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Oct. 27, 2025, 4:30 p.m. ET Call participants President and Chief Executive Officer — Alexander Hardy Chief Financial Officer — Brian Mueller Chief Commercial Officer — Cristin Hubbard Chief R&D Officer — Greg Friberg Vice President, Investor Relations — Traci McCarty Need a quote from a Motley Fool analyst? Email [email protected] BioMarin Pharmaceutical (BMRN 3.34%) is discontinuing and seeking to divest Roctavian from its portfolio, reducing its future commercial asset base. Management described the competitive landscape for Voxzogo as highly uncertain, noting scenarios in which "two competitors come to market and that by the end of 2027, they've been successful with their launch and take significant share," according to Brian Mueller, impacting long-range revenue forecasts. Enzyme therapies experienced lower revenue in fiscal Q3 2025 compared to fiscal Q2 2025, due to large prior Naglazyme and Vimizim orders, resulting in revenue volatility between quarters. The IPR&D charges significantly increased R&D expenses in fiscal Q3 2025 on both a reported and non-GAAP basis, and, along with higher SG&A investments across the skeletal conditions and enzyme therapies business units, resulted in lower year-over-year operating margin and diluted earnings per share on both a reported and non-GAAP basis, according to Brian Mueller. Total revenue growth -- 11% year-to-date increase in total revenue compared to 2024, driven by growth in global enzyme therapies and skeletal conditions business units (non-GAAP). Voxzogo revenue -- Expected between $900 million and $935 million for fiscal 2025, reaffirmed despite quarter-to-quarter order timing, with year-to-date revenue up 24% in 2025 and fiscal Q3 2025 Voxzogo revenue up 15% year over year; 75% of Voxzogo revenue is generated outside the U.S. Palynziq performance -- Generated more than 20% revenue growth year to date in 2025, attributed to increased patient adherence and efficacy results. Enzyme therapies franchise -- Over $2 billion in trailing 12-month revenue as of fiscal Q3 2025, reflecting 8% growth year to date in 2025, with lower revenue in fiscal Q3 2025 compared to fiscal Q2 2025, due to prior large orders; flat year over year in fiscal Q3 2025 (non-GAAP), driven by timing and product mix dynamics. Full-year guidance raised -- Fiscal 2025 total revenue guidance increased to a range starting at $3.15 billion, with midpoint indicating double-digit growth. Profitability and cash flow -- Non-GAAP operating margin guidance updated to 26%-27% for fiscal 2025, non-GAAP diluted EPS guidance raised to $3.50-$3.60 for fiscal 2025, and operating cash flow reached $369 million in fiscal Q3 2025, and $728 million year to date. IPR&D charge -- $221 million pre-tax charge related to the Enzyme Pharma acquisition in fiscal Q3 2025, equating to approximately $1.10 per share in fiscal Q3 2025, significantly elevating R&D expense and impacting quarterly earnings metrics. Cash position -- $2 billion in cash and investments as of the end of fiscal Q3 2025, providing estimated $4 billion-$5 billion in total acquisition firepower. 2027 outlook -- Management withdrew a specific top-line target for 2027, now presenting a range from $3.65 billion (in line with current consensus, excluding Roctavian) up to $4 billion in total revenues for 2027 (non-GAAP), citing high uncertainty related to Voxzogo competition; future guidance will be limited to annual updates. Roctavian strategy -- Options are being pursued for divestiture of Roctavian, with continued availability in the U.S., Italy, and Germany during transition. Pipeline milestones -- Phase 3 data for Voxzogo in hypochondroplasia expected in the first half of 2026, with potential launch in 2027; BMN-333 phase 2-3 study set to initiate in the first half of 2026 targeting superior efficacy in achondroplasia; label extension for Palynziq in adolescents targeted for 2026 approval. BioMarin Pharmaceutical (BMRN 3.34%) raised its fiscal 2025 total revenue guidance and confirmed its outlook for Voxzogo, driven by broad-based demand and sustained double-digit top-line growth year to date. Strategic moves included advancing a $2 billion enzyme therapy franchise, affirming Palynziq’s expansion, and prioritizing the pipeline with milestones anticipated in hypochondroplasia, BMN-333, and ENPP1 deficiency. Management explicitly withdrew a specific 2027 revenue target due to forecast uncertainty, emphasizing a range of potential outcomes shaped by the timing and impact of competition for Voxzogo. The company completed the Enzyme Pharma acquisition, expensed $221 million for IPR&D in fiscal Q3 2025, and is actively seeking to divest Roctavian to align resources with prioritized business units. Voxzogo growth was supported by strong patient starts in younger children, expanded prescriber base, and broadening global adoption, with patient adherence and international revenue mix highlighted as key business drivers. The company maintained a 40% non-GAAP operating margin target for fiscal 2026, while clarifying that long-term operating cash flow projections above $1.25 billion will be proportionate to evolving top-line results, as discussed in relation to future guidance. Management described business development, including pursuit of phase 3 and commercial-stage assets, as its primary use of capital, with share repurchases currently deprioritized. Clinical momentum continues with significant upcoming readouts, including BMN-351 for Duchenne’s muscular dystrophy, targeting mean muscle dystrophin increases of 10% at steady state in a registrational cohort. The capital position—combining approximately $2 billion in cash and investments as of the end of fiscal Q3 2025, with further leverage capacity—enables $4 billion-$5 billion for acquisitions or partnerships to support growth and pipeline expansion. Industry glossary IPR&D (In-Process Research and Development): Expense recognized for the value of acquired research programs that have not yet reached commercial viability. CNP (C-type Natriuretic Peptide): A peptide involved in skeletal growth; analogs are used in therapies targeting growth disorders such as achondroplasia. AGV (Annualized Growth Velocity): A clinical metric measuring yearly growth rate, often used in pediatric trials targeting skeletal conditions. TAP (Total Addressable Population): Total patient population that could potentially benefit from all current and planned therapeutic indications. Full Conference Call Transcript Operator: Hello, and welcome to the BioMarin Pharmaceutical Third Quarter 2025 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, please press *1 on your telephone keypad. I would now like to turn the conference over to Traci McCarty. Please go ahead. Traci McCarty: Thank you, Operator. To remind you, this non-confidential presentation contains forward-looking statements about the business prospects of BioMarin Pharmaceutical Inc., including expectations regarding BioMarin's financial performance, commercial products, and potential future products in different areas of therapeutic research and development. Results may differ materially depending on the progress of BioMarin's product programs, actions of regulatory authorities, availability of capital, future actions in the pharmaceutical market, and developments by competitors, and those factors detailed in BioMarin's filings with the Securities and Exchange Commission, such as 10-Q, 10-K, and 8-K reports. In addition, we will use non-GAAP financial metrics as defined in Regulation G during the call today. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S. GAAP, and you can find the related reconciliations to U.S. Traci McCarty: GAAP in the earnings release and earnings presentation, both of which are available in the Investor Relations section of our website. Please note that our commentary on today's call will focus on non-GAAP financial measures unless otherwise indicated. Beginning on slide three and introducing BioMarin's management team joining today's call: Alexander Hardy, President and Chief Executive Officer, Brian Mueller, Chief Financial Officer, Cristin Hubbard, Chief Commercial Officer, and Greg Friberg, Chief R&D Officer. I will now turn the call over to BioMarin's President and CEO, Alexander Hardy. Alexander Hardy: Thank you, Traci. Good afternoon, everyone, and thank you for joining us on today's call. Starting on slide five, I am very pleased with the strong results across the business, leading us to raise full-year total revenues guidance at the midpoint and reaffirm our Voxzogo revenue outlook for 2025. In addition to top-line performance, BioMarin has delivered expanding profitability and significant growth in operating cash flow, bringing our cash and investments balance to approximately $2 billion at the end of the third quarter. We are focused on finishing the year strong, positioning ourselves to achieve record commercial results for the full year. To date this year, we have delivered an 11% increase in top-line growth year over year. These strong results are driven by the performance of our global enzyme therapies and skeletal conditions business units as we deliver for patients around the world. Alexander Hardy: We have built the enzyme therapies business unit into a $2 billion-plus franchise over the last 12 months, with continued growth anticipated. In the skeletal conditions business unit, our first indication with our first product, Voxzogo, the treatment of achondroplasia, is expected to generate more than $900 million in revenues this year, leading us to reaffirm our full-year 2025 Voxzogo outlook and representing 25% growth at the midpoint of our guidance range. As the established standard of care in achondroplasia, Voxzogo revenue has increased 24% year to date compared to 2024. Now, in the fourth year of its global launch, Voxzogo has represented a breakthrough therapy for families seeking treatment for their children with achondroplasia. Building on this innovation, we are excited to bring Voxzogo's second indication forward for the treatment of children with hypochondroplasia. Alexander Hardy: We have high confidence in the upcoming pivotal data readout for hypochondroplasia expected in the first half of next year, based on proof-of-concept data and more than 10,000 patient years of safety and efficacy data in achondroplasia. Building on the rapid and successful global commercialization of Voxzogo in achondroplasia, now available in 55 countries, we are well positioned to execute a strong global launch in hypochondroplasia, targeting 2027 should the data be supportive. Cristin and Greg will provide more details in a moment. Turning now to our broader strategic objectives, over the past 18 months, we have undertaken a series of initiatives designed to prepare BioMarin for future growth and expansion. As part of this effort, we have made difficult decisions, including the discontinuation of multiple research programs that did not meet our criteria for advancement. Alexander Hardy: Accordingly, today we are announcing the decision to pursue options to divest Roctavian and remove it from our portfolio as we focus on the business units aligned with our strategic priorities. Roctavian is an innovative gene therapy that holds potential within the treatment landscape for severe hemophilia A. As a result, we are working to find an alternative that will allow for Roctavian to reach its full potential by ensuring access to those interested in a gene therapy treatment. In the meantime, Roctavian will be commercially available in the U.S., Italy, and Germany. Throughout this process, we will support and monitor patients who have received Roctavian, as their well-being is our top priority. As we look to the future, we are pleased that our breakthrough medicines are in high demand and reaching thousands of patients around the world. Alexander Hardy: Our financial performance so far this year reflects strategic investments in the enzyme therapies and skeletal conditions business units, both of which remain central to our growth strategy, along with increased business development opportunities and our own advancing internal pipeline. Building on this momentum, we look forward to the many data readouts and potential new approvals ahead, along with new business development opportunities as we focus on the next stage of BioMarin's growth. With that, I will now turn it over to Brian. Brian Mueller: Thank you, Alexander. Please refer to today's press release for detailed third quarter 2025 results, including reconciliations of GAAP to non-GAAP financial measures. All 2025 results will be available in our upcoming Form 10-Q, which we expect to file in the coming days. Starting on slide seven, strong global demand across our portfolio of innovative medicines drove a year-to-date total revenue increase of 11% compared to the same period in 2024. Revenues from Voxzogo and Palynziq each increased by more than 20% on a year-to-date basis. As we shared last quarter, we anticipate Voxzogo revenue in Q4 to reach its highest level of the year due to the timing of contracted orders, as well as increasing numbers of patients on therapy, and we expect full-year 2025 Voxzogo revenue of between $900 million and $935 million. Brian Mueller: We are pleased with 8% year-to-date growth of the enzyme therapies business unit led by Palynziq. Due to large orders for Naglazyme and Vimizim in the second quarter, we note that enzyme therapies revenue was lower in Q3, quarter over quarter. Compared to Q3 2024, enzyme therapy revenue in the quarter was relatively flat, primarily due to a higher volume of Aldurazyme quartered last year. Given the strong top-line performance so far this year and our expectations for the fourth quarter, we are raising the lower end of our full-year 2025 total revenue guidance to $3.15 billion, with the midpoint of the range representing double-digit year-over-year growth. Now moving to slide eight, Q3 2025 results include a charge of $221 million for acquired in-process research and development, or IPR&D, on the pre-tax basis related to the Enzyme Pharma acquisition completed on July 1 of this year. Brian Mueller: This acquisition-related expense represents an approximate impact of $1.10 on a per-share basis. The IPR&D charges significantly increased both GAAP and non-GAAP R&D expenses in the third quarter, and along with higher SG&A investments across our skeletal conditions and enzyme therapies business units, resulted in lower year-over-year operating margin and diluted earnings per share, both on a GAAP and a non-GAAP basis. However, looking past the IPR&D charge, BioMarin's underlying strong revenue performance and operational efficiencies drove increased year-to-date GAAP and non-GAAP diluted earnings per share. Further, we recognize lower tax expense during the third quarter due to the timing impact of the Enzyme Pharma IPR&D charge on our quarterly estimated tax rate, as well as some tax benefits from the recently enacted tax law. Brian Mueller: Taking these dynamics into account, alongside our expectations for strong revenue growth and continued operational execution in Q4 2025, we are updating full-year 2025 non-GAAP operating margin guidance to between 26% and 27%, and non-GAAP diluted earnings per share guidance to between $3.50 and $3.60. BioMarin Pharmaceutical Inc. continues to generate robust operating cash flow, reaching $369 million in the third quarter and $728 million year to date, contributing to the company's total cash and investments balance of approximately $2 billion at the end of Q3. We expect this momentum to continue, both solidifying the sustainability of our profitability and cash flows and building incremental capital to invest in future growth through business development. Now moving to slide nine, and to summarize, we have updated our full-year 2025 guidance across total revenues, non-GAAP operating margin, and non-GAAP diluted earnings per share, incorporating the impact of the Q3 IPR&D charges. Brian Mueller: This update reflects a net improvement in our expected financial performance, net of the IPR&D charge of about $0.15 per share for non-GAAP diluted earnings per share. We are executing on our business plan so far this year, and today's guidance updates reflect both our year-to-date performance and our confidence in strong top-line and profitability growth in the final quarter of 2025. Finally, we are sharing an update on our previously provided 2027 revenue outlook, given the high level of interest. Based on the many unknowns and variables impacting our revenue over the next two years, mostly the impact of Voxzogo potential competition, we recognize that there are a range of outcomes from which a single scenario cannot be predicted with enough certainty at this point in time. Brian Mueller: We have developed a number of scenarios and will share that the lower end of our range of estimates is in line with current 2027 top-line consensus per FactSet, excluding Roctavian. On the higher end of the range of estimates, there are scenarios that reach $4 billion in total 2027 revenues, also excluding Roctavian. Again, given the many unknowns between now and then, we are not providing a specific estimate or more narrow range. Going forward, we will continue to execute on our strategy and monitor the most impactful variables. However, we do not plan to provide additional estimates of 2027 revenues, and we plan to follow our usual process of providing full-year guidance at the beginning of each year with the usual quarterly updates. Thank you for your attention, and I will now turn the call over to Cristin for a commercial update. Cristin? Cristin Hubbard: Thank you, Brian. I want to begin by acknowledging the exceptional work from our teams across the world, whose dedication has delivered strong year-to-date results for BioMarin's commercial portfolio. Now moving to slide 11, we are pleased that Palynziq's strong performance resulted in another quarter of more than 20% growth, reflecting more patients reaching efficacy and adhering to therapies. Palynziq's sustained growth demonstrates the PKU community's continued belief in its unparalleled efficacy profile and the importance of reaching normal Phe levels for effective treatment. We are pursuing approval of Palynziq for adolescents aged 12 to 17 in the United States and Europe in 2026, potentially enabling this younger group of people to have access to therapy during an important period of transition to adulthood. Cristin Hubbard: Beyond Palynziq, year-to-date revenue growth across our enzyme therapies portfolio reflects increased new patient starts across all products and strong adherence to therapy, reinforcing the durability and high penetration of these treatments despite quarter-to-quarter order timing dynamics. Now moving to slide 12, Voxzogo for the treatment of achondroplasia was available in 55 countries as of the end of the third quarter, with new launches across multiple geographies. Global expansion and demand drove year-over-year Voxzogo revenue growth of 15% in the third quarter and 24% year to date, with growth in patient numbers quarter over quarter. For the remainder of 2025, we expect large contracted OUS orders, deeper penetration across our growing Voxzogo footprint, and quarter-to-quarter new patient starts to result in Q4 being the highest of Voxzogo revenue for the year. Cristin Hubbard: Outside the U.S., with a large majority of children eligible for Voxzogo located, our global footprint remains a powerful growth engine, and we saw strong uptake across key large markets during the quarter. With approximately 75% of year-to-date Voxzogo revenue generated outside the U.S., we expect significant opportunity ahead as we open new countries and more deeply penetrate countries that currently have access. Leveraging Voxzogo's best-in-class evidence package of health benefits beyond height, international treatment guidelines recommending treatment as early as possible, and broad age label, we are focused on increasing access to Voxzogo for more children around the world and keeping them on therapy to realize the greatest health benefits. In the U.S., the team has been laser-focused on initiatives to expand Voxzogo treatment. Cristin Hubbard: These efforts drove new patient starts across all age groups during the third quarter, with the majority of new starts from children under two years of age, and we expect that trend to continue. Due to the geographical dispersion and management across a range of specialties for older children in the U.S., we have implemented initiatives to address slowing uptake in that age group, noting that the initiatives will take time to show results. We have expanded this prescriber base across the country and increased the number of children on therapy across all age groups in Q3 versus Q2. Importantly, the strong adherence rates observed among families with children receiving Voxzogo remain a key indicator of the product's value proposition. Cristin Hubbard: Now moving to slide 13, we look forward to building on the momentum we have established with the breakthrough treatment of achondroplasia as we pursue the next five indications in our skeletal conditions business unit. Achondroplasia represents the first of six indications we are pursuing for treatment with Voxzogo and/or BMN-333, our long-acting CNP. With the pivotal data readout just around the corner in hypochondroplasia, we are preparing for a strong global launch should those data be supportive, and I'll share more about that in a moment. We are also advancing our canopy clinical studies with Voxzogo across four additional indications, including phase two studies in idiopathic short stature, Noonan syndrome, Turner syndrome, and Schatz deficiency. Cristin Hubbard: These skeletal conditions represent a total addressable population, or TAP, of approximately 420,000 patients, acknowledging our focus will be on the most severely impacted subset of these children, representing a modest proportion of the total TAP. We are expanding our leadership position in skeletal conditions, building on Voxzogo as the standard of care in achondroplasia, with future potential indications, the second in hypochondroplasia, and four follow-on indications across the canopy trials. Our next-generation product, BMN-333, offers the promise of even greater efficacy, not just the convenience of the extended dosing interval, and we look forward to starting our phase two-three study in the first half of 2026. Now moving to slide 14, our experience launching Voxzogo for the treatment of achondroplasia has given us a strong foundation to scale globally. Cristin Hubbard: We've built the infrastructure, the relationships, and the expertise to execute effectively as new indications come online, and Voxzogo for the treatment of hypochondroplasia represents a potential significant breakthrough for patients. Hypochondroplasia is underdiagnosed because children with growth delays often do not receive a full diagnostic workup for various reasons, in part because hypochondroplasia presents with a wide range of symptoms and no single sign confirms the diagnosis. Families often face a complicated referral process and barriers to genetic testing, which slows down the path to diagnosis. These challenges mean many children go undiagnosed for too long, and that is why one of our priorities is improving early diagnosis for hypochondroplasia worldwide. We're driving initiatives like genetic reclassification, clinician education, and patient and caregiver awareness, all aimed at driving earlier diagnosis. We're also optimizing diagnostic pathways so that in the future, children can potentially access therapy as early as possible. Cristin Hubbard: Importantly, we're seeing robust engagement from healthcare providers across multiple specialties. That enthusiasm reflects growing recognition of the unmet need in hypochondroplasia. This positions us well for the next phase. Our phase three program in hypochondroplasia is progressing, with data expected in the first half of 2026 and a potential launch in 2027. I'll now turn the call to Greg to provide an R&D update. Greg? Greg Friberg: Thank you, Cristin. Now moving to slide 16, and to provide a little more color, hypochondroplasia is a serious condition with a potentially broad impact on the health and daily life of those affected. Children and adults with hypochondroplasia can face significantly higher rates of comorbidities and procedures when compared to the general population, covering areas like respiratory, orthopedic, ear, nose, and throat, and mental health. As a result, they often undergo more surgeries, adding to the overall burden of the condition. Beyond the medical challenges, the condition can affect quality of life in very real ways, making everyday tasks harder and creating social and emotional strain. These insights reinforce why it's important to advance treatment options for hypochondroplasia, a condition for which no approved therapies are broadly available today. Greg Friberg: Now moving to slide 17, at ASBMR in September, we presented important spinal morphology data for children under five years old with achondroplasia. These children were treated on our phase two canopy study with either vosoritide or placebo. Spinal morphology is one of the factors that contributes to spinal stenosis, a leading cause of morbidity in achondroplasia. Spinal stenosis, particularly in the lumbar region, is a serious and all-too-common medical complication in achondroplasia, resulting in pain, muscle weakness, and reduced mobility in the most severe cases. Since measures of spinal canal reach near final size by age five, early intervention is essential to prevent complications. Radiographs of the spine in our canopy study demonstrated that children who received Voxzogo experienced improved spinal measurements across all lumbar vertebrae and an overall improved curvature of the spine after just one year of treatment. Greg Friberg: As a reminder, these improvements were seen as compared to placebo, rather than simply describing the natural history of growing children. As these anatomic measures are often predictors of complications later in life, we intend to follow these patients in our canopy extension study to confirm that they translate to reduced morbidity or need for surgical correction. Importantly, with these results, Voxzogo is the only approved therapy with data showing a positive impact on spinal morphology, and these findings add to the extensive body of evidence supporting Voxzogo's health benefits beyond improving growth. Now moving to slide 18 and BMN-333, we will focus on our next-generation therapy for achondroplasia. Last call, we shared that multiple cohorts from our phase one study had demonstrated superior pharmacokinetic measures of free CNP as compared to another long-acting CNP agent. Greg Friberg: We're advancing the program and are targeting initiation of phase two-three in the first half of 2026. We have a strong conviction that the multifold increases in free CNP AUC that we observed with the BMN-333 can translate into clinical benefit. That confidence comes from three pillars: preclinical data showing roughly double the attributable growth versus Voxzogo at high free CNP exposures, human genetics, where natural CNP pathway overactivation leads to extreme height without unexpected safety issues, and clinical dose response data from other long-acting CNP agents suggesting that additional growth may be possible at higher exposures. BMN-333 is the right agent to test this hypothesis, and in our phase one study, we observed multiple cohorts which met our model PK requirements to deliver superior growth. Greg Friberg: From a design standpoint, the upcoming study will include a dose-ranging phase two portion followed by a phase three comparison against Voxzogo, assessing safety, growth, and resulting functional outcomes. Our goal is clear: BMN-333 is designed to deliver superior efficacy versus Voxzogo without additional safety signals. We've engineered the molecule to safely achieve these higher free CNP levels, and our target product profile reflects that ambition. We've aligned with regulators on this approach, and our strategy is to establish a new standard of care for achondroplasia. BMN-333 represents a major opportunity to build on Voxzogo's success and further strengthen our leadership in skeletal conditions. Finally, on slide 19, here's a snapshot of a few highlights expected across the pipeline through the coming quarters. Greg Friberg: As mentioned in our skeletal conditions portfolio in the first half of next year, we're excited for the phase three data readout for Voxzogo in hypochondroplasia, as well as the initiation of our phase two-three registrational enabling study for BMN-333 in achondroplasia. For enzyme therapies, we look forward to extending Palynziq access to younger populations with a potential approval in 2026 of the Palynziq label extension for adolescents age 12 to 17. In the first half of 2026, we also expect phase three data for BMN-401 in children age 1 to 12, providing a potential first-in-disease medicine for ENPP1 deficiency. Our earlier stage pipeline is also advancing, and we plan to share a clinical update by the end of the year for BMN-351 for the treatment of Exon 51 skip-amendable Duchenne's muscular dystrophy. Greg Friberg: At this next update, we intend to share whether data from our six and nine milligram per kilogram cohorts supports our stated ambition to reach mean muscle dystrophin increases of 10% at steady state, and a reminder, this is without additional adjustment for muscle content. Safely achieving this target defines our GO criteria for a potential registrational study. In summary, we have multiple data readouts and regulatory milestones ahead, and we look forward to keeping you updated as we execute on these opportunities to drive growth and deliver value for patients. Thank you for your attention today. We will now open the call to your questions. Operator? Operator: Thank you. If you would like to ask a question, please press *1 on your telephone keypad. If you would like to withdraw your question, simply press *1 again. We ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Phil Nadeau with TD Cowen. Your line is open. Phil Nadeau: Hi, thanks for taking our question. Our question is on the 2027 guidance. Can you talk a little bit more about the scenarios you see and maybe most specifically, why are you rescinding the guidance now? What has changed over the last year since it was initially issued? Thank you. Brian Mueller: Hi, Phil. This is Brian. Thanks for the question. I'll take that one. Since we shared the original $4 billion 2027 outlook last year, we've had a year to assess the various factors that have arisen since then, including the impact of potential Voxzogo competition. There are other puts and takes. We've got our acquisition of Enzyme and the potential for BMN-401 to launch in the pediatric indication in 2027. We've also incorporated today's announcement that we're pursuing options to divest Roctavian. We've developed a number of scenarios to capture what we believe are different outcomes across these key variables across the entire portfolio. Given the many unknowns and their impact on predicting 2027 revenue, instead of taking an official position on those key assumptions, what we've done is outline the range of our lower case estimates and our higher case estimates. I'll share that in the lower case estimate. Brian Mueller: That reflects the scenario with two competitors successfully launching and taking significant share by 2027. I'll share on the high case. That reflects the scenario where there's a significant delay in the competition. For example, successful intellectual property events for BioMarin. In between there, there are a number of outcomes. Highly uncertain at this time, and therefore narrowing the range or coming up with more specific point-in-time estimates at this time isn't appropriate. I'll just finish by saying, reiterating my comments in the prepared remarks that in that lower case estimate for BioMarin, we are still at consensus for 2027. Phil Nadeau: Maybe just to follow up, I think when you issued the guidance a year ago, you suggested that competition was factored into the guidance. Do you now have a different appreciation or a different concern about how much share that competition could take, specifically against Voxzogo? Thank you. Brian Mueller: Yeah, thanks, Phil. We did the initial work last year following Investor Day when the competitor data was released, and at the time, modeled some competitive impact. There was some ability to absorb that into our original forecasts at the time, and we did have some other upsides last year. We have taken a different view. We've observed trends in the marketplace, both what we are experiencing in these markets, as well as different potential competitor scenarios. This is not a single point-in-time estimate. It is not our forecast. We merely wanted to reflect what the range of outcomes could be from our view. Operator: The next question comes from Selvine Richter with Goldman Sachs. Your line is open. Selvine Richter: Good afternoon. Thanks for taking my questions. Could you speak to why Voxzogo's sales were down quarter over quarter? Also, just help us understand here the business development strategy, just given that there seems to be so much of a focus on Voxzogo and how that plays out, but you're kind of stuck from just given all these various dynamics competitively. You know, when can we start to see that business development lever or levers kind of emerge to really add to your portfolio? Thank you. Brian Mueller: Hi, Selvine. This is Brian. I'll take the first part of the question on Q3 Voxzogo. Yeah, slightly down quarter over quarter. Looking back to the remarks that we made last quarter when we signaled that we were expecting Voxzogo revenue for the second half of the year to be backweighted to the fourth quarter, we noted a couple of specific larger orders where there were true timing shifts, but also just our market-by-market forecasts for Q3 and Q4. What ended up happening in Q3 is that was just a bit more exacerbated, and the timing shifted a little more. I'll point you to two things. One, reaffirming the total Voxzogo range today for the year of $900 million to $935 million. Again, just timing between Q3 and Q4. Brian Mueller: Most importantly, steadily adding patients across all markets and all age groups in Q3, which again, that's the key indicator of long-term demand, and we're going to continue to experience some of these quarter-to-quarter order timing fluctuations. Alexander Hardy: Hey, Selvine. Thanks very much. Your question is, Alexander. I'll answer part of your question around business development. First off, I would say, you know, we've got strong underlying business performance in both enzyme therapies and in skeletal conditions. I mean, 11% year-to-date growth across both business units. We are also producing significant cash flow, and our balance sheet is very strong. We have conviction that assets are worth more in our hands than they are right now. Business development is a very important part of our strategy right now. We have a number of deals that we're in pursuit of. We've always been a company focused on early-stage collaborations. What is different or how our strategy has evolved is we're also looking at phase three, pre-commercial and commercial assets, because, again, we think we can add value to all stakeholders with those in our hands. Alexander Hardy: We have a number of deals in the works and in sight. Obviously, business development's never completely within your control, but it remains a very high priority for us, and we're looking forward to sharing more information when we have that. Operator: The next question comes from Corey Kasimov with Evercore. Your line is open. Corey Kasimov: Hey, good afternoon, guys. Thanks for taking my question. I guess I have a follow-up on two questions that were asked. First of all, Brian, I appreciate the commentary you made on the previously issued 2027 guidance. I think the way you framed it is helpful. However, I'm curious if you have any qualitative commentary you could also share on your prior long-term mid-2030s guidance with regard both to the opportunity for Voxzogo, as well as the anticipated CAGR for the enzyme therapies business. A follow-up for Alexander's capital deployment commentary. You know, given the pretty big cash balance and good operating cash flow generation you alluded to, have you given much consideration to share buybacks, or are you really just holding that capital for other uses like BDs you were talking about? Thank you. Brian Mueller: Thanks, Corey. This is Brian. Appreciate the question. It's a similar analysis as I shared with the 2027 range of estimates there. We are absolutely planning on continued sustainable growth across the business. I'll share that we are still targeting high single-digit sustainable growth rate for the enzyme therapies over time. Voxzogo, we do plan to continue to grow the brand by deepening patient penetration across all markets, plus the indication expansion opportunities where we will always have a lead. However, the offsets to that, most notably being potential competition, are still very uncertain at this time. We and the investor community will watch all of these variables very closely, and we'll keep you updated in terms of what we're seeing along the way. Again, we feel it's prudent to avoid taking an official position on a forecast with so many uncertainties. Brian Mueller: Not quoting a long-term growth rate at this time for that reason. Alexander Hardy: Hey, Corey. This is Alexander Hardy, the second part of your question with regard to capital allocation. It's obviously something we discuss with our board frequently. It's very, very important, obviously, that we're really effective stewards of the significant capital that we've generated through the success of our business. We actually think that business development is the greatest opportunity for us to drive significant incremental growth rate on the top line, and that's the most highly correlated with stock appreciation. We have this strong financial profile. We have this capability in rare diseases, whether it's in research, development, manufacturing, commercialization. We're convicted that assets are worth more in our hands than where they are right now. In an environment that we have right now in the U.S., with biotech stocks, there are many rare disease companies that are undercapitalized and under-resourced, and those assets are worth more in our hands. Alexander Hardy: We are, as you can tell, very convicted that business development is the best use of our capital. That remains our priority, but it's something that as a board we constantly look at. Operator: The next question comes from Joe Schwartz with Leerink Partners. Your line is open. Joe Schwartz: Great. Thanks very much. For the upcoming BMN-333 PK data, what specific exposure levels would give you confidence that you can achieve clinical superiority over Voxzogo? As you move into a head-to-head superiority trial against Voxzogo, what is the minimum annualized growth velocity delta over Voxzogo that you believe could be required to demonstrate clear clinical superiority, drive patient switching, and reestablish a standard of care in the face of potential competition? Greg Friberg: Thanks, Joe. This is Greg. I'll take a stab at both of those. With regard to the exposure levels, the stated level that we were looking for from our phase one PK study was while we were looking at the free CNP levels. In the case of Voxzogo, of course, that's the drug itself. In the case of other molecules, it would be the released active quantity. We were looking for increases of at least 3x on the AUC. As I mentioned in our prepared remarks, we actually saw three different dose levels where we achieved that in that ongoing phase one study. In our dose ranging, again, we'll have an opportunity to test a variety of levels that met that criteria. With regard to the change in AGV over Voxzogo, not ready to comment today on an actual number. Sorry to disappoint you there. Greg Friberg: I will add, though, that we have looked at this very closely, spoken with both clinicians as well as patients, and we've determined a level of differentiation that we think will be not only clinically meaningful but also has the potential to pull through to the endpoints that really count, which are not just linear growth but are all of those measures of health and wellness and function that we think, again, these patients deserve from a next-generation therapy. Operator: The next question comes from Jessica Fye of JP Morgan. Your line is open. Jessica Fye: Hey, guys. Good afternoon. Thanks for taking the question. I had a couple on the guidance and a couple on the pipeline. On the guidance, I don't have FactSet. What is the 2027 FactSet consensus excluding Roctavian, just so we know what that lower bound is? The second one on the guidance, maybe just talking about the other two elements of the longer-term targets that I don't think Corey mentioned. Should we still expect 40% non-GAAP operating margins starting in 2026 that could expand to the low to mid-40% and the greater than $1.25 billion of CFOs starting in 2027, or were those sort of top-line dependent and more in question now? The two on the pipeline for 351, my understanding is we'll get six-month biopsy data for the six-milligram cohort. What should we expect for the nine-milligram cohort? Jessica Fye: The second one on the pipeline is for hypochondroplasia, can you remind us of the powering for that trial? Is that SIG sufficient in your mind, or is there some minimum delta on efficacy you want to see to meet your target product profile? Thank you. Brian Mueller: Thanks, Jess. This is Brian. I'll speak to those first couple. First, just to clarify that FactSet math for you, we are showing FactSet total revenue consensus for 2027 of $3.725 billion. That includes $75 million of Roctavian, so without Roctavian, consensus would be $3.65 billion in 2027. With respect to the 40% operating margin target next year, that does remain our target. Just a reminder that we've grown profitability and operating margin significantly over the last two years due to our strong underlying execution and the focused cost transformation. We do expect that to continue heading into next year and hold that 40% target. I will say that our operating margin objective is rooted in driving efficiency in the business through cost and process transformation, without compromising value-creating activities. Brian Mueller: In the event, in the lower-end scenario, over time, if we do face a trade-off, and this is less next year or more beyond, if we face a trade-off between preserving those value-creating activities and hitting the 40% margin, we will prioritize value creation to maximize long-term shareholder value. Right now, cost transformation and the target for next year is on track. We'll be prepared to update that again when we issue 2026 guidance early next year. Greg Friberg: Thanks, Jessica. This is Greg. Let me take your two pipeline questions. With regard to 351, just as a reminder, what you can anticipate as a top-line result will be a combination of all the safety data that we have. That will be the 6 milligram and the 9 milligram per kilogram cohorts, as well as the early data that we have. We'll be looking at the 12 milligram per kilogram, which is currently enrolling. We will also be looking at biopsy results and dystrophin levels from muscle biopsies in both the 6 and the 9 milligram per kilogram cohort. Our goal, again, is to have a level that predicts its steady state, that we would be hitting this 10% level, which is a quite ambitious target. That's not correcting for fat and muscle content. That is a level that has yet to be seen in programs targeting Exon 51. Greg Friberg: With regard to hypochondroplasia, we powered the study to measure for an AGV delta similar to what's been seen with Voxzogo with achondroplasia, though, as a quick reminder, the Dr. Dauber data would suggest that growth in hypochondroplasia may be on the order of 1.8 centimeters per year, a little bit more, which gives us confidence, again, that this is a well-powered study for hypochondroplasia. Brian Mueller: Sorry, Jess. This is Brian. I'll come back again because I realized you had another part to your question about that 2027 cash flow and that greater than $1.25 billion. I'll use your words there. That was top-line dependent, and therefore, in the lower case scenarios, would be somewhat proportional to the overall revenue scenario. I will say, again, we're generating significant operating cash flow today, almost $370 million this quarter, over $700 million year to date. We've got a number of working capital optimization initiatives that we're introducing across the enterprise over the next two years. As Alexander touched on, with respect to our capital allocation strategy and business development, these cash balances and the sustaining cash flow that we're building have the opportunity to be deployed as growth capital going forward. It's a top priority for the company. Brian Mueller: In short, that $1.25 billion was tied to the fourth bill. Thanks. Operator: The next question comes from Paul Matthias with Stifel. Your line is open. Julian Pino: Hey, there. This is Julian on for Paul. Thanks so much for taking our questions. You talked about how your views have changed on the market, as well as, you know, in thinking about some of these best-case scenarios and some of these, you know, more bearish scenarios. Can you talk about the contributions of potential commercial competition versus the risk to some of these competitors entering the market? How much do you think could be attributed to your overall view on being able to have a positive outcome in litigation? I'm just curious on what you think about that. Further, on the DMD program, can you just talk a little bit more about the 10% bar that you're sort of setting for yourselves there? Julian Pino: Obviously, I think a lot of investors believe that the bar for regulatory approval is meaningfully lower when thinking about Exon skippers that are currently approved. Just thinking about what sort of informs that view and if there's any sort of outside case that you could push a program forward that doesn't meet that bar. Thank you. Brian Mueller: Hi. Thanks for the question. This is Brian. I'll start with just outlining those bookends of the lower case estimates and the higher case estimates again, and then I'll hand it over to Cristin to make a couple of remarks on the specific market trends we're observing. For the sake of making these assumptions and developing the lower end of these estimate scenarios, we took the assumption that two competitors come to market and that by the end of 2027, they've been successful with their launch and take significant share. In the higher case estimates, and there's a range in between outcomes, of course, that includes either less competition or success with our intellectual property defense. Neither of those are our official forecasts. We are illustrating what the revenue impacts of those potential outcomes could be over time. At the lower end, comfortable with consensus today. Brian Mueller: In the higher end, we can still get back to $4 billion. This is excluding Roctavian. Cristin, you want to comment then? Cristin Hubbard: Thanks, Brian. Looking at the overall trends, I just want to note what Brian, you said earlier and we said in the prepared remarks, and that is that we have continued to add patients on treatment with Voxzogo quarter over quarter, and that is worldwide. If we dig a little bit into the U.S. market in particular, we do see that the majority of those new patient adds is for children under two years old. We want to see that, right? This is patients getting on treatment early. The international guidelines also reiterate the importance of this. What we see is our adherence rates are remaining strong. Importantly, we are expanding the prescriber base, primarily or mostly in the pediatric endocrinology specialty. Cristin Hubbard: What we've also seen in the U.S., and this is not unexpected for something its fourth year into launch, we are seeing a slower rate of growth in the older patients. We expected this to some extent. One, many of these patients are geographically dispersed and in different parts of the country and therefore harder to find, not to mention they're being managed by different specialties. I will say that the team has been very focused on drawing out initiatives that will target these patients, and we expect that those initiatives will take a little bit of time to play out. It's really important that we note that the U.S. is 25% of our overall revenues. Really looking to the ex-U.S., which comprises 75% of the revenues, we do reiterate our guidance of $900 million to $935 million this year alone. Cristin Hubbard: If we look into the future, we continue to see Voxzogo as a strong growth engine for us. This is a product that, as Brian had said, has been first to market in achondroplasia. We expect the same in hypochondroplasia, and we have a robust lifecycle management plan behind it, launching in new indications over time, not to mention our asset BMN-333. An important growth engine for us, but it's important to note the trends and the dynamics that we're seeing in the markets today. Greg Friberg: Thanks, Julian. This is Greg. If I could tackle the DMD question, if that's okay. We have set a pretty ambitious bar with the 10% level. Just to back up a little bit, of course, Duchenne's muscular dystrophy, the name of the game is opening a therapeutic window in these patients and delivering meaningful results. We've made some choices with the way we've engineered this molecule. We've chosen to use so-called phosphorothioate chemistry instead of what most Exon skippers use, the morpholino approaches. That opens this opportunity again to open a large therapeutic window for what we think will be a potentially dramatic effect. There are some challenges associated with that as well, though. Weekly administration is required, and the reality is that steady state, because of the very long tissue half-life, will be out at a year or more. What we've done is we've set an ambitious target. Greg Friberg: We know that we're looking at biopsies at the six-month time frame. As a quick reminder, if we see something between about 3% and 5% at six months, that will translate in our model to 10% at steady state. We chose that number because of the human genetic data that suggests dramatically improved functional outcomes in patients that reach those sorts of levels, similar more to a Becker's muscular dystrophy. We think in the face of some of the characteristics of this molecule, we think that sort of doubling of dystrophin as compared to some of the data that's been produced with other Exon 51 skippers would be an undeniable advance in the field. While we also will be looking, of course, at functional data, we'll look at the totality of the data. That 10% bar is our true north right now to deliver something meaningful for patients. Operator: The next question comes from Chris Raymond of Raymond James. Your line is open. Chris Raymond: Hey, thanks for taking the question. Just two, actually, for me. Brian, I heard what you said about 2027 not being guidance, just a sort of range of outcomes. I won't say it's this way. Is it safe to say you're more concerned about trans-con-CNP than infigratinib? I guess it is when you talk about that FactSet number being sort of the low end. Is it your assumption that Ascendis gets first cycle approval with just one year's worth of data when their PDUFA date comes next month? Does that factor into your thinking? I know it's a little bit removed from 2027, but are you getting that granular in your thinking? Maybe an M&A question, Alexander. You guys talk about wanting assets that are under-resourced and could be better served by the BioMarin infrastructure. Chris Raymond: For the Enzyme Asset 401, can you talk about how you have leveraged and improved upon Enzyme's efforts in terms of patient identification, outreach, and other things that you've done to make that asset better? Thanks. Brian Mueller: Thanks, Chris. This is Brian. I'll start. I appreciate the question. With respect to the two potential competitors, first, I'll say I don't think we're going to comment on them versus each other, one versus another. I will say this is, I think, the heart of your question. What we've assumed in those lower case estimates that I referred to in that lower end of the range, we have assumed middle-of-the-road assumptions with respect to those companies' communicated timelines for their approvals, one of which has a PDUFA next month, as you noted. Following those action dates and communicated approval and launch timelines by those other companies, we then modeled what a successful launch for those competitors could look like. That's where we get to this point of the lower-end estimate where Voxzogo remains a growth product for us over these next two years. Brian Mueller: I think that's all that we'd have to say at this time. Alexander Hardy: Chris, I'm going to take the first part of the question and hand it over to Greg because obviously, 401 is very much in the development stage right now. Overall, you know, what BioMarin is now is we're executing rare disease at scale. I mean, we're in 80 countries with an incredible muscle, and you know, we're confident that's going to magnify the potential impact and ability to reach patients with these genetic conditions all around the world. Our capability is the ability to find patients, to start them on therapy, and then keep them on therapy. These are capabilities we've built over 20 years. Very confident that should this product be approved, we'll be able to leverage that and achieve significant things for 401. Right now, our focus is on the execution of the clinical program, and I'll hand it over to Greg. Greg Friberg: Thanks, Alexander. Yeah, Brian, just as a quick reminder, again, the deal closed on July 1. We're not quite four months into the integration at this point. It's premature to cite, I think, too many examples of the impact that scale of our capabilities and resources can have on the totality of the program. It is very early days. I will reassure you again that we're leveraging all of our capabilities, whether it's interacting with regulators around the world or looking for additional indications. That first sign, I think, that we'll be able to talk about in future calls will be our preparation that's ongoing for an adult indication in this ENPP1 deficiency area. We're very much looking forward to taking this asset that the Enzyme Pharma team, quite frankly, did a remarkable job being able to recruit these very difficult-to-find patients, difficult-to-reach patients onto a pivotal study. Greg Friberg: We're looking forward to turning the card over for the ENERGY3 study in the first half of next year. Operator: The next question comes from Sean Lehman with Morgan Stanley. Your line is open. Sean Lehman: Hi, Alex and team. Hope everyone's well and thanks for taking my questions. Just get your latest thoughts on orphan drug exclusivity, you know, kids under five, and what you think about the potential switching to a competitor as the first one. The second one, if I'm getting the narrative right, you know, without business development, BioMarin's a capital accumulator. Just to get your thoughts on what you think your balance sheet capacity is and what you see as an efficient balance sheet structure. Thanks. Cristin Hubbard: Hi, Sean. This is Cristin. I'll take the first question. I think it really comes down to that element of a patient switching. Assuming we're, you know, as we're looking at there being a potential for more therapies on the market for the treatment of achondroplasia, we do think that there's a distinct difference between patients that are new to therapy that are naive and the choices that they will make, and importantly, those that are already on therapy and seeing great efficacy. What we hear in both our market research and in our conversations with physicians and families alike, we hear that the majority of patients, when they are looking at the opportunity to switch, if they are satisfied with their treatment, they will more likely than not remain on therapy. Of course, some will choose not to, but that is irrespective of orphan drug exclusivity. Cristin Hubbard: That is just a decision that a physician, caregiver, and patient are likely to make in that moment. We do think that the adherence rates that we see on Voxzogo, which remain really high, are a testament to the product's efficacy and safety, for that matter, and the impact that patients and families are seeing. It really does come down to that element of a decision made between the physician and the family at that time as to whether or not a switch is appropriate, where we think that's going to be a different decision than for those that are naive to treatment. Brian Mueller: I'll answer the firepower part of your question there, Sean. This is Brian. We estimate that our total firepower is between $4 billion to $5 billion. We're just reporting $2 billion of cash investments on hand, a significant portion of which is available to invest in future growth. With our current and growing EBITDA profile, we do have a chance to leverage our earnings. Assuming a reasonable ratio, we believe that in total, we've got $4 billion to $5 billion to deploy as growth capital. Alexander Hardy: Sean, I just want to jump in. Was your question around orphan drug exclusivity as well? Sean Lehman: Sure, it was. Alexander Hardy: Okay. I apologize about that. Yes, I mean, we've submitted a petition to the FDA concerning the orphan drug exclusivity for Voxzogo to assert that. The timing of that is we'll find that out at the time of PDUFA. We feel convicted of the status and the importance of the incentive with regard to innovation in these orphan diseases, and that's very much in process right now. Operator: The next question comes from Akash Tewari with Jefferies. Your line is open. Zaki Molvi: Hi. This is Zaki on for Akash. Thanks so much for taking the question. You talked about how the lower end of your 2027 scenarios is basically in line with the top-line res for consensus, in part due to the changing competitive environment, which includes Ascendis, which had positive data shortly after your initial guide. It sounds like we're kind of revising the case estimates ahead of pending phase three data from BridgeBio. Number one, why not just wait until the BridgeBio data comes out first half of next year? I mean, should we assume that the lower end of your 2027 case is the most conservative case that is seeing superior efficacy versus for BridgeBio? In the most bullish scenario, it sounds like you are either modeling, you know, at most $4 billion or lower in res. Just wanted to confirm that I have that correct. Zaki Molvi: Thank you so much. Brian Mueller: Hi. Thanks for the question. I tried to capture the primary takeaway from this exercise, which is that we've modeled a significant level of scenarios across all of our portfolio, across all markets, and given the various key assumptions. We did that given the significant level of investor interest on the topic. We appreciate that when we gave the original $4 billion guidance at Investor Day last year, that was before seeing the first competitor data here, and have made some updates along the way. Really outlining the full range of outcomes and including a lower case that has two competitors launching successfully, yet our revenue is still landing at current consensus for 2027, we thought would be useful. I am not characterizing that as a worst-case scenario, nor am I characterizing the $4 billion as a best-case scenario. Brian Mueller: We just decided to share with you a range of our lower case estimates and our higher case estimates. On the upside, that would include, I mentioned as an example, intellectual property defense success, but it could also include success across the entire portfolio or competing successfully. Thanks. Operator: That concludes the Q&A portion of the call. I will now turn it back to BioMarin's President and CEO, Alexander Hardy. Alexander Hardy: Thank you all, Priya. We are pleased with the third quarter results across the business, leading us to raise full-year total revenues guidance at the midpoint and reaffirm our Voxzogo revenue outlook for 2025. We have delivered expanding profitability and significant growth in operating cash flow, bringing our cash and investments balance to approximately $2 billion as of the end of the third quarter. Our financial performance so far this year reflects strategic investments in the enzyme therapies and skeletal conditions business units, both of which remain central to our growth strategy. Building on this momentum, we look forward to the many data readouts and potential new approvals ahead, along with new potential business development opportunities as we focus on the next stage of BioMarin's growth. Thank you for joining us today. We look forward to speaking with you all soon. Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
The post v3 Noticias de la Costa Central 10-27-25 appeared first on News Channel 3-12.
A generous Boise family is helping protect the city’s scenic views. The Satz family donated 44 acres near Table Rock to expand open space and recreation access.
Walking on Eleventh Avenue in Montrose now comes with a warning after a 73-year-old man was attacked by a dog over one week ago. On the afternoon of Friday, Oct. 17 a 73-year-old Montrose man was seriously injured by a dog in the 700 block of Eleventh Avenue in Montrose. The man was walking outside on the street near his residence when a loose dog allegedly charged and attacked him, said RCMP Sgt. Mike Wicentowich in a statement. “The man fought the dog off with his cane but received injuries to his hand, leg, and head during the incident,” he said. The dog was secured by one of the owner’s family members who arrived on scene shortly after the attack. An officer spoke to the owner who believed the dog may have escaped the yard after a gate was insecure. The matter has been referred to the SPCA’s animal protection officer. “There are no criminal charges in this case; however, we do advise using caution walking outside on this street after this incident at this time,” said Wicentowich.
The Forest Service didn't "err on the side of the bear" when it left out illegal road use from the project assessment.
A single airport has been closed four times in one week.
By turning within while remaining engaged with the world, we can bring about a transmutation in ourselves. And must do so before turning scientists loose to mess with the DNA of the few wild animals left in the few intact habitats on Earth.
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LAS VEGAS — Geoswift, a leading provider of cross-border payment services and solutions globally, today announced its integration with Circle Payments Network (CPN). Geoswift integrates its banking infrastructure with stablecoin-powered settlement system, enabling real-time, compliant, and cost-efficient B2B payments worldwide. Building on its role as an Originating Financial Institution (OFI) within CPN, Geoswift enables clients […]
Malmsbury Youth Justice Centre closed in 2023 after being plagued with violence against staff and attempted escapes.
The Managing Director of the Tema Development Corporation (TDC) Ghana Limited, Courage Makafui Nunekpeku, has appealed to religious institutions, particularly churches and mosques, to settle their outstanding debts owed to the corporation. Speaking to the media after a successful revenue mobilisation exercise, Nunekpeku noted that while several customers had complied with payment directives, some religious organisations continued to owe the corporation huge sums despite enjoying its facilities and services. He expressed concern that some of these institutions had been in arrears for up to 10 years, stressing that such long-standing debts undermined TDC’s ability to maintain and expand essential infrastructure within its operational areas. “We have realised that some churches and mosques have not paid what they owe for many years, yet they continue to use our facilities. It is only fair that everyone, including religious bodies, fulfils their obligations. The Bible itself says, ‘Give to Caesar what is due Caesar,’” he said. Nunekpeku disclosed that TDC would soon embark on a special exercise targeting defaulting churches and mosques, including a Sunday operation aimed at recovering long-standing arrears from such institutions. He emphasised that the corporation’s intention was not to disrupt worship activities but to ensure fairness and accountability in the use of state-provided facilities. “Our goal is not to embarrass anyone but to ensure that those benefiting from TDC’s services also contribute their fair share. This is what sustains the development projects we all enjoy,” he added. Nunekpeku reiterated TDC’s commitment to improving service delivery and urged all debtors, including religious institutions, schools, and businesses, to settle their arrears promptly to avoid sanctions, including the locking up of facilities.
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He's tanned. He's ripped. He's often shirtless. And he's got 30 million fans who can't get enough of his crazy Florida antics. Anthony Dawson — better known as TooTurntTony — is the king of so-called 'swamp slapstick' in the Sunshine State. The 30-year-old mega-influencer has built an empire out of pranks, babes and backyard chaos. But behind the laughs and the lake water, there's something lurking beneath the surface. Viewers have grown increasingly concerned about the dark side of Dawson's 'bro humor' brand. In one video, for example, Dawson flings a bikini-clad woman 30 feet into a pool containing a crocodile. In another, he tosses an intern down an embankment so hard the poor guy claims to have broken two ribs — before Dawson mocks him for it. He's always 'too turnt,' meaning overly excited, wild or even dangerous. Speaking to the Daily Mail, psychologist Toby Ingham, author of A Guilty Victim, claimed Dawson's stunts blur the line between entertainment and abuse. 'Tony's certainly intimidating people,' Ingham alleged. 'He pushes them around — and they're always supposed to see the funny side.' He described Dawson's online persona as 'vain and narcissistic,' a 'sadomasochistic' ringmaster who's seemingly found a way to turn humiliation into a multimillion-dollar brand. 'He's charismatic,' Ingham speculated. 'He makes people complicit — and then he humiliates them.' Dawson did not answer the Daily Mail's requests for comment. Before fame, Dawson was a duck rancher in Michigan. He started posting videos about wetland conservation and his feathered friends. His pet duck, named Baby Girl, became a breakout star. Then came the girls, the boats, the gators and the brand deals. Now he lives large on Lake Istokpoga, Florida, in a $525,000 lake house, where the parties never seem to end. He boasts 21 million followers on TikTok, 7 million on YouTube and 4 million on Instagram, and was named one of Forbes' Top 50 Creators in 2023, reportedly making $3 million a year from content and brand deals with Crocs, Celsius, Fireball Whisky and Kraken Rum. He even has his own drink — Too Turnt Tea — and a horror movie in the works titled Skinwalker Island. And, back in August 2024, he signed with the Hollywood powerhouse talent agency CAA. Not bad for a guy who started filming ducks in his backyard. Dawson's content revolves around the so-called TooTurntFamily — his mother Lisa, father Gordon, sister Maria and brother Dominic — and they're often unwilling participants in his stunts, but always end up on camera. Fans love their reactions: Mom screaming, dad sighing and Maria looking like she's reconsidering her life choices. But not all laughs come easy. Mom Lisa reportedly broke her arm during a skit in 2022, and Maria was left nauseated after being duct-taped to a wall for another prank. Even Dawson himself suffered a serious knee injury in 2023 — though, naturally, he posted footage of it. Still, the show goes on. The TooTurnt universe churns out content daily, each clip more wild than the last. And the fans, interns and bikini-clad beauties keep lining up to join him, perhaps in the hope that some of his followers and star power will rub off on their feeds, too. But as Dawson's fame exploded, so did the controversies. In 2022, he posted a series of 'Dahmer pranks' — recreating scenes from the hit Netflix series about serial killer Jeffrey Dahmer. He used a power drill outside his mother's bedroom and placed roadkill under her bed. The internet didn't find it funny. 'It's so insensitive and disgusting,' one follower wrote. 'This isn't content. It's cruelty.' Then in July 2024, Dawson drove his Jeep onto Daytona Beach, wrangled a large tiger shark, and dragged it through the surf for a video. Police were not amused. He was banned from the beach. Later that year, Dawson briefly disappeared from social media, revealing only that he'd been summoned to federal court for unspecified reasons. He came back with a grin and a beer — but offered no explanation. Animal rights activists have also taken aim at him, accusing Dawson of mishandling wildlife, including ducks, raccoons and alligators. One clip from last year appeared to show him trapping a raccoon before beating it to death — though it was later claimed to be staged. Some viewers, however, weren't reassured. 'It's never really clear what's real,' one fan said. 'But the blood looks real enough.' Unlike comedy shows where the stars humiliate themselves, Ingham said, TooTurntTony's stunts seem to humiliate other people. 'It's a performance of power,' psychologist Ingham speculated. 'Tony's never the butt of the joke — he's always the one dishing out the apparent pain.' 'It's a one-way street,' he continued. 'He's the doer. They're the done-to.' And yet, millions keep watching. To Ingham, that says as much about us as it does about Dawson. 'We seem to enjoy watching people get hurt — and then thanking the person who hurt them,' he claimed. And he sees Dawson's popularity as part of a bigger social shift. 'We've normalized danger,' he said. 'Social media has taken us to riskier, potentially more harmful places — and we've started to see it as entertainment.' Maybe it's the Florida factor. The land of alligators, airboats and endless sunshine seems to produce a special kind of madness. Dawson fits right in — muscles, mischief and mayhem all wrapped up in one viral package. There's something undeniably magnetic about him. He's charming, funny and quick-witted. He plays the role of the lovable rogue — the guy who'll toss you into a lake, then offer you a beer while you dry off. His catchphrases — 'Stay Turnt!' and 'Duck Daddy Life!' — have become rallying cries for fans who see him as the embodiment of carefree, shirtless rebellion. Dawson himself has spoken publicly about the creative process behind his rise. In a 2022 piece by Business Insider, he said: 'I knew if I tried enough different things, eventually something would stick.' He also told the outlet he chooses brand collaborations 'based on whether it matches our vibe, we can make a great video with this, and both parties will be happy.' Those comments suggest the pranks and stunts may be less spontaneous than they appear — part of a calculated strategy to engage and build a personal brand. But the laughs are getting louder, while each new video pushes the limits a little more and every prank feels closer to crossing a line. So what happens when the laughs stop? What happens when a prank goes too far — when someone actually gets hurt, or worse? It's hard to say. Dawson's career is still climbing. His fan base still cheers him on. And in a world where clicks mean cash, danger seems to sell. Ingham claimed Dawson's story is a cautionary tale about modern fame — the kind that rewards recklessness with riches. 'Social media doesn't just amplify behavior,' he claimed. 'It encourages it. You have to keep topping yourself to stay relevant.' And for TooTurntTony, that next viral stunt is always just around the corner — faster, louder, and maybe even a little crueler.
An analyst's price-target raise brightened the outlook on beaten-down chemical stock Dow (DOW +3.71%) on Monday. The company's shares enjoyed a nearly 4% gain on the day as a result, easily eclipsing the 1.2% advance of the S&P 500 index across that trading session. A pundit gets cautiously more positive That adjustment, made by Deutsche Bank's David Begleiter, was enacted before market open that day. Begleiter now feels that Dow is worth $26 per share, quite some distance above his previous estimation of $22. That didn't change his outlook on the stock, however, as he maintained his hold recommendation. The reasoning behind Begleiter's price-target raise wasn't immediately clear. What is apparent is that Dow is a stock that's fallen well out of favor with the market -- so far this year it's lost nearly 36% of its value in a generally bullish environment for equities. By contrast, the S&P 500 index has largely moved higher since the middle of the year and year to date has posted an almost 17% gain. Dow has numerous challenges it's contending with these days, not least of which is the sluggish demand for chemicals on the global market. This is due to a number of factors, including but certainly not limited to overcapacity and the negative effects of geopolitical developments. Waiting for an unswing Dow is a classic American industrial, so there are certainly investors out there who are capitalizing on a relatively low stock price to take advantage of an eventual upswing in the cyclical chemical sector. While the industry is sure to recover at some point, investors might have to be patient for the more lingering negative factors to play themselves out.
Monday, Oct. 27, 2025, at 5 p.m. ET Call participants President and Chief Executive Officer — Anirudh DevganSenior Vice President and Chief Financial Officer — John WallVice President, Investor Relations — Richard Gu Need a quote from a Motley Fool analyst? Email [email protected] Revenue -- $1.339 billion reported in the third quarter, with updated fiscal 2025 (period ending Dec. 31, 2025) revenue guidance of $5.262 billion to $5.292 billion.Operating margin -- Operating margin at 31.8% for fiscal Q3 2025; non-GAAP operating margin at 47.6%.Earnings per share -- GAAP EPS was $1.05, non-GAAP EPS was $1.93.Backlog -- Backlog increased to $7 billion, with the remainder attributed to broader business growth.Operating cash flow -- $311 million in the third quarter, with a quarter-end cash balance of $2.753 billion and $2.5 billion in principal debt outstanding.Share repurchases -- $200 million used for share repurchases during fiscal Q3 2025.Q4 2025 guidance -- Non-GAAP revenue expected in the $1.405 billion to $1.435 billion range for fiscal Q4 2025, EPS between $1.17 and $1.23 for fiscal Q4 2025, and non-GAAP EPS between $1.88 and $1.94.Full-year growth outlook -- Management raised the full-year forecast to approximately 14% revenue growth.Hardware demand -- Hardware verification platforms achieved record results (non-GAAP) in fiscal Q3 2025, with a strong pipeline for the next six months and ongoing inventory buildup to meet anticipated orders.AI integration -- SIM AI demonstrated productivity gains, including a "5x to 10x improvement in logic simulation efficiency and coverage," according to Anirudh Devgan during fiscal Q3 2025; and a "4x productivity improvement" at major customers like Samsung, also according to Anirudh Devgan during fiscal Q3 2025.Geography performance -- China returned to "business as usual" following the July regulatory change, contributing materially to results in fiscal Q3 2025; design activity across geographies remains strong.Strategic partnerships and M&A -- Expanded partnerships with Samsung, TSMC, and leading semiconductor companies, and closed on the ARM Artisan Foundation IP acquisition; a definitive agreement was announced last month to acquire Hexagon's TNE and MSC software businesses.Recurring revenue mix -- On a rolling four-quarter basis, business mix remains approximately 80% recurring, 20% upfront revenue, mainly due to hardware and IP deliveries.OpEx and margin dynamics -- Fiscal Q3 benefited from a small restructure and very healthy hardware gross margins, offset in fiscal Q4 by acquisition-related expense increases.Q4 and annual outlook assumptions -- John Wall stated, "flow in the range of $1.65 billion to $1.75 billion, and we expect to use at least 50% of our annual free cash flow to repurchase shares," referring to projected operating cash flow for fiscal 2025, with guidance assuming no material change in current export regulation regimes. Cadence Design Systems (CDNS +1.93%) reported quarterly results above prior expectations, driven by strong performance in all business lines and robust demand across all geographies. Management increased full-year revenue and EPS guidance, highlighting momentum from secular AI demand, rapid customer adoption of AI-driven EDA solutions, and an expanding backlog that reached a record $7 billion in fiscal Q3 2025. Strategic M&A activity, deepened collaborations with key ecosystem partners, and healthy recurring revenue mix underpin management’s continued outlook for double-digit growth and operating leverage into 2026. Devgan stated, "The accelerating AI megatrend is fueling an unprecedented wave of design activity across industries," signaling the company’s positioning at the center of infrastructure build-out for enterprise AI and physical AI markets.Wall highlighted, "bookings were strong, resulting in a backlog of $7 billion," which management characterized as a "record" and noted is weighted toward multiyear recurring arrangements, supporting durable growth.In response to questions regarding China exposure, Wall confirmed, Yes, we saw broad-based strength, and China design activity remains very strong. The region returned to business as usual for us in the second half, following the lifting of export regulations for EDA in early July. Fiscal Q3 was only slightly better than we expected. We now expect China to be up year over year for fiscal 2025, with fiscal Q3 including backlog catch-up following export policy changes in July.Management explained that hardware demand is being driven by the proliferation of AI, HPC, and auto-market designs, with capacity expansions underway and a "very strong pipeline for the next six months" according to John Wall. Industry glossary PPA: Power, Performance, and Area — Key semiconductor design metrics prioritized during EDA tool evaluation.3D IC: Three-Dimensional Integrated Circuit — Advanced chip packaging combining multiple dies in stacked configurations.Chiplet: Modular integrated circuit components combined within a single package to enhance flexibility and scalability in advanced semiconductor designs.JEDI: Cadence's "joined enterprise data and AI" platform for standardized and customer-specific AI model deployment and data management in EDA workflows.SDNA: System Design and Analysis — Cadence’s business line focused on system-level simulation, PCB, package, and multi-physics analysis.Upfront revenue: Portion of recognized revenue from non-recurring items such as hardware and IP deliveries, as opposed to recurring subscription or maintenance fees.Agentic AI: AI systems capable of autonomous, multi-step reasoning or task execution in EDA tools, as referenced by Cadence for next-generation chip design automation.AI HPC: High-Performance Computing applications and infrastructure specialized for artificial intelligence workloads, a primary target segment for Cadence IP and hardware products. Full Conference Call Transcript Richard Gu: Thank you, operator. I would like to welcome everyone to our third quarter of 2025 earnings conference call. I am joined today by Anirudh Devgan, President and Chief Executive Officer, and John Wall, Senior Vice President and Chief Financial Officer. The webcast of this call and a copy of today's prepared remarks will be available on our website cadence.com. Today's discussion will contain forward-looking statements, including our outlook on future business operating results. Due to risks and uncertainties, actual results may differ materially from those projected or implied in today's discussion. For information on factors that could cause actual results to differ, please refer to our SEC filings, including our most recent forms 10-K and 10-Q. CFO commentary and today's earnings release, all forward-looking statements during this call are based on estimates and information available to us as of today, and we disclaim any obligation to update them. In addition, all financial measures discussed on this call are non-GAAP unless otherwise specified. The non-GAAP measures should not be considered in isolation from or as a substitute for GAAP results. Reconciliations of GAAP to non-GAAP measures are included in today's earnings release. For the Q&A session today, we would ask that you observe a limit of one question only. If time permits, you can requeue with additional questions. Now I will turn the call over to Anirudh. Anirudh Devgan: Thank you, Richard. Good afternoon, everyone. And thank you for joining us today. Cadence Design Systems, Inc. delivered excellent results for the 2025 with strong operational and financial performance across all product categories and geographies as we continued the disciplined execution of our strategy. Bookings exceeded our expectations, with backlog growing to over $7 billion, underscoring our continued technology leadership and reaffirming Cadence Design Systems, Inc. as the trusted partner enabling customer success. Given the ongoing strength of our business, we are raising our full-year outlook to approximately 14% revenue growth and 18% EPS growth. John will provide more details on our financials shortly. The accelerating AI megatrend is fueling an unprecedented wave of design activity across industries, ranging from hyperscaler infrastructure to fast-growing physical AI realm autonomous driving, drones, and robotics, to the emerging domain of science and AI. As AI drives exponential design complexity and new system architectures, Cadence Design Systems, Inc. is uniquely positioned to capture this generational opportunity with a differentiated and comprehensive portfolio spanning EDA IP, 3D IC, PCB, and system analysis. The cadence.ai portfolio embodies our strategy of design for AI and AI for design, empowering customers to build out the global AI infrastructure while we infuse AI into our own products to deliver breakthrough automation and productivity. With deep partnerships across AI innovators, foundries, system leaders, and a comprehensive chip-to-systems portfolio, Cadence Design Systems, Inc. is driving transformative PPA and productivity gains, positioning us well for sustained growth in the AI era. In Q3, we meaningfully expanded our partnership with Samsung through a wide-ranging proliferation of our core EDA software, as well as our system software across PCB, advanced packaging, and system analysis. We also deepened our long-standing partnership with a leading semiconductor company in Q3 through a broad proliferation of our core EDA IP and systems portfolio and are closely collaborating on next-generation AgenTeq AI EDA solutions. We expanded our long-standing partnership with TSMC to power next-gen AI flows supporting TSMC's N2 and A16 technologies. Our Integrity 3D IC solution provides comprehensive support for the latest TSMC 3D fabric die stacking configurations. And our design and ready IP, including HBM4 and LPDDR6, on N3P enable next-generation AI infrastructure. At TSMC's OIP conference, Broadcom highlighted Integrity 3D IC full flow deployment success for hyperscaler, high-capacity ASICs. Our IP business maintained strong momentum in Q3, driven by global accelerating IP demand and increasing customer proliferation of our expanding IP portfolio. Our profitable scalable IP strategy focused on AI HPC and automotive verticals positions us well for continued growth. Increasing complexity of interconnect protocols driven by AI and chiplet architectures, along with new foundry opportunities, are providing strong tailwinds to our IP business. Bookings were strong and tracked ahead of our expectations. Our design IP portfolio secured several competitive wins at top AI and memory customers. For instance, we won a highly competitive engagement at a marquee memory company that embraced our HBM4 and DDR5 IP for its new AI design. The recently completed acquisition of the ARM Artisan Foundation IP further augments our design IP portfolio with standard cell libraries, memory compilers, and IOs optimized for advanced node at the leading foundries. Our Tensilica audio and vision DS and Neo AI accelerator, NPUs, scored multiple design wins with leading customers in the US and Asia for mobile, automotive, and data center verticals. Our core EDA business delivered strong results, driven by growing adoption of our AI-driven design and verification solutions. In digital, Cadence Cerberus AI Studio, the industry's first agentic AI, multi-blog, multi-user design platform, continues to deliver unparalleled PPA productivity benefits. Samsung US taped out an SF2 design using Cadence Cerberus AI Studio to achieve a 4x productivity improvement. In another instance, Samsung used Cadence SerDes Tempus and Innovus to rapidly close and sign off a multi-billion instance AI design on SF4 with 22% power reduction and first-pass silicon success. Our Virtuoso Studio and Spectre platforms saw strong momentum, with their AI-driven features and workflows gaining rapid traction as the customers leverage the automated design migration and optimization capabilities. Our hardware verification platforms have become the de facto choice for AI designs, offering industry-leading performance, capacity, and scalability. Hardware had a record Q3 with several significant expansions, especially at AI and HPC customers. We deepened our overall collaboration with OpenAI as they expanded their commitment to our Palladium emulation platform. Vericium SIM AI in Q3 saw growing adoption as it delivered dramatic debug productivity, test bench efficiency, and accelerated coverage closure. NVIDIA, Samsung, and Qualcomm all presented semi success stories at Cadence Live India, highlighting 5x to 10x improvement in verification throughput. Our system design and analysis business achieved another solid quarter, driven by an expanding set of innovative solutions and growing adoption across a broadening customer base. In Q3, we significantly expanded our Cadence Reality digital twin platform library with NVIDIA DGX SuperPOD model and DGX GB 200 systems to accelerate AI data center deployment and operations. Three major memory providers significantly increased their Clarity and Security usage as they transitioned to a full Cadence Design Systems, Inc. flow for advanced IC packaging, displacing competitive solutions. Richard Gu: Beta CAE continued its momentum with multiple competitive displacements, underscoring its accuracy and performance advantages, including a significant competitive win at a large Tier 1 automotive company in China. Anirudh Devgan: In Q3, Infineon Technologies standardized its PCB design workflow on the Cadence AI-driven Allegro X platform for their future designs. Last month, we signed a definitive agreement to acquire Hexagon's TNE business, including its MSC software business, to bring industry-leading structural analysis and multi-body dynamics technologies to Cadence Design Systems, Inc. Complementing our multi-physics portfolio, this will accelerate our expansion in SDA and put us at the forefront in unlocking new opportunities across automotive, aerospace, industrial, and the rapidly emerging world of physical AI. In summary, I am pleased with our Q2 results and the strong momentum across our businesses. The AI era offers massive market opportunities, and through the co-optimization of our entire portfolio with AI and accelerated computing, Cadence Design Systems, Inc. is uniquely positioned to be the trusted partner to deliver AI-centric transformational solutions across multiple industries. Now, I will turn it over to John to provide more details on the Q2 results and our updated 2025 outlook. John Wall: Thanks, Anirudh. Good afternoon, everyone. I am pleased to report that Cadence Design Systems, Inc. delivered strong results for the 2025 with broad-based momentum across all our businesses. We exceeded our guidance for Q3 revenue, operating margin, and EPS and are raising the full-year outlook across these key metrics. With the updated outlook, and at the midpoint, we now expect our 2025 revenue to grow approximately 14% year over year, on track to achieve double-digit growth across all our product categories for the year. Third-quarter bookings were strong, resulting in a backlog of $7 billion. Here are some of the financial highlights from the third quarter, starting with the P&L. Total revenue was $1.339 billion, GAAP operating margin was 31.8%, and non-GAAP operating margin 47.6%. GAAP EPS was $1.05 with non-GAAP EPS $1.93. Next, turning to the balance sheet and cash flow. Cash balance at quarter-end was $2.753 billion, while the principal value of debt outstanding was $2.5 billion. Operating cash flow was $311 million. DSOs were fifty-five days, and we used $200 million to repurchase Cadence Design Systems, Inc. shares. Before I provide our updated outlook, I would like to highlight that it contains the usual assumption that export control regulations that exist today remain substantially similar for the remainder of the year. With that in mind, for Q4, we now expect revenue in the range of $1.405 billion to $1.435 billion, GAAP operating margin in the range of 32.5% to 33.5%, non-GAAP operating margin in the range of 44.5% to 45.5%, GAAP EPS in the range of $1.17 to $1.23, and non-GAAP EPS in the range of $1.88 to $1.94. As a result, our updated outlook for 2025 is revenue in the range of $5.262 billion to $5.292 billion, GAAP operating margin in the range of 27.9% to 28.9%, non-GAAP operating margin in the range of 43.9% to 44.9%, GAAP EPS in the range of $3.80 to $3.86, non-GAAP EPS in the range of $7.02 to $7.08, operating cash flow in the range of $1.65 billion to $1.75 billion, and we expect to use at least 50% of our annual free cash flow to repurchase Cadence Design Systems, Inc. shares. As usual, we published a CFO commentary document on our Investor Relations website, which includes our outlook for additional items as well as further analysis and GAAP to non-GAAP reconciliations. In conclusion, I am pleased with our Q3 results and strong 2025 as we continue to deepen strategic partnerships across the ecosystem. As always, I would like to close by thanking our customers, partners, and our employees for their continued support. And with that, operator, we will now take questions. Operator: Thank you. At this time, I would like to remind everyone who wants to ask a question to please press star and then the number one on your telephone keypad. As a courtesy to all participants, we ask that you please limit yourself to one question. And our first question comes from the line of Vivek Arya with Bank of America Securities. Vivek Arya: Thanks for taking my question. Your IP business is now, I think, tracking to over 20% growth for the second year. I mean, that was, you know, just hoping you would give us some sense for what's driving this growth because your competitor expressed a lot of concerns about their IP business, whether it's in China or at Intel or just IP visibility in general. And I think they were talking about a new business model. So how do we square that in the growth you are seeing? How sustainable is this growth? And what is your visibility in your IP business? Thank you. Anirudh Devgan: Yeah. Thanks, Vivek, for the question. Yeah. I am actually quite pleased with the performance of our IP business. And, you know, we do not look at any one quarter. But even if you look at how we performed last year, of course, this quarter was exceptional. But overall, how we performed this year, and what we see, you know, backlog and activity going into next year, overall IP business is performing quite well. And there are multiple reasons for it. You know, first, our IP business is different. You know, I think it is much more profitable even though the profitability is less than our EDA business, but I think it is more profitable than general IP business because we also have Tensilica, which is almost like software-like profitability. But a lot of the growth is coming in, you know, design IP. And the reason for that is, you know, our IP business is focused on AI and HPC, at the most advanced nodes. Since we got started later in the IP business, we focused it where the future is going, which is AI, HPC, and chiplet-based architecture. So a lot of the, you know, like, SerDes and PCIe and HBM4 IPs, and that part of the market is doing well actually across the world. And then the second reason is, as you know, there are more and more foundries entering, especially at advanced nodes. And we have a long-standing partnership with TSMC but also Samsung, Intel, and now Rapidus. So there are at least four major foundries now leading nodes. So that is, I think, the second reason for our IP business to be well-positioned. As the performance of our IP business has improved, you know, the PPA and we are, you know, our PPA is comparatively better in design IP. And a lot of customers want to shift over to Cadence Design Systems, Inc. So the customer demand, I think, is the third reason as our IP business strengthened that we are seeing strength in the IP business. So I think for these three main reasons, I am pretty optimistic about the IP business. And going to next year, we are not getting to next year, but just to give an indication, I would be surprised if our IP business does not grow better than Cadence Design Systems, Inc. average. You know, which it should, given the profitability profile. We want that to happen. You know. If the profitability is slightly lower than EDA, the growth should be higher than Cadence Design Systems, Inc. average. So overall, I think that would make, like, three years trend. And overall, I am pleased by our IP performance. Operator: Excellent. And our next question comes from the line of Jason Celino with KeyBanc Capital Markets. Your line is open. Jason Celino: Great. Thank you. You know, last quarter, I think you mentioned the second half having, you know, good renewal opportunity. Know, with some of your large customers. With the uptick in backlog, I imagine some of that strength was from some of these renewals. But as we think about Q4, do you still have renewals on the docket? Thank you. Anirudh Devgan: Yeah. Thanks for the question. I will let John comment on the timing of the renewal. But overall, I do think that, you know, our performance in Q3 is much better than we expected. And the primary reason, and this is true in all geographies, but I think the primary reason is that the AI infrastructure build-out, as you know, is accelerating. Okay. And we are essential to the design and build-out of the AI infrastructure. Of course, we, you know, I have said publicly there are three big phases of AI in my mind, you know. AI infrastructure being the first one, physical AI being the second one, and science of AI being the third one. But most of our focus and investment is, of course, on the first one, and as you see in the last six months, it is accelerating. And also, we are privileged to work with all the max sevens and also investment in internal chip design is accelerating, along with, of course, the big, you know, merchant silicon companies like Nvidia and Broadcom and AMD. So I think that is coming through in our booking activity in Q3. And so far, you know, we see that strong demand continuing in the future. Yeah. John Wall: Jason, I would just like to add that the mix as well as healthy across EDA IP, hardware, and SDA. And the core EDA and IP backlog is weighted towards multiyear recurring arrangements, and that supports durable double-digit growth. Jason Celino: Awesome. Thank you. And our next question comes from the line of Joe Vruwink with Baird. Your line is open. Joe Vruwink: Hi. Great. Thank you very much. I guess I am struck by the number of times the word acceleration has already been used on the call so far, and I guess the third-quarter bookings much stronger than we were expecting. It would support a future acceleration. I know it is atypical to kind of get 2026 comments, but Hunter had already disbursed the IP business. I am just wondering if you can maybe start to frame expectations for next year based on what you have in hand, and it certainly seems like things are setting up well. Do you have the type of visibility at this point to maybe comment on? Anirudh Devgan: Yeah. I think what I would like to say is that, you know, we always look at our business in terms of how well our products are doing. Okay. And we report, like, five lines of businesses, as you know. And I would say at this point, you know, all five lines of business are performing very well. And you can see that in this year, I think we will grow double digits in all five lines of business. And also, we are performing well in all geographies. So in terms of products and geographies, which is our main focus, you know, are we aligned with the, you know, leading companies, you know, are we trusted partner of the market-shaping companies. So if you look at products, geographies, and customer alignment, I think we are well-positioned. Of course, as you know, as we enter a new year, we are always prudent in our outlook. And we will give you an update about next year, you know, when we come to, you know, January, February time frame. I think Cadence Design Systems, Inc. is very well-positioned, you know, better positioned than it has been, I think, for the last compared to the last several years. And then we look forward to working with our customers in the future. John Wall: Yeah. Joe, we will not guide FY '26 today, but exiting FY '25 with probably record backlog and broad-based momentum from deepening strategic and trusted partnerships across the ecosystem positions us well for next year. You can expect our framework will remain disciplined. We typically aim for double-digit top-line ambition, continued operating leverage, and balanced capital allocation. And that is all underpinned by secular AI demand across chip-to-systems. Joe Vruwink: Thank you. Operator: And our next question comes from the line of Lee Simpson with Morgan Stanley. Your line is open. Lee Simpson: Great. Thanks for fitting me in and congratulations on another great quarter. I just wanted to ask around about China really. It looks as though you are up about 53% year on year. Doing well in the mix up to 18%. That feels more than just a sort of return of business post the restrictions on the BIS letter last quarter. It feels so there is genuine momentum there. So I wonder if you can talk me through what is driving this? Is it IP? Is it hardware? Is it core EDA? What are the vectors here? Thanks. John Wall: Thanks for the question, Lee. Yes, I mean, we saw broad-based strength, and China design activity remains very strong. The region returned to business as usual for us in the second half, but with the lifting of the export regulations that changed for EDA in early July. But Q3 really was only slightly better than we expected. We now expect China to be up year over year for fiscal 2025. Anirudh, do you want to add anything to what is happening in China? Anirudh Devgan: Yeah. Lee, that is a good question on China. I mean, overall, I would say the behavior in China, from what I can tell, is back to normal. You know, of course, there was disruption in Q2 for obvious reasons, you know, given, you know, the policy in Q2. But the behavior that we are seeing is back to normal in Q3. And a lot of it was driven by, you know, like, us prioritizing hardware deliveries that we could not do in Q2 into Q3. But overall design activity is strong in China across, you know, semiconductor are essentials to every country, and China continues to invest in semi. But overall, I would say the broad strength is broad-based, not particularly tied to any one geography. And there was some, you know, makeup from Q2 to Q3. Now it is difficult to predict the future, but what I see, I do not see any unusual activity in China. Like, you know, the question maybe, is there any, you know, pull-in from future quarters? We do not see that in terms of what we see, and we see overall broad-based trend in other geographies as well. John Wall: Thanks so much. Operator: And our next question comes from the line of Siti Panigrahi with Mizuho. Your line is open. Siti Panigrahi: Great. Congratulations on another strong execution. Anirudh, I want to ask you about your system design, mainly that simulation analysis, that market. Help us understand your strategy. You made an acquisition last year, Beta CAE, and this year again, you have announced MSC software. Help us understand how you are going to, you know, position yourself against your competitors in that market. You know, this is definitely a growing market. I would appreciate any color on that. Anirudh Devgan: Yes, Siti. Thanks for that question. I mean, I am pretty pleased with the overall performance of SDNA. You know, I mean, just to remind everybody, you know, Cadence Design Systems, Inc. is the one that started this whole thing in 2017, 2018. Now it is considered obvious that silicon and systems are going to come together. I mean, we have been talking about this for a very long time. Now I think what the acquisition that we did this quarter is more forward-looking in the sense that, you know, like I mentioned, these three horizon technologies, horizon one being infrastructure AI, horizon two being physical AI, horizon three being science AI. You know, that is how we are focused. Most of our investment in horizon one, but, of course, like, maybe 70, 80% is horizon one, about 20% horizon two, and a few percent horizon three. But horizon two of cars, drones, and robots, can be, you know, a very, very big market in the future. What happens is AI is going to change also for Horizon two. As you see, there are a lot of reports that the world is going to move from LLM-based AI to a world model-based AI. In which, you know, robots you have to, it is no longer the text data that trains the robot. It is the physical, you know, movement and all that. And one of the key challenges in training robots or cars is that there is not enough data that is available. Know, when you train an LLM model, basically the data is available on the Internet and is well, you know, language data is available. Whereas training a robot, the data is not available. Okay. So the data either has to be generated manually, you know, like, put sensors on a human and the person picks up the object, you know, that could be data. But that is a very slow form of getting data. The best way to generate data for a world model is through simulation. And this is what we have talked about for also for a very long time of the three-layer cake. So then the fundamental simulation of multi-body dynamics becomes essential in horizon two physical AI. You know, Hexagon had a leading, you know, simulator for multi-body dynamics. Along with structure simulation, you know, which helps in all kinds of electronics and automotive. So I think I am pretty optimistic that this can position us well for the second horizon, you know, which is physical AI. And so what that will do for SDNA business, the way I look at it, our SDNA business, know, once we complete this acquisition, we will have two strong pillars. You know. And it will actually the run rate should cross a billion dollars in 2026 if the acquisition closes. And one pillar will be driven by 3D IC and chiplets. You know, Allegro is in our SDNA business. Allegro is a de facto standard for package design in the world. And so if you take Allegro combined, you know, security and clarity and Celsius, our kind of electromagnetic and electrothermal tools. That is one key area of this merger of silicon and system. We will be very, very strong in that, you know, and our partnership with TSMC, our partnership with all the leading AI players like Nvidia positions us very well with Allegro and 3D IC. So that will be roughly one half of our SDNA business. Because there is going to be a lot of growth in this chiplet-based architecture. And the second part will be this physical AI, you know, structural analysis. And the combination of Beta, which was the leader in pre-post processing with Hexagon, which has a lot of solvers, like multi-body dynamic structural. And then, you know, we acquired a great new CFD solver from Stanford a couple of years ago. So if you put all the solvers together with Beta, that will be roughly half of our SDNA business. And really well-positioned for the physical AI. So if you put it all together, the benefit of Hexagon is that it will give us two strong pillars in SDNA, in the areas that are going to grow the most in the future. One is 3D IC and HPC. The other is physical AI and connected technologies. Siti Panigrahi: Great. Thanks for the color, Anirudh. Operator: And our next question comes from the line of James Schneider with Goldman Sachs. Your line is open. James Schneider: Good evening. Thanks for taking my question. I was wondering if you could maybe frame for us some of the tailwinds you expect you might see over the next couple of years as a result of the inclusion of AI features into your products on the core EDA side. Maybe talk about any kind of productivity metrics you can give us in terms of time to market or developer productivity and how that might translate into either revenue or adoption rates of that technology and features? Thank you. Anirudh Devgan: No. Absolutely. Great question. You know, as we have said before, there are two parts to our AI strategy, which is we call design for AI and then AI for design. Okay? I think the first part is the build-out of the AI ecosystem, whether it is infrastructure or physical AI. And that, you know, we are very well-positioned with all the leading players. All the max seven companies and now I think your question is on the second one, which is, of course, applying AI to design. So even this time, you know, we highlighted several. So we have, you know, at least five major platforms and some of the big examples are, for example, SIM AI, which is using AI to accelerate verification. It is an almost exponential task in chip design. And we are seeing with SIM AI, you know, 5 to 10x improvement in logic simulation efficiency and coverage, which is one of the mostly heavily used tools in verification. Even in Cadence Live, you know, Samsung and Qualcomm and Nvidia highlighted this. So these are demonstrated benefits at customer site being highlighted by the customer themselves. Okay. The other area is in physical design. You know, the back-end physical design with Cerebras AI Studio. Again, we had Samsung code 4x improvement in productivity. And also 22% improvement in PPA. The way, this is huge numbers. Because when you go from, like, five to three nanometer to two nanometer, typically, a node migration, which the industry is spending like, you know, billions and billions of dollars, will give, like, 10 to 20% PPA improvement. And if we can get that with better optimization, with better AI, that is a huge value for our customers. So the good news is that I think the adoption of AI tools is almost taken as a de facto. You know, all the big customers are adopting our AI tools. And I have said even before that, you know, the monetization of that takes some time. It always takes two contract cycles. I think we should be able to do that or slightly better. So but the productivity is huge by applying AI to EDA. And the reason I think it is different in EDA than other things is first of all, there are multiple reasons. One is, you know, we have done automation for thirty years. You know, the chip design process is highly automated. You know, about 80, 90% of it is already automated. So we have a lot of history of automation, and then AI is the next 10x that automation that can happen. I mean, we have probably improved chip design 100x in the last twenty years, and AI can give the next 10x. The other thing that is different in chip design versus other industries, I believe, is because the workload is exponential. You know, the chips in five years from now will be like five, 10 times bigger, complexity will be 20, 30 times more given software and chiplet. So AI productivity is needed just to keep up. So our workload is exponential. It is very different than a workload is not. So the customers are expecting us to deliver more productivity and are accepting of deploying that in their designs. James Schneider: Thank you. And our next question comes from the line of Harlan Sur with JPMorgan. Your line is open. Harlan Sur: Good afternoon, guys. Great job on the quarterly execution as always. On the third-generation upgrade cycle on your emulation and prototyping platforms, you are about five quarters into the upgrade cycle. So record revenues in Q3. If I rewind back to your second-generation launch, right, the team drove three years of record revenues post-launch. You still have the same drivers in place. Right? Design, software complexity increasing exponentially, the cadence of new chip program introductions, accelerating addition of new customers like OpenAI, as you mentioned on the call today, and proliferation of all of these challenges into new markets like automotive and software-defined vehicle, given the lead times for your Proteon and Palladium systems, I assume you are already booking into next year. What is the demand curve look like? And do you anticipate continued momentum and growth in 2026 for the hardware platform? Anirudh Devgan: Yeah. Harlan, as always, you are always very perceptive in the overall trends in the market. Yes. Hardware is doing phenomenally well. And I expect the trend to continue. So will '26 be better than '25? That is what, you know, we would think. Now how much better? You know, we are always prudent in that because, you know, hardware, you do not have like, if full-year visibility like we would have in the software business. So when we go into any given year, you know, we only have a six-month visibility. So we are always prudent in a hardware guide. And then, you know, if the business comes in as expected, just like this year, we can, you know, improve our guide for the rest of the year. That is on the, you know, that is more on the, you know, guiding discipline, which we want to be, we want to derisk our guide for investors. Now in terms of fundamental technology trends and market trends, I mean, is this, this is a great setup for hardware because, first of all, we are the only company that builds our own systems. We build our own chips at TSMC. There are full radical chips. You know, you should see these things, you know. These racks have 144 liquid cool chips connected by InfiniBand and optical, and the customers will connect, 16 racks together, even that can emulate like 1 trillion transistor designs. I mean, there is no other platform that can compete with that. And also the demand for hardware is increasing not just because of their more AI designs, but as the, you know, as we go from three nanometer to two nanometer to 1.4 to one, will take, you know, next seven, ten years. The size of the chips only increases. And so there is more and more demand for hardware. So overall, competitively and market trend-wise, I think we are well-positioned in hardware. But of course, for any given year, we are prudent in the guide. John, I do not know if you want to add. John Wall: Yes. Yeah. Yeah. I got it, Harlan. What I would add there is demand remains very strong, particularly across AI, HPC, and auto markets. We have been scaling manufacturing capacity and trying to improve lead time. We have also had hardware gross margins become more healthy. We remain focused on throughput to meet the elevated need from AI designs. And if you look at our financials this quarter, you will see that we have been building inventory to try and meet the demand in this reflected in the pipeline for the next six months. Harlan Sur: Insightful. Thank you very much. John Wall: Thanks. Operator: And our next question comes from the line of Jay Vleeschhouwer with Griffin Securities. Your line is open. Jay Vleeschhouwer: Thank you. Anirudh, you gave several examples of customer activity, customer engagements, and so forth. And I would like to ask you about the recent announcement of the joint work that NVIDIA and Intel are going to be doing. Would it be fair to presume that combined GPU and CPU work would necessarily lift up demand and capacity requirements for multiple types of EDA tools, also IP, probably hardware as well. So there would be a general uplift as a result of that combined work. But at the same time, would it also necessitate your increase in your investments, for example, in AEs, as you did when you had that breakthrough with Intel several years ago. Anirudh Devgan: Hi, Jay. That is a good observation in terms of CPU, GPU together. By the way, I have said this for almost fifteen, twenty years. That the CPU GPU need to work together because, you know, EDA is a very well-optimized workload. And, you know, it is computational software, you know, mathematical software. Which is very similar to AI. You know, what happened in the history of EDA is that, of course, there are a lot of SIMD tasks, you know, like, which can be done in a GPU kind of machine, but there are also a lot of conditional tasks which need to be done on a CPU kind of machine. So we always wanted both CPU and GPU, and we also wanted CPU and GPU to be close to each other. And actually, to NVIDIA's credit and, you know, Jensen's credit of, you know, Grace Hopper and then Grace Blackwell. I mean, they are one of the first people to track, you know, to kind of watch this trend. And now, you know, if you look at all the major designs, other companies too, there is a combination of CPU and GPU together. And that is the reason for the last several years, we are already working on our workload to CPU plus GPU. And a perfect example was when we announced Millennium earlier in the year. So we are moving not just, you know, system analysis workload, which are more GPU friendly, but also EDA workload, you know, which are critical for accelerating EDA and 3D IC to CPU GPU combination. So what I would like to say is I am actually very pleased to see that the whole industry now is going toward this combination of CPU plus GPU, whether you look at Apple's chips or, you know, AMD chips, of course, NVIDIA, amazing platform. This partnership with NVIDIA and Intel is good for us in terms of gives us a new kind of x86 plus GPU. And also, we have a long-standing partnership with NVIDIA as Intel does more work with NVIDIA, it is also good for our overall discussions with Intel, which I think are proceeding well. I think Intel has to invest both, you know, in its ecosystem for foundry and also its own products. And I think Labool knows that and has good to see the investment on both sides. Jay Vleeschhouwer: But just to be clear, aside from the porting that you have to do internally for your own tools, you are presuming that in terms of demand that this customer activity would necessarily increase the consumption of EDA. Anirudh Devgan: The customer activity should, I mean, I think, first of all, if the EDA tools get better because of, you know, CPU GPU system being optimized, typically, the customers will adopt. We are always looking at ways to improve our tools, and this gives another vehicle to improve the performance of our tools. So that is good for all customers. And then I think in this particular partnership, there are specific design activities that need to be done. You know, without getting into too much detail, you know, and we link based IP and the so, yeah, we are working with the particular companies on design to make this design happen just like we would work with any of the leading designs. So, yeah, there is a specific customer activity connected to NVIDIA and Intel. And in general, there is customer benefit if our tools are optimized better on this platform. Yeah. Jay Vleeschhouwer: Got it. Thank you, Anirudh. And our next question comes from the line of Gianmarco Paolo Conti with Deutsche Bank. Gianmarco Paolo Conti: Yes. Hi, there. Thank you for taking my questions again. Congrats on another great quarter. Maybe just going back towards China. Especially given the amazing quarter you guys have had, of course, some of it was recouped from Q2. But how should we think about a sustainable growth rate in the region beyond what was recouped last quarter? And potentially, if you could give some color on if there is any real risk from yet another ban in the region. Obviously, there was some news flow going on, and I think investors will want to be a bit wary about, like, what was real in terms of potential risk to EDA or what is sort of like the broader macro level impact? Any commentary, that would be great. Thank you. Anirudh Devgan: Yeah. I think China, like I said, the design activity seems back to normal to me. And I think we mentioned, of course, when we started the year, we were very prudent. Very because I said before, when I went to China last year, I mean, they were expecting a tough kind of macro environment, geopolitical environment, which turned out to be in '25. So we were very prudent in our guide of China in the beginning of the year. Turned out to be correct. Now I think at this point, like John also mentioned last time and this time, we expect China to grow, you know. How much it grows will depend, you know. We will have a better idea. It is very difficult to predict. You know. We will have a better idea at the end of the year. But I do expect China to grow this year. And then it is good to see, I mean, it is very difficult to predict the geopolitical environment, and I definitely do not want to do that. But it is good to see that there are a lot of discussions between the two kind of presidents and two big economies. So any stability there, certainty is good for our business. So we look forward to that. But I do expect that design activity is strong. And if there is no, you know, unforeseen development and the environment is stable, it should help our business. I just want to remind you that our strength in Q3 is helped by performance in China, but it is very broad-based. Given, you know, like, all the reasons we mentioned of the build-out of the AI infrastructure, the emerging design of physical AI, you know, the overall AI megatrend. So we are pleased. So we are not indexed to any particular country. But it is good to see that the environment is improving in China. John Wall: Yes. And Gianmarco, I would like to remind you that our Q4 and full-year outlook assumes today's export regime remains substantially similar. And we always incorporate prudence for regulatory variability. And we will continue to comply rigorously while supporting customers globally. And as Anirudh says, we are seeing strength right across all businesses and across all geographies. Gianmarco Paolo Conti: Great. Thank you. Operator: And our next question comes from the line of Joseph Michael Quatrochi with Wells Fargo. Your line is open. Joseph Michael Quatrochi: Yes. Thanks for taking the question. I was wondering if you could just maybe help us understand the OpEx dynamics. I think 3Q is a bit better than expected, but 4Q is a bit worse than expected. Is that related to just the Artisan deal timing of closing that or just any sort of help there would be helpful? John Wall: Sure. Yeah. But yeah. I mean, it is really just the timing of some hardware delivery shifting between Q3 and Q4. But overall, the year is slightly ahead of what we were expecting, and we are pleased by the broad-based execution, strong demand across all of the product categories. Core EDA software is performing very well. Hardware continues to be strong. We are continuing to make progress in SDA, and we have continued momentum and healthy renewals set up for Q4. Joseph Michael Quatrochi: Guess maybe the OpEx. John Wall: Sorry. Can you repeat the question? The question was on the OpEx side. Joseph Michael Quatrochi: Like, the OpEx timing. John Wall: Oh, yes. So on the OpEx side, we did a small restructure that benefited Q3. The hardware gross margins were very healthy in Q3. And then it is offset a little in Q4 by some new expenses we are picking up from new acquisitions. Operator: Perfect. Thank you. John Wall: Thanks. Operator: And our next question comes from the line of Charles Shi with Needham. Your line is open. Charles Shi: Hey, thanks for taking my question. Anirudh, congrats on the nice results. And as John, similarly here. The question looks at the growth rate of the overall company for the last few years, it has been maintaining around that 40% ish plus-minus range. Truly remarkable. Looks feels like you did not really skip a bit at all, but when I look under the hood, there are lots of moving parts. Right? Like, let us compare last year versus this year. Last year, China was bad. Hardware was kind of decelerating. I think that was partially due to your hardware transitioning to the V3X3. I mean, I am looking at the upfront revenue as to inform me about your hardware growth. But this year, both things are kind of turned out much more net positive, like, your upfront revenue probably going to grow somewhere closer to 50%. China looks like it at least it is going to grow above the corporate average. So wonder when we look at, think about next year, do you think both and China can maintain a current momentum? Maybe especially on hardware, based on the observation of the V2X2 cycle, I believe that was somewhere in between 2021 and 2024. When you go into, like, a second or third year ish, the growth rate in the V2X2 cycle, it kind of decelerated a little bit. So my question is, is this time can be a little bit different in terms of the hardware growth rate going forward? And could any fear of your from your customers regarding hardware transition to, let us say, Z4X4 in the maybe, the next one to two years, causing some of the deceleration of hardware revenue? I know this is a long question, but I think that this is the most important one. We think about the Cadence Design Systems, Inc. outperformance going into next year? John Wall: Thanks for the question, Charles. We are trying to unpack it. So I think I would not focus too much on any one quarter or even any one half in terms of results. If you recall last year, the shape of the revenue curve was kind of back-end loaded. And Q3 over Q3 comps can be a bit skewed, particularly as well with China. Given that we had that temporary restriction in China from May to the early July. But generally, when you are talking about hardware demand is very, very strong. But and we are seeing a secular trend in hardware demand for many years now. Because the growth in complexity continues unabated. But we are seeing a very strong pipeline for the next six months. And we are ramping up on inventory for some large orders that we have to fill in the next couple of quarters. But so we are seeing lots of momentum, and we expect to mean, typically, if I go back, I think the last five, six years, and it is typical of Cadence Design Systems, Inc. Q4 bookings would exceed Q4 revenue. So we just finished with $7 billion of backlog at the end of Q3, which is a new record for us. Given renewal timing in Q4 and the visibility we have, we would expect to end '25 at a fresh high. And with that mix being so healthy across all of the different businesses, I think it bodes well for next year. Charles Shi: So maybe a quick follow-up. So Anirudh, with a technical perspective, the current hardware, the E3X3. Enough to support 1 trillion transistors but with the AI really, like, moving really fast. Do you foresee, like, when you have when you probably need to like, do another hardware refresh? And is there any light you can shed on this? Anirudh Devgan: Yeah. Hi, Charles. Yeah. I am very confident in a hardware position. You know, we talked about Palladium. You know, we are the only company that designs our own chips. And also, Protium with FPGA systems, and that is also doing well with the dynamic deal. And like John said, you know, we do see good demand. Now I just want to remind you that, you know, when we guide, we always are prudent given hardware is not as predictable as software. But there is almost though we reported kind of upfront revenue, but what has happened is that all these big customers are almost buying every year. It is not that they are buying, you know, so the buying behavior is different than four, five years ago. They are doing so much design. They are all the really big customers. It has all always almost become like an annual kind of subscription even though financially it is reported, of course, as upfront. So now will the hardware trend continue? I mean, right now, I do not see any reason that it will not. And so I think '26 will be stronger than '25. How much stronger? We will have a better idea. Now in terms of our next generation, we are always investing in R&D. Know, we have a huge investment in R&D as you know. 35% of our revenue is invested in R&D. And but if you look at the expense side, almost 65% of our expenses invest in R&D and about 25% is invested in application engineering. So more than 90% of our investment and headcount is in engineering, you know, customer support and R&D. And that is true for hardware. So we are, you know, we do not want to go into all the details, but you can assume we are well on our way designing the next generation of hardware systems. And they will come in time. You know, one thing good thing is about our current systems already support 1 trillion transistor design. And that is supposed to happen by 2030. But before 2030, we will have a next generation of hardware which will support it for the next, you know, five years. So I think I am pretty confident in our hardware roadmap. And the demand itself, I think because, you know, Harlan, you know all this area well. I mean, AI, the chips are only getting bigger. And also what is happening is, like, even with the, like, Blackwell, it is not just one chip now. It has multiple chips and then grays together. So the customers are also not emulating just one chip, which is growing x every node. They are emulating systems of chips. You know, like, Grace and Blackwell together or if you have chiplet by architectures. So the demands of hardware may move faster than just Moore's Law or technology scaling. Because of this 3D IC. But again, we will see that. We are well-positioned. We will see how it progresses. But systemically, there is no issue in demand for hardware in our competitive position. John Wall: Charles, there was a lot in your question. I think you referred to upfront recurring revenue as well. I mean, we continue to frame 25% around eighty-twenty recurring to upfront on a rolling four-quarter basis. And I think as you mentioned in your question, the variability quarter to quarter is driven mainly by strong upfront businesses like hardware and IP and the timing of China ratable revenue earlier in the year. But with core EDA growing so well, we are comfortable that eighty-twenty is probably the right kind of mix of business for the foreseeable future. Charles Shi: Thanks for the insights. Operator: And our next question comes from the line of Gary Mobley with Loop Capital. Your line is open. Gary Mobley: Hi, guys. Thanks so much for squeezing me in and let me extend my congratulations. I really just had a clarification or question to get to a clarification. So if I recall correctly, given the timing of the export control repeal, which we believe is July 2. Your China backlog was not in your June ending backlog. But I presume now that it is. So given that $600 million revenue or $600 million delta in your backlog, how much of that was a function of the inclusion of China backlog versus the prior quarter. Anirudh Devgan: Yeah. Hi. Let me take a crack at it and then I think yeah. You are right. Our backlog grew from $6.4 billion to $7 billion. There is a growth of $600 million. So I think about, I would say, about 25% of that. About $150 million is catch up from Q2 to Q3, and the rest growth is growth strength across our business. John Wall: Yeah. That is right. No. That is exactly right. Gary Mobley: Appreciate it. Still good numbers. Thank you. Operator: And our next question comes from the line of Clarke Jeffries with Piper Sandler. Your line is open. Clarke Jeffries: Thank you for taking the question. Anirudh, I appreciate the comments on the mechanics of the strength in the IP business and specifically the demand for design IP you are seeing for AI projects? I wanted to follow-up with just how the wallet opportunity is changing with those AI projects. Specifically, do you see any potential for growing pains or lower profitability to serve the industry as they make more customer bespoke technologies with chiplet or custom memory designs incorporated into those AI and HPC designs? Has Cadence Design Systems, Inc. changed its investment plan or selling motion to serve that more custom nature required by the industry, or is that even needed at all? Thank you. Anirudh Devgan: Yeah. Great question. I mean, this is a big trend. Right? Design of custom silicon. I mean, we have talked about it for years, you know, system companies doing silicon and, you know, as you know, about 45% of our business is coming from system companies and fifty-five is coming from semi companies. And so with this, especially with AI, there is acceleration of custom silicon. And I think one different from six months ago or one year ago to now is when I look at these big, you know, system companies, they are more and more committed to custom silicon. And, of course, we have a great partnership with NVIDIA, and NVIDIA is doing phenomenally well. But so will, you know, custom silicon, and we can see from Broadcom results and we also work very closely with Broadcom and the customers themselves. So and there are opportunities because the demand is so high in terms of if you look at all these big customers, they are projecting AI compute demand to grow like 2x every year for the next several years. So I think there is growth for everyone, you know, involved in that. And the benefit of doing custom silicon, at least for the inference part, can be so high, you know, that they are willing to invest in EDA internal chip design. So I think the financial and the customization benefit for our customers. And these are, of course, the biggest companies in the world, is significant doing custom silicon. You can look at all the big ones like Google and Meta and all the others like Microsoft, Amazon, Tesla. So I think there is going to be an acceleration of that. And as they do more internal design, of course, they need to invest in EDA and IP and hardware. So I think the trend is healthy there. You know, profitability questions are similar. You know, we want to have discipline on our pricing. So our profitability is similar, but the benefit to our system companies is high as they do their own chips. Yeah. Clarke Jeffries: Thank you very much. Operator: And our next question comes from the line of Ruben Roy with Stifel. Your line is open. Ruben Roy: Thank you. Anirudh, I had a quick question, I hope, on a comment you made during your prepared remarks about collaborating with a customer on next-generation AgenTeq AI solutions. I am wondering, is that something that you are seeing across a wide swath of your end customers? And if so, just wondering if you could walk through maybe some implications of that, whether it is how some of those collaborative efforts on that type of solution might be monetized longer term and how you are thinking about agentic.ai overall. Relative to, you know, specific almost sounds like custom solutions, you know, by customer versus, you know, a broader agentic AI solution set that Cadence Design Systems, Inc. might offer to the broader ecosystem? Thank you. Anirudh Devgan: Yeah. It is a great question. We could talk for a while on this one. And, you know, we are, you know, privileged to have a deep partnership with several companies on AI. I mean, not just the design of AI, but AI for design, you know, in our solutions. And especially on AgenTeq AI. Because this is a new emerging area. We have, like, five major AI platforms. What is unique about agentic AI is, of course, all the gen AI stuff. And if you look at even the biggest applications of AI, you know, is kind of wide coding or, you know, software development. Well, if you look at it, part of the chip design is also coding. You know, we have automated, like I mentioned earlier, 90% of the workflow for chip design. But one part of the workflow which is not automated, the customer still has to write RTL. You know, RTL is like a language, you know, register transfer language that describes the chip. And this happens in the very beginning part of the chip design process. So that process is still manual. But the algorithm that is helping wipe coding or, you know, C++ coding for general software development, kind of these agenting methods can also help for RTL development. Okay? And it can provide a lot of benefit to this 10% flow that is not automated. So therefore, we have massive investment in agentic AI, which you will see as we announce more products going forward. And we already have several partnerships in there, and we are highlighting one of them. The way we are going to market there is, you know, this is longer is through JEDI. I have talked about JEDI before. So JEDI is joined into data and AI platform. So it does have some standardized components. You know, the database is standard, all the models are available, AI models have an interface to all our AI tools. So part of JEDI is standard across all customers, and we work with foundries and all to kind of train our models. Now part of it could be customer-specific. Okay? And in that case, the data is held at the customer side. And that is where we architect JEDI from the very beginning to be both on-prem and cloud-based. Because sometimes the customers wanted cloud-based, but sometimes if they want data to be localized, they want it on-prem. So that is why for years we have invested in this kind of unique platform, JEDI. That allows us not just to build unique solutions like RTL development and verification plan development, but also deploy either in a general way or more specialized to a particular big customer. But I am pretty optimistic in how AgenTeq AI can automate the remaining kind of part that was manual and again focus our customers to do higher-level tasks and remove some of the mundane tasks of RTL coding, verification plan generation, things like that. Yeah. Ruben Roy: Very helpful. Thank you, Anirudh. Operator: And our final question comes from the line of Joshua Tilton with Wolfe Research. Your line is open. Joshua Tilton: Thank you so much, guys, for sneaking me in here and congrats on a very strong quarter. Given the time, I am just going to actually ask a pretty direct clarification question. John, I think it is pretty much for you. In the event that you do see some impacts in the China region, given the ongoing tariff negotiations this coming quarter. Do you feel or can you help us understand how you kind of handicap the updated guidance for some, if any, potential negativity in the region? John Wall: Josh. I mean, that is a great question. I would love to be able to tell the future. I mean, as always, we incorporate prudence for all kinds of regulatory variability. And we base our guidance assuming that today's export regime remains substantially similar going forward through the 2025. But it is very, very hard to predict what is going to happen. But by all reports that we have heard, we believe that geopolitical tensions are lower than people expect. Joshua Tilton: Helpful. Thank you guys again for sneaking me in. Congrats again on a good quarter. John Wall: No worries. Thank you. Operator: And I will now turn the call back to Anirudh Devgan for closing remarks. Anirudh Devgan: Thank you all for joining us this afternoon. It is an exciting time for Cadence Design Systems, Inc. with strong business momentum and growing opportunities with semiconductor and system customers. With a world-class employee base, we continue delivering to our innovation roadmap and working hard to delight our customers and partners. On behalf of our board of directors, we thank our customers, partners, and investors for their continued trust and confidence in Cadence Design Systems, Inc. Operator: And ladies and gentlemen, thank you for participating in today's Cadence Design Systems, Inc. Third Quarter 2025 Earnings Conference Call. This concludes today's call, and you may now disconnect.
Rush-hour rail services at one of the UK’s busiest stations experienced significant delays and cancellations on Monday evening after a swan was discovered on the tracks. Network Rail said a bird had been found on the high level of Glasgow Central at around 5.49pm. “We’re dealing with a swan on the tracks at Glasgow Central high-level station. Services to/from the station are being disrupted, but trains are still moving at a reduced speed,” the railway operator said. “Thanks for your patience if you’re affected. “We have a response team on site at Glasgow Central working to help retrieve the swan from the tracks as quickly as we can.” Network Rail posted a picture of the avian “culprit” just after 6pm, adding that its teams were “working to keep services moving and move the swan out of harm’s way”. At 6.30pm ScotRail said the bird had been removed and by 9.42pm said the disruption sparked by it had ended. “Good news,” the transport provider posted on X, “the swan has been moved and is now safely away from the railway. “It’s a little distressed, but recovering well. “Thank you for your patience, we really do appreciate it. We’re working to get crew and units back into position, with services now resuming as normal.” It added three hours later: “Disruption caused by animals on the railway earlier today at Glasgow Central has now ended. “Services are no longer affected by this problem.”