Cadence Reports Third Quarter 2026 Financial Results
Q3 Recurring Revenue Up 18% YoY, Record Backlog of $8.2 Billion SAN JOSE, Calif. — October 26, 2026 — Cadence (Nasdaq: CDNS) today announced results for the third quarter of 2026.
• Cadence used $400 million to repurchase Cadence shares. Underscoring Cadence's continued commitment to returning capital to shareholders, Cadence's Board of Directors has authorized an additional $2.5 billion for Cadence's share repurchase program.
Quarter-end backlog was $8.2 billion and revenue expected to be recognized in the next 12 months from remaining performance obligations was $4.2 billion.
“Cadence delivered an outstanding third quarter. With broad-based business momentum, expanding technology leadership and a record backlog, we are raising our 2026 revenue outlook to 21% year-over-year growth,” said Anirudh Devgan, president and chief executive officer. “With the launch of Maestro, our portfolio of domain specialized AI models for chip and system design, and the accelerating deployment of our AI Super Agents, Cadence is exceptionally well positioned to capitalize on the transformational Agentic AI opportunity.”
“Q3 revenue grew 22% year-over-year, with strong double-digit growth across all product categories, driven by growing momentum from AI-driven designs,” said John Wall, senior vice president and chief financial officer. “With record backlog of $8.2 billion and continued strength in recurring revenue, we are poised to deliver a strong 2026.”
Commentary on the third quarter of 2026 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company’s geographic earnings mix, or other changes to the company’s strategy or business operations. The company expects to use the current normalized non-GAAP tax rate through fiscal 2026 but will re-evaluate this rate periodically for significant items that may materially affect its projections.
Reconciliations of the financial results and business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non- GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, are included in this press release. Revenue growth outlook is based on the midpoint of the range.
• Launched Maestro, a portfolio of domain-specialized AI models purpose-built for chip and system design, delivering initial workflow results of up to 30% higher quality and 5X greater token efficiency versus general-purpose foundation models, with several customer deployments underway
• Cadence AI Super Agents continued to gain momentum with more than 100 active customer engagements, delivering significant productivity and design improvements across digital, analog and custom, and system design workflows
• Core EDA revenue grew 20% year-over-year, driven by broad-based strength across the portfolio, including 16 new digital and signoff full-flow wins and growing adoption among memory and hyperscaler customers
• Hardware delivered another record quarter, fueled by meaningful expansions with marquee customers and strong growth in Cadence's hardware cloud offering
• IP revenue increased 24% year-over-year, driven by strong demand for Cadence's differentiated Star IP portfolio across interface, memory and foundation IP, and continued engagement with leading hyperscalers, semiconductor companies and foundries
• System Design and Analysis revenue grew 30% year-over-year, driven by continued strength in Cadence’s PCB and advanced packaging solutions, strong adoption of the Millennium platform and growing momentum across Cadence's physical SDA portfolio
Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the third quarter 2026 financial results audio webcast today, October 26, 2026, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting October 26, 2026 at 5 p.m. (Pacific) and ending December 17, 2026 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
Cadence is a market leader in AI and digital twins, pioneering the application of computational software to accelerate innovation in the engineering design of silicon to systems. Our design solutions, based on Cadence’s Intelligent System Design™ strategy, are essential for the world’s leading semiconductor and systems companies to build their next-generation products from chips to full electromechanical systems that serve a wide range of markets, including hyperscale computing, mobile communications, automotive, aerospace, industrial, life sciences and robotics. In 2025, Cadence was recognized by Fortune as one of the world’s top 100 best companies to work for. Cadence solutions offer limitless opportunities—learn more at www.cadence.com.
© 2026 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at
are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
This press release and related webcast contain forward-looking statements, including Cadence’s outlook on future operating results, financial condition, strategic objectives, capital allocation and share repurchase program, business model and prospects, technology and product developments and performance, customer adoption and demand, strategic relationships, backlog, industry trends and Cadence's ability to capitalize on them, market dynamics and market growth, tax rates, legislative and regulatory developments and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. F orward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control, and which may cause actual results to differ materially from expectations expressed or implied in the forward- looking statements, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates and realize the benefits of its investments in research and development, including opportunities presented by AI; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) changes in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence’s products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including export controls, tariffs, other trade restrictions and other government regulations, as well as rising tensions, armed conflicts around the world, increased energy costs and supply chain constraints; (vi) changes in tax laws, interest rate and currency exchange rate fluctuations, inflation rates, Cadence’s increased debt levels and obligations and Cadence’s ability to repay debt or access capital and debt markets in the future; (vii) legislative or regulatory requirements; (viii) Cadence’s acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (ix) harm caused by compromises in cybersecurity and cybersecurity attacks; (x) capital expenditure requirements and events that affect cash flow, liquidity or reserves, or estimates Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (xi) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject, including Cadence’s ongoing obligations under its July 2025 settlement agreements with the U.S. Department of Justice (“DOJ”) and Bureau of Industry and Security (“BIS”), any further inquiries or adverse actions by the DOJ, BIS or other foreign governmental authorities and any impact of the settlements on Cadence’s operations and business dealings; and (xii) Cadence’s ability to successfully meet any environmental, social and governance targets and practices. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. Cadence's share repurchase program may be modified, suspended or terminated without prior notice.
For a detailed discussion of these and other cautionary statements related to Cadence and its business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this press release are based on management's expectations as of the date of this press release and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.
To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, income or expenses related to foreign currency forward exchange contract and settlement associated with an acquisition, investments, divestitures and Cadence’s non-qualified deferred compensation plan, restructuring, loss related to contingent liability and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.
Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
Three Months Ended Operating Margin September 30, September 30, Reconciliation 2026 2025 ────────────────────────────────────────────────────────────────────────────── -unaudited GAAP operating margin as a 26.2% 31.8% percent of total revenue Reconciling items to non-GAAP operating margin as a percent of total revenue: Stock-based compensation 8.9% 8.7% expense Amortization of acquired 4.9% 1.9% intangibles Acquisition and integration-rel… 1.5% 2.8% costs Restructuring 2.6% 2.0% Non-qualified deferred compensation 0.0% 0.4% expenses (credits) Non-GAAP operating margin 44.1% 47.6% as a percent of total revenue
Net Income Three Months September 30, September 30, Reconciliation Ended 2026 2025 ────────────────────────────────────────────────────────────────────────────── (in thousands) -unaudited Net income on a $ 289,747 $ 287,122 GAAP basis Stock-based compensation 144,763 116,073 expense Amortization of acquired 79,870 25,984 intangibles Acquisition and integration-re… 25,031 37,295 costs Restructuring 42,159 27,394 Non-qualified deferred compensation -42 5,760 expenses (credits) Other income or expense related to foreign currency forward — 18,561 exchange contract and settlement associated with an acquisition Other income or expense related to investments, divestitures and -2,886 8,741 non-qualified deferred compensation plan assets Income tax effect of 3,545 1,283 non-GAAP adjustments Net income on a $ 582,187 $ 528,213 non-GAAP basis
Diluted Net Income Per Share Three Months September 30, September 30, Reconciliation Ended 2026 2025 ────────────────────────────────────────────────────────────────────────────── (in thousands, except per -unaudited share data) Diluted net income per $ 1.05 $ 1.05 share on a GAAP basis Stock-based compensation 0.53 0.42 expense Amortization of acquired 0.29 0.10 intangibles Acquisition and integration-re… 0.09 0.14 costs Restructuring 0.15 0.10 Non-qualified deferred compensation — 0.02 expenses (credits) Other income or expense related to foreign currency forward — 0.07 exchange contract and settlement associated with an acquisition Other income or expense related to investments, divestitures and -0.01 0.03 non-qualified deferred compensation plan assets Income tax effect of 0.01 — non-GAAP adjustments Diluted net income per $ 2.11 $ 1.93 share on a non-GAAP basis Shares used in calculation of diluted 275,278 273,798 net income per share
Nine Months September 30, September 30, Ended 2026 2025 ────────────────────────────────────────────────────────────────────────────── Cash and cash equivalents at $ 3,001,317 $ 2,644,030 beginning of period Cash flows from operating activities: Net income 992,483 720,752 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and 320,159 163,269 amortization Stock-based 429,836 342,011 compensation Gain on divestitures and -88,611 -22,135 investments, net Deferred income 118,684 89,756 taxes ROU asset amortization and change in -2,105 1,702 operating lease liabilities Other non-cash 7,266 4,713 items Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables -84,285 -90,666 Inventories -172,927 -60,858 Prepaid expenses and 39,812 -14,834 other Other assets -38,982 5,811 Accounts payable and -263,024 -23,237 accrued liabilities Deferred 148,835 44,456 revenue Other long-term 7,295 14,546 liabilities Net cash provided by 1,414,436 1,175,286 operating activities Cash flows from investing activities: Purchases of -98,481 -35,182 investments Proceeds from the sale and 166,529 3,493 maturity of investments Proceeds from the sale of IP — 11,500 and other assets Purchases of property, plant -163,254 -100,830 and equipment Purchases of intangible -6,975 — assets Cash paid in business combinations, -2,143,429 -250,695 net of cash acquired Net cash used for investing -2,245,610 -371,714 activities Cash flows from financing activities: Proceeds from revolving 875,000 — credit facility Payments on revolving -725,000 — credit facility Proceeds from issuance of 139,073 138,069 common stock Stock received for payment of employee taxes on -195,608 -148,130 vesting of restricted stock Payments for repurchases of -800,025 -725,025 common stock Net cash used for financing -706,560 -735,086 activities Effect of exchange rate changes on cash -11,563 40,730 and cash equivalents Increase (decrease) in -1,549,297 109,216 cash and cash equivalents Cash and cash equivalents at $ 1,452,020 $ 2,753,246 end of period
Three Months Ending Year Ending December 31, 2026 December 31, 2026 ────────────────────────────────────────────────────────────────────────────── Forecast Forecast GAAP operating margin as a percent of 30% - 31% 28.2% - 29.2% total revenue Reconciling items to non-GAAP operating margin as a percent of total revenue: Stock-based compensation expense 8% 9% Amortization of acquired 5% 4% intangibles Acquisition and integration-related 1% 2% costs Restructuring 0% 1% Non-GAAP operating margin as a percent 44% - 45% 44.2% - 45.2% of total revenue†
The non-GAAP measures presented in the table above should not be † considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Three Months Ending Year Ending December 31, 2026 December 31, 2026 ────────────────────────────────────────────────────────────────────────────── Forecast Forecast Diluted net income per share on a GAAP $1.23 to $1.29 $4.84 to $4.90 basis Stock-based compensation expense 0.51 2.07 Amortization of acquired 0.29 1.05 intangibles Acquisition and integration-related 0.08 0.45 costs Restructuring — 0.15 Non-qualified deferred compensation — 0.03 expenses Other income or expense related to foreign currency forward exchange — -0.01 contract and settlement associated with an acquisition Other income or expense related to investments, divestitures and — -0.35 non-qualified deferred compensation plan assets Income tax effect of non-GAAP 0.08 0.14 adjustments Diluted net income per share on a $2.19 to $2.25 $8.37 to $8.43 non-GAAP basis†
The non-GAAP measures presented in the table above should not be † considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Three Months Ending Year Ending December 31, 2026 December 31, 2026 ────────────────────────────────────────────────────────────────────────────── ($ in millions) Forecast Forecast Net income on a GAAP basis $339 to $355 $1,331 to $1,347 Stock-based compensation expense 139 569 Amortization of acquired 78 289 intangibles Acquisition and integration-related 23 122 costs Restructuring — 42 Non-qualified deferred compensation — 9 expenses Other income or expense related to foreign currency forward exchange — -3 contract and settlement associated with an acquisition Other income or expense related to investments, divestitures and — -98 non-qualified deferred compensation plan assets Income tax effect of non-GAAP 22 40 adjustments Net income on a non-GAAP basis† $601 to $617 $2,301 to $2,317
The non-GAAP measures presented in the table above should not be † considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Full text with the tables
Exhibit 99.01
Cadence Reports Third Quarter 2026 Financial Results
Raising 2026 Revenue Growth Outlook to 21% and Non-GAAP EPS to $8.40
Q3 Recurring Revenue Up 18% YoY, Record Backlog of $8.2 Billion
SAN JOSE, Calif. — October 26, 2026 — Cadence (Nasdaq: CDNS) today announced
results for the third quarter of 2026.
Third Quarter 2026 Financial Results
•
Revenue of $1.633 billion, compared to revenue of $1.339 billion in Q3 2025
• GAAP operating margin of 26.2%, compared to 31.8% in Q3 2025
• Non-GAAP operating margin of 44.1%, compared to 47.6% in Q3 2025
• GAAP diluted net income per share of $1.05, compared to $1.05 in Q3 2025
• Non-GAAP diluted net income per share of $2.11, compared to $1.93 in Q3 2025
• Cadence used $400 million to repurchase Cadence shares. Underscoring Cadence's
continued commitment to returning capital to shareholders, Cadence's Board of
Directors has authorized an additional $2.5 billion for Cadence's share
repurchase program.
•
Quarter-end backlog was $8.2 billion and revenue expected to be recognized in
the next 12 months from remaining performance obligations was $4.2 billion.
“Cadence delivered an outstanding third quarter. With broad-based business
momentum, expanding technology leadership and a record backlog, we are raising
our 2026 revenue outlook to 21% year-over-year growth,” said Anirudh Devgan,
president and chief executive officer. “With the launch of Maestro, our
portfolio of domain specialized AI models for chip and system design, and the
accelerating deployment of our AI Super Agents, Cadence is exceptionally well
positioned to capitalize on the transformational Agentic AI opportunity.”
“Q3 revenue grew 22% year-over-year, with strong double-digit growth across all
product categories, driven by growing momentum from AI-driven designs,” said
John Wall, senior vice president and chief financial officer. “With record
backlog of $8.2 billion and continued strength in recurring revenue, we are
poised to deliver a strong 2026.”
CFO Commentary
Commentary on the third quarter of 2026 financial results by John Wall, senior
vice president and chief financial officer, is available at
www.cadence.com/cadence/investor_relations.
Business Outlook
For fiscal year 2026, the company expects:
• Revenue in the range of $6.387 billion to $6.417 billion
• GAAP operating margin in the range of 28.2% to 29.2%
• Non-GAAP operating margin in the range of 44.2% to 45.2%
• GAAP diluted net income per share in the range of $4.84 to $4.90
• Non-GAAP diluted net income per share in the range of $8.37 to $8.43
The company utilizes a long-term projected non-GAAP tax rate, which reflects
currently available information, as well as other factors and assumptions. The
non-GAAP tax rate is subject to change for a variety of reasons, including the
rapidly evolving global tax environment, significant changes in the company’s
geographic earnings mix, or other changes to the company’s strategy or business
operations. The company expects to use the current normalized non-GAAP tax rate
through fiscal 2026 but will re-evaluate this rate periodically for significant
items that may materially affect its projections.
Reconciliations of the financial results and business outlook from GAAP
operating margin, GAAP net income and GAAP diluted net income per share to non-
GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per
share, respectively, are included in this press release. Revenue growth outlook
is based on the midpoint of the range.
Business Highlights
• Launched Maestro, a portfolio of domain-specialized AI models purpose-built
for chip and system design, delivering initial workflow results of up to 30%
higher quality and 5X greater token efficiency versus general-purpose foundation
models, with several customer deployments underway
• Cadence AI Super Agents continued to gain momentum with more than 100 active
customer engagements, delivering significant productivity and design
improvements across digital, analog and custom, and system design workflows
• Core EDA revenue grew 20% year-over-year, driven by broad-based strength
across the portfolio, including 16 new digital and signoff full-flow wins and
growing adoption among memory and hyperscaler customers
• Hardware delivered another record quarter, fueled by meaningful expansions
with marquee customers and strong growth in Cadence's hardware cloud offering
• IP revenue increased 24% year-over-year, driven by strong demand for Cadence's
differentiated Star IP portfolio across interface, memory and foundation IP, and
continued engagement with leading hyperscalers, semiconductor companies and
foundries
• System Design and Analysis revenue grew 30% year-over-year, driven by
continued strength in Cadence’s PCB and advanced packaging solutions, strong
adoption of the Millennium platform and growing momentum across Cadence's
physical SDA portfolio
Audio Webcast Scheduled
Anirudh Devgan, president and chief executive officer, and John Wall, senior
vice president and chief financial officer, will host the third quarter 2026
financial results audio webcast today, October 26, 2026, at 2 p.m. (Pacific) / 5
p.m. (Eastern). Attendees are asked to register at the website at least 10
minutes prior to the scheduled webcast. An archive of the webcast will be
available starting October 26, 2026 at 5 p.m. (Pacific) and ending December 17,
2026 at 5 p.m. (Pacific). Webcast access is available at
www.cadence.com/cadence/investor_relations.
About Cadence
Cadence is a market leader in AI and digital twins, pioneering the application
of computational software to accelerate innovation in the engineering design of
silicon to systems. Our design solutions, based on Cadence’s Intelligent System
Design™ strategy, are essential for the world’s leading semiconductor and
systems companies to build their next-generation products from chips to full
electromechanical systems that serve a wide range of markets, including
hyperscale computing, mobile communications, automotive, aerospace, industrial,
life sciences and robotics. In 2025, Cadence was recognized by Fortune as one of
the world’s top 100 best companies to work for. Cadence solutions offer
limitless opportunities—learn more at www.cadence.com.
© 2026 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the
Cadence logo and the other Cadence marks found at
www.cadence.com/go/trademarks
are trademarks or registered trademarks of Cadence Design Systems, Inc. All
other trademarks are the property of their respective owners.
This press release and related webcast contain forward-looking statements,
including Cadence’s outlook on future operating results, financial condition,
strategic objectives, capital allocation and share repurchase program, business
model and prospects, technology and product developments and performance,
customer adoption and demand, strategic relationships, backlog, industry trends
and Cadence's ability to capitalize on them, market dynamics and market growth,
tax rates, legislative and regulatory developments and other statements using
words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,”
and words of similar import and the negatives thereof. F orward-looking
statements are subject to a number of risks, uncertainties and other factors,
many of which are outside Cadence’s control, and which may cause actual results
to differ materially from expectations expressed or implied in the forward-
looking statements, including, among others: (i) Cadence’s ability to compete
successfully in the highly competitive industries in which it operates and
realize the benefits of its investments in research and development, including
opportunities presented by AI; (ii) the success of Cadence’s efforts to maintain
and improve operational efficiency and growth; (iii) the mix of products and
services sold, the timing of orders and deliveries and the ability to develop,
install or deliver Cadence’s products or services; (iv) changes in customer
demands or supply constraints that could result in delays in purchases,
development, installations or deliveries of Cadence’s products or services,
including those resulting from consolidation, restructurings and other
operational efficiency improvements of Cadence’s customers; (v) economic,
geopolitical and industry conditions, including export controls, tariffs, other
trade restrictions and other government regulations, as well as rising tensions,
armed conflicts around the world, increased energy costs and supply chain
constraints; (vi) changes in tax laws, interest rate and currency exchange rate
fluctuations, inflation rates, Cadence’s increased debt levels and obligations
and Cadence’s ability to repay debt or access capital and debt markets in the
future; (vii) legislative or regulatory requirements; (viii) Cadence’s
acquisition of other companies, businesses or technologies or the failure to
successfully integrate and operate them; (ix) harm caused by compromises in
cybersecurity and cybersecurity attacks; (x) capital expenditure requirements
and events that affect cash flow, liquidity or reserves, or estimates Cadence
may take from time to time with respect to accounts receivable, taxes and tax
examinations, litigation, regulatory or other matters; (xi) the effects of any
litigation, regulatory, tax or other proceedings to which Cadence is or may
become a party or to which Cadence or its products, services, technologies or
properties are subject, including Cadence’s ongoing obligations under its July
2025 settlement agreements with the U.S. Department of Justice (“DOJ”) and
Bureau of Industry and Security (“BIS”), any further inquiries or adverse
actions by the DOJ, BIS or other foreign governmental authorities and any impact
of the settlements on Cadence’s operations and business dealings; and (xii)
Cadence’s ability to successfully meet any environmental, social and governance
targets and practices. In addition, the timing and amount of Cadence’s
repurchases of its common stock are subject to business and market conditions,
corporate and regulatory requirements, stock price, acquisition opportunities
and other factors. Cadence's share repurchase program may be modified, suspended
or terminated without prior notice.
For a detailed discussion of these and other cautionary statements related to
Cadence and its business, please refer to Cadence’s filings with the U.S.
Securities and Exchange Commission, including its most recent report on Form
10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this press release are based on management's
expectations as of the date of this press release and, except as required by
law, Cadence disclaims any obligation to update these forward-looking statements
to reflect future events or circumstances.
GAAP to Non-GAAP Reconciliation
Non-GAAP financial measures should not be considered as a substitute for or
superior to measures of financial performance prepared in accordance with
generally accepted accounting principles, or GAAP. Investors are encouraged to
review the reconciliation of non-GAAP measures contained within this press
release with their most directly comparable GAAP results. Investors are also
encouraged to look at the GAAP results as the best measure of financial
performance.
To supplement Cadence’s financial results presented on a GAAP basis, Cadence
management uses non-GAAP measures that it believes are helpful in understanding
Cadence’s performance. One such measure is non-GAAP net income, which is a
financial measure not calculated under GAAP. Non-GAAP net income is calculated
by Cadence management by taking GAAP net income and excluding, as applicable,
amortization of intangible assets, stock-based compensation expense, acquisition
and integration-related costs including retention expenses, income or expenses
related to foreign currency forward exchange contract and settlement associated
with an acquisition, investments, divestitures and Cadence’s non-qualified
deferred compensation plan, restructuring, loss related to contingent liability
and other significant items not directly related to Cadence’s core business
operations, and the income tax effect of non-GAAP pre-tax adjustments.
Cadence management uses non-GAAP net income because it excludes items that are
generally not directly related to the performance of Cadence’s core business
operations and therefore provides supplemental information to Cadence management
and investors regarding the performance of the business operations, facilitates
comparisons to the historical operating results and allows the review of
Cadence's business from the same perspective as Cadence management, including
forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP operating
margin, GAAP net income and GAAP net income per diluted share in the calculation
of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per
diluted share for the periods shown below:
Three Months
Ended
Operating Margin September 30, September 30,
Reconciliation 2026 2025
──────────────────────────────────────────────────────────────────────────────
-unaudited
GAAP operating
margin as a 26.2% 31.8%
percent of
total revenue
Reconciling
items to
non-GAAP
operating
margin as a
percent of total
revenue:
Stock-based
compensation 8.9% 8.7%
expense
Amortization of
acquired 4.9% 1.9%
intangibles
Acquisition and
integration-rel… 1.5% 2.8%
costs
Restructuring 2.6% 2.0%
Non-qualified
deferred
compensation 0.0% 0.4%
expenses
(credits)
Non-GAAP
operating margin 44.1% 47.6%
as a percent
of total revenue
Net Income Three Months September 30, September 30,
Reconciliation Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
(in thousands) -unaudited
Net income on a $ 289,747 $ 287,122
GAAP basis
Stock-based
compensation 144,763 116,073
expense
Amortization of
acquired 79,870 25,984
intangibles
Acquisition and
integration-re… 25,031 37,295
costs
Restructuring 42,159 27,394
Non-qualified
deferred
compensation -42 5,760
expenses
(credits)
Other income or
expense related
to
foreign
currency
forward — 18,561
exchange
contract and
settlement
associated with
an acquisition
Other income or
expense related
to
investments,
divestitures
and -2,886 8,741
non-qualified
deferred
compensation
plan
assets
Income tax
effect of 3,545 1,283
non-GAAP
adjustments
Net income on a $ 582,187 $ 528,213
non-GAAP basis
Diluted Net
Income Per
Share Three Months September 30, September 30,
Reconciliation Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
(in thousands,
except per -unaudited
share data)
Diluted net
income per $ 1.05 $ 1.05
share on a GAAP
basis
Stock-based
compensation 0.53 0.42
expense
Amortization of
acquired 0.29 0.10
intangibles
Acquisition and
integration-re… 0.09 0.14
costs
Restructuring 0.15 0.10
Non-qualified
deferred
compensation — 0.02
expenses
(credits)
Other income or
expense related
to
foreign
currency
forward — 0.07
exchange
contract and
settlement
associated with
an acquisition
Other income or
expense related
to
investments,
divestitures
and -0.01 0.03
non-qualified
deferred
compensation
plan
assets
Income tax
effect of 0.01 —
non-GAAP
adjustments
Diluted net
income per $ 2.11 $ 1.93
share on a
non-GAAP basis
Shares used in
calculation of
diluted 275,278 273,798
net income per
share
For more information, please contact:
Cadence Investor Relations
408-944-7100
investor_relations@cadence.com
Cadence Newsroom
408-944-7039
newsroom@cadence.com
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
September 30, 2026 and December 31, 2025
(In thousands)
(Unaudited)
September 30, 2026 December 31, 2025
──────────────────────────────────────────────────────────────────────────────
Current assets:
Cash and cash equivalents $ 1,452,020 $ 3,001,317
Receivables, net 1,110,591 944,939
Inventories 448,824 303,545
Prepaid expenses and other 342,452 419,872
Total current assets 3,353,887 4,669,673
Property, plant and 603,189 517,004
equipment, net
Goodwill 4,926,955 2,749,143
Acquired intangibles, net 1,792,006 718,223
Deferred taxes 789,077 917,733
Other assets 759,660 581,372
Total assets $ 12,224,774 $ 10,153,148
Current liabilities:
Revolving credit facility $ 150,000 $ —
Current portion of 498,809 —
long-term debt
Accounts payable and 805,365 856,856
accrued liabilities
Current portion of deferred 1,012,305 778,435
revenue
Total current liabilities 2,466,479 1,635,291
Long-term liabilities:
Long-term portion of 138,228 155,997
deferred revenue
Long-term debt 1,984,433 2,480,150
Other long-term liabilities 760,383 407,529
Total long-term liabilities 2,883,044 3,043,676
Stockholders’ equity 6,875,251 5,474,181
Total liabilities and
stockholders’ $ 12,224,774 $ 10,153,148
equity
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Nine Months Ended September 30, 2026 and September 30, 2025
(In thousands, except per share amounts)
(Unaudited)
Three Septem… Septem… Nine Septem…
Months 30, 30, Months 30, Septemb…
Ended 2026 2025 Ended 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Reven…
Produ…
and $ 1,487,… $ 1,207,… $ 4,266,… $ 3,489,0…
maint…
Servi… 146,000 131,135 425,081 367,582
Total 1,633,… 1,338,… 4,691,… 3,856,6…
reven…
Costs
and
expen…
Cost
of
produ… 173,867 118,702 502,362 374,672
and
maint…
Cost
of 61,753 63,493 187,123 158,823
servi…
Marke…
and 242,476 192,560 694,995 595,855
sales
Resea…
and 537,541 423,031 1,577,… 1,304,1…
devel…
Gener…
and 113,020 78,035 289,785 210,162
admin…
Amort…
of 33,779 10,233 88,304 28,359
acqui…
intan…
Loss
relat…
to — — — 128,545
conti…
liabi…
Restr… 42,159 27,394 41,802 27,332
Total
costs 1,204,… 913,448 3,381,… 2,827,9…
and
expen…
Income
from 428,716 425,390 1,310,… 1,028,7…
opera…
Inter… -30,375 -29,035 -97,124 -87,101
expen…
Other
income 9,994 -3,572 133,436 87,476
(expe…
net
Income
before
provi… 408,335 392,783 1,346,… 1,029,0…
for
income
taxes
Provi…
for 118,588 105,661 354,189 308,330
income
taxes
Net $ 289,747 $ 287,122 $ 992,483 $ 720,752
income
Net
income
per $ 1.06 $ 1.06 $ 3.63 $ 2.65
share
-
basic
Net
income
per $ 1.05 $ 1.05 $ 3.61 $ 2.64
share
-
dilut…
Weigh…
avera…
common
shares 273,748 271,152 273,260 271,471
outst…
-
basic
Weigh…
avera…
common
shares 275,278 273,798 275,061 273,440
outst…
-
dilut…
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2026 and September 30, 2025
(In thousands)
(Unaudited)
Nine Months September 30, September 30,
Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
Cash and cash
equivalents at $ 3,001,317 $ 2,644,030
beginning
of period
Cash flows from
operating
activities:
Net income 992,483 720,752
Adjustments to
reconcile net
income to
net cash
provided by
operating
activities:
Depreciation
and 320,159 163,269
amortization
Stock-based 429,836 342,011
compensation
Gain on
divestitures
and -88,611 -22,135
investments,
net
Deferred income 118,684 89,756
taxes
ROU asset
amortization
and change in -2,105 1,702
operating lease
liabilities
Other non-cash 7,266 4,713
items
Changes in
operating
assets and
liabilities,
net of effect
of acquired
businesses:
Receivables -84,285 -90,666
Inventories -172,927 -60,858
Prepaid
expenses and 39,812 -14,834
other
Other assets -38,982 5,811
Accounts
payable and -263,024 -23,237
accrued
liabilities
Deferred 148,835 44,456
revenue
Other long-term 7,295 14,546
liabilities
Net cash
provided by 1,414,436 1,175,286
operating
activities
Cash flows from
investing
activities:
Purchases of -98,481 -35,182
investments
Proceeds from
the sale and 166,529 3,493
maturity of
investments
Proceeds from
the sale of IP — 11,500
and other
assets
Purchases of
property, plant -163,254 -100,830
and
equipment
Purchases of
intangible -6,975 —
assets
Cash paid in
business
combinations, -2,143,429 -250,695
net
of cash
acquired
Net cash used
for investing -2,245,610 -371,714
activities
Cash flows from
financing
activities:
Proceeds from
revolving 875,000 —
credit facility
Payments on
revolving -725,000 —
credit facility
Proceeds from
issuance of 139,073 138,069
common stock
Stock received
for payment of
employee
taxes on -195,608 -148,130
vesting of
restricted
stock
Payments for
repurchases of -800,025 -725,025
common stock
Net cash used
for financing -706,560 -735,086
activities
Effect of
exchange rate
changes on cash -11,563 40,730
and cash
equivalents
Increase
(decrease) in -1,549,297 109,216
cash and cash
equivalents
Cash and cash
equivalents at $ 1,452,020 $ 2,753,246
end of
period
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
…
… … … …
% … % … % … % …
% 9 % … % … % …
% … % … % … % …
% … % … % … % …
% 7 % 7 % 6 % 7
% … % … % … % …
Revenue Mix by Product Category (% of Total Revenue)
…
… … … …
% … % … % … % …
% … % … % … % …
% … % … % … % …
% … % … % … % …
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of October 26, 2026
(Unaudited)
Three Months Ending Year Ending
December 31, 2026 December 31, 2026
──────────────────────────────────────────────────────────────────────────────
Forecast Forecast
GAAP operating margin as a
percent of 30% - 31% 28.2% - 29.2%
total revenue
Reconciling items to non-GAAP
operating
margin as a percent of total
revenue:
Stock-based compensation expense 8% 9%
Amortization of acquired 5% 4%
intangibles
Acquisition and
integration-related 1% 2%
costs
Restructuring 0% 1%
Non-GAAP operating margin as a
percent 44% - 45% 44.2% - 45.2%
of total revenue†
The non-GAAP measures presented in the table above should not be
† considered a substitute for financial results and measures determined
or calculated in accordance with GAAP.
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of October 26, 2026
(Unaudited)
Three Months Ending Year Ending
December 31, 2026 December 31, 2026
──────────────────────────────────────────────────────────────────────────────
Forecast Forecast
Diluted net income per share on
a GAAP $1.23 to $1.29 $4.84 to $4.90
basis
Stock-based compensation expense 0.51 2.07
Amortization of acquired 0.29 1.05
intangibles
Acquisition and
integration-related 0.08 0.45
costs
Restructuring — 0.15
Non-qualified deferred
compensation — 0.03
expenses
Other income or expense related
to
foreign currency forward
exchange — -0.01
contract and settlement
associated with
an acquisition
Other income or expense related
to
investments, divestitures and — -0.35
non-qualified deferred
compensation plan
assets
Income tax effect of non-GAAP 0.08 0.14
adjustments
Diluted net income per share on
a $2.19 to $2.25 $8.37 to $8.43
non-GAAP basis†
The non-GAAP measures presented in the table above should not be
† considered a substitute for financial results and measures determined
or calculated in accordance with GAAP.
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of October 26, 2026
(Unaudited)
Three Months Ending Year Ending
December 31, 2026 December 31, 2026
──────────────────────────────────────────────────────────────────────────────
($ in millions) Forecast Forecast
Net income on a GAAP basis $339 to $355 $1,331 to $1,347
Stock-based compensation expense 139 569
Amortization of acquired 78 289
intangibles
Acquisition and
integration-related 23 122
costs
Restructuring — 42
Non-qualified deferred
compensation — 9
expenses
Other income or expense related
to
foreign currency forward
exchange — -3
contract and settlement
associated with
an acquisition
Other income or expense related
to
investments, divestitures and — -98
non-qualified deferred
compensation plan
assets
Income tax effect of non-GAAP 22 40
adjustments
Net income on a non-GAAP basis† $601 to $617 $2,301 to $2,317
The non-GAAP measures presented in the table above should not be
† considered a substitute for financial results and measures determined
or calculated in accordance with GAAP.