Cadence Design Systems Inc. (NASDAQ:CDNS)

Gross profit margin

The gross profit margin data begins from December 31, 2020, showing a consistently high level above 88%. It rose gradually from 88.61% to a peak around 89.87% by mid-2022. Afterward, there is a gradual decline from late 2022 through mid-2025, reaching approximately 85.57% by June 2025. This indicates a strong but slightly deteriorating efficiency in controlling production costs relative to revenue over the recent periods.

Operating profit margin

Operating profit margin exhibits a generally positive trend from the end of 2020 through 2022, improving from 24.06% to a high of 30.81% in December 2022. Post this peak, the margin fluctuates moderately but remains relatively stable around high twenties, ending at approximately 27.71% by June 2025. This reflects sustained operating efficiency and successful management of operating expenses, with some minor variability in later periods.

Net profit margin

The net profit margin improved steadily from December 2020 (22.02%) through late 2023, reaching a peak of 25.68%. Following this peak, there is a moderate downward trend through 2024 and into mid-2025, declining to 19.88%. This pattern suggests that while overall profitability was strengthened initially, factors such as rising costs, taxes, or financing expenses may have exerted pressure on net income in the most recent quarters.

Return on Equity (ROE)

The ROE values display an upward trajectory from December 2020 (23.69%) to a maximum nearing 30.75% in late 2023, indicating effective use of shareholders’ equity to generate profits during this period. Subsequently, a notable decline occurs from late 2023 onward, falling to about 20.21% by mid-2025. This suggests a weakening in equity profitability, potentially due to reduced net income or increased equity base without corresponding profit growth.

Return on Assets (ROA)

ROA rises from approximately 14.95% at the end of 2020 to a peak of about 18.36% in early 2024. Afterwards, there is a marked decrease through 2024 and into mid-2025, with the ratio dropping to near 10.64%. This indicates that asset utilization to generate earnings improved initially but has weakened substantially in recent quarters, possibly reflecting lower net profit levels or increased asset base.

The financial data over the reviewed periods reveals several important trends regarding revenue, gross margin, and gross profit margin percentages.

Revenue

Revenue exhibits a general upward trend across the quarters. Starting from approximately $618 million in the first quarter of 2020, revenue has increased steadily to exceed $1.27 billion by the second quarter of 2025. Despite some fluctuations, such as a slight decline in the third quarter of 2025 compared to the prior quarter, the overall progression shows consistent growth over time. This indicates expanding sales or service delivery performance within the company.

Gross Margin (US$ in thousands)

Gross margin in absolute terms follows a similar trajectory to revenue, increasing from around $543 million in the first quarter of 2020 to over $1.09 billion by the second quarter of 2025. The growth demonstrates the company’s ability to scale its production or service costs in a manner that supports higher gross profits. Annual seasonal variations are apparent, with margins typically peaking during the fourth quarter, likely reflecting strong end-of-year sales.

Gross Profit Margin (%)

The gross profit margin percentage data, available from the fourth quarter of 2020 onward, shows a declining trend over the analyzed quarters. Initially stable near 89.6% to 89.8%, the gross profit margin percentage gradually decreases to approximately 85.6% by the second quarter of 2025. This decline suggests that while revenues and gross margins in absolute amounts are increasing, the company’s cost of goods sold or related expenses are growing at a faster rate relative to revenue. Consequently, profitability at the gross level is experiencing slight compression.

Overall Interpretation

The company demonstrates strong revenue and gross margin growth over the analyzed timeframe. However, the decreasing gross profit margin percentage signals efficiency or cost management pressures, possibly reflecting increased input costs, pricing adjustments, or competitive factors impacting margins. Management may need to focus on product mix, cost controls, or pricing strategies to stabilize or improve profitability ratios despite continued sales growth.

Revenue Trends

Revenue has generally exhibited a steady upward trajectory throughout the periods analyzed. Starting from approximately 618 million USD in March 2020, revenue increased consistently each quarter with some fluctuations, reaching over 1.35 billion USD in December 2024. Notably, there were significant jumps in revenue observed in the quarters ending April 2022 and December 2024, indicating potential periods of strong sales performance or new business growth.

Income from Operations Trends

Income from operations followed a pattern somewhat parallel to revenue but with greater volatility. Beginning near 139 million USD in March 2020, income saw gradual growth until Q4 2021, after which it surged notably in Q2 2022 to over 318 million USD. This was followed by a downtrend until the end of 2022, after which income again increased substantially peaking in Q4 2024 at approximately 457 million USD. However, the most recent quarters show a decline, suggesting recent pressures on operational income despite earlier strong gains.

Operating Profit Margin Analysis

The operating profit margin, available from Q4 2020 onwards, shows an overall stable and positive trend. Starting around 24%, margins increased gradually to peak around 30.8% in Q4 2022, maintaining around 28-30% thereafter. This suggests effective cost management and operational efficiency improvements over the years. Some minor fluctuations in margin percentages reflect changing cost structures or revenue mix but do not indicate significant deterioration in profitability.

Overall Insights

The data illustrates a company experiencing healthy growth in revenue and operational profitability over the analyzed time frame. Despite some quarters showing fluctuations or short-term declines in income from operations, the overall upward trend in income and robust operating margins suggest strong underlying business performance. The ability to increase revenue significantly while maintaining or slightly improving margins points to scalable operations and effective cost controls. However, the recent decline in operating income in the last two quarters may warrant monitoring for potential emerging issues or market challenges.

The financial data reveals several noteworthy trends across the reported quarters. Revenue exhibits a general upward trajectory from March 2020 through mid-2025, with intermittent fluctuations. Starting at approximately $618 million in the first quarter of 2020, revenue rises steadily to peak near $1.36 billion by the end of 2024, reflecting consistent growth over the five-year horizon. Despite short-term dips, notably in mid-2022 and late 2024, the overall increase suggests sustained demand and expansion in operations.

Net income similarly demonstrates growth but with more volatility. Beginning at roughly $124 million in early 2020, net income climbs with significant oscillations between quarters. There are periods of strong performance, such as the surge to over $323 million in December 2023, followed by contractions, evidenced by a decline to approximately $160 million by mid-2025. This pattern indicates variability possibly due to operational costs, market conditions, or strategic investments impacting profitability.

The net profit margin, available from late 2020 onwards, remains relatively stable within a range of approximately 19.9% to 25.7%. It peaks in mid-2024 at around 25.7%, suggesting improved efficiency or pricing power during this phase. However, a declining trend is observable toward mid-2025, with the margin dropping below 20%, which could point to rising costs or pricing pressures affecting profitability despite growing revenues.

Revenue Trends

Consistent growth from $618 million to over $1.35 billion over five years, with short-term fluctuations.

Net Income Trends

General upward trend with strong quarterly volatility, indicating sensitivity to operational or market factors.

Net Profit Margin Trends

Stable margins around 20–25%, peaking in mid-2024 before declining in the latest quarters, suggesting margin pressures amidst revenue growth.

The analysis of quarterly financial data reveals several key trends related to net income, stockholders’ equity, and return on equity (ROE) over multiple periods.

Net Income

Net income demonstrates an overall upward trend with fluctuations across the quarters. Initial values in early 2020 showed moderate growth, with net income increasing from approximately 124 million USD in March 2020 to around 176 million USD by the end of 2021. A notable spike occurred in the first quarter of 2022, reaching over 235 million USD, followed by a decline and subsequent recovery in late 2022 and early 2023. The highest recorded net income appears in the first quarter of 2025, peaking at approximately 340 million USD, although a significant drop follows in the next quarter. This pattern suggests some volatility in profitability but an overall growth trajectory in net income.

Stockholders’ Equity

Stockholders’ equity exhibits a steady increase throughout the periods analyzed. Beginning at around 2.16 billion USD in March 2020, equity consistently grows across quarters, crossing 3 billion USD by late 2023 and exceeding 5 billion USD by mid-2025. Despite minor fluctuations, the general pattern reflects strong capitalization and potential reinvestment of earnings or successful equity financing activities. This consistent growth supports the company’s balance sheet solidity over time.

Return on Equity (ROE)

ROE values, available from late 2020 onwards, consistently remain robust, generally ranging between 20% and 31%. ROE peaks near 31% in early 2023 but exhibits a gradual decline starting in 2024, dropping to approximately 20% by mid-2025. This trend indicates strong profitability relative to equity initially, with some attenuation in efficiency or profitability in the most recent periods analyzed.

Overall, the financial data points to a company experiencing growth in net income and stockholders’ equity, supported by high but slightly declining returns on equity in the later periods. The net income volatility suggests sensitivity to either market conditions or operational factors, whereas the solid equity base underlines sustained investor confidence and financial stability.

The analyzed quarterly data reveals several trends in financial performance and asset base over the examined periods.

Net Income

Net income demonstrated an overall upward trend from early 2020 through late 2024, with fluctuations across quarters. Starting at approximately $124 million in March 2020, net income rose significantly, reaching a peak of roughly $324 million in December 2023. After this peak, there was a sharp decline towards mid-2025, falling to about $160 million. Despite this variability, the general direction indicates growth in profitability over the long term, punctuated by periods of volatility in some quarters.

Total Assets

Total assets showed consistent growth throughout the entire period, indicating expansion of the company’s asset base. Beginning near $3.77 billion in March 2020, total assets increased steadily, surpassing $9 billion by the end of the observed timeline in mid-2025. Notable jumps occurred between 2023 and 2024, with assets rising sharply from approximately $5.17 billion to over $9 billion. This suggests substantial investment or acquisitions leading to asset base enhancement.

Return on Assets (ROA)

ROA figures, available starting in December 2020, reveal a relatively strong and stable return profile initially, fluctuating mostly between 15.8% and 18.36% through late 2023. This period signifies efficient use of assets to generate earnings. Post-2023, there is a declining trend in ROA, dropping from 14.61% to around 10.64% by mid-2025, suggesting reduced profitability relative to the expanding asset base in the most recent periods. The decrease may be connected to the sharp net income decline observed simultaneously, reflecting challenges in maintaining asset efficiency or profitability.

In summary, the data illustrates a company that has expanded its asset base significantly over the reported quarters, accompanied by increasing net income subject to some volatility. Profitability, as measured by ROA, remained robust initially but showed signs of weakening in the latter periods, highlighting potential pressures on operational efficiency or market conditions impacting returns on newly acquired or invested assets.