Cadence Design Systems (CDNS) 10-K risk factor changes: FY2025 vs FY2024

*Our operations and financial results are subject to various risks and uncertainties, including those described in the sections below, that could adversely affect our business, financial condition, [removed: results of operations, cash flows, liquidity, revenue, growth,] [added: growth] prospects, demand for our products and services, reputation and the trading price of our common stock, and make an investment in us speculative or risky.

- Uncertainty in the global economy and instability within international relations, including changes in governmental policies relating to technology, [removed: and any potential downturn in the semiconductor and electronics industries,] may negatively [removed: impact] [added: affect] our business and reduce our bookings levels and revenue.

- We are subject to governmental export and import controls that [removed: could] subject us to liability [removed: or] [added: and] impair our ability to compete in global markets as well as a variety of other laws and regulations.

- We may not realize opportunities presented by AI and may incur reputational and financial harm and liability as a result of issues [removed: in] [added: relating to] the [removed: development] [added: management] and [added: governance of our] use of AI.

- Cyberattacks that compromise the confidentiality, integrity or availability of our or our third-party providers’ information technology systems or confidential information could materially harm our [added: reputation,] business, [removed: reputation and] financial [removed: condition.][added: condition and results of operations.]

- Our business is subject to the risk of natural [removed: disasters and] [added: disasters,] global climate [removed: change.][added: change and other catastrophic events.]

- Our debt obligations expose us to risks that could adversely affect our business, [removed: operating results or] financial [removed: condition,] [added: condition] and [added: results of operations, and] could prevent us from fulfilling our obligations under such indebtedness.

- Various factors could increase our future borrowing costs or reduce our access to capital, including a lowering or withdrawal of the ratings assigned to us and our [removed: New] [added: Senior] Notes by credit rating agencies.

Uncertainty in the global economy and instability within international relations, including changes in governmental policies relating to technology, [removed: and any potential downturn in the semiconductor and electronics industries,] may negatively [removed: impact] [added: affect] our business and reduce our bookings levels and revenue.

The [removed: IC] [added: semiconductor] and electronics systems industries are cyclical and are characterized by constant and rapid technological change, [removed: rapid] product obsolescence and price erosion, evolving standards, short product life cycles and wide fluctuations in product supply and demand.

Uncertainty caused by challenging global political and economic conditions, including inflation, interest rates, bank failures, [removed: U.S.] [added: government] deficit concerns, [added: government shutdowns or political stalemates,] geopolitical conflicts and other adverse changes to international relationships among countries in which we or our customers operate or do business, protectionist measures or decline in corporate or consumer spending could negatively impact our customers’ businesses, reducing the number of new chip designs and their overall research and development spending, including their spending on our products and services, and as a result decrease demand for our products and services.

Adverse developments that affect financial institutions, transactional counterparties or other third parties, such as bank failures and failure by [added: the U.S.] Congress to increase the U.S. federal debt ceiling on a timely basis, or concerns or speculation about any similar events or risks, have led and could lead to further credit downgrades and market-wide liquidity problems, which in turn may cause customers and other third parties to become unable to meet their obligations under various types of financial arrangements as well as general disruptions or instability in the financial markets.

For example, the ongoing geopolitical and economic uncertainty between the United States and China, where we [added: conduct business and] have derived a substantial percentage of our revenue, the unknown impact of current and future U.S. and Chinese trade regulations, [added: including tariffs] and [added: other trade restrictions, and] geopolitical risks with respect to Taiwan, which serves as a central hub for the technology industry supply chain, could, directly or indirectly, materially harm our business, financial condition and results of operations.

We are subject to governmental export and import controls that [removed: could] subject us to liability [removed: or] [added: and] impair our ability to compete in global markets as well as a variety of other laws and regulations.

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 [removed: markets,] [added: markets and] prevent our customers from deploying our products or [removed: 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.][added: services.]

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, [removed: operating results and] financial [removed: condition.][added: condition and results of operations.]

[removed: When customers are on] [added: If a customer was added to] the Entity List or [removed: are] [added: became] subject to new or expanded trade restrictions, it [removed: has] [added: could have] a negative effect on our ability to sell products and provide services to these customers.

In addition, the issuance of new or expanded trade restrictions, such as the continued expansion of the military end-user and military end-use rule, the foreign-direct product rules, or any other rule that prevents [added: or places restrictions on] a class of commodities, software or technology from export [added: or re-export] to any specific country or countries without a license, could increase our costs or expenses.

We cannot predict whether or when any [added: additional] changes will be made that eliminate or decrease these limitations on our ability to sell products and provide services to these Entity List customers or other customers impacted by other trade restrictions.

New or increased tariffs and other changes in U.S. trade policy, including new sanctions, [added: have triggered and] could [added: continue to] trigger retaliatory actions by affected countries.

Although we have implemented risk-based policies and procedures that are reasonably designed to comply with all applicable trade restrictions, [added: from time to time] we and governmental authorities [removed: have had and may in the future have reason to] inquire into particular [removed: sales.][added: transactions.]

In addition, political, media or other scrutiny surrounding [removed: governmental investigations] [added: these matters] or their outcome could cause significant expense and reputational harm and distract senior executives from managing normal day-to-day operations.

[removed: Any] [added: In addition to the matters described above, any further] failure or alleged failure to comply with these laws and policies could have negative consequences, including significant legal costs, government investigations, penalties, denial of export privileges and debarment from participation in U.S. government contracts, any of which could have a material adverse effect on our [removed: operations, reputation and] [added: reputation, business,] financial [removed: condition.][added: condition and results of operations.]

In addition to [removed: export] [added: trade] control laws, our global operations are subject to numerous U.S. and foreign laws and regulations, including those related to anti-corruption, anti-bribery, tax, corporate governance, financial and other disclosures, competition, antitrust, data privacy, data [removed: protection] [added: protection, cybersecurity] and employment.

Any violation individually or in the aggregate could have a material adverse effect on our [removed: operations, reputation and] [added: reputation, business,] financial [removed: condition.][added: condition and results of operations.]

- unanticipated [removed: costs or] [added: costs,] assumed [removed: liabilities,] [added: liabilities or challenges in enforcing consistent controls over the acquired business,] including those related to an acquired company's disclosure controls and procedures, internal control over financial reporting, cybersecurity, taxes and other compliance programs;

Our ability to acquire other businesses or technologies, make strategic investments or integrate acquired businesses effectively [removed: may be impaired] [added: is impacted] by [added: geopolitical conflicts,] trade tensions and increased global scrutiny of foreign investments and acquisitions and investments in the technology sector.

The United States [removed: and several other countries have] [added: has] adopted, or [removed: are] [added: is] considering adopting, restrictions on transactions involving foreign investments.

[removed: Antitrust] [added: Further, antitrust] authorities in the United States and a number of countries have also reviewed acquisitions and investments in the technology industry with increased scrutiny.

IP infringement and misappropriation claims, including contractual defense reimbursement obligations related to third-party claims against our customers, regardless of merit, could consume valuable management time, result in costly litigation or cause product shipment delays, all of which could seriously harm our business, [removed: operating results and] financial [removed: condition.][added: condition and results of operations.]

IP claims [removed: or] [added: and] litigation [removed: has] [added: have] compelled and could [added: in the future] compel us to do one or more of the following:

If we were compelled to take any of these actions, our [added: reputation,] business, [removed: reputation] [added: financial condition] and [removed: operating] results [added: of operations] might suffer.

We generally rely on a combination of patent, copyright and trademark law, trade secret protection and confidentiality or licenses agreements with our [removed: employers,] [added: employees,] contractors, customers, business partners and others to establish and protect our [removed: proprietary] rights in [added: our proprietary] technology and products.

Despite the precautions we may take to protect our IP rights, from time to time third parties [added: may] challenge, invalidate or circumvent these safeguards.

We may [removed: have] [added: need] to seek new or renew existing licenses for such software and other IP.

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 [removed: 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.][added: actions.]

Our failure to obtain third party software, other IP licenses or other IP rights that are necessary or helpful for our business on favorable terms (or at all), or our need to engage in litigation over these licenses or rights, could seriously harm our business, [removed: operating results or] financial [removed: condition.][added: condition and results of operations.]

We may incur significant costs, resources, investments, delays and not achieve a return on investment or capitalize on opportunities presented by [removed: AI,] [added: AI Technologies,] and we could incur financial losses.

Further, the introduction of AI Technologies into new or existing products may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, or other complications that could adversely affect our [added: reputation,] business, [removed: reputation or] financial [removed: results.][added: condition and results of operations.]

[removed: Additionally, existing] [added: Existing] laws and regulations may be interpreted in ways that would affect the operation of AI Technologies, or could be rescinded or amended as new administrations take differing approaches to evolving AI Technologies.

- The growth of our business depends primarily on the semiconductor and electronics systems industries.

- 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.

- 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.

- Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

The growth of our business depends primarily on the semiconductor and electronics systems industries.

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.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

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.

In addition, there is currently significant uncertainty in the global economy and the future relationship among the United States and various other countries, caused by increased geopolitical instabilities and changes in global trade policies.

Similarly, many of our suppliers, vendors and other entities with whom we do business have strong ties to doing business in China and other countries impacted by recent tariffs and other trade restrictions.

Their ability to supply materials to us, buy products or services from us, or otherwise work with us is affected by their ability to do business in impacted countries.

Moreover, these tariffs and any other trade restrictions imposed on our suppliers could adversely affect our business, financial condition and results of operations through reduced demand for our products and services, cancelled orders, supply chain disruptions, increased transaction costs and increased expenses.

In some cases, such changes have prevented and may further prevent the export or import of our products or services to certain countries, governments or persons altogether, or may result in increased costs for us, which could reduce our competitiveness, or for our

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

customers, which could affect their purchasing behaviors.

For example, U.S. trade control laws and regulations have been amended over the past several years, including through the imposition of certain export control restrictions concerning advanced node IC production in China, the inclusion of additional Chinese technology companies on BIS “Entity List” and regulations governing the sale and export of certain technologies.

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.

For example, effective September 29, 2025, BIS issued an interim final rule that extended the export restrictions imposed on entities identified on the Entity List or the Military End-User List and certain other sanctioned parties, to entities that are 50% or more owned by one or more of such entities.

However, on November 11, 2025, BIS published a one-year suspension of the new rule that is currently set to expire on November 9, 2026, absent a future extension.

For instance, the United States has increased use of Section 232 trade authorities to impose tariffs on certain commodities, including certain articles of steel, aluminum and copper.

In response to these and other U.S. measures, China and other countries have taken a range of retaliatory measures.

These include the imposition of retaliatory tariffs on certain U.S.-origin goods; the implementation of new export controls by China on various critical minerals, including rare earths metals; the scheduling of further retaliatory tariff measures; and other actions that may affect us directly or indirectly.

The Chinese government has also responded to U.S. actions by adding U.S. companies to an “unreliable entity list,” which limits the ability of listed companies to engage in business with Chinese customers.

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 fail to obtain appropriate import, export or re-export licenses or permits for re-sale of our products, we may also be adversely affected through reputational harm and penalties and may not be able to provide support related to those items.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

The current outlook for the global economy is uncertain and may result in a decrease in spending on our products and services despite recent growth.

If economic conditions or international relationships among countries in which we do business deteriorate, or, in particular, if semiconductor or electronics systems industry revenues do not grow, the ability to export or import products or services by the semiconductor or electronics systems industry is adversely restricted, or our supplies of hardware components and products are subject to problems or delays, we may be adversely affected.

For example, BIS maintains and frequently adds entities to the “Entity List,” which limits our ability to deliver products and services to these entities, some of which are our customers.

In addition, if our customers sell our products to any entity on the Entity List without our knowledge or authorization, we may be held liable for such 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.

For example, in May 2024, the European Union approved the EU AI Act establishing 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.

Moreover, breaches of our security measures and vulnerabilities in our or third-party providers’ IT Systems or products or services may expose us to a risk of loss or misuse, loss of financial assets, business interruption, regulatory investigations, litigation and other potential liability.

Furthermore, employees working from remote work environments can expose us to increased security risks and attacks.

In addition, certain of our third-party vendors use cloud storage of information as part of their services and product offerings, creating risk of misappropriation of our Confidential Information by third parties.

The loss, misuse or theft of personal data collected, used, stored or transferred by us, vendors or other third parties in the course of running our business could result in business or financial harm, damage to our reputation and legal or regulatory proceedings.

In addition, although the U.S. Tax Cuts and Jobs Act (the “Tax Act”) has reduced the tax impact of repatriation of foreign earnings, there are still 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.

In addition, if our customers build elevated inventory levels, we could experience a decrease in short-term and/or long-term demand for our hardware products.

For example, our fiscal 2022 and fiscal 2023 effective tax rates and cash tax payments increased significantly as compared to fiscal 2021, which primarily resulted from a requirement that we capitalize and amortize R&D costs beginning from fiscal 2022, rather than expense these costs as incurred for U.S. corporate income tax purposes.

In August 2022, the United States enacted the Inflation Reduction Act of 2022, which included a new minimum tax on certain large corporations, an excise tax on stock buybacks and significant funding for IRS enforcement efforts.

In October 2021, the Organisation for Economic Co-operation and Development (“OECD”) announced an agreement among more than 130 countries to adopt new rules including Pillar Two Model Rules which call for the taxation of large multinational corporations, such as Cadence, at a minimum rate of 15%.

Subsequently multiple sets of administrative guidance have been issued.

Many non-U.S. tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules (including the European Union Member States) with the adoption of additional components in later years or announced their plans to enact legislation in future years.

Furthermore, many countries have enacted or proposed new laws to tax digital transactions.

These and future developments in tax laws and regulations, and related compliance, could have a material adverse effect on our operating results, financial position and cash flows.

Cadence® is a global market leader that develops computational, AI-driven software, accelerated hardware, and [added: silicon] IP [added: products and] solutions for engineers and scientists to bring new and innovative products to life.

[removed: The] [added: Our mission is to empower the] world’s most innovative [removed: technology] companies [removed: use our solutions and services] to deliver [removed: transformational] [added: extraordinary electronic] products [removed: to multiple industries] that drive the global [removed: economy.][added: economy and improve everyday life.]

- [added: Semiconductor] IP; and

[removed: Recent Acquisitions][added: Acquisitions]

[removed: Revenue and] [added: The] cost of revenue associated with [added: these] contracts [removed: assumed with our acquisition of Invecas is] [added: was] primarily classified as [removed: services revenue and] cost of [removed: services] [added: product and maintenance] in our consolidated income statements.

During the second quarter of fiscal 2024, we completed our acquisition of BETA [removed: CAE,] [added: CAE Systems International AG (“BETA CAE”),] a system analysis platform provider of multi-domain, engineering simulation solutions.

Revenue associated with [removed: contracts assumed with] our acquisition of BETA CAE is primarily classified as product and maintenance revenue in our System Design and Analysis product [removed: category.][added: category, and cost of revenue associated with these contracts is primarily classified as cost of product and maintenance in our consolidated income statements.]

[removed: Cost of revenue] [added: Revenue] associated with [removed: these] contracts [removed: is] [added: assumed with our acquisition of the Artisan foundation IP business and Secure-IC was] primarily classified as [removed: cost of] product and maintenance [added: revenue] in our [removed: consolidated income statements.][added: Semiconductor IP product category.]

Because we operate globally, our business is subject to the effects of economic downturns or recessions in the regions in which we do business, volatility in foreign currency exchange rates relative to the U.S. dollar, inflation, changing interest rates, expanded trade control laws and regulations, [removed: potential] imposition of new or higher tariffs and geopolitical conflicts.

[removed: We have been impacted by the continued expansion of trade] [added: Trade] control laws and [removed: regulations,] [added: regulations have amended over the past several years,] including [added: through the imposition of] certain export control restrictions concerning advanced node IC production in [removed: China,] [added: China and] the inclusion of additional Chinese technology companies on the [removed: Bureau of Industry and Security] [added: BIS] “Entity List” [removed: and] regulations governing the sale of certain technologies.

[removed: Based on our current assessments, we] [added: We] expect the impact of these [added: current] expanded trade control laws and regulations on our business to be [removed: limited.][added: limited, but we will continue to monitor future developments.]

In addition, [added: U.S.] President Trump has [removed: announced] [added: made a series of announcements regarding] the imposition of [removed: broad-based] [added: new and higher U.S.] tariffs on imports from many countries, including China and Mexico.

We are monitoring [removed: the imposition of] these [removed: new or higher tariffs,] [added: actions,] including any [removed: pauses on] [added: pauses, escalations, exemptions or removal of exemptions, with respect to] the [removed: tariffs imposed,] [added: threatened or imposed tariffs,] and will [added: continue to] assess their potential impact on our business either directly, such as on our hardware business, or due to downstream effects.

The discussion of our fiscal [removed: 2024] [added: 2025] consolidated results of operations includes year-over-year comparisons to fiscal [removed: 2023] [added: 2024] for revenue, cost of revenue, operating expenses, operating margin, other non-operating income and expenses, income taxes and cash flows.

For a discussion of the fiscal [removed: 2023] [added: 2024] changes compared to fiscal [removed: 2022,] [added: 2023,] see the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2023,] [added: 2024,] filed with the SEC on February [removed: 14, 2024.][added: 20, 2025.]

Results of operations for fiscal [removed: 2024,] [added: 2025,] as compared to fiscal [removed: 2023,] [added: 2024,] reflect the following:

- Growth in revenue from our software, [removed: services, IP and] hardware [removed: offerings;][added: and IP offerings, including revenue from our recent acquisitions;]

- [removed: Continued] [added: Increases in operating expenses from continued] investment in research and development [removed: activities] and technical sales support, including [added: additional] headcount from acquisitions;

- Increased interest expense from our [added: outstanding] indebtedness.

We primarily generate revenue from licensing our software and IP, selling or leasing our hardware products, providing maintenance for our software, hardware and IP, providing engineering [added: and cloud] services and earning royalties generated from the use of our IP.

Recurring revenue includes revenue recognized over time from [added: certain of] our software [added: licensing] arrangements, services, royalties, maintenance on IP licenses and [removed: hardware products,] [added: hardware,] and operating leases of hardware.

[removed: Recurring] [added: Other recurring] revenue [removed: also] includes revenue recognized at [added: a point in time for certain short-term software arrangements that are typically renewed at least annually and revenue recognized at] varying points in time over the term of other arrangements with non-cancelable commitments, whereby the customer commits to a fixed dollar amount over a specified period of time that can be used to purchase from a list of [removed: products or services.][added: products.]

Up-front revenue is primarily generated by our sales of hardware products, individual IP licenses and certain software [removed: licenses.][added: licenses with a term greater than one year.]

The following table shows the percentage of our revenue that is classified as recurring or up-front for fiscal [removed: 2024] [added: 2025] and [removed: 2023:][added: 2024:]

| Revenue recognized over time | | | [removed: 80] [added: 76] | | % | | | | [removed: 81] [added: 80] | | % |

| Recurring revenue | | | [removed: 83] [added: 80] | | % | | | | [removed: 84] [added: 83] | | % |

| Up-front revenue | | | [removed: 17] [added: 20] | | % | | | | [removed: 16] [added: 17] | | % |

| | | | December 31, [removed: 2024] [added: 2025] | | | | | | September 30, [removed: 2024] [added: 2025] | | | | | | June 30, [removed: 2024] [added: 2025] | | | | | | March 31, [removed: 2024] [added: 2025] | | | | | | December 31, [removed: 2023] [added: 2024] | | |

| Recurring revenue | | | [removed: 83] [added: 80] | | % | | | | [removed: 86] [added: 80] | | % | | | | [removed: 87] [added: 80] | | % | | | | [removed: 87] [added: 82] | | % | | | | [removed: 84] [added: 83] | | % |

| Up-front revenue | | | [removed: 17] [added: 20] | | % | | | | [removed: 14] [added: 20] | | % | | | | [removed: 13] [added: 20] | | % | | | | [removed: 13] [added: 18] | | % | | | | [removed: 16] [added: 17] | | % |

The following table shows our revenue for fiscal [removed: 2024] [added: 2025] and [removed: 2023] [added: 2024] and the change in revenue between years:

| | | | [removed: 2024] [added: 2025] | | | | | | [removed: 2023] [added: 2024] | | | | | | | | | | | | [removed: 2024] [added: 2025] vs. [removed: 2023] [added: 2024] | | | | | | | | | | | | | | | | | | | | |

| Product and maintenance | | | $ | [removed: 4,213.5] [added: 4,821.6] | | | | | $ | [removed: 3,834.4] [added: 4,213.5] | | | | | | | | | | | $ | [removed: 379.1] [added: 608.1] | | | | | [removed: 10] [added: 14] | | % | | | | | | | | | | | | |

| Total revenue | | | $ | [removed: 4,641.3] [added: 5,296.8] | | | | | $ | [removed: 4,090.0] [added: 4,641.3] | | | | | | | | | | | $ | [removed: 551.3] [added: 655.5] | | | | | [removed: 13] [added: 14] | | % | | | | | | | | | | | | |

Product and maintenance revenue increased during fiscal [removed: 2024,] [added: 2025,] as compared to fiscal [removed: 2023,] [added: 2024,] primarily due to growth in revenue from our software, hardware and IP [added: product] offerings as a result of [removed: customers’] [added: existing customers'] continued investment in complex designs for their products.

Services revenue increased during fiscal [removed: 2024,] [added: 2025,] as compared to fiscal [removed: 2023,] [added: 2024,] primarily due to [removed: growth in] [added: increased] revenue from our [removed: design] [added: cloud and IP] service [removed: offerings, which were supplemented by our acquisition of Invecas.][added: offerings.]

No one customer accounted for 10% or more of total revenue during fiscal [removed: 2024] [added: 2025] or [removed: 2023.][added: 2024.]

The following table shows the percentage of revenue contributed by each of our product categories during fiscal [removed: 2024] [added: 2025] and [removed: 2023:][added: 2024:]

| Core EDA | | | [removed: 71] [added: 70] | | % | | | | [removed: 76] [added: 71] | | % | | | | | | |

| System Design and Analysis | | | 16 | | % | | | | [removed: 12] [added: 16] | | % | | | | | | |

Our customers include semiconductor companies that design and manufacture ICs, as well as systems companies that design and manufacture electromechanical systems containing various types of semiconductor and other electronics.

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.

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.

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.

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.

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.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

In furtherance of these regulations, effective September 29, 2025, BIS issued an interim final rule that extended the export restrictions imposed on entities identified on the Entity List or the Military End-User List and other certain sanctioned parties, to entities that are 50% or more owned by one or more such entities.

However, on November 11, 2025, BIS published a one-year suspension of the new rule that is currently set to expire on November 9, 2026, absent a future extension.

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.

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.

In response, China and other countries, as well as the European Union, have announced retaliatory tariffs on imports of U.S. goods and other countermeasures.

- A loss associated with our settlements with BIS and the DOJ that was paid during fiscal 2025; and

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

Arrangements that require future decisions on the performance obligations to be delivered do not meet the definition of a revenue contract until the customer executes a separate selection form to identify the products and services that they are purchasing.

Each separate selection form under the arrangement is treated as an individual contract and accounted for based on the respective performance obligations.

| | | | 2025 | | | | | | 2024 | | |

| Other recurring revenue | | | 4 | | % | | | | 3 | | % |

On an annual basis, we expect recurring and up-front revenue as a percentage of total revenue to remain relatively consistent with the results of fiscal 2025.

| Services | | | 475.2 | | | | | | 427.8 | | | | | | | | | | | | 47.4 | | | | | | 11 | | % | | | | | | | | | | | | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

| | | | 2025 | | | | | | 2024 | | | | | | | | |

| Semiconductor IP | | | 14 | | % | | | | 13 | | % | | | | | | |

| China | | | 680.0 | | | | | | 573.1 | | | | | | | | | | | | 106.9 | | | | | | 19 | | % | | | | | | | | | | | | |

| Japan | | | 341.7 | | | | | | 260.2 | | | | | | | | | | | | 81.5 | | | | | | 31 | | % | | | | | | | | | | | | |

| Total revenue | | | $ | 5,296.8 | | | | | $ | 4,641.3 | | | | | | | | | | | $ | 655.5 | | | | | 14 | | % | | | | | | | | | | | | |

Revenue in any one of Cadence’s six geographies 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.

The products these companies develop are some of the most complex systems in the world.

Since our inception, we have been at the forefront of technology innovation.

We work closely with our customers, helping them solve their most complex challenges in the semiconductor and electronic systems industries to unlock limitless opportunities.

Our strategy allows us to deliver solutions to our customers to solve their most complex product development challenges.

Our industry-leading computational software, specialized accelerated hardware, and IP enable us to adapt to our customer’s dynamic design requirements, allowing them to meet their critical business and environmental concerns including time-to-market and sustainability.

The creation of even the most seemingly simple electronic systems and products often requires a complex design process and requires highly trained engineers with various areas of specialized knowledge and skill sets.

Our ability to deliver innovative products that keep up with increasing complexity allows our customers to be successful in meeting their business goals and objectives.

Consistent with our Intelligent System Design strategy, during the first quarter of fiscal 2024, we completed our acquisition of Invecas, a leading provider of design engineering, embedded software and system-level solutions.

We believe the addition of a skilled engineering team with vast experience in delivering end-to-end system solutions with deep expertise in advanced nodes, mixed-signal, verification, embedded software, packaging and turnkey custom silicon production will enhance our ability to pursue attractive opportunities in the markets we serve.

The acquisition of BETA CAE expands our multiphysics system analysis suite with highly complementary products, enabling us to offer a more comprehensive portfolio to customers in the automotive sector and at companies in the aerospace, industrial and healthcare industries.

- Incremental costs for professional services; and

| | | | 2024 | | | | | | 2023 | | |

| Revenue from arrangements with non-cancelable commitments | | | 3 | | % | | | | 3 | | % |

We expect our percentage of annual up-front revenue to continue to increase in 2025 as growth in our product offerings for which revenue is recognized up-front is expected to be greater than the growth of our product offerings for which revenue is recognized over time

| Services | | | 427.8 | | | | | | 255.6 | | | | | | | | | | | | 172.2 | | | | | | 67 | | % | | | | | | | | | | | | |

| | | | 2024 | | | | | | 2023 | | | | | | | | |

| IP | | | 13 | | % | | | | 12 | | % | | | | | | |

While revenue from our Core EDA product category increased during fiscal 2024, as compared to fiscal 2023, Core EDA as a percentage of total revenue decreased over the same period.

As shown in the table below, revenue from China decreased during the same period and the substantial majority of that decreased revenue is included in the Core EDA category, resulting in lower revenue growth in the Core EDA category compared to both the IP and System Design and Analysis categories.

Certain of our licensing arrangements allow customers the ability to remix among software products.

Additionally, we have arrangements with customers that include a combination of our products, with the actual product selection and number of licensed users to be determined at a later date.

For these arrangements, we estimate the allocation of the revenue to product categories based upon the expected usage of our products.

The actual usage of our products by these customers may differ and, if that proves to be the case, the revenue allocation in the table above would differ.

| China | | | 573.1 | | | | | | 679.5 | | | | | | | | | | | | (106.4) | | | | | | (16) | | % | | | | | | | | | | | | |

| Japan | | | 260.2 | | | | | | 229.2 | | | | | | | | | | | | 31.0 | | | | | | 14 | | % | | | | | | | | | | | | |

During fiscal 2024, as compared to fiscal 2023, revenue in the United States increased primarily due to growth in revenue from our hardware, software, IP and service offerings, while revenue in China decreased primarily due to a decrease in revenue from our hardware and IP offerings.

Revenue in the remaining geographies presented in the table above increased during fiscal 2024, as compared to fiscal 2023, primarily due to growth in revenue from software offerings.

| Europe, Middle East and Africa | | | 15 | | % | | | | 16 | | % | | | | | | |

| Cost of services | | | 210.9 | | | | | | 103.3 | | | | | | | | | | | | 107.6 | | | | | | 104 | | % | | | | | | | | | | | | |

Cost of services increased during fiscal 2024, as compared to fiscal 2023, primarily due to increased costs associated with our design service offerings and costs associated with the service offerings from our acquisition of Invecas.

| General and administrative | | | 282.3 | | | | | | 242.4 | | | | | | | | | | | | 39.9 | | | | | | 16 | | % | | | | | | | | | | | | |

| Outside legal fees | | | $ | 18.7 | | | | | | | |

| Estimated legal liabilities | | | 8.3 | | | | | | | | |

| Foreign service tax | | | 5.0 | | | | | | | | |

| Other professional services | | | 3.4 | | | | | | | | |

Also, during fiscal 2024, as compared to fiscal 2023, we experienced an increase in foreign service tax expense, because we did not benefit from any foreign service tax refunds as we did during fiscal 2023.

Restructuring and Other Charges

Operating margin decreased during fiscal 2024, as compared to fiscal 2023, primarily due to the mix of products and services sold during each respective period.

We expect interest expense to increase during fiscal 2025 due to the increased level of debt on our consolidated balance sheet compared to prior periods.

During fiscal 2024, we received best judgment tax audit assessments of approximately $26.0 million from the Israel Tax Authority (“ITA”) for the tax years 2017, 2018 and 2019.

The following table provides information about our foreign currency forward exchange contracts as of December 31, [removed: 2024.][added: 2025.]

All of these forward contracts mature during [removed: February 2025.][added: June 2026.]

| European [removed: union] [added: Union] euro | | | [removed: 165.1] [added: $] | [added: 2,454.6] | | | | | [removed: 0.94] [added: 0.84] | | |

| South Korean [removed: Won] [added: won] | | | [removed: 3.4] [added: 4.2] | | | | | | [removed: 1,399.26] [added: 1,460.89] | | |

| Estimated fair value | | | $ | [removed: (7.5)] [added: (26.0)] | | | | | | | |

As of December 31, [removed: 2023,] [added: 2024,] our foreign currency exchange contracts had an aggregate principal amount of [removed: $697.9] [added: $927.6] million, and an estimated fair value of [removed: $9.3] [added: $(7.5)] million.

We have performed sensitivity analyses as of December 31, [removed: 2024,] [added: 2025,] and December 31, [removed: 2023,] [added: 2024,] using a modeling technique that measures the change in the fair values arising from a hypothetical 10% change in the value of the U.S. dollar relative to applicable foreign currency exchange rates, with all other variables held constant.

The sensitivity analyses indicated that a hypothetical 10% decrease in the value of the U.S. dollar would result in [removed: an increase] [added: a decrease] to the fair value of our foreign currency forward exchange contracts of [removed: $18.3] [added: $213.1] million and [removed: a decrease of $18.4] [added: $18.3] million as of December 31, [removed: 2024] [added: 2025] and December 31, [removed: 2023,] [added: 2024,] respectively, while a hypothetical 10% increase in the value of the U.S. dollar would result in [removed: a decrease] [added: an increase] to the fair value of our foreign currency forward exchange contracts of [removed: $12.7] [added: $219.4] million and [removed: an increase of $20.4] [added: $12.7] million as of December 31, [removed: 2024] [added: 2025] and December 31, [removed: 2023,] [added: 2024,] respectively.

The carrying value of our interest-bearing instruments approximated fair value as of December 31, [removed: 2024.][added: 2025.]

Our investments in debt securities had a fair value of approximately [removed: $50.3] [added: $71.0] million and [removed: $49.8] [added: $50.3] million as of December 31, [removed: 2024] [added: 2025] and December 31, [removed: 2023,] [added: 2024,] respectively, that may decline in value if market interest rates rise.

As of December 31, [removed: 2024] [added: 2025] and December 31, [removed: 2023,] [added: 2024,] an increase in the market rates of interest of 1% would result in a decrease in the fair values of our marketable debt securities by approximately [removed: $2.0] [added: $2.8] million and [removed: $2.6] [added: $2.0] million, respectively.

As of December 31, [removed: 2024,] [added: 2025,] there were no borrowings outstanding under our 2024 Credit Facility.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

We enter into foreign currency forward exchange contracts to protect against currency exchange risks associated with existing assets, liabilities and other commitments.

In connection with our pending acquisition of Hexagon’s D&E business, we entered into foreign currency forward exchange contracts to mitigate the impact of currency price fluctuations of the European Union euro relative to the U.S. dollar on the contractual cash consideration payable to Hexagon at close.

| Canadian dollar | | | 174.1 | | | | | | 1.39 | | |

| Japanese yen | | | 146.1 | | | | | | 154.47 | | |

| Chinese renminbi | | | 107.9 | | | | | | 7.04 | | |

| British pound | | | 105.6 | | | | | | 0.76 | | |

| Israeli shekel | | | 101.3 | | | | | | 3.21 | | |

| Swedish krona | | | 66.8 | | | | | | 9.33 | | |

| Indian rupee | | | 61.2 | | | | | | 89.4 | | |

| Taiwan dollar | | | 22.0 | | | | | | 31.32 | | |

| Swiss franc | | | 7.7 | | | | | | 0.79 | | |

| Singapore dollar | | | 4.1 | | | | | | 1.29 | | |

| Brazilian real | | | 2.0 | | | | | | 5.52 | | |

| Total | | | $ | 3,257.6 | | | | | | | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

| British pound | | | $ | 205.3 | | | | | 0.79 | | |

| Chinese renminbi | | | 124.3 | | | | | | 7.25 | | |

| Swiss franc | | | 106.2 | | | | | | 0.89 | | |

| Japanese yen | | | 101.7 | | | | | | 154.4 | | |

| Israeli shekel | | | 74.9 | | | | | | 3.69 | | |

| Swedish krona | | | 52.4 | | | | | | 10.93 | | |

| Indian rupee | | | 49.1 | | | | | | 84.99 | | |

| Canadian dollar | | | 28.2 | | | | | | 1.4 | | |

| Taiwan dollar | | | 14.9 | | | | | | 32.54 | | |

| Singapore dollar | | | 2.1 | | | | | | 1.34 | | |

| Total | | | $ | 927.6 | | | | | | | |

Our 2025 Term Loan and 2026 Term Loan, which had variable interest rates, were prepaid in full in September 2024.

Statements including, but not limited to, statements regarding [removed: the horizons of] artificial intelligence (“AI"), other technological and market advancements and their impacts on our business; the extent, timing and mix of future revenues and customer demand; the deployment of our products and services; the impact of the macroeconomic and geopolitical environment, including but not limited to, expanded trade controls, tariffs, conflicts around the world, volatility in foreign currency exchange rates, inflation and changes in interest rates; the impact of government actions; future costs, expenses, tax rates and uses of cash; pending legal, administrative and tax proceedings; restructuring actions and associated charges and benefits; pending acquisitions, accounting for acquisitions and integration of acquired businesses; and other statements using words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and “would,” and words of similar import and the negatives thereof, constitute forward-looking statements.

Cadence® is a global [removed: market] [added: technology] leader that develops computational, AI-driven software, accelerated hardware, and [added: silicon] intellectual property (“IP”) [removed: solutions for engineers and scientists to bring new and innovative] products [removed: to life.][added: and solutions.]

[removed: The] [added: Our mission is to empower the] world’s most innovative [removed: technology] companies [removed: use our solutions and services] to deliver [removed: transformational] [added: extraordinary electronic] products [removed: to multiple industries] that drive the global [removed: economy.][added: economy and improve everyday life.]

Our [removed: strategy, illustrated in the graphic below, is focused] [added: ISD strategy focuses] on three [removed: primary areas:] [added: key pillars:] Design Excellence, System Innovation, and Pervasive Intelligence.

System [removed: Innovation builds] [added: Innovation: Building] on our [removed: foundation of] Design Excellence [removed: and deep expertise in] [added: foundation, this pillar applies our AI-driven] computational [removed: algorithms and expands that] expertise to [removed: include] multiphysics-based analysis of systems [removed: that contain] [added: containing] electronic devices, [removed: including] [added: such as] printed circuit boards [removed: (“PCBs”), devices with] [added: ("PCBs"),] advanced packaging [removed: technology,] [added: technologies,] and [removed: 3-dimensional IC (“3D-IC”).][added: 3D-ICs.]

This [removed: gives] [added: enables] customers [removed: designing full systems containing multiple electronic devices, the ability] to verify that their products will [removed: work] [added: function] as intended under various physical conditions.

Pervasive [removed: Intelligence incorporates] [added: Intelligence: This pillar integrates] AI [removed: training] [added: training, inference,] and [removed: inference] [added: reasoning] algorithms [removed: in] [added: into] our [removed: solutions to help] [added: products and solutions, enabling] customers [added: to] optimize [removed: performance] [added: performance, productivity,] and [removed: productivity with improved quality of results for their products.][added: design quality.]

[removed: ][added: ]

Our software and hardware [removed: products] [added: solutions] also support cloud access to address our customers' growing computational needs.

The [removed: third horizon,] [added: third,] Life Sciences AI, [removed: is the application of] [added: applies] AI and [removed: computer] [added: computational] science to [removed: biology to drive advancements] [added: biology, enabling breakthroughs] in [removed: the] medical and life sciences industries.

[removed: With the rapid pace of] [added: As] innovation [removed: comes the opportunity for] [added: accelerates,] our products [removed: to] [added: and solutions] address [removed: growing key] [added: critical] challenges [removed: associated with the design of] [added: in] electronic [removed: products, such as] [added: design, including] power [removed: consumption,] [added: efficiency,] performance, chip [removed: area] [added: area,] and cost.

[removed: In alignment] [added: Aligned] with our [removed: Intelligent System Design] [added: ISD] strategy, we [removed: define] [added: organize] our [removed: solutions in] [added: offerings into] three [added: tightly integrated] product categories: Core EDA, Semiconductor IP, and System Design and Analysis (“SD&A”).

Core EDA [removed: includes our] [added: encompasses the] software, hardware, and services [removed: used to] [added: essential for the] design and [removed: verify] [added: verification of] a wide [removed: variety] [added: range] of semiconductors.

Our Semiconductor IP portfolio includes silicon subsystems, software, and [added: related] services that [removed: are used in] [added: accelerate the] semiconductor [removed: design.][added: design process.]

Virtuoso [removed: Studio] is [removed: the foundation of] our [removed: solution] [added: flagship] platform [removed: for custom,] [added: used by engineers to design and verify] analog, [removed: mixed-signal, photonics,] [added: custom, RF, mixed-signal IC, memory,] and [removed: RF semiconductors.][added: photonics devices.]

We offer two [removed: functional verification] software [removed: solutions,] [added: solutions for functional verification:] the Jasper Formal Verification [removed: Platform,] [added: Platform] and the Xcelium™ Parallel Logic Simulation Platform.

Our Palladium® Enterprise Emulation Platform and Protium™ field programmable gate arrays (“FPGA”)-Based Prototyping Platforms [removed: are for more] [added: significantly reduce simulation times, enabling] comprehensive chip verification, [removed: often running low-level embedded software on top of a model of the chip, to ensure proper functionality before silicon manufacturing.][added: early bug detection, and hardware/software co-verification.]

[removed: Verisium™ is] [added: Additionally,] our [added: Verisium™] generative AI solution [removed: for multi-run verification that enables additional] [added: enhances] productivity, automation, and quality [removed: of results throughout] [added: across] the entire verification flow.

Our [removed: semiconductor] [added: Semiconductor] IP [removed: product category includes strategic and] [added: portfolio features strategic,] mission-critical design architectures that [removed: our] customers [removed: use to] integrate into their [removed: highly] differentiated design blocks, [removed: SoC] [added: system-on-chip (“SoC”)] subsystems, and chiplets.

These [added: IP solutions] are [removed: typically designed into] [added: embedded in] silicon chips [removed: that are found in high volume in multiple markets such as] [added: deployed across high-volume markets, including] automotive, hyperscale, mobile computing, and [removed: many] consumer products [removed: including] [added: such as] mobile [removed: phones,] [added: phones] and AI chips.

Our [removed: IP] offerings include controllers and physical [removed: interfaces, which are commonly] [added: interfaces widely] used in computing, networking, and embedded systems.

[removed: We have a broad] [added: The] portfolio [removed: of] [added: spans] PCI Express, Universal Accelerator Link, Compute Express Link, multiple memory interfaces [removed: including] [added: such as] High Bandwidth Memory and Graphics Double Data Rate, and [removed: many] other [added: industry] standards.

[removed: Our] [added: Additionally, our] Tensilica® configurable digital signal processors [removed: are] [added: (“DSPs”) provide] vertically targeted subsystems for AI, audio/voice, [removed: baseband] [added: baseband,] and vision/imaging [removed: applications, controllers and physical interfaces for standard protocols and analog IP.][added: applications.]

Our design IP portfolio [added: also] includes [removed: solutions for high speed] [added: high-speed] serializer/deserializer (“SerDes”), peripheral component interconnect (“PCI”), USB, and [removed: many] other [removed: standards.][added: standard protocols.]

[removed: The VIP models are designed to work] [added: Complementing these offerings, our Verification IP (“VIP”) portfolio enables system-level validation and integrates] seamlessly with our Xcelium™ simulator and Palladium® Enterprise Emulation solutions.

Careful analysis is required for these systems to work as designed under a wide range of operating conditions, standards, and [removed: regulatory laws.][added: regulations.]

Our comprehensive suite of [removed: computational fluid dynamics (“CFD”)] [added: CFD] solutions enables our customers to extend their multiphysics analysis workflows to address simulation and analysis challenges for applications such as aerodynamics, hydrodynamics, propulsion, turbomachinery, heat transfer, and combustion.

[removed: Millennium M1] [added: Our Millennium™ Multiphysics Enterprise Platform] is [removed: the first release] [added: an industry-first turnkey AI-enabled digital twin] and is designed to overcome traditional CFD speed/accuracy and compute resource limitations with a combination of GPU resident CFD solvers such as Fidelity LES for large eddy simulations (“LES”) and scalable high-performance hardware.

| | | | [removed: 2024] [added: 2025] | | | | | | | | | | | | [removed: 2023] [added: 2024] | | | | | | | | | | | | [removed: 2022] [added: 2023] | | | | | | | | |

| Product and maintenance | | | $ | [removed: 4,213] [added: 4,822] | | | | | 91 | | % | | | | $ | [removed: 3,834] [added: 4,214] | | | | | [removed: 94] [added: 91] | | % | | | | $ | [removed: 3,340] [added: 3,834] | | | | | 94 | | % |

| Services | | | [removed: 428] [added: 475] | | | | | | 9 | | % | | | | [removed: 256] [added: 428] | | | | | | [removed: 6] [added: 9] | | % | | | | [removed: 222] [added: 256] | | | | | | 6 | | % |

| Total revenue | | | $ | [removed: 4,641] [added: 5,297] | | | | | | | | | | | $ | [removed: 4,090] [added: 4,642] | | | | | | | | | | | $ | [removed: 3,562] [added: 4,090] | | | | | | | |

For additional information and analysis on our revenue, including revenue by geography, see the discussion under “Results of Operations” under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” For our fiscal [removed: 2024] [added: 2025] results of operations and our financial position as of December 31, [removed: 2024,] [added: 2025,] see Part IV, Item 15, “Exhibits and Financial Statement Schedules.”

Contracted but unsatisfied performance obligations were [removed: approximately $6.8] [added: $7.8] billion as of December 31, [removed: 2024,] [added: 2025,] which included [removed: $0.5] [added: $0.6] billion of non-cancelable commitments from customers where actual product selection and quantities of specific products or services are to be determined by customers at a later date.

As of December 31, [removed: 2024,] [added: 2025,] we expected to recognize [removed: 54%] [added: 53%] of the contracted but unsatisfied performance obligations, excluding non-cancelable commitments, as revenue over the next 12 months, [removed: 42%] [added: 43%] over the next 13 to 36 months and the remainder thereafter.

These include, but are not limited to, laws and regulations related to trade controls, anti-corruption and anti-bribery, and data privacy and data protection and AI, as well as antitrust, competition, employment, income [removed: taxes] [added: taxes, national security, foreign ownership] and [added: investment and] the environment.

These restrictions [added: have had,] and any subsequent restrictions may [removed: have] [added: have,] an adverse effect on our business, results of operations or financial condition, either directly or by impacting our customers’ products, and restrict our ability to license or support our products to certain companies in China.

Furthermore, increased restrictions on China exports may lead to [added: additional] regulatory retaliation by the Chinese government and possibly further escalate geopolitical tensions, and any such scenarios may adversely impact our business.

Trade regulations limiting or banning sales into certain countries or to certain companies, including economic and financial sanctions and trade embargoes administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets [removed: Control (“OFAC”),] [added: Control,] have impacted our ability to transact business in certain countries and with certain customers.

We are subject to laws and regulations in the United States and other jurisdictions governing data privacy and data protection, including the [added: California Consumer Privacy Act and the] EU/UK General Data Protection Regulation, which regulate our collection, handling and use of personal information.

Our customers include semiconductor companies that design and manufacture integrated circuits (“ICs”), as well as systems companies that design and manufacture electromechanical systems containing various types of semiconductor and other electronics.

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

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

Our Intelligent System Design™ (“ISD”) 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.

Design Excellence: This pillar leverages our core expertise in AI-driven computational software and accelerated computing to deliver industry-leading electronic design, analysis, and verification products and solutions for semiconductors, which are embedded in many products and services that we use every day.

With the exponential growth of data generated during the design process, our agentic and generative AI solutions analyze vast datasets and are designed to overcome the limitations of traditional human-intensive optimization processes and to enable more accurate, efficient, and optimal design solutions that meet the demands of increasingly complex systems.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

Our business growth and customer success are fueled by the transformative impact of AI and the increasing complexity of semiconductors and electronic system design that underpins modern society.

Anchored in our ISD strategy, we view AI as a pivotal force driving new opportunities across three key horizons.

The first, Infrastructure AI, is powered by the demand for high-performance computing (“HPC”) and AI chips essential for data centers and hyperscalers.

The second, Physical AI, focuses on embedding AI into physical systems like autonomous vehicles, industrial robotics, and automation.

The growing complexity of chip and system designs is a fundamental driver of demand for our technology.

As customers tackle the challenges of designing increasingly intricate systems, they rely on our advanced AI-driven computational software, hardware, IP, and services to manage this complexity without proportional cost increases.

Our products and solutions are critical for optimizing the performance, power, and area (“PPA”) of semiconductors and electronic systems while accelerating time-to-market.

This demand is further amplified by rapid advancements in integrated circuit manufacturing technology.

To ensure our customers can fully capitalize on these innovations, we remain committed to significant investments in Research and Development (“R&D”).

Our business is also propelled by the differentiation and measurable value our products and solutions deliver to our customers and partners.

Our customers rely on our solutions to provide superior quality of results, enhanced engineering productivity, and unmatched reliability.

These capabilities have become increasingly vital as customers pursue sustainability goals by developing energy-efficient products.

Beyond traditional electronics, we have expanded into new verticals such as life sciences, leveraging our expertise in simulation and algorithmic design to unlock transformative growth opportunities.

Engineers depend on our solutions to navigate every stage of the electronic product design process, from initial concept to implementation and verification.

Advanced AI technologies are integrated into our design platforms to empower users to create highly accurate digital twins—virtual models that replicate functionality, manufacturability, and compliance with industry standards.

By leveraging sophisticated simulations, engineers can predict real-world performance, identify potential issues early, and optimize designs before transitioning to physical prototyping.

This simulation-first approach delivers significant time and cost efficiencies, reduces the need for costly design iterations, and ensures customers have confidence that their products will perform safely, reliably, and as intended.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

The SD&A category provides solutions and services that enable the design and verification of complete electronic systems, from PCBs to complex system assemblies.

Our Core EDA products and solutions are essential in the design and verification of semiconductor chips, including analog, digital, mixed-signal, memory, radio-frequency (“RF”), and silicon photonics, and are widely used across multiple industries including automotive, aerospace and defense, consumer electronics, data centers, industrial, medical, and mobile.

We work closely with leading semiconductor ecosystem partners to develop foundry process design kits (“PDKs”) to ensure our core EDA products and solutions meet manufacturing sign-off requirements.

To address increasing design and manufacturing complexity, we integrate machine learning, generative AI and native cloud scalability in our solutions, enhancing design quality and engineering productivity.

It is considered the industry standard for custom and analog IC design, enabling high-performance, low-power, and differentiated silicon development.

Its integrated simulation and analysis capabilities ensure circuit functionality, performance, and reliability under varying conditions, while comprehensive physical verification and signoff flows, including design rule checking (“DRC”) and layout-versus-schematic (“LVS”) verification, ensure manufacturing compliance.

The Innovus™ platform is used by engineers to design and verify large digital ICs.

Innovus is critical for customers to optimize their designs to achieve the best PPA.

Its integrated physical verification and signoff capabilities, including DRC, LVS, static timing analysis (“STA”), and power analysis are necessary to ensure correct circuit functionality, while optimizing for PPA.

Functional verification is a critical part of the design process, ensuring a chip's functional description matches its physical implementation.

This process is repeated throughout the design cycle to identify potential issues early, reducing the risk of costly errors post-manufacturing.

The products these companies develop are some of the most complex systems in the world.

Since our inception, we have been at the forefront of technology innovation.

We work closely with our customers, helping them solve their most complex challenges in the semiconductor and electronic systems industries to unlock limitless opportunities.

Our customers include semiconductor companies that design and manufacture semiconductor devices and systems companies that design and manufacture products containing many different types of semiconductors, which they either make themselves or buy from a semiconductor company.

Semiconductors, also referred to as integrated circuits (“ICs”), or chips, are the heart of almost every industry.

Semiconductors are the catalyst for innovation in many industries including automotive, aerospace, biotech, hyperscale and cloud computing, data centers, telecommunications, medical technology, industrial internet of things (“IIoT”), and AI.

They are found in a wide variety of consumer products such as cell phones, automobiles, computers, home appliances, home security, drones, and home entertainment systems.

Our Intelligent System Design™ (“ISD”) strategy allows us to deliver solutions to our customers to solve their most complex product development challenges.

Our industry-leading computational software, accelerated hardware, and IP enable us to adapt to our customer's dynamic design requirements, allowing them to meet their critical business and environmental concerns including time-to-market and sustainability.

The creation of even the most seemingly simple electronic systems and products typically includes a complex design process and requires highly trained engineers with various areas of specialized knowledge and skill sets.

Our ability to deliver innovative products that keep up with increasing complexity allows our customers to be successful in meeting their business goals and objectives.

Historically, the industry that provided the software tools IC engineers used was called Electronic Design Automation (“EDA”).

The pace of technical innovation in EDA has been driven by a concept known as Moore’s Law, which more than 50 years ago predicted that the complexity of ICs would double approximately every 18-24 months.

Design Excellence focuses on our core technology and deep understanding of computational software, accelerated computing, machine learning, and AI to develop best-in-class electronic design and analysis semiconductor solutions.

In this area, customers are primarily developing large chips including those used in computers, laptops, cellphones, medical devices, games and entertainment systems, and many other types of consumer electronics.

Design Excellence applies to all types of semiconductor electronics including CPUs, GPUs, MCUs, memory, radio frequency (“RF”), analog, and mixed-signal, in both mainstream and advanced semiconductor process nodes.

Some examples of electronic systems are a computer motherboard, the electronics in a cellphone, or the electronic transmission or infotainment system in an automobile.

The amount of data produced in the design phase of their products has grown exponentially over the last 20 years.

We implement generative AI agents to analyze large data sets and break through the limitations of the conventional human-intensive optimization process to achieve optimal design solutions expeditiously and without compromising accuracy.

Our products and services enable our customers to design complex and innovative semiconductor and electronic systems that are driven by key trends, including foundries creating new advanced transistor devices and processes, semiconductor companies designing electrical systems, systems companies designing semiconductors, the hyper-convergence between electrical and mechanical systems, hyperscale computing, autonomous driving, and 5G.

These trends are accelerated by the AI super cycle.

Demand for our technology and expertise is driven by increasing complexity and our customers’ need to invest in new designs and products that are highly differentiated.

Generative AI is reshaping the entire semiconductor and systems industry development process.

From our perspective, the AI super cycle we are experiencing will influence our key business opportunities along three horizons, which are Infrastructure AI, Physical AI and Life Sciences AI.

The first horizon, Infrastructure AI, is being driven by data centers and hyperscale computing to provide the necessary power to run AI workloads.

The second horizon, Physical AI, is the integration of AI with autonomous systems.

It will drive many applications such as automobiles, industrial robots, and many other autonomous systems.

Underlying the requirements within any particular vertical sector is the availability of rapidly improving IC manufacturing technology.

In order for our customers to take advantage of such advancements, some of our products need to first incorporate new capabilities such that they can exploit new manufacturing capabilities.

This dependency means that we must invest significantly in product research and development (“R&D”) to keep pace with the latest manufacturing technology.

The demand for new IC manufacturing technology directly impacts the demand for our newest products.

Another driver for our business is the differentiation, capabilities and benefits provided to our customers by our products.

Our products and services have differentiated attributes that our customers value.

In general, these attributes can be grouped into broader categories such as quality of results (in terms of power consumption, performance and chip area), engineering productivity, tool performance, manufacturability, reliability and faster time to market.

Many of these attributes contribute to sustainability initiatives by enabling our customers to create innovative products that optimize power, space and energy.

Engineers use our solutions to complete critical steps in the design process, which includes creating, implementing, and verifying the design for functionality, manufacturability and other required industry-related compliance standards.

Much of an engineer's time spent with our solutions during the design process involves running simulations to verify that their design will work as expected.

Our technology, enhanced by AI, allows our customers to build a virtual model or digital twin that accurately predicts how their design will work.

The ability to perform these simulations leads to significant time and cost savings for our customers as they can find and fix critical design problems before building their products.

Our customers rely on our solutions to ensure their products perform safely and reliably.

For the fiscal year ended December 31, [removed: 2024][added: 2025]

[removed: ][added: ]

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter ended June 30, [removed: 2024] [added: 2025] was approximately [removed: $84,268,000,000.][added: $83,968,000,000.]

On January 31, [removed: 2025,] [added: 2026,] approximately [removed: 274,108,000] [added: 272,651,000] shares of the registrant’s common stock, $0.01 par value, were outstanding.

Such definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended December 31, [removed: 2024.][added: 2025.]

| Item 1. | | | [removed: [Business](#i42632382fa9049e3a986daf03147e52f_13)] [added: [Business](#i253f30c322854d55bf1ad1a5df028570_13)] | | | [removed: [1](#i42632382fa9049e3a986daf03147e52f_13)] [added: [1](#i253f30c322854d55bf1ad1a5df028570_13)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i42632382fa9049e3a986daf03147e52f_22)] [added: Factors](#i253f30c322854d55bf1ad1a5df028570_22)] | | | [removed: [11](#i42632382fa9049e3a986daf03147e52f_22)] [added: [12](#i253f30c322854d55bf1ad1a5df028570_22)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i42632382fa9049e3a986daf03147e52f_25)] [added: Comments](#i253f30c322854d55bf1ad1a5df028570_25)] | | | [removed: [29](#i42632382fa9049e3a986daf03147e52f_25)] [added: [33](#i253f30c322854d55bf1ad1a5df028570_25)] | | |

| Item 1C. | | | [removed: [Cybersecurity](#i42632382fa9049e3a986daf03147e52f_28)] [added: [Cybersecurity](#i253f30c322854d55bf1ad1a5df028570_28)] | | | [removed: [29](#i42632382fa9049e3a986daf03147e52f_28)] [added: [33](#i253f30c322854d55bf1ad1a5df028570_28)] | | |

| Item 2. | | | [removed: [Properties](#i42632382fa9049e3a986daf03147e52f_31)] [added: [Properties](#i253f30c322854d55bf1ad1a5df028570_31)] | | | [removed: [30](#i42632382fa9049e3a986daf03147e52f_31)] [added: [34](#i253f30c322854d55bf1ad1a5df028570_31)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i42632382fa9049e3a986daf03147e52f_34)] [added: Proceedings](#i253f30c322854d55bf1ad1a5df028570_34)] | | | [removed: [30](#i42632382fa9049e3a986daf03147e52f_34)] [added: [34](#i253f30c322854d55bf1ad1a5df028570_34)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i42632382fa9049e3a986daf03147e52f_37)] [added: Disclosures](#i253f30c322854d55bf1ad1a5df028570_37)] | | | [removed: [30](#i42632382fa9049e3a986daf03147e52f_37)] [added: [34](#i253f30c322854d55bf1ad1a5df028570_37)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i42632382fa9049e3a986daf03147e52f_43)] [added: Securities](#i253f30c322854d55bf1ad1a5df028570_43)] | | | [removed: [31](#i42632382fa9049e3a986daf03147e52f_43)] [added: [35](#i253f30c322854d55bf1ad1a5df028570_43)] | | |

| Item 6. | | | [removed: [\[Reserved\]](#i42632382fa9049e3a986daf03147e52f_55)] [added: [\[Reserved\]](#i253f30c322854d55bf1ad1a5df028570_55)] | | | [removed: [32](#i42632382fa9049e3a986daf03147e52f_55)] [added: [36](#i253f30c322854d55bf1ad1a5df028570_55)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i42632382fa9049e3a986daf03147e52f_58)] [added: Operations](#i253f30c322854d55bf1ad1a5df028570_58)] | | | [removed: [33](#i42632382fa9049e3a986daf03147e52f_58)] [added: [37](#i253f30c322854d55bf1ad1a5df028570_58)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i42632382fa9049e3a986daf03147e52f_82)] [added: Risk](#i253f30c322854d55bf1ad1a5df028570_82)] | | | [removed: [45](#i42632382fa9049e3a986daf03147e52f_82)] [added: [50](#i253f30c322854d55bf1ad1a5df028570_82)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i42632382fa9049e3a986daf03147e52f_85)] [added: Data](#i253f30c322854d55bf1ad1a5df028570_85)] | | | [removed: [47](#i42632382fa9049e3a986daf03147e52f_85)] [added: [52](#i253f30c322854d55bf1ad1a5df028570_85)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i42632382fa9049e3a986daf03147e52f_88)] [added: Disclosure](#i253f30c322854d55bf1ad1a5df028570_88)] | | | [removed: [47](#i42632382fa9049e3a986daf03147e52f_88)] [added: [52](#i253f30c322854d55bf1ad1a5df028570_88)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i42632382fa9049e3a986daf03147e52f_91)] [added: Procedures](#i253f30c322854d55bf1ad1a5df028570_91)] | | | [removed: [47](#i42632382fa9049e3a986daf03147e52f_91)] [added: [52](#i253f30c322854d55bf1ad1a5df028570_91)] | | |

| Item 9B. | | | [Other [removed: Information](#i42632382fa9049e3a986daf03147e52f_94)] [added: Information](#i253f30c322854d55bf1ad1a5df028570_94)] | | | [removed: [48](#i42632382fa9049e3a986daf03147e52f_94)] [added: [53](#i253f30c322854d55bf1ad1a5df028570_94)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i42632382fa9049e3a986daf03147e52f_100)] [added: Inspections](#i253f30c322854d55bf1ad1a5df028570_100)] | | | [removed: [48](#i42632382fa9049e3a986daf03147e52f_100)] [added: [53](#i253f30c322854d55bf1ad1a5df028570_100)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#i42632382fa9049e3a986daf03147e52f_106)] [added: Governance](#i253f30c322854d55bf1ad1a5df028570_106)] | | | [removed: [49](#i42632382fa9049e3a986daf03147e52f_106)] [added: [54](#i253f30c322854d55bf1ad1a5df028570_106)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i42632382fa9049e3a986daf03147e52f_109)] [added: Compensation](#i253f30c322854d55bf1ad1a5df028570_109)] | | | [removed: [49](#i42632382fa9049e3a986daf03147e52f_109)] [added: [54](#i253f30c322854d55bf1ad1a5df028570_109)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i42632382fa9049e3a986daf03147e52f_112)] [added: Matters](#i253f30c322854d55bf1ad1a5df028570_112)] | | | [removed: [49](#i42632382fa9049e3a986daf03147e52f_112)] [added: [54](#i253f30c322854d55bf1ad1a5df028570_112)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#i42632382fa9049e3a986daf03147e52f_115)] [added: Independence](#i253f30c322854d55bf1ad1a5df028570_115)] | | | [removed: [49](#i42632382fa9049e3a986daf03147e52f_115)] [added: [54](#i253f30c322854d55bf1ad1a5df028570_115)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#i42632382fa9049e3a986daf03147e52f_118)] [added: Services](#i253f30c322854d55bf1ad1a5df028570_118)] | | | [removed: [49](#i42632382fa9049e3a986daf03147e52f_118)] [added: [54](#i253f30c322854d55bf1ad1a5df028570_118)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i42632382fa9049e3a986daf03147e52f_124)] [added: Schedules](#i253f30c322854d55bf1ad1a5df028570_124)] | | | [removed: [50](#i42632382fa9049e3a986daf03147e52f_124)] [added: [55](#i253f30c322854d55bf1ad1a5df028570_124)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i42632382fa9049e3a986daf03147e52f_217)] [added: Summary](#i253f30c322854d55bf1ad1a5df028570_217)] | | | [removed: [98](#i42632382fa9049e3a986daf03147e52f_217)] [added: [105](#i253f30c322854d55bf1ad1a5df028570_217)] | | |

| | | | [removed: [Signatures](#i42632382fa9049e3a986daf03147e52f_220)] [added: [Signatures](#i253f30c322854d55bf1ad1a5df028570_220)] | | | [removed: [99](#i42632382fa9049e3a986daf03147e52f_220)] [added: [106](#i253f30c322854d55bf1ad1a5df028570_220)] | | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

- a security incident response plan that includes procedures for responding to [added: and escalating] cybersecurity incidents;

We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected [removed: or are reasonably likely to materially affect] us, including our business strategy, results of operations, or financial condition.

Our [removed: management team, including our] Chief Information Officer [removed: (“CIO”), CISO] [added: (“CIO”)] and [added: CISO, who are members of] the [removed: General Counsel, is] [added: management team, are primarily] responsible for assessing and managing material risks from cybersecurity threats, including supervision of our internal security incident response team and [removed: our Disclosure Committee comprised of certain of our employees (including any applicable subcommittees thereof).][added: external cybersecurity service providers.]

Our management team has relevant expertise in the [removed: following:(i)] [added: following: (i)] understanding of cybersecurity risks in enterprise operations, including information technology, information security, product security, physical security and legal, (ii) experience in overseeing risk management and understanding risks faced by enterprise operations and (iii) significant operating experience allowing them to provide insight into developing, implementing and assessing our operating plan.

In addition, our [added: CIO has over 25 years of experience in managing enterprise information technology, with a background in software development and technologies, and holds a Bachelor of Engineering (BE) in electrical engineering, and our] CISO has over 30 years of broad cybersecurity and information technology risk management experience, is a Certified Information Security Manager (“CISM”) and holds a Master's Degree in computer science and information systems.

Our management [removed: team supervises] [added: team, led by our CIO and CISO, stays informed about and monitors] efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents, and is responsible for oversight and management of our cybersecurity risk management program.

Our [added: CIO and CISO, as well as other] management team [added: members,] also [removed: provides] [added: provide] quarterly cybersecurity risk management program updates, to the Board of Directors or to the Audit Committee, in alternating quarters.

See Item 1A, “Risk Factors,” for descriptions of certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

Our Disclosure Committee comprised of certain of our employees (including any applicable subcommittees thereof) participates in incident escalations and analyses.

As of December 31, [removed: 2024,] [added: 2025,] the total square footage of our owned buildings was approximately 1,330,000.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

As of January 31, [removed: 2025,] [added: 2026,] we had [removed: 327] [added: 294] registered stockholders.

The graph assumes that the value of the investment in our common stock and in each index on [removed: December 28, 2019,] [added: January 2, 2021,] (including reinvestment of dividends) was $100 and tracks it each year thereafter on the last day of our fiscal year through December 31, [removed: 2024,] [added: 2025,] and for each index on the last day of the calendar year.

[removed: ][added: ]

*$100 invested on [removed: 12/29/19] [added: 1/2/21] in stock or index, including reinvestment of dividends.

| | | | | | | [removed: 12/28/2019] [added: 1/2/2021] | | | | | | [removed: 1/2/2021] [added: 1/1/2022] | | | | | | [removed: 1/1/2022] [added: 12/31/2022] | | | | | | [removed: 12/31/2022] [added: 12/31/2023] | | | | | | [removed: 12/31/2023] [added: 12/31/2024] | | | | | | [removed: 12/31/2024] [added: 12/31/2025] | | |

We are authorized to repurchase shares of our common stock under a publicly announced program that was most recently increased by our Board of Directors on [removed: August 2, 2023.][added: May 8, 2025.]

The following table presents repurchases made under our publicly announced repurchase authorizations and shares surrendered by employees to satisfy income tax withholding obligations during the three months ended December 31, [removed: 2024:][added: 2025:]

(3)Our publicly announced share repurchase program was originally announced on February 1, 2017, and most recently increased by an additional [removed: $1.0] [added: $1.5] billion on [removed: August 2, 2023.][added: May 8, 2025.]

The information required by Item 201(d) of Regulation S-K under Item 5 is incorporated herein by reference from the section entitled “Equity Compensation Plan Information” in our definitive proxy statement for our [removed: 2025] [added: 2026] Annual Meeting of Stockholders.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

| Cadence Design Systems, Inc. | | | | | | $ | 100.00 | | | | | $ | 136.59 | | | | | $ | 117.75 | | | | | $ | 199.64 | | | | | $ | 220.23 | | | | | $ | 229.11 | |

| Nasdaq Composite | | | | | | 100.00 | | | | | | 122.18 | | | | | | 82.43 | | | | | | 119.22 | | | | | | 154.48 | | | | | | 187.14 | | |

| S&P 500 | | | | | | 100.00 | | | | | | 128.71 | | | | | | 105.40 | | | | | | 133.10 | | | | | | 166.40 | | | | | | 196.16 | | |

| S&P 500 Information Technology | | | | | | 100.00 | | | | | | 134.53 | | | | | | 96.60 | | | | | | 152.48 | | | | | | 208.30 | | | | | | 258.38 | | |

| October 1, 2025 - October 31, 2025 | | | 230,300 | | | | | | $ | 337.18 | | | | | 205,794 | | | | | | $ | 1,532 | |

| November 1, 2025 - November 30, 2025 | | | 206,963 | | | | | | $ | 316.23 | | | | | 190,425 | | | | | | $ | 1,472 | |

| December 1, 2025 - December 31, 2025 | | | 221,319 | | | | | | $ | 322.67 | | | | | 216,767 | | | | | | $ | 1,402 | |

| Total | | | 658,582 | | | | | | $ | 325.72 | | | | | 612,986 | | | | | | | | |

| Cadence Design Systems, Inc. | | | | | | $ | 100.00 | | | | | $ | 194.10 | | | | | $ | 265.12 | | | | | $ | 228.54 | | | | | $ | 387.49 | | | | | $ | 427.46 | |

| Nasdaq Composite | | | | | | 100.00 | | | | | | 144.92 | | | | | | 177.06 | | | | | | 119.45 | | | | | | 172.77 | | | | | | 223.87 | | |

| S&P 500 | | | | | | 100.00 | | | | | | 118.40 | | | | | | 152.39 | | | | | | 124.79 | | | | | | 157.59 | | | | | | 197.02 | | |

| S&P 500 Information Technology | | | | | | 100.00 | | | | | | 143.89 | | | | | | 193.58 | | | | | | 139.00 | | | | | | 219.40 | | | | | | 299.72 | | |

| October 1, 2024 - October 31, 2024 | | | 230,867 | | | | | | $ | 268.37 | | | | | 199,684 | | | | | | $ | 923 | |

| November 1, 2024 - November 30, 2024 | | | 179,112 | | | | | | $ | 295.39 | | | | | 162,073 | | | | | | $ | 875 | |

| December 1, 2024 - December 31, 2024 | | | 164,036 | | | | | | $ | 308.45 | | | | | 157,047 | | | | | | $ | 827 | |

| Total | | | 574,015 | | | | | | $ | 288.25 | | | | | 518,804 | | | | | | | | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

As required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, [removed: 2024.][added: 2025.]

Based on their evaluation our CEO and CFO have concluded that, as of December 31, [removed: 2024,] [added: 2025,] our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, [removed: 2024,] [added: 2025,] that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2024.][added: 2025.]

Our management has concluded that, as of December 31, [removed: 2024,] [added: 2025,] our internal control over financial reporting is effective based on these criteria.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

In accordance with guidance issued by the SEC staff, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting for a period not to exceed one year from the date of the acquisition.

Our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024 excluded BETA CAE, which we acquired on May 30, 2024.

The financial results of BETA CAE, a wholly-owned subsidiary, included in our consolidated financial statements since the date of acquisition constituted less than 2% of total consolidated assets and less than 2% of total consolidated revenue as of and for the year ended December 31, 2024.

During the fiscal quarter ended December 31, [removed: 2024,] [added: 2025,] our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated the contracts, instructions or written plans for the purchase or sale of our securities set forth in the table below.

| Ita Brennan, Director | | | | | | [removed: Adoption] [added: Adoption(1)] | | | | | | [removed: 12/12/2024] [added: 11/24/2025] | | | | | | X | | | | | | Up to 720 | | | | | | [removed: 3/16/2026] [added: 3/18/2027] | | |

(1) Ms. Brennan previously adopted a Rule 10b5-1 trading arrangement on December 12, 2024, that expires on March 16, 2026, or, if earlier, upon completion of all authorized transactions under such plan (the "Prior Plan").

Trading under the new plan adopted on November 24, 2025 may not begin until after all trades under Ms. Brennan's Prior Plan are completed or expired without execution.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

The information required by Item 10 as to directors is incorporated herein by reference from the sections entitled “Proposal 1 - Election of Directors” and, as applicable, “Security Ownership of Certain Beneficial Owners and Management - Delinquent Section 16(a) Reports” in our definitive proxy statement for our [removed: 2025] [added: 2026] Annual Meeting of Stockholders.

The information required by Item 10 as to Cadence’s code of ethics is incorporated herein by reference from the section entitled “Corporate Governance - Code of Business Conduct” in our definitive proxy statement for our [removed: 2025] [added: 2026] Annual Meeting of Stockholders.

The information required by Item 10 as to the director nomination process and our Audit Committee is incorporated by reference from the section entitled “Board of Directors - Committees of the Board” in our definitive proxy statement for our [removed: 2025] [added: 2026] Annual Meeting of Stockholders.

The information required by Item 11 is incorporated herein by reference from the sections entitled “Board of Directors - Components of Director Compensation,” “Board of Directors - Director Compensation for Fiscal [removed: 2024,”] [added: 2025,”] “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation,” “Compensation of Executive Officers,” “Potential Payments Upon Termination or Change In Control” and “Pay Ratio Disclosure” in our definitive proxy statement for our [removed: 2025] [added: 2026] Annual Meeting of Stockholders.

The information required by Item 12 is incorporated herein by reference from the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our definitive proxy statement for our [removed: 2025] [added: 2026] Annual Meeting of Stockholders.

The information required by Item 13 is incorporated herein by reference from the sections entitled “Certain Transactions” and “Board of Directors - Director Independence” in our definitive proxy statement for our [removed: 2025] [added: 2026] Annual Meeting of Stockholders.

The information required by Item 14 is incorporated herein by reference from the section entitled “Fees Billed to Cadence by the Independent Registered Public Accounting Firm During Fiscal [removed: 2024] [added: 2025] and [removed: 2023”] [added: 2024”] in our definitive proxy statement for our [removed: 2025] [added: 2026] Annual Meeting of Stockholders.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

| | | | [Report of Independent Registered Public Accounting [removed: Firm](#i42632382fa9049e3a986daf03147e52f_127)] [added: Firm](#i253f30c322854d55bf1ad1a5df028570_127)] (Auditor Firm ID 238) | | | [removed: [51](#i42632382fa9049e3a986daf03147e52f_127)] [added: [56](#i253f30c322854d55bf1ad1a5df028570_127)] | | |

| | | | [Consolidated Balance Sheets as of December 31, [removed: 2024,] [added: 2025,] and December 31, [removed: 2023](#i42632382fa9049e3a986daf03147e52f_130)] [added: 2024](#i253f30c322854d55bf1ad1a5df028570_130)] | | | [removed: [53](#i42632382fa9049e3a986daf03147e52f_130)] [added: [58](#i253f30c322854d55bf1ad1a5df028570_130)] | | |

| | | | [Consolidated Income Statements for the three fiscal years ended December 31, [removed: 2024](#i42632382fa9049e3a986daf03147e52f_133)] [added: 2025](#i253f30c322854d55bf1ad1a5df028570_133)] | | | [removed: [54](#i42632382fa9049e3a986daf03147e52f_133)] [added: [59](#i253f30c322854d55bf1ad1a5df028570_133)] | | |

| | | | [Consolidated Statements of Comprehensive Income for the three fiscal years ended December 31, [removed: 2024](#i42632382fa9049e3a986daf03147e52f_136)] [added: 2025](#i253f30c322854d55bf1ad1a5df028570_136)] | | | [removed: [55](#i42632382fa9049e3a986daf03147e52f_136)] [added: [60](#i253f30c322854d55bf1ad1a5df028570_136)] | | |

| | | | [Consolidated Statements of Stockholders’ Equity for the three fiscal years ended December 31, [removed: 2024](#i42632382fa9049e3a986daf03147e52f_139)] [added: 2025](#i253f30c322854d55bf1ad1a5df028570_139)] | | | [removed: [56](#i42632382fa9049e3a986daf03147e52f_139)] [added: [61](#i253f30c322854d55bf1ad1a5df028570_139)] | | |

| | | | [Consolidated Statements of Cash Flows for the three fiscal years ended December 31, [removed: 2024](#i42632382fa9049e3a986daf03147e52f_142)] [added: 2025](#i253f30c322854d55bf1ad1a5df028570_142)] | | | [removed: [57](#i42632382fa9049e3a986daf03147e52f_142)] [added: [62](#i253f30c322854d55bf1ad1a5df028570_142)] | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#i42632382fa9049e3a986daf03147e52f_145)] [added: Statements](#i253f30c322854d55bf1ad1a5df028570_145)] | | | [removed: [58](#i42632382fa9049e3a986daf03147e52f_145)] [added: [63](#i253f30c322854d55bf1ad1a5df028570_145)] | | |

| [(a) 3. [removed: Exhibits](#i42632382fa9049e3a986daf03147e52f_214)] [added: Exhibits](#i253f30c322854d55bf1ad1a5df028570_214)] | | | | | | [removed: [96](#i42632382fa9049e3a986daf03147e52f_214)] [added: [103](#i253f30c322854d55bf1ad1a5df028570_214)] | | |

© [removed: 2025] [added: 2026] Cadence Design Systems, Inc. All rights reserved worldwide.

We have audited the accompanying consolidated balance sheets of Cadence Design Systems, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2024] [added: 2025] and [removed: 2023,] [added: 2024,] and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, [removed: 2024,] [added: 2025,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, [removed: 2024,] [added: 2025,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2024] [added: 2025] and [removed: 2023,] [added: 2024,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2024] [added: 2025] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2024,] [added: 2025,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

For the year ended December 31, [removed: 2024,] [added: 2025,] the Company’s total revenue was [removed: $4.641] [added: $5.297] billion.

December 31, [removed: 2024] [added: 2025] and December 31, [removed: 2023][added: 2024]

| | | | [removed: December 31,] [added: | | | | | |] 2024 | | | | | | [removed: December 31,] 2023 | | |

| Cash and cash equivalents [added: at beginning of year] | | | $ | 2,644,030 | | | | | $ | 1,008,152 | | [added: | | | $ | 882,325 | |]

| Receivables, net | | | [removed: 680,460] [added: 944,939] | | | | | | [removed: 489,224] [added: 680,460] | | |

| Inventories | | | [removed: 257,711] [added: 303,545] | | | | | | [removed: 181,661] [added: 257,711] | | |

| Prepaid expenses and other | | | [removed: 433,878] [added: 419,872] | | | | | | [removed: 297,180] [added: 433,878] | | |

| Total current assets | | | [removed: 4,016,079] [added: 4,669,673] | | | | | | [removed: 1,976,217] [added: 4,016,079] | | |

| Property, plant and equipment, net | | | [removed: 458,200] [added: 517,004] | | | | | | [removed: 403,213] [added: 458,200] | | |

| Goodwill | | | [removed: 2,378,671] [added: 2,749,143] | | | | | | [removed: 1,535,845] [added: 2,378,671] | | |

| Acquired intangibles, net | | | [removed: 594,734] [added: 718,223] | | | | | | [removed: 336,843] [added: 594,734] | | |

| Deferred taxes | | | [removed: 982,057] [added: 917,733] | | | | | | [removed: 880,001] [added: 982,057] | | |

| Other assets | | | [removed: 544,741] [added: 581,372] | | | | | | [removed: 537,372] [added: 544,741] | | |

| Total assets | | | $ | [removed: 8,974,482] [added: 10,153,148] | | | | | $ | [removed: 5,669,491] [added: 8,974,482] | |

| Accounts payable and accrued liabilities | | | [removed: 632,692] [added: $] | [added: 856,856] | | | | | [removed: 576,558] [added: $] | [added: 632,692] | |

| Current portion of deferred revenue | | | [removed: 737,413] [added: 778,435] | | | | | | [removed: 665,024] [added: 737,413] | | |

| Total current liabilities | | | [removed: 1,370,105] [added: 1,635,291] | | | | | | [removed: 1,590,867] [added: 1,370,105] | | |

| Long-term portion of deferred revenue | | | [removed: 115,168] [added: 155,997] | | | | | | [removed: 98,931] [added: 115,168] | | |

| Long-term debt | | | [removed: 2,476,183] [added: 2,480,150] | | | | | | [removed: 299,771] [added: 2,476,183] | | |

| Other long-term liabilities | | | [removed: 339,448] [added: 407,529] | | | | | | [removed: 275,651] [added: 339,448] | | |

| Total long-term liabilities | | | [removed: 2,930,799] [added: 3,043,676] | | | | | | [removed: 674,353] [added: 2,930,799] | | |

| Common stock – $0.01 par value; authorized 600,000 shares; issued and outstanding shares: [removed: 273,851] [added: 271,799] and [removed: 271,706,] [added: 273,851,] respectively | | | [removed: 4,181,737] [added: 4,719,443] | | | | | | [removed: 3,166,964] [added: 4,181,737] | | |

| Treasury stock, at cost; [removed: 57,049] [added: 59,101] shares and [removed: 57,453] [added: 57,049] shares, respectively | | | [removed: (5,309,579)] [added: (6,344,213)] | | | | | | [removed: (4,604,323)] [added: (5,309,579)] | | |

| Retained earnings | | | [removed: 5,991,868] [added: 7,100,756] | | | | | | [removed: 4,936,384] [added: 5,991,868] | | |

| Accumulated other comprehensive loss | | | [removed: (190,448)] [added: (1,805)] | | | | | | [removed: (94,754)] [added: (190,448)] | | |

| Total stockholders’ equity | | | [removed: 4,673,578] [added: 5,474,181] | | | | | | [removed: 3,404,271] [added: 4,673,578] | | |

| Total liabilities and stockholders’ equity | | | $ | [removed: 8,974,482] [added: 10,153,148] | | | | | $ | [removed: 5,669,491] [added: 8,974,482] | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

February 18, 2026

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

| Cash and cash equivalents | | | $ | 3,001,317 | | | | | $ | 2,644,030 | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

| Loss related to contingent liability | | | 128,545 | | | | | | 8,322 | | | | | | — | | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

For the three fiscal years ended December 31, 2025

| | | | 2025 | | | | | | 2024 | | | | | | 2023 | | |

| Reclassification of losses on derivatives designated as hedging instruments | | | 607 | | | | | | — | | | | | | — | | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

For the three fiscal years ended December 31, 2025

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 1,108,888 | | | | | | — | | | | | | $ | 1,108,888 | |

| Purchase of treasury stock, including excise tax | | | (3,165) | | | | | | — | | | | | | (928,162) | | | | | | — | | | | | | — | | | | | | $ | (928,162) | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance, December 31, 2025 | | | 271,799 | | | | | | $ | 4,719,443 | | | | | $ | (6,344,213) | | | | | $ | 7,100,756 | | | | | $ | (1,805) | | | | | $ | 5,474,181 | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

For the three fiscal years ended December 31, 2025

| | | | 2025 | | | | | | 2024 | | | | | | 2023 | | |

| Net income | | | 1,108,888 | | | | | | 1,055,484 | | | | | | 1,041,144 | | |

| Proceeds from the sale of IP and other assets | | | 11,500 | | | | | | — | | | | | | — | | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

For the three fiscal years ended December 31, 2025

*Measurements of Credit Losses for Accounts Receivable and Contract Assets*

In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets.” This ASU provides a practical expedient that allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets.

Cadence does not expect the adoption of this ASU to have a material impact on its consolidated financial statements and disclosures.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

*Accounting for Internal-Use Software*

In September 2025, the FASB issued ASU No. 2025‑06, “Intangibles—Goodwill and Other—Internal‑Use Software (Subtopic 350‑40): Simplifying the Accounting for Internal‑Use Software.” The updated guidance changes the capitalization criteria for internal‑use software by replacing the existing stage‑based model with a principles‑based approach focused on the point at which management authorizes the software project, funding is approved, and it is probable that the software will be completed and used as intended.

Costs that do not directly relate to the development of internal‑use software, such as training, data conversion, and ongoing maintenance, will continue to be expensed as incurred.

This standard is effective for annual and interim periods beginning after December 15, 2026, and interim periods within those fiscal years.

Early adoption is permitted and the standard will be applied prospectively.

Cadence does not expect the adoption of this ASU to have a material impact on its consolidated financial statements or disclosures.

*Interim Reporting*

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270) Narrow-Scope Improvements,” which provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period.

The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application.

The guidance is effective for annual and interim periods beginning after December 15, 2027.

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

As described in Management’s Annual Report on Internal Control Over Financial Reporting, management has excluded BETA CAE Systems International AG (“BETA CAE”) from its assessment of internal control over financial reporting as of December 31, 2024, because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded BETA CAE from our audit of internal control over financial reporting.

BETA CAE is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 2% of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

February 20, 2025

| Current portion of long-term debt | | | $ | — | | | | | $ | 349,285 | |

| Balance, January 1, 2022 | | | 276,796 | | | | | | $ | 2,467,701 | | | | | $ | (2,740,003) | | | | | $ | 3,046,288 | | | | | $ | (33,311) | | | | | $ | 2,740,675 | |

| Purchase of treasury stock | | | (6,602) | | | | | | — | | | | | | (1,020,091) | | | | | | — | | | | | | — | | | | | | $ | (1,020,091) | |

| Equity forward contract | | | — | | | | | | (12,035) | | | | | | (17,965) | | | | | | — | | | | | | — | | | | | | $ | (30,000) | |

| Cash and cash equivalents at beginning of year | | | $ | 1,008,152 | | | | | $ | 882,325 | | | | | $ | 1,088,940 | |

| Amortization of debt discount and fees | | | 3,473 | | | | | | 1,262 | | | | | | 1,134 | | |

| Provisions for losses on receivables | | | 2,078 | | | | | | 3,325 | | | | | | 204 | | |

| Cash paid for income taxes, net | | | 509,979 | | | | | | 253,700 | | | | | | 233,235 | | |

Historically, Cadence’s fiscal years were 52- or 53-week periods ending on the Saturday closest to December 31.

During fiscal 2022, Cadence’s Board of Directors approved a change in its fiscal year end from the Saturday closest to December 31 of each year to December 31 of each year.

The fiscal year change became effective beginning with Cadence’s 2023 fiscal year, which began on January 1, 2023.

Fiscal year 2022, which is included in this report for comparative purposes, represents a 52-week period.

*Segment Reporting*

In November 2023.

the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” intended to improve reportable segment disclosure requirements, primarily through enhanced annual and interim disclosures about significant segment expenses.

| IP | | | 13 | | % | | | | 12 | | % | | | | 12 | | % |

| Revenue from arrangements with non-cancelable commitments | | | 3 | | % | | | | 3 | | % | | | | 2 | | % |

| Year ended December 31, 2022 | | | | | | $ | 3,692 | | | | | $ | 204 | | | | | | | | | | | $ | (1,606) | | | | | $ | 2,290 | |

| 2024 Notes | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 350,000 | | | | | $ | (715) | | | | | $ | 349,285 | |

| 2025 Term Loan | | | — | | | | | | — | | | | | | — | | | | | | 300,000 | | | | | | (229) | | | | | | 299,771 | | |

In October 2014, Cadence issued $350.0 million aggregate principal amount of 4.375% Senior Notes that were due October 15, 2024 (the “2024 Notes”).

As of December 31, 2023, the carrying value of the 2024 Notes was classified as a current liability on Cadence’s consolidated balance sheet.

In October 2024, Cadence settled the outstanding principal of $350.0 million and accrued interest on its 2024 Notes.

Term Loans

In September 2022, Cadence entered into a $300.0 million three-year senior non-amortizing term loan facility due on September 7, 2025, as amended, with a group of lenders led by Bank of America, N.A., as administrative agent (the “2025 Term Loan”).

Proceeds from the loan were used to finance Cadence’s acquisition of OpenEye Scientific Software, Inc. (“OpenEye”) in fiscal 2022.

Debt issuance costs associated with the 2025 Term Loan were not material.

In May 2024, Cadence entered into a $700.0 million two-year senior non-amortizing term loan facility due on May 30, 2026, as amended, with a group of lenders led by Bank of America, N.A., as administrative agent (the “2026 Term Loan”).

All proceeds from the 2026 Term Loan were used to finance Cadence’s acquisition of BETA CAE Systems International AG (“BETA CAE”).

Debt issuance costs associated with the 2026 Term Loan were not material.

In September 2024, Cadence used a portion of the net proceeds from the New Notes to fully prepay the outstanding principal and accrued interest of both the 2025 Term Loan and the 2026 Term Loan.

2022 Acquisitions

*Acquisition of OpenEye Scientific Software, Inc.*

On August 31, 2022, Cadence acquired all of the outstanding equity of OpenEye, a leading provider of computational molecular modeling and simulation software used by pharmaceutical and biotechnology companies for drug discovery.

The addition of OpenEye’s technologies and experienced team with its deep scientific expertise is expected to accelerate Cadence’s Intelligent System Design strategy and broadens Cadence’s System Design and Analysis technology portfolio.

The acquisition expands Cadence’s total addressable market, bringing Cadence’s computational software expertise to apply proven algorithmic, simulation and solver advances to life sciences.

| Dated: | | | February [removed: 20, 2025] [added: 18, 2026] | | |

| /s/ Anirudh Devgan | | | DATE: | | | February [removed: 20, 2025] [added: 18, 2026] | | |

| /s/ John M. Wall | | | DATE: | | | February [removed: 20, 2025] [added: 18, 2026] | | |

Wall and [removed: Karna Nisewaner,] [added: Marc Taxay,] and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

| /s/ | | | Mark W. Adams | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

| /s/ | | | Ita Brennan | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

| /s/ | | | Lewis Chew | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

| /s/ | | | Anirudh Devgan | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

| /s/ | | | Moshe Gavrielov | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

| /s/ | | | Julia Liuson | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

| /s/ | | | Dr. James D. Plummer | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

| /s/ | | | Dr. Alberto Sangiovanni-Vincentelli | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

| /s/ | | | Young K. Sohn | | | | | | February [removed: 20, 2025] [added: 18, 2026] | | | | | |

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

[Table](#i253f30c322854d55bf1ad1a5df028570_7) [of Contents](#i253f30c322854d55bf1ad1a5df028570_7)

| /s/ | | | ML Krakauer | | | | | | February 18, 2026 | | | | | |

| ML, Chair | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ | | | Dr. Luc Van den hove | | | | | | February 18, 2026 | | | | | |

| Dr. Luc Van den hove, Director | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ | | | Mary Louise Krakauer | | | | | | February 20, 2025 | | | | | |

| Mary Louise Krakauer, Chair | | | | | | | | | | | | | | |