for investing activities was consistently negative throughout the period, ranging from US$292,954 thousand to US$837,118 thousand. The largest outflow occurred in 2024. Significant purchases of property, plant, and equipment were present each year, ranging from US$65,298 thousand to US$142,542 thousand. More substantial cash outflows were related to cash paid in business combinations, which decreased from US$226,201 thousand in 2021 to US$429,538 thousand in 2025. Proceeds from the sale and maturity of investments increased over time, reaching US$140,281 thousand in 2025. Purchases of investments also increased significantly in 2023.
Financing Activities: Net cash provided by (used for) financing activities exhibited substantial volatility. 2021 and 2022 saw net cash outflows, while 2024 experienced a significant net cash inflow of US$1,239,241 thousand, largely due to proceeds from the issuance of debt. Payments for repurchases of common stock were consistently negative, ranging from US$612,297 thousand to US$925,034 thousand, representing a significant use of cash. Proceeds from the issuance of common stock were also present each year, but were consistently lower than the amount spent on stock repurchases. The revolving credit facility was utilized in 2022 and 2023, providing cash inflows, but was subsequently paid down.
Cash Position: Despite the fluctuations in investing and financing activities, the company experienced an overall increase in cash and cash equivalents over the period, rising from US$928,432 thousand in 2021 to US$3,001,317 thousand in 2025. The largest increase occurred in 2024, coinciding with the significant debt issuance. The effect of exchange rate changes on cash and cash equivalents was relatively small, with a positive impact in 2025.

In summary, the company demonstrates strong operational cash generation, but its cash flow is significantly influenced by investment and financing decisions, particularly acquisitions and stock repurchases. The increased reliance on debt financing in 2024 is a notable trend, and the continued investment in stock repurchases represents a substantial cash outflow.

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Cadence Design Systems Inc. (NASDAQ:CDNS)

Cash Flow Statement