Cadence Design Systems, Inc. (CDNS) - Company Profile - 2026-06-18
Company Overview
Cadence Design Systems, Inc. is a software and semiconductor intellectual property company headquartered in San Jose, California. Founded in 1987, the company operates in the technology sector, specifically software applications and design tools. With approximately 15,110 employees, Cadence serves customers in semiconductor design, verification, and manufacturing workflows globally. The company maintains a market capitalization of approximately $106.85 billion, with enterprise value of $108.51 billion as of June 18, 2026.
Business and Operations
Cadence develops computational and AI-driven software, hardware, and silicon intellectual property solutions for the semiconductor and electronics design industries. The company's primary business lines include:
Verification and Simulation: Functional verification platforms such as Jasper (formal verification), Xcelium (parallel logic simulation), Verisium (generative AI solution), Palladium (enterprise emulation), and Protium (prototyping platform).
Digital and Custom IC Design: Innovus platform for digital IC design and sign-off, and Virtuoso platform for analog design and verification.
Design IP Portfolio: Serializer/deserializer, PCI Express, USB, peripheral component interconnect protocols, and Secure-IC embedded security solutions.
System-Level Design and Analysis: SD&A platform for end-to-end design and verification across chips, packages, printed circuit boards, and electronic systems. Allegro X and Orca X for PCB and advanced packaging; Sigrity X for signal and power integrity; AIR for RF design.
Computational Analysis: Fidelity for computational fluid dynamics, Celsius for thermal and airflow analysis, Clarity 3D for electromagnetic and power electronics analysis, and Integrity 3D-IC for multi-chiplet designs.
The company maintains a strategic collaboration with NVIDIA. Revenue for the trailing twelve months totaled $5.53 billion.
Fundamental Metrics
- Trailing price-to-earnings: 89.88
- Forward price-to-earnings: 41.28
- Price-to-book: 16.28
- Price-to-sales: 19.33
- PEG ratio: 3.68
Profitability:
- Net profit margin: 21.18%
- Operating margin: 29.70%
- Return on equity: 20.66%
- Return on assets: 10.39%
Capital Structure and Liquidity:
- Debt-to-equity ratio: 46.99
- Current ratio: 1.47
- Free cash flow (TTM): $1.50 billion
Growth:
- Revenue growth (year-over-year): 18.70%
- Earnings growth (year-over-year): 23.00%
Dividends and Risk:
- Dividend yield: Not applicable
- Payout ratio: 0.00%
- Beta: 1.15
Share Structure and Ownership
Cadence has 275.816 million shares outstanding with a public float of 274.539 million shares. Insiders hold 0.29 percent of shares, while institutional investors hold 91.13 percent.
Top institutional shareholders:
- Blackrock Inc.: 9.23%
- Vanguard Capital Management LLC: 6.46%
- State Street Corporation: 4.53%
- FMR, LLC: 3.32%
- Geode Capital Management, LLC: 2.86%
Short interest represents 1.78 percent of the float, with a short ratio of 2.24 days to cover.
Trading Activity
Average daily trading volume stands at 2.463 million shares over the past 30 days and 2.562 million shares over the past 90 days, indicating consistent market liquidity.
Recent Price Action
The stock closed at $387.39 on June 18, 2026. Over recent periods, the stock has posted the following price changes:
- One-month change: +14.57%
- Three-month change: +31.88%
- Year-to-date change: +24.80%
- One-year change: +31.14%
The 52-week trading range extends from $262.75 (low) to $416.69 (high). The stock is currently trading 7.03 percent below its 52-week high.
Strengths
- Earnings growth of 23 percent year-over-year exceeds revenue growth of 18.7 percent, indicating operating leverage and margin expansion.
- Operating margin of 29.7 percent reflects efficient cost management and pricing power in specialized software markets.
- Free cash flow of $1.5 billion supports capital allocation and operational flexibility.
- Market concentration among institutional investors (91.13 percent held) reflects participation by major asset managers.
- Forward price-to-earnings of 41.28 is lower than trailing multiple of 89.88, suggesting market expectations for earnings growth.
- Return on equity of 20.66 percent and return on assets of 10.39 percent demonstrate capital efficiency.
- Collaboration with NVIDIA positions the company within a major semiconductor ecosystem partner.
Considerations
- Trailing price-to-earnings of 89.88 reflects elevated current valuation relative to historical norms for software companies.
- Price-to-sales ratio of 19.33 indicates substantial premium to top-line revenue, typical of high-margin software but sensitive to growth deceleration.
- PEG ratio of 3.68 suggests valuation premium relative to growth rate when compared to broader market benchmarks.
- Debt-to-equity ratio of 46.99 percent indicates material leverage relative to shareholder equity.
- Current ratio of 1.47 indicates adequate but not substantial short-term liquidity coverage.
- Stock price has risen 31.14 percent over the past year, positioning the stock above historical average price levels.
- Beta of 1.15 indicates volatility tracking higher than broad market indices.
- Short interest, while modest at 1.78 percent of float, has coverage available in 2.24 days.
Summary
Cadence Design Systems develops semiconductor design and verification software and intellectual property serving the global electronics industry. The company reported revenue of $5.53 billion and earnings growth of 23 percent year-over-year, with operating margins of 29.7 percent. Institutional investors hold 91.13 percent of shares, and the stock has appreciated 31.14 percent over the past year, currently trading at $387.39 with elevated valuation multiples relative to historical precedent.