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CDNS, Cadence Design Systems Inc.

Software asset-light

Cadence is a global technology leader that develops computational, AI-driven software, accelerated hardware, and silicon intellectual property products and solutions.

Our products and solutions empower our customers to design and verify and bring to life new and innovative products.

Strategy Designing even the simplest electronic systems is a sophisticated process that requires highly skilled engineers with specialized expertise.

Latest annual: FY2025 10-K

CDNS · Cadence Design Systems Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$5.3B

+14.1% YoY · 18% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $5.5B 5-yr avg $4.1B

Gross margin 99%

Operating margin 28.3% 5-yr avg 28.4%

ROIC 15% 5-yr avg 30%

Owner-earnings margin 26% 5-yr avg 29%

Free cash flow margin 26% 5-yr avg 29%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What moves the needle: Operating margin has run about 24% through the cycle, a solid margin the cost base and competition set as much as the price does. Stock-based pay runs about 7.8% of sales, a real and recurring claim on owners that the GAAP margin understates. Read this kind of business on retention and the cost of growth. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has run high across the record (median 28%, above 15% in 9 of 9 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 28% of revenue reaches owners as cash, consistently, and customers and suppliers fund the business through negative working capital. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.

Every line is arithmetic on the company's filings, shown in full in the sections below.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
										Income statement
$1.8B	$1.9B	$2.1B	$2.3B	$2.7B	$3.6B	$4.1B	$4.6B	$5.3B	$5.5B	RevenueRevenue
7%	7%	6%	6%	6%	7%	6%	6%	6%	6%	SG&A / revenueSG&A/rev
$245M	$324M	$396M	$492M	$646M	$1.1B	$1.3B	$1.4B	$1.5B	$1.6B	Operating incomeOp. inc.
13.5%	16.7%	18.5%	21.1%	24.1%	30.1%	30.6%	29.1%	28.2%	28.3%	Operating marginOp. mgn
$203M	$204M	$346M	$989M	$591M	$849M	$1.0B	$1.1B	$1.1B	$1.2B	Net incomeNet inc.
14%	35%	8%	—	7%	19%	19%	24%	27%	27%	Effective tax rateTax rate
										Cash flow & returns
$445M	$471M	$605M	$730M	$905M	$1.2B	$1.3B	$1.3B	$1.7B	$1.6B	Operating cash flowOp. cash
$120M	$116M	$119M	$123M	$146M	$132M	$145M	$197M	$228M	$260M	DepreciationDeprec.
$13M	$21M	($27M)	($564M)	($29M)	($10M)	($163M)	($383M)	($63M)	($319M)	Working capital & otherWC & other
$54M	$58M	$62M	$75M	$95M	$123M	$102M	$143M	$142M	$168M	CapexCapex
3.0%	3.0%	2.9%	3.2%	3.5%	3.5%	2.5%	3.1%	2.7%	3.0%	Capex / revenueCapex/rev
$391M	$413M	$543M	$655M	$810M	$1.1B	$1.2B	$1.1B	$1.6B	$1.4B	Owner earningsOwner earn.
21.5%	21.2%	25.4%	28.0%	30.2%	31.4%	30.5%	24.1%	30.0%	25.9%	Owner earnings marginOE mgn
$391M	$413M	$543M	$655M	$810M	$1.1B	$1.2B	$1.1B	$1.6B	$1.4B	Free cash flowFCF
21.5%	21.2%	25.4%	28.0%	30.2%	31.4%	30.5%	24.1%	30.0%	25.9%	Free cash flow marginFCF mgn
$42M	$143M	$0	$338K	$198M	$614M	$198M	$738M	$430M	$2.5B	AcquisitionsAcquis.
$960M	$100M	$250M	$306M	$380M	$1.1B	$700M	$550M	$925M	—	BuybacksBuybacks
23%	22%	33%	28%	32%	35%	38%	23%	22%	15%	ROICROIC
27%	21%	27%	47%	24%	31%	31%	23%	20%	18%	Return on equityROE
27%	21%	27%	47%	24%	31%	31%	23%	20%	18%	Retained to equityRetained/eq
										Balance sheet
$468M	$693M	$533M	$705M	$928M	$887M	$1.1B	$2.8B	$3.2B	$1.6B	Cash & investmentsCash+inv
$157M	$190M	$297M	$305M	$338M	$487M	$489M	$680M	$945M	$1.0B	ReceivablesReceiv.
$39M	$33M	$28M	$56M	$76M	$128M	$182M	$258M	$304M	$318M	InventoryInvent.
$4M	$5M	$5M	$317M	$350M	$557M	$577M	$633M	$857M	$864M	Accounts payablePayables
$192M	$219M	$320M	$43M	$64M	$58M	$94M	$305M	$392M	$488M	Operating working capitalOper. WC
$702M	$980M	$951M	$1.2B	$1.5B	$1.7B	$2.0B	$4.0B	$4.7B	$3.2B	Current assetsCur. assets
$586M	$642M	$709M	$672M	$797M	$1.3B	$1.6B	$1.4B	$1.6B	$2.2B	Current liabilitiesCur. liab.
1.2×	1.5×	1.3×	1.7×	1.9×	1.3×	1.2×	2.9×	2.9×	1.5×	Current ratioCurr. ratio
$573M	$666M	$662M	$662M	$782M	$1.4B	$1.5B	$2.4B	$2.7B	$4.9B	GoodwillGoodwill
$2.1B	$2.4B	$2.5B	$3.4B	$4.0B	$5.1B	$5.7B	$9.0B	$10.2B	$12.1B	Total assetsAssets
$643M	$644M	$345M	$346M	$347M	$648M	$300M	$2.5B	$2.5B	$2.5B	Total debtDebt
$175M	($48M)	($188M)	($359M)	($582M)	($239M)	($839M)	($308M)	($675M)	$920M	Net debt / (cash)Net debt
10.3×	12.6×	17.1×	26.1×	31.1×	46.8×	34.6×	17.8×	12.8×	13.1×	Interest coverageInt. cov.
$742M	$989M	$1.3B	$2.1B	$2.5B	$2.7B	$3.4B	$4.7B	$5.5B	$6.6B	Shareholders’ equityEquity
6.0%	6.7%	7.8%	7.8%	7.4%	7.6%	8.0%	8.4%	8.6%	8.8%	Stock comp / revenueSBC/rev
										Per share
291M	280M	281M	281M	280M	275M	273M	274M	273M	274M	Shares out (diluted)Shares
$6.24	$6.93	$7.60	$8.33	$9.59	$12.95	$15.00	$16.95	$19.38	$20.20	Revenue / shareRev/sh
$0.70	$0.73	$1.23	$3.53	$2.11	$3.09	$3.82	$3.85	$4.06	$4.28	EPS (diluted)EPS
$1.34	$1.47	$1.93	$2.33	$2.90	$4.07	$4.57	$4.08	$5.81	$5.22	Owner earnings / shareOE/sh
$1.34	$1.47	$1.93	$2.33	$2.90	$4.07	$4.57	$4.08	$5.81	$5.22	Free cash flow / shareFCF/sh
$0.18	$0.21	$0.22	$0.27	$0.34	$0.45	$0.38	$0.52	$0.52	$0.61	Cap. spending / shareCapex/sh
$2.55	$3.53	$4.58	$7.50	$8.92	$9.98	$12.48	$17.07	$20.03	$23.97	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+13.4%/yr	+19.2%/yr (4-yr)
Owner earnings / share	+17.7%/yr	+19.0%/yr (4-yr)
EPS	+21.6%/yr	+17.7%/yr (4-yr)
Capital spending / share	+12.2%/yr	+11.2%/yr (4-yr)
Book value / share	+25.8%/yr	+22.4%/yr (4-yr)

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

273Mpeak FY2016

ROIC

22%low FY2025

Net debt ÷ owner earnings

-0.4×peak FY2016

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$1.6Bowner earningsvs.$1.1Bnet incomelow FY2016

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned $1.1B of profit into $1.6B of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

Reported net income$1.1B

Owner earnings$1.6B · 30% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$1.1B	$1.1B	$1.0B	$849M	$591M
Depreciation & amortizationnon-cash charge added back	+$228M	+$197M	+$145M	+$132M	+$146M
Stock-based compensationreal costnon-cash, but a real cost	+$455M	+$391M	+$326M	+$270M	+$197M
Working capital & othertiming of cash in and out, other non-cash items	−$63M	−$383M	−$163M	−$10M	−$29M
Cash from operations	$1.7B	$1.3B	$1.3B	$1.2B	$905M
Capital expenditurecash put back in to keep running and to grow	−$142M	−$143M	−$102M	−$123M	−$95M
Owner earnings	$1.6B	$1.1B	$1.2B	$1.1B	$810M
Owner-earnings marginowner earnings ÷ revenue	30%	24%	30%	31%	30%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $455M), owner earnings is nearer $1.1B.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 12.8×

Comfortable

Operating income $1.5B ÷ interest expense $117M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? +$675M

Net cash

Cash $3.0B + ST investments $154M − debt $2.5B

What this means
Cash and short-term investments exceed every dollar of debt by $675M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? -2687d

Negative, funded by others

DSO 65 + DIO 1510 − DPO 4261 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money.

Is it a good business?

Return on invested capital 28%

Very high (≥25%) through the cycle

9-yr median, range 22%–38%; 22% latest = NOPAT $1.1B ÷ invested capital $5.0B

Industry peers: median -7%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 9 years (it ran 22% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 28%

High through the cycle

9-yr median margin, range 21%–31%; latest $1.6B = operating cash $1.7B − maintenance capex $142M

Industry peers: median 25%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 30% of revenue this year, a 28% median across 9 years. Treating stock comp as the real expense it is (less $455M of SBC) leaves $1.1B.
Are earnings backed by cash? 1.56×

Cash-backed

Cash from ops $1.7B ÷ net income $1.1B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 58%

Returns about half

Dividends + buybacks $925M ÷ Owner Earnings $1.6B

What this means
Of $1.6B Owner Earnings, $925M (58%) went back to shareholders, $0 dividends, $925M buybacks. Net of $455M stock comp, the real buyback was about $470M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.62×

Harvesting

Capex $142M ÷ depreciation $228M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 5 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $5.3B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 2.86×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Pass

Debt ≤ working capital · $2.5B vs $3.0B WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (9-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +326%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $3.87/share (latest year $4.02), the averaged base the calculator's gate runs on, and book value is $19.85/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 9 of 9

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 9 of 9 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 16% → 29% (3-yr avg ends)

What this means
Through the cycle the operating margin widened — about 16% early to 29% lately, median 24% — pricing power intact or improving.
Reinvestment, incremental ROIC 25%

What this means
Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.
Owner earnings growth +14%/yr

What this means
Owner earnings grew about 14% a year over the record.
Worst year 2016 · 13.5% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −0.7%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.

Does AI threaten the moat?

Elevated contestability

The product is software or information, the very thing capable AI now produces more cheaply, so the moat is more contestable than the record alone implies.

In its own filing A competitive risk, new this year

Its FY2025 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“Even if the demand for AI-enabled products develops in the manner or in the time periods we anticipate, if we do not have timely, competitively priced, market-accepted products available to meet our customers' needs, we may miss a significant opportunity and our business, financial condition and results of operations m…”

The moat the record shows, a high return on capital held across years, was earned before AI collapsed the cost of building a capable substitute for the very thing this business sells. When a credible alternative can be assembled for a fraction of the incumbent's price, it is pricing power that erodes first, not revenue tomorrow. The live question is whether the moat survives that, not whether it held in the past. Whether that question is answerable at all is yours to decide, against your own circle of competence.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$3.2B

Cash & short-term investments$1.6B
Receivables$1.0B
Inventory$318M
Other current assets$268M

Current liabilities$2.2B

Debt due within a year$300M
Accounts payable$864M
Other current liabilities$999M

Current ratio1.47×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.32×stricter: inventory excluded

Cash ratio0.72×strictest: cash alone against what's due

Working capital$1.0Bthe cushion left after near-term bills

Debt due this year vs. cash$300M due · $1.6B cash covered by cash on hand, no refinancing forced · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago+18.7%the freshest read on whether the business is still growing

Current ratio, recent quarters1.4× → 1.5×

Deeper floors

Tangible book value($301M)equity stripped of goodwill & intangibles

Debt incl. operating leases$527M$227M of it operating leases

Deferred revenue$1.0Bcustomer cash collected before delivery; operating float

From the company's latest filing.

How the cash was used, 2016–2025

Over the record, the business generated $8.7B of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.

Reinvested$852M · 10%
Buybacks$5.2B · 60%
Retained (debt / cash)$2.7B · 30%

Returned to owners$5.2B
66% of the owner earnings the business produced over the span, $0 as dividends and $5.2B as buybacks.
Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span debt rose $1.8B and cash and short-term investments rose $1.1B.
Average price paid for buybacks$71.68
Across the years where the filing reports a share count, 73M shares were bought for $5.2B, about $71.68 each. Year to year the price paid ranged from $23.71 (2016) to $292.27 (2025); its heaviest year, 2022, paid $159.06 ($1.1B).
Net change in share count−6.0%
The diluted count fell from 291M to 274M, so the buybacks outran the stock issued to staff.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
Return on what it retained75%
Of the earnings it kept rather than paid out ($1.2B over the span), annual owner earnings (first three years vs last three) grew $868M, so each retained $1 added about 0.75 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 9-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$3.5B34% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity50%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$2.4Bover 9 years buying other businesses, against $852M of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 9-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Dr. Devgan	$21.7M	$39.8M	$810M
2021	Mr. Tan	$11.2M	$60.4M	$810M
2022	Dr. Devgan	$32.2M	$24.8M	$1.1B
2023	Dr. Devgan	$17.3M	$119.1M	$1.2B
2024	Dr. Devgan	$19.3M	$28.7M	$1.1B
2025	Dr. Devgan	$56.5M	$95.3M	$1.6B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership<1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio592:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$455M
The slice of the business handed to employees in shares this year, 9% of revenue, equal to 31% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Cadence Design Systems Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

2 of the 5 tests turned up something to look into; the other 3 came back clean.

Look hereDid debt outgrow the business?$643M → $2.5B
Debt rose from $643M to $2.5B while owner earnings went from about $449M to $1.3B — about 1.4 years of owner earnings in debt then, about 1.9 now: measured against what the business earns, the balance sheet carries more debt than it did. Debt raised for buybacks or deals rather than growth is the kind that bites in a downturn.
Look hereDid receivables and inventory outpace sales?11% → 24% of sales
Receivables and inventory grew from $197M to $1.4B while revenue grew 204%: working capital is climbing faster than sales (11% of revenue then, 24% now). That can mean customers paying slower, stock building up, or revenue pulled forward. The filing's cash-flow and receivables notes say which.

And these came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did reported profit become cash?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Revenue recognition, Income taxes, Acquisitions, Contingencies as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Software

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
SSNCSS&C Technologies	$6.3B	47%	21.8%	7%	25%
CDNSCadence Design Systems Inc.	$5.3B	99%	24.1%	28%	28%
TEAMAtlassian	$5.2B	83%	-2.5%	—	27%
TWLOTwilio Inc.	$5.1B	52%	-19.4%	-7%	-1%
GENGen Digital	$5.0B	82%	32.2%	11%	31%
RBLXRoblox Corporation	$4.9B	76%	-28.8%	-247%	18%
CRWDCrowdStrike Holdings Inc.	$4.8B	74%	-9.8%	—	31%
SNOWSnowflake Inc.	$4.7B	64%	-49.7%	-20%	16%
Group median	—	75%	-6.2%	-0%	26%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Cadence Design Systems Inc. has delivered.

Today’s price $

Through the cycle, Cadence Design Systems Inc. earns about $1.5B on its 28.0% median owner-earnings margin. This year’s 30.0% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($1.5B) Net of stock comp (−$486M) Steady-state · maintenance capex ($1.5B)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+9%/yr

Owner-earnings growth · ’16→’25+14%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $1.4B on 276M shares outstanding, per the 10-Q cover, as of 2026-03-31; net debt $920M. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($168M) runs well above depreciation ($260M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $1.5B, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh CDNS against another business →

The owners of CDNS: the meeting and the votes →

Cite: Owner Scorecard, "Cadence Design Systems Inc. (CDNS), the owner's record," https://ownerscorecard.com/c/CDNS, data as of 2026-07-09.

Manual order: ← CDNL its page in the Manual CDP →

Industry order: ← CCSI the Software chapter CERT →