Cadence Design Systems vs Zoom Communications
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KIRA’s take AI analyst
I put Cadence Design Systems and Zoom Communications side by side, using each one’s latest annual report. Here is what stands out:
- Cadence Design Systems is the larger business, with $5.3B of revenue in fiscal 2025 against $4.9B for Zoom Communications.
- Cadence Design Systems grew revenue faster (14.1%, against 4.4%).
- Cadence Design Systems kept more of each dollar of sales as operating profit (28.2% operating margin, against 23.1%).
- Zoom Communications turned more of its sales into free cash flow (39.5% FCF margin, against 30.0%).
- Zoom Communications earned a higher return on the capital invested in it (56.2%, against 23.7%).
- Investors pay more for each dollar of Cadence Design Systems’s earnings: a P/E of 75.1x against 9.1x for Zoom Communications.
Who comes out ahead
Of the 10 measures where higher (or lower) is clearly better, how many each company leads.
Cadence Design Systems
CDNS
4/10
Revenue growth5-year growthOperating marginReturn on equity
Zoom Communications
ZM
6/10
Net marginFCF marginReturn on capitalPiotroski F-scoreNet debt / EBITDAShare count change
Side by side
Best in the row
| Latest fiscal year | CDNS FY25 | ZM FY26 |
|---|---|---|
| Size | ||
| Market cap | $88.2B | $29.4B |
| Revenue | $5.3B | $4.9B |
| Free cash flow | $1.6B | $1.9B |
| Net income | $1.1B | $1.9B |
| Growth | ||
| Revenue growth | 14.1% | 4.4% |
| 5-year growth | 14.6% | 12.9% |
| Share count change | −0.2% | −2.5% |
| Profitability | ||
| Gross margin | — | 77.0% |
| Operating margin | 28.2% | 23.1% |
| Net margin | 20.9% | 39.0% |
| FCF margin | 30.0% | 39.5% |
| Return on capital | 23.7% | 56.2% |
| Return on equity | 21.9% | 20.3% |
| Balance sheet | ||
| Net debt | −$675M | −$7.8B |
| Net debt / EBITDA | −0.4x | −6.2x |
| Dividends and buybacks | $925M | $1.6B |
| Valuation & quality | ||
| P/E | 75.1x | 9.1x |
| Piotroski F-score | 5 | 6 |
Ten years
Revenue
Operating margin
Free cash flow
Return on capital
Each company's latest fiscal year; fiscal years end in different months. The best value in each row is highlighted where higher (or lower) is clearly better. Not investment advice.