AddedRisk Factors
•The growth of our business depends primarily on the semiconductor and electronics systems industries.
CDNSCadence Design Systems
We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this Annual Report. 10-K, Item 1
- Employees
- 13,800
- Headquarters
- San Jose, CA
- CEO
- Anirudh Devgan
- Next results
- around Feb 16, 2027
10-K 0000813672-26-000016 (2026-02-19) vs 10-K 0000813672-25-000024 (2025-02-21)
| Section | Compared text | Words now | Changed |
|---|---|---|---|
| Risk Factors | Item 1A | 19,610 | 18.4% |
| MD&A | Item 7 | 8,041 | 27.6% |
| Legal Proceedings | Item 3, via Note 18 – COMMITMENTS AND CONTINGENCIES | 601 | 25.7% |
| Accounting Policies | 10-K text, Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 5,448 | 6.2% |
The redline: what was cut and what was added
In each section, the paragraph that changed most, marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Risk Factors 292 words changed in this paragraph; it is 36% similar to last year's version.
Failure to obtain import, export or re-export licenses or permits when required or restrictions on trade imposed by the United States or other countries could harm our business by rendering us unable to sell or ship products and transfer our technology outside of the United States or across borders. Delays, uncertainty or an inability to obtain required export licenses in a timely manner, including as a result of government processing backlogs or policy changes, could cause delays in scheduled shipments and may impact our business and customer relationships. In addition, if our customers sell fail to obtain appropriate import, export or re-export licenses or permits for re-sale of our products to any entity on the Entity List without our knowledge or authorization, products, we may also be held liable for such sales. adversely affected through reputational harm and penalties and may not be able to provide support related to those items. Although we have implemented risk-based policies and procedures that are reasonably designed to comply with all applicable trade restrictions, from time to time we and governmental authorities have had and may in the future have reason to inquire into particular sales. Specifically, in February 2021, we received an administrative subpoena from BIS requesting the production of records in connection with certain sales to our customers in China. In November 2023, we received a related subpoena from the U.S. Department of Justice (“DOJ”) that also requested information regarding our business activity in China. In December 2024, we began discussions with BIS and DOJ regarding preliminary findings of their investigations and a potential resolution of this matter. We have been and will continue cooperating with BIS and DOJ in responding to the subpoenas and their ongoing investigations. These matters are subject to uncertainties and the outcomes of these and other proceedings that may occur are difficult to predict. If any governmental fines, penalties, restrictions or compliance requirements are imposed on us, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition and results of operations could be materially adversely affected. In addition, political, media or other scrutiny surrounding governmental investigations or their outcome could cause significant expense and reputational harm and distract senior executives from managing normal day-to-day operations. transactions.
Source: Item 1A, 10-K 0000813672-26-000016 vs Item 1A, 10-K 0000813672-25-000024
MD&A 180 words changed in this paragraph; it is 38% similar to last year's version.
Source: Item 7, 10-K 0000813672-26-000016 vs Item 7, 10-K 0000813672-25-000024
Accounting Policies 62 words changed in this paragraph; it is 61% similar to last year's version.
In December 2023, the FASB Financial Accounting Standards Board (“FASB”) issued ASU accounting standards update (“ASU”) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” (“ASU 2023-09”) which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. This standard is effective for fiscal years beginning after December 15, 2024, and may be applied on a retrospective or prospective basis. Cadence is currently evaluating the impact of adopting adopted this ASU on its prospectively during fiscal 2025. See Note 8 in the notes to the consolidated financial statements and disclosures. for further details.
Source: 10-K text, Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 10-K 0000813672-26-000016 vs 10-K text, Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 10-K 0000813672-25-000024
Legal Proceedings 40 words changed in this paragraph; it is 90% similar to last year's version.
From time to time, Cadence is involved in various disputes and litigation that arise in the ordinary course of business. These include disputes and legal proceedings related to IP, intellectual property, indemnification obligations, mergers and acquisitions, licensing, contracts, customers, products, distribution and other commercial arrangements and employee relations matters. Cadence is also subject from time to time to inquiries, investigations and regulatory proceedings involving governments and regulatory agencies in the jurisdictions in which Cadence operates, including the ongoing investigations by the Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce and the U.S. Department of Justice (“DOJ”) regarding certain historical sales by Cadence to customers in China. operates. At least quarterly, Cadence reviews the status of each significant matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, Cadence accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on Cadence’s judgments using the best information available at the time. As additional information becomes available, Cadence reassesses the potential liability related to pending claims and legal proceedings and may revise estimates.
Source: Item 3, via Note 18 – COMMITMENTS AND CONTINGENCIES, 10-K 0000813672-26-000016 vs Item 3, via Note 18 – COMMITMENTS AND CONTINGENCIES, 10-K 0000813672-25-000024
Every change, by type
Sentences and paragraphs of CDNS's Risk Factors and MD&A, 10-K 2026-02-19 against 10-K 2025-02-21. Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier
(may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, would
AddedRisk Factors
•Any actual or perceived failure to comply with new or existing laws, regulations and other requirements relating to the privacy, security, processing and cross-border transfer of Personal Information (as defined below) could adversely affect our business, financial condition and results of operations.
AddedRisk Factors
•We rely on third-party data center providers and any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could adversely affect our business, financial condition and results of operations.
AddedRisk Factors
•Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements.
AddedRisk Factors
The growth of our business depends primarily on the semiconductor and electronics systems industries.
AddedRisk Factors
The increasing complexity of designs of semiconductors and electronic systems and customers’ concerns about managing costs have previously led to, and in the future could lead to, a decrease in design starts and design activity in general. For example, in response to this increasing complexity, some customers have chosen to focus on one discrete phase of the design process or opt for less advanced, but less risky, manufacturing processes that may not require the most advanced EDA products. If growth in the semiconductor and electronics systems industries slows or stalls, then demand for our products and services could decrease and our business, financial condition and results of operations could be adversely affected. Additionally, as the EDA industry has matured, stronger competition has emerged from companies better able to compete as sole source vendors. This increased competition could cause our revenue growth rate to decline and exert downward pressure on our operating margins, which would have an adverse effect on our business, financial condition and results of operations.
AddedRisk Factors
Furthermore, the semiconductor and electronics systems industries have become increasingly complex and interconnected ecosystems. Many of our customers outsource the manufacturing of their semiconductor designs to foundries. Our customers also frequently incorporate third-party IP, whether provided by us or other vendors, into their designs to improve the efficiency of their design process. We work closely with major foundries to help ensure that our products are compatible with their manufacturing processes. Similarly, we work closely with other major providers of semiconductor IP, particularly microprocessor IP, to optimize our EDA products for use with their IP designs and to help ensure that their IP and our own IP products work effectively together, as we may each provide for the design of separate components on the same chip. If we fail to optimize our products for use with major foundries’ manufacturing processes or major IP providers’ products, or if our access to such foundry processes or third-party IP products is hampered, then our products and services may become less desirable to our customers, resulting in an adverse effect on our business, financial condition and results of operations.
AddedRisk Factors
customers, which could affect their purchasing behaviors. Any decreased use of our products or services or limitation on our ability to export to or sell our products or services in international markets would likely harm our business, financial condition and results of operations.
AddedRisk Factors
In addition, as previously disclosed, on May 23, 2025, BIS informed us that a license was required for the export, re-export or in-country transfer of EDA Software and Technology when a party to the transaction is located in China or is a Chinese "military end user" on the "Military End-User List," wherever located. On July 2, 2025, BIS informed us that the license requirements set forth in the May 23, 2025 letter from BIS were rescinded effective immediately. While we have since restored access to EDA Software and Technology for affected customers in accordance with these updated U.S. export regulations, the temporary license requirements negatively impacted our revenue in China during this period. However, in light of continued negotiations between the United States and China, the United States may consider reimposing these or additional restrictions on the export, re-export or in-country transfer of EDA Software and Technology or our other products and services in China in the future.
AddedRisk Factors
Specifically, as previously disclosed, on July 27, 2025, we reached a settlement with each of BIS and the U.S. Department of Justice ("DOJ") that resolved matters relating to export control violations that occurred between 2015 and 2021 primarily involving sales initiated by a Cadence subsidiary of products and services valued at $45.3 million in total over that period to a customer in China, as well as the subsequent transfer of technology involved in those sales to a third party in China, without the requisite authorization from BIS. As part of the settlements, we entered into a plea agreement with the DOJ pursuant to which we agreed to plead guilty to one count of conspiracy to commit export controls violations. The plea agreement has a three-year probationary term and includes obligations to implement additional export compliance programs and policies, including ongoing reporting and certification requirements and risk assessments, as well as obligations to cooperate in any ongoing or future investigations. In addition, we have entered into an administrative settlement agreement with BIS. Obligations under the administrative settlement agreement include two internal annual audits of our export compliance programs. Compliance with the administrative settlement agreement is a condition to our continued ability to export products. Under the agreements, we paid BIS and the DOJ aggregate net penalties and forfeitures of $140.6 million during the three months ended September 30, 2025.
AddedRisk Factors
Failure to comply with the terms of the plea agreement, the administrative settlement agreement or our probation could result in further criminal, civil, or administrative proceedings or denial of export privileges. Such failure or any resulting further government action could materially and adversely affect our reputation, business, financial condition and results of operations. Further, our ongoing obligations under these agreements will generally apply to any new business entities we acquire, which could limit our ability to acquire new businesses that may be strategically important to us, and our continued acquisition and integration of other businesses could increase our risk of a violation. Our ongoing obligations under these agreements will also generally apply to any purchaser of our company or our material business operations, which could deter a potential acquisition of our company. In addition, political, media or other scrutiny surrounding these matters or their outcome could cause significant expense and reputational harm and distract senior executives from managing normal day-to-day operations. Entry into the settlements, including the plea agreement and the administrative settlement agreement, exposes us and our directors, officers and employees to further inquiries or other actions by other governmental authorities, including in China, which could materially and adversely affect our ability to operate and do business in China. We could also face challenges in our future business dealings with government agencies, including the potential for debarment from U.S. government contracts. Any of the foregoing could further materially and adversely affect our reputation, business, financial condition and results of operations.
AddedRisk Factors
In addition to risks related to license requirements, use of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or assurances of title or controls on origin of the software. Moreover, many of the risks associated with use of open source software, such as the lack of warranties or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect our business. While we have established processes designed to help alleviate these risks, including a review process for screening requests from our development organizations for the use of open source software, we cannot guarantee that our processes for controlling our use of open source software in our products and services will be effective.
RemovedRisk Factors
RewordedRisk Factors
RewordedRisk Factors
Changes in our products or services, or changes in and continued expansion of these laws and regulations, including new or increased tariffs, trade protection measures, sanctions, trade embargoes and other trade barriers, may create delays in the introduction of our products or services into international markets, markets and prevent our customers from deploying our products or services or, in some cases, prevent the export or import of our products or services to certain countries, governments or persons altogether or result in increased costs for us, which could reduce our competitiveness, or for our customers, which could affect their purchasing behaviors. services.
RewordedRisk Factors
In addition, we and certain third-party providers collect, maintain and process data about our customers, employees, business partners and others, including personally information that relates to individuals and/or constitutes “personal data,” “personal information,” "personally identifiable information, information" or similar terms under applicable data privacy laws (collectively “Personal Information”), as well as proprietary data such as trade secrets (collectively, "Confidential Information"). (together with Personal Information, “Confidential Information”).
RewordedRisk Factors
For example, in May 2024, the European Union approved the EU Artificial Intelligence Act (the "EU AI Act establishing Act") establishes a comprehensive, risk-based governance framework for AI in the EU market, the breach of which could result in fines of up to 7% of worldwide annual turnover. market.
RewordedRisk Factors
In addition, we use open source software in our products, and due to uncertainties regarding the interpretation of open source software licenses, there is a risk that our use of open source software is inconsistent with what the copyright owners had intended, which could lead to disputes and enforcement actions, including demands that we release applicable source code, and we may be forced to re-engineer our products or incur additional costs to replace the affected open source software. actions.
RewordedRisk Factors
RewordedRisk Factors
We cannot accurately predict the full impact that evolving macroeconomic and geopolitical conditions may have on our cash flows. flows and there are administrative processes associated with repatriation of foreign earnings that could affect the timing of returning cash to the U.S. from non-U.S. jurisdictions.
RewordedRisk Factors
Although we generally have limitation of liability provisions in our standard terms and conditions of sale, in some circumstances, we may be required to indemnify a customer in full, without limitation, for certain liabilities. liabilities, including for losses suffered or incurred as a result of claims of infringement, misappropriation or other violation of IP rights, or other liabilities relating
RewordedRisk Factors
RewordedRisk Factors
RewordedRisk Factors
Although we have implemented risk-based policies and procedures that are reasonably designed to comply with all applicable trade restrictions, from time to time we and governmental authorities have had and may in the future have reason to inquire into particular sales. transactions.
RewordedRisk Factors
Quiet changesRisk Factors
We are subject to governmental export and import controls that could subject us to liability or and impair our ability to compete in global markets as well as a variety of other laws and regulations.
Quiet changesRisk Factors
AddedMD&A
Our strategy enables us to address our customers’ most challenging product development needs while expanding our capabilities beyond traditional chip design to encompass full electromechanical systems. By leveraging our deep expertise, we develop industry-leading computational AI-driven software, accelerated hardware, and IP solutions that adapt to our customers’ evolving design requirements. This flexibility helps our customers address critical business priorities such as reducing time-to-market and advancing sustainability goals. To address the growing complexity of modern design, we’ve integrated cutting-edge technologies including agentic and generative AI, machine learning, and digital twin algorithms, into our core products and solutions. These innovations, whether developed in-house or through strategic acquisition, empower our customers to achieve their business objectives with greater efficiency and precision.
AddedMD&A
As part of our ISD strategy, we invest in and acquire complementary businesses, joint ventures, services and technologies and IP rights. The size and timing of these investments and acquisitions may affect comparability of revenue, expenses and cash flows between fiscal periods.
AddedMD&A
During fiscal 2025, we completed multiple acquisitions, including our acquisition of a holding company containing the VLAB Works business (“VLAB Works”), our acquisition of the Artisan foundation IP business from Arm Limited and our acquisition of Secure-IC.
AddedMD&A
For fiscal 2025, the revenue associated with contracts assumed with our acquisition of VLAB Works was primarily classified as product and maintenance revenue in our Core EDA product category. Revenue associated with contracts assumed with our acquisition of the Artisan foundation IP business and Secure-IC was primarily classified as product and maintenance revenue in our Semiconductor IP product category. The cost of revenue associated with these contracts was primarily classified as cost of product and maintenance in our consolidated income statements.
AddedMD&A
On September 4, 2025, we entered into a definitive agreement with Hexagon to acquire its D&E business. This acquisition is expected to expand our System Design & Analysis portfolio, building upon our acquisition of BETA CAE in fiscal 2024. The acquisition includes substantially all of the subsidiaries and related assets comprising Hexagon's D&E business. Among other conditions, closing is conditioned on the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, and receipt of other required approvals under antitrust and foreign direct investment laws of certain other jurisdictions.
AddedMD&A
As previously disclosed, on May 23, 2025, BIS informed us that a license was required for the export, re-export or in-country transfer of EDA software and technology classified under Export Control Classification Numbers (ECCNs) 3D991 and 3E991 on the Commerce Control List (“EDA Software and Technology”), when a party to the transaction is located in China or is a Chinese “military end user” wherever located. On July 2, 2025, BIS informed us that the license requirements set forth in the May 23, 2025 letter from BIS were rescinded effective immediately. During this period, our revenue in China decreased primarily due to reduced deliveries of software offerings to our customers in China due to these license requirements. Following the rescission, we have restored access to EDA Software and Technology for affected customers in accordance with these updated U.S. export regulations. However, in light of continued negotiations between the U.S. and China, the United States may consider reimposing these or additional restrictions on the export, re-export or in-country transfer of EDA Software and Technology or our other products and services in China in the future.
AddedMD&A
Also, as previously disclosed, on July 27, 2025, we reached a settlement with each of BIS and the U.S. Department of Justice (“DOJ”) that resolved matters relating to export control violations that occurred between 2015 and 2021 primarily involving sales initiated by a Cadence subsidiary of products and services valued at $45.3 million in total over that period to a customer in China, as well as the subsequent transfer of technology involved in those sales to a third party in China, without the requisite authorization from BIS. These settlement agreements include ongoing audit, compliance and other obligations.
AddedMD&A
•Growth in revenue from our software, hardware and IP offerings, including revenue from our recent acquisitions;
AddedMD&A
•A loss associated with our settlements with BIS and the DOJ that was paid during fiscal 2025; and
AddedMD&A
Revenue from any one product category as a percentage of total revenue may fluctuate from period to period based on the mix of products and services sold in a given period and the timing of revenue recognition, particularly for our hardware, IP and certain software products for which revenue is recognized up-front.
AddedMD&A
Stock-based compensation included in general and administrative expense increased during fiscal 2025, as compared to fiscal 2024, primarily due to incremental expense from market-based equity awards granted to certain members of senior management.
AddedMD&A
Facilities and other infrastructure costs included in general and administrative expense decreased during fiscal 2025, as compared to fiscal 2024, primarily due to a decrease in facilities and related resources allocated for general and administrative activities as these resources have been reallocated to support ongoing growth of technical sales support and research and development activities.
RemovedMD&A
RemovedMD&A
RemovedMD&A
RemovedMD&A
RewordedMD&A
Other income (expense), income, net increased during fiscal 2024, 2025, as compared to fiscal 2023, 2024, primarily due to increased interest earned from deposits deposits, a recognized gain during fiscal 2025 on the sale of IP and other assets and an increase in net gains from our investments in equity securities of publicly held companies. strategic investment portfolio.
RewordedMD&A
Cash flows from financing activities increased decreased during fiscal 2024, 2025, as compared to fiscal 2023, 2024, primarily due to a decrease in net proceeds from the issuance of debt, an increase in proceeds from debt, increased repurchases of common stock and decreased proceeds from the issuance of common stock resulting from stock purchases under our employee stock purchase plan and stock options exercised during the period, and a decrease in repurchases of common stock. period.
RewordedMD&A
RewordedMD&A
We also recognized tax benefits of $42.9 $37.5 million related to stock-based compensation that vested or was exercised during the period. period partially offset by $33.4 million of tax expense for a non-deductible loss associated with our settlements with BIS and the DOJ that was paid during fiscal 2025.
RewordedMD&A
Cash used for investing activities increased decreased during fiscal 2024, 2025, as compared to fiscal 2023, 2024, primarily due to increased decreased payments for business combinations and purchases an increase in proceeds from the sale and maturity of property, plant and equipment, partially offset by a decrease in cash used for investments in equity and debt securities.
RewordedMD&A
We are monitoring the imposition of these new or higher tariffs, actions, including any pauses on pauses, escalations, exemptions or removal of exemptions, with respect to the tariffs imposed, threatened or imposed tariffs, and will continue to assess their potential impact on our business either directly, such as on our hardware business, or due to downstream effects.
RewordedMD&A
RewordedMD&A
Revenue associated with contracts assumed with our acquisition of BETA CAE is primarily classified as product and maintenance revenue in our System Design and Analysis product category. category, and cost of revenue associated with these contracts is primarily classified as cost of product and maintenance in our consolidated income statements.
RewordedMD&A
RewordedMD&A
Operating margin decreased during fiscal 2024, 2025, as compared to fiscal 2023, 2024, primarily due to the mix of products loss recognized in connection with our settlements with BIS and services sold during each respective period. the DOJ.
RewordedMD&A
We assumed technological obsolescence at a rate of 10% rates between 8% and 13% annually, before applying an assumed royalty rate of rates between 25% and 30% and a discount rate of 10%. rates between 10% and 13%.
RewordedMD&A
Interest expense increased during fiscal 2024, 2025, as compared to fiscal 2023, 2024, primarily due to contractual interest from the Senior Notes, partially offset by the decrease in interest expense related to new debt issued during that was settled in fiscal 2024.
Quiet changesMD&A
The fair value of the intangible assets acquired was primarily determined by using variations of the income approach that utilizes unobservable inputs classified as Level 3 measurements.
Quiet changesMD&A
For existing technology, the fair value was determined primarily by applying the relief-from-royalty method.
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