The acquisition of BETA CAE Systems International AG in the second quarter of fiscal 2024 is contributing to revenue, primarily classified as product and maintenance within the System Design and Analysis category. This indicates successful integration and revenue synergy from the acquisition.

Revenue growth is attributed to both existing customers' continued investment in complex designs and increased revenue from IP service offerings. This suggests a balanced growth strategy leveraging both established and emerging product lines.

Demand for software product offerings contributed to revenue growth across all geographies. In addition, growth from hardware and IP product offerings contributed to increased revenue in the United States.

The company has initiated restructuring plans, most recently in August 2024, to better align resources with its business strategy. While benefits are anticipated, the success and timing are based on management's estimates.

The company continues to invest in attracting and retaining talent dedicated to research and development activities and technical sales support, including additional headcount from acquisitions. This reflects a commitment to innovation and customer service.

The CEO and CFO have concluded that disclosure controls and procedures were effective as of March 31, 2025, providing reasonable assurance that information is recorded, processed, summarized, and reported accurately and timely.

The company acknowledges exposure to foreign currency risk, stating that fluctuations in operating expenses outside the United States are not generally moderated by corresponding fluctuations in revenue. The company enters into forward exchange contracts to mitigate these risks.

The company acknowledges the impact of expanded trade control laws and regulations, including export control restrictions concerning advanced node IC production in China. While the impact is currently expected to be limited, it remains a risk factor.

The company is exposed to interest rate fluctuations on its 2024 Credit Facility, although there were no borrowings outstanding as of March 31, 2025. This remains a potential risk if borrowings increase in the future.

Cadence's revenue is well diversified, with no single customer accounting for 10% or more of total revenue during the three months ended March 31, 2025 or March 31, 2024. This reduces reliance on any one customer.

Cadence's customers are primarily concentrated within the semiconductor and electronics systems industries, indicating a focus on specific sectors.

In certain foreign countries where products are priced in U.S. dollars, a decrease in value of the local currency relative to the U.S. dollar results in an increase in prices for Cadence's products compared to competitors priced in local currency, making it less competitive.

Total operating expenses increased by 12% year-over-year, driven by increases in research and development and marketing and sales. This suggests continued investment in innovation and market expansion.

General and administrative expenses decreased due to decreased legal and consulting services associated with acquisition-related activities. This suggests improved efficiency in managing administrative costs.

Hardware product costs increased during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to increased installations of our hardware products. This suggests a shift in product mix towards hardware, which has higher costs.

Research and development expense increased by 16%, reflecting a continued commitment to innovation and development of new technologies.

As part of the ISD strategy, Cadence invests in and acquires complementary businesses, joint ventures, services and technologies and IP rights. The recent acquisition of BETA CAE reflects this strategy.

Cadence has integrated the multiphysics domain (also known as “computational fluid dynamics,” or “CFD”) with its EDA solutions. This provides customers with complete system-level design and analysis solutions, indicating a focus on advanced capabilities.

The company continues to repurchase shares under its publicly announced program, with $477 million remaining available as of March 31, 2025. This reflects a commitment to returning capital to shareholders.

The issuance of $2.5 billion in senior notes provides increased financial flexibility for strategic initiatives, although it also increases interest expense.

Cash used for investing activities decreased, primarily due to a decrease in payments for business combinations and purchases of property, plant and equipment. This suggests a focus on internal investments and infrastructure.

Cadence has been responding to subpoenas received from BIS in February 2021 and DOJ in November 2023 regarding sales and business activity in China. In December 2024, Cadence began discussions with BIS and DOJ regarding their preliminary findings and a potential resolution.

The company is actively monitoring macroeconomic and geopolitical conditions, including economic downturns, currency volatility, inflation, and trade controls. These factors could impact business performance.

The currently enacted Pillar Two Model Rules did not have a material impact to our provision for income taxes for the three months ended March 31, 2025.