CAE earnings recap: No hallucinations here

I probably get more CAE questions that any other single topic but, across the PLMish landscape, fewer and fewer companies report specifically on CAE-related earnings so it’s hard to quantify what’s going on with the vendors. Siemens mentions its CAE acquisitions, including Altair, but provides few numbers. Synopsys rolls Ansys into its overall reporting, but does give Ansys revenue data. Cadence has MSC Software (via the Hexagon Design & Engineering acquisition) and BETA CAE, but doesn’t break either out. Keysight mentions ESI Group, but that acquisition closed in 2023 so we don’t have financial updates. And Dassault Systèmes rarely even mentions SIMULIA by name these days. Careful listening and reading, though, still turn up real hints about the CAE vendor ecosystem.

I covered Dassault Systèmes’ and Siemens’ overall earnings in more detail here so I won’t rehash that. But to quickly recap the rest:

Cadence reported its strongest quarter to date, per CEO Anirudh Devgan: revenue of $1.584 billion (up 24% year over year) and a record $8.1 billion backlog, with broad-based double-digit growth across all product groups, with IP up more than 40%, and hardware verification setting another record. Cadence raised full-year 2026 revenue guidance to $6.26–$6.34 billion (about 19% growth), citing agentic AI design-tool demand, though it flagged slightly softer second-half margins as it integrates Hexagon’s design-and-engineering business.

Keysight also posted a record quarter, with orders up 56%, and revenue up 36% as reported (up 31% on a comparable basis because of a divestiture). Its Electronic Industrial Solutions Group (where ESI sits) reported revenue of $501 million, up 21%. Management said little about ESI specifically, beyond flagging continued investment in its software as part of EISG’s margin story (more below).

Synopsys CEO Sassine Ghazi called the quarter “outstanding”: revenue of $2.477 billion was up 42% year over year (including $711 million from Ansys), beating the high end of guidance. EDA revenue grew 8.5% versus a tough 16% prior-year comparison, while Design IP revenue returned to growth, up about 11% to $474 million. Synopsys raised full-year guidance to $9.69–$9.74 billion, including roughly $2.98 billion of Ansys revenue.

That’s each company’s headline summary. Now, the CAE-specific threads:

Cadence’s “System Design and Analysis” (SDA) revenue —BETA CAE’s structural-simulation business plus the newly acquired Hexagon Design and Engineering (D&E) unit— grew 37% year over year in Q2, as reported (meaning, a full quarter of D&E this last quarter compared to none a year ago since the acquisition hadn’t closed). Management noted “several competitive displacement” wins for BETA CAE and said Hexagon D&E integration is “progressing well, with key deals closed with top customers” expressing strong interest in an integrated multiphysics flow spanning electrical, CFD, and structural domains for next-gen system design and”physical AI. On the earnings call, CFO John Wall noted SDA is approaching a $1 billion run rate (meaning $1 billion in revenue per year), giving Cadence meaningful scale to pursue multiphysics as a genuine third leg alongside core EDA and IP. Cadence expects continued double-digit SDA growth through 2026, with integration margin benefits “showing up more fully” in 2027.

Keysight completed its roughly €913 million acquisition of ESI Group back in November 2023 — framed at the time as a move into virtual prototyping, predictive simulation, and real-time digital-twin software for automotive, aerospace, and heavy-industry customers. ESI sits inside the Electronic Industrial Solutions Group (EISG) — confusing naming, I know. This quarter’s earnings call mentioned ESI once: management said Keysight is “investing more in some of the software elements of the business with ESI and the Optical Solutions group,” as part of a push to grow EISG’s top line before shifting its mix toward higher-margin software. No ESI-specific figures were disclosed, but the mention confirms ESI remains an active priority for Keysight.

One year into the Ansys combination, Synopsys said Ansys “continues to perform strongly,” but the real news was the first true joint Synopsys-Ansys product, Multiphysics Fusion, billed as the industry’s only solution with thermal analysis built into the chip design flow. Early customers have reported seeing significant workflow gains, though management said that Synopsys won’t see meaningful revenue from Multiphysics Fusion until fiscal 2027. One more tidbit: Ansys’s largest deal of the quarter was GPU-accelerated CFD for a multinational electronics-component maker. CEO Ghazi said GPU acceleration now delivers 40x–60x CFD speedups and that Synopsys sells the accelerated software directly and prices the deal for the speedup delivered, while NVIDIA (the GPU maker) gets more hardware sales. Details, hopefully, at Synopsys’ investor day later this month.

Siemens CEO Roland Busch said the company is “bringing our simulation products together and launching new products” following the Altair and Dotmatics acquisitions, with revenue opportunities already materializing. In the Q&A, Busch said Siemens’ physics-based, data-centric simulation software differs from “workflow-based, rule-based” tools, and that the company is investing to remove traditional bottlenecks—no numbers, but clearly a strategic priority.

Dassault Systèmes didn’t break out SIMULIA or simulation-specific figures — simulation sits inside the broader Industrial Innovation segment, which grew 5% in Q2. But CEO Pascal Daloz spent significant time in the investor Q&A on how AI is changing simulation economics for Dassault. As my recap pointed out in more detail, he said DS’ advantage is that “you could basically do advanced simulation you were not capable of doing in the past because the time to compute the simulation was such that it was too long.”

TL;DR: so, what have we learned?

2027 is the year the recent CAE acquisitions are supposed to pay off. Cadence expects integration margin benefits to “show up more fully” in 2027. Siemens ties its confidence to backlog visibility “well into fiscal year 2027.” And Synopsys said outright that Multiphysics Fusion —shipped this quarter— isn’t expected to contribute to EDA growth until 2027, calling FY2026 “a year of execution.”

CAE matters a lot to these businesses. Ansys contributed about $711 million to Synopsys revenue this quarter, close to a third of total revenue. Cadence’s SDA line is “approaching a $1 billion run rate” (meaning, $1 billion in revenue per year)— real, and likely to grow. Keysight, Siemens, and Dassault don’t break out simulation revenue but, strategically, CAE matters beyond revenue contribution — it lets these vendors tell a complete innovation story, not just a design story.

The “AI needs us, not the other way around” argument is getting stronger. Siemens and Dassault both draw a physics-based-vs-workflow/rule-based line, as noted above. Synopsys, asked directly whether AI might disrupt EDA, said AI models and agents need Synopsys’s software to supply “ground truth physics” to operate with confidence — AI is a demand driver for the underlying tools, not a replacement for them. I like that phrase: “ground truth physics.” No hallucinations here.

As always, visit each company’s website for far more detail on their recent earnings than we can cover here.