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Cadence Design Systems (NASDAQ: CDNS) lifts 2026 outlook after strong Q2

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Cadence Design Systems reported strong second‑quarter 2026 results, with revenue of $1.584 billion compared to $1.275 billion a year earlier. GAAP operating margin was 28.4% and non‑GAAP operating margin 45.5%. GAAP diluted EPS was $1.33 and non‑GAAP diluted EPS $2.11. Quarter‑end backlog reached a record $8.1 billion, with $4.2 billion expected to be recognized as revenue over the next 12 months. Operating cash flow for the quarter was $635 million.

Management highlighted broad-based strength across core EDA, IP and system design and analysis, and launched the AuraStack AI Super Agent platform. For fiscal 2026, Cadence now expects revenue between $6.26 billion and $6.34 billion, GAAP operating margin of 27.75%–28.75% and non‑GAAP EPS of $8.05–$8.15, with operating cash flow of about $2.0 billion. Third‑quarter 2026 guidance calls for revenue of $1.595–$1.625 billion and non‑GAAP EPS of $2.01–$2.07, and the company plans approximately $200 million of share repurchases in Q3 and to return roughly half of full‑year free cash flow via buybacks.

Positive

  • Cadence delivered Q2 2026 revenue of $1.584 billion and non-GAAP EPS of $2.11, exceeding its guidance with a non-GAAP operating margin of 45.5%.
  • Quarter-end backlog reached a record $8.1 billion, with $4.2 billion expected to be recognized as revenue over the next 12 months, providing strong near-term visibility.
  • The company raised its 2026 outlook to revenue of $6.26–$6.34 billion (18%–20% growth) and non-GAAP EPS of $8.05–$8.15, indicating higher expected profitability.
  • Cadence generated Q2 operating cash flow of $635 million and targets about $2.0 billion for 2026, while planning to deploy roughly 50% of free cash flow to share repurchases.

Negative

  • None.

Filing Explained

At June 30, cash was $1,440,443 thousand after $2,100,292 thousand paid for acquisitions and $400,006 thousand repurchased shares.

At June 30, 2026, Cadence reported cash and cash equivalents of $1,440,443 thousand, down from $3,001,317 thousand at December 31, 2025; this is the company’s reported liquidity position after the first half.

The six-month cash-flow statement shows $2,100,292 thousand paid for business combinations and $400,006 thousand spent on share repurchases, partly offset by $990,711 thousand of operating cash flow and $88,840 thousand from common-stock issuance.

Long-term debt was $2,482,200 thousand at June 30, 2026, versus $2,480,150 thousand at year-end 2025; the company also drew and repaid $600,000 thousand on its revolving credit facility during the period.

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Q2 2026 Revenue $1.584 billion Quarter ended June 30, 2026, compared to $1.275 billion in Q2 2025
Q2 2026 GAAP diluted EPS $1.33 Quarter ended June 30, 2026, GAAP diluted net income per share
Q2 2026 non-GAAP diluted EPS $2.11 Quarter ended June 30, 2026, non-GAAP diluted net income per share
Quarter-end backlog $8.1 billion Backlog at the end of Q2 2026
FY 2026 revenue guidance $6.26–$6.34 billion Company outlook for fiscal year 2026 total revenue
FY 2026 non-GAAP EPS guidance $8.05–$8.15 Projected non-GAAP diluted EPS for fiscal year 2026
Q2 2026 operating cash flow $635 million Net cash provided by operating activities in Q2 2026
Cash paid in business combinations H1 2026 $2,100,292 (thousands) Six months ended June 30, 2026, net cash paid for acquisitions
non-GAAP operating margin financial
"Non-GAAP operating margin of 45.5%, compared to 42.8% in Q2 2025"
Non-GAAP operating margin is a way companies show how much profit they make from their main business activities, excluding certain expenses or income they consider unusual or non-recurring. It helps investors see how well the company is performing in its normal operations, without the effects of one-time costs or gains that might distort the picture.
backlog financial
"Quarter-end backlog was $8.1 billion and revenue expected to be recognized"
A backlog is the amount of work or orders that a company has received but hasn't completed yet. It’s like a restaurant with many dishes to serve; the backlog shows how many orders are still waiting to be finished. It matters because a large backlog can indicate strong demand or potential delays in delivering products or services.
Rule of 40 Metric financial
"Rule of 40 Metric = Revenue growth % + Non-GAAP operating margin %"
deferred revenue financial
"Current portion of deferred revenue | 1,025,118 | | | 778,435"
Cash a company has already received for goods or services it has promised but not yet delivered; it's recorded as a liability because the company still owes that product, service, or future revenue recognition. For investors, deferred revenue signals upcoming work or deliveries that will convert into reported sales over time and affects short-term obligations, cash flow quality, and how quickly a firm can grow recognized revenue—think of it like prepaid subscriptions or gift cards a business must honor later.
recurring revenue financial
"Recurring Revenue | 78 % | | 82 % | | 79 % |"
Revenue that a company expects to receive on a regular, predictable basis from ongoing sources such as subscriptions, service contracts, or repeat customer purchases. It matters to investors because it provides steadier cash flow and makes future earnings easier to forecast—like a landlord collecting monthly rent instead of one-off sales—supporting higher valuations and lower risk when those payments are reliable and customers tend to stay.
Q2 2026 Revenue $1.584 billion compared to $1.275 billion in Q2 2025
Q2 2026 GAAP diluted EPS $1.33 compared to $0.59 in Q2 2025
Q2 2026 non-GAAP diluted EPS $2.11 compared to $1.65 in Q2 2025
Guidance

For fiscal 2026, Cadence expects revenue of $6.26–$6.34 billion, GAAP operating margin of 27.75%–28.75%, non-GAAP operating margin of 43.75%–44.75%, GAAP EPS of $4.76–$4.86 and non-GAAP EPS of $8.05–$8.15.

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FAQ

How did Cadence Design Systems (CDNS) perform in Q2 2026?
Cadence reported Q2 2026 revenue of $1.584 billion, up from $1.275 billion a year earlier. GAAP diluted EPS was $1.33 and non-GAAP diluted EPS was $2.11, with a non-GAAP operating margin of 45.5%, exceeding its guidance.

What 2026 full-year guidance did Cadence Design Systems (CDNS) provide?
For fiscal 2026, Cadence expects revenue of $6.26–$6.34 billion and non-GAAP operating margin of 43.75%–44.75%. GAAP EPS is projected at $4.76–$4.86 and non-GAAP EPS at $8.05–$8.15, with operating cash flow around $2.0 billion.

What is Cadence Design Systems’ (CDNS) backlog and revenue visibility?
At the end of Q2 2026, Cadence reported a record backlog of $8.1 billion. It expects $4.2 billion of revenue to be recognized in the next 12 months from remaining performance obligations, supporting strong short- to medium-term revenue visibility.

What are Cadence Design Systems’ (CDNS) Q3 2026 forecasts?
For Q3 2026, Cadence forecasts revenue of $1.595–$1.625 billion, GAAP EPS of $1.11–$1.17 and non-GAAP EPS of $2.01–$2.07. Expected GAAP operating margin is 27.5%–28.5% with non-GAAP operating margin of 43.5%–44.5%.

How strong is Cadence Design Systems’ (CDNS) cash generation and capital return?
Cadence generated $635 million of operating cash flow in Q2 2026 and targets about $2.0 billion for 2026. The company plans to use roughly 50% of free cash flow for share repurchases and expects about $200 million of buybacks in Q3.

Which business areas drove Cadence Design Systems’ (CDNS) growth?
Management cited broad-based strength across core EDA, semiconductor IP and system design and analysis. Highlights included more than 40% year-over-year IP revenue growth and 37% growth in System Design and Analysis, alongside strong demand for AI-driven solutions.
0000813672false00008136722026-07-272026-07-27

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 8-K
 
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 27, 2026
CADENCE DESIGN SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware 000-15867 00-0000000
(State or Other Jurisdiction
of Incorporation)		 (Commission File Number) (I.R.S. Employer
Identification No.)
2655 Seely Avenue, San Jose, California 95134
(Address of Principal Executive Offices) (Zip Code)
(408) 943-1234
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareCDNSNasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐







Item 2.02. Results of Operations and Financial Condition.

On July 27, 2026 Cadence Design Systems, Inc. (“Cadence”) issued a press release announcing its financial results for the quarter ended June 30, 2026.
A copy of the press release is attached hereto as Exhibit 99.01 and a copy of the commentary by the Chief Financial Officer of Cadence regarding Cadence's financial results for the quarter ended June 30, 2026 is attached hereto as Exhibit 99.02, and the press release and the commentary are incorporated herein by reference.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits

Exhibit No.  Description
99.01
Press Release issued by Cadence Design Systems, Inc. on July 27, 2026.
99.02
CFO Commentary on Results of Quarter Ended June 30, 2026.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 27, 2026
CADENCE DESIGN SYSTEMS, INC.
By: 
/s/ John M. Wall
 
John M. Wall
 
Senior Vice President and Chief Financial Officer




Exhibit 99.01
Cadence Reports Second Quarter 2026 Financial Results
Record Backlog of $8.1 Billion
Raising 2026 Revenue Outlook to 19% YoY Growth
Raising 2026 Non-GAAP EPS to $8.10 and Operating Cash Flow to $2 Billion

SAN JOSE, Calif. — July 27, 2026 — Cadence (Nasdaq: CDNS) today announced results for the second quarter of 2026.
Second Quarter 2026 Financial Results
•Revenue of $1.584 billion, compared to revenue of $1.275 billion in Q2 2025
•GAAP operating margin of 28.4%, compared to 19.0% in Q2 2025
•Non-GAAP operating margin of 45.5%, compared to 42.8% in Q2 2025
•GAAP diluted net income per share of $1.33, compared to $0.59 in Q2 2025
•Non-GAAP diluted net income per share of $2.11, compared to $1.65 in Q2 2025
•Quarter-end backlog was $8.1 billion and revenue expected to be recognized in the next 12 months from remaining performance obligations was $4.2 billion

“Cadence delivered an outstanding Q2 driven by broad-based strength and the accelerating demand for our AI-driven solutions across both Design for AI and AI for Design fronts,” said Anirudh Devgan, president and chief executive officer. “Cadence is leading the agentic AI transformation in semiconductor design with a healthy environment. We are uniquely positioned to capitalize on this massive TAM expansion opportunity as the only provider with agentic solutions spanning the full electronic system design flow.”

“Cadence delivered excellent results for the second quarter of 2026, with broad-based strength driving double-digit growth across all our businesses,” said John Wall, senior vice president and chief financial officer. “With a record backlog and continued business momentum, we are now raising our 2026 outlook to 19% revenue growth, non-GAAP operating margin to 44.25%, non-GAAP EPS to $8.10, and operating cash flow to $2 billion at the midpoint.”

CFO Commentary
Commentary on the second 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 $6.26 billion to $6.34 billion
•GAAP operating margin in the range of 27.75% to 28.75%
•Non-GAAP operating margin in the range of 43.75% to 44.75%
•GAAP diluted net income per share in the range of $4.76 to $4.86
•Non-GAAP diluted net income per share in the range of $8.05 to $8.15
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 AuraStack AI Super Agent, the industry's first agentic AI platform for advanced packaging and PCB, extending Cadence's AI Super Agents portfolio to span the full electronic system design flow
•Strong early traction for the AI Super Agents portfolio, with compelling initial customer results across ChipStack, ViraStack and InnoStack
•IP revenue grew more than 40% year-over-year, driven by strong demand for Cadence’s Star IP portfolio, highlighted by a significant agreement with Intel and additional wins with leading semiconductor companies
•Core EDA revenue grew 18% year-over-year, driven by strong demand for Cadence’s AI portfolio and expanded adoption across hyperscalers, top semiconductor companies and startups
•Hardware delivered another record quarter, adding 12 new customers and significant expansions with hyperscalers and leading AI innovators
•System Design and Analysis revenue grew 37% year-over-year, driven by strong adoption of Cadence's PCB and advanced packaging solutions and continued integration of the Hexagon D&E business

Audio Webcast Scheduled
Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the second quarter 2026 financial results audio webcast today, July 27, 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 July 27, 2026 at 5 p.m. (Pacific) and ending September 16, 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, business model and prospects, technology and product developments, customer adoption and demand, strategic relationships, backlog, industry trends, market growth, tax rates and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-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 pending acquisitions, acquisition of the Hexagon D&E business and 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.

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:
 
Operating Margin ReconciliationThree Months Ended
June 30, 2026June 30, 2025
 (unaudited)
GAAP operating margin as a percent of total revenue28.4%19.0%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense9.3%9.3%
Amortization of acquired intangibles5.0%1.8%
Acquisition and integration-related costs2.1%2.0%
Restructuring 0.0%0.0%
Non-qualified deferred compensation expenses0.7%0.6%
Loss related to contingent liability*
0.0%
10.1%
Non-GAAP operating margin as a percent of total revenue45.5%42.8%
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.





Net Income ReconciliationThree Months Ended
June 30, 2026June 30, 2025
(in thousands)(unaudited)
Net income on a GAAP basis$367,076 $160,051 
Stock-based compensation expense146,890 118,325 
Amortization of acquired intangibles79,922 23,703 
Acquisition and integration-related costs32,823 26,021 
Restructuring (352)47 
Non-qualified deferred compensation expenses11,430 7,778 
Loss related to contingent liability*
— 128,545 
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
(83,496)(46,248)
Income tax effect of non-GAAP adjustments28,079 31,658 
Net income on a non-GAAP basis$582,372 $449,880 
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.

Diluted Net Income Per Share ReconciliationThree Months Ended
June 30, 2026June 30, 2025
(in thousands, except per share data)(unaudited)
Diluted net income per share on a GAAP basis$1.33 $0.59 
Stock-based compensation expense0.53 0.43 
Amortization of acquired intangibles0.29 0.09 
Acquisition and integration-related costs0.12 0.09 
Restructuring — — 
Non-qualified deferred compensation expenses0.04 0.03 
Loss related to contingent liability*
— 0.47 
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
(0.30)(0.17)
Income tax effect of non-GAAP adjustments0.10 0.12 
Diluted net income per share on a non-GAAP basis$2.11 $1.65 
Shares used in calculation of diluted net income per share276,163 272,899 
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.

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
June 30, 2026 and December 31, 2025
(In thousands)
(Unaudited)
 
June 30, 2026December 31, 2025
Current assets:
Cash and cash equivalents$1,440,443 $3,001,317 
Receivables, net 1,065,023 944,939 
Inventories390,378 303,545 
Prepaid expenses and other326,049 419,872 
Total current assets3,221,893 4,669,673 
Property, plant and equipment, net 560,161 517,004 
Goodwill4,914,788 2,749,143 
Acquired intangibles, net 1,874,455 718,223 
Deferred taxes832,566 917,733 
Other assets676,462 581,372 
Total assets$12,080,325 $10,153,148 
Current liabilities:
Accounts payable and accrued liabilities$823,724 $856,856 
Current portion of deferred revenue1,025,118 778,435 
Total current liabilities1,848,842 1,635,291 
Long-term liabilities:
Long-term portion of deferred revenue144,453 155,997 
Long-term debt2,482,200 2,480,150 
Other long-term liabilities746,867 407,529 
Total long-term liabilities3,373,520 3,043,676 
Stockholders’ equity6,857,963 5,474,181 
Total liabilities and stockholders’ equity$12,080,325 $10,153,148 




Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Six Months Ended June 30, 2026 and June 30, 2025
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended Six Months Ended
 June 30, 2026June 30, 2025June 30, 2026June 30, 2025
Revenue:
Product and maintenance$1,430,668 $1,170,510 $2,779,590 $2,281,360 
Services153,783 104,931 279,081 236,447 
Total revenue1,584,451 1,275,441 3,058,671 2,517,807 
Costs and expenses:
Cost of product and maintenance175,183 139,298 328,495 255,970 
Cost of services64,135 44,869 125,370 95,330 
Marketing and sales241,034 200,595 452,519 403,295 
Research and development531,273 442,057 1,039,710 881,159 
General and administrative88,548 69,029 176,765 132,127 
Amortization of acquired intangibles34,315 9,204 54,525 18,126 
Loss related to contingent liability
— 128,545 — 128,545 
Restructuring (352)47 (357)(62)
Total costs and expenses1,134,136 1,033,644 2,177,027 1,914,490 
Income from operations450,315 241,797 881,644 603,317 
Interest expense(35,136)(28,948)(66,749)(58,066)
Other income, net
95,055 67,758 123,442 91,048 
Income before provision for income taxes
510,234 280,607 938,337 636,299 
Provision for income taxes
143,158 120,556 235,601 202,669 
Net income$367,076 $160,051 $702,736 $433,630 
Net income per share - basic$1.34 $0.59 $2.57 $1.60 
Net income per share - diluted$1.33 $0.59 $2.56 $1.59 
Weighted average common shares outstanding - basic273,955 271,294 273,012 271,633 
Weighted average common shares outstanding - diluted276,163 272,899 274,948 273,264 



Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2026 and June 30, 2025
(In thousands)
(Unaudited) 
Six Months Ended
 June 30, 2026June 30, 2025
Cash and cash equivalents at beginning of period
$3,001,317 $2,644,030 
Cash flows from operating activities:
Net income702,736 433,630 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization201,611 106,592 
Stock-based compensation285,073 225,938 
Gain on divestitures and investments, net(85,817)(36,654)
Deferred income taxes76,189 3,241 
ROU asset amortization and change in operating lease liabilities1,072 2,629 
Other non-cash items3,921 3,502 
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables(38,326)(11,211)
Inventories(106,987)7,528 
Prepaid expenses and other56,296 (24,201)
Other assets(20,470)12,239 
Accounts payable and accrued liabilities(255,486)115,603 
Deferred revenue169,728 21,824 
Other long-term liabilities1,171 3,964 
Net cash provided by operating activities990,711 864,624 
Cash flows from investing activities:
Purchases of investments(39,880)(21,596)
Proceeds from the sale and maturity of investments162,889 1,989 
Proceeds from the sale of IP and other assets
— 11,500 
Purchases of property, plant and equipment(101,448)(67,146)
Purchases of intangible assets(6,975)— 
Cash paid in business combinations, net of cash acquired (2,100,292)(122,146)
Net cash used for investing activities(2,085,706)(197,399)
Cash flows from financing activities:
Proceeds from revolving credit facility
600,000 — 
Payments on revolving credit facility
(600,000)— 
Proceeds from issuance of common stock88,840 78,322 
Stock received for payment of employee taxes on vesting of restricted stock(140,722)(94,334)
Payments for repurchases of common stock(400,006)(525,016)
Net cash used for financing activities(451,888)(541,028)
Effect of exchange rate changes on cash and cash equivalents(13,991)52,535 
Increase (decrease) in cash and cash equivalents
(1,560,874)178,732 
Cash and cash equivalents at end of period
$1,440,443 $2,822,762 






Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
 
 20252026
GEOGRAPHYQ1Q2Q3Q4YearQ1Q2
Americas48 %49 %43 %47 %47 %45 %43 %
China11 %9 %18 %12 %13 %13 %15 %
Other Asia19 %19 %18 %20 %19 %20 %20 %
Europe, Middle East and Africa16 %16 %14 %14 %15 %16 %15 %
Japan6 %7 %7 %7 %6 %6 %7 %
Total100 %100 %100 %100 %100 %100 %100 %

Revenue Mix by Product Category (% of Total Revenue)
 
 20252026
PRODUCT CATEGORYQ1Q2Q3Q4YearQ1Q2
Core EDA
71 %71 %71 %69 %70 %71 %68 %
Semiconductor IP
14 %13 %14 %15 %14 %14 %15 %
System Design and Analysis15 %16 %15 %16 %16 %15 %17 %
Total100 %100 %100 %100 %100 %100 %100 %

















Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of July 27, 2026
(Unaudited)
 
Three Months Ending
September 30, 2026
Year Ending
December 31, 2026
 ForecastForecast
GAAP operating margin as a percent of total revenue27.5% - 28.5%27.75% - 28.75%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense
9%
9%
Amortization of acquired intangibles
5%
5%
Acquisition and integration-related costs
2%
2%
Non-GAAP operating margin as a percent of total revenue†43.5% - 44.5%43.75% - 44.75%
†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 July 27, 2026
(Unaudited)
 
Three Months Ending
September 30, 2026
Year Ending
December 31, 2026
 ForecastForecast
Diluted net income per share on a GAAP basis$1.11 to $1.17$4.76 to $4.86
Stock-based compensation expense0.532.06
Amortization of acquired intangibles0.291.04
Acquisition and integration-related costs0.090.44
Non-qualified deferred compensation expenses—0.03
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
—(0.01)
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
—(0.34)
Income tax effect of non-GAAP adjustments(0.01)0.07
Diluted net income per share on a non-GAAP basis†$2.01 to $2.07$8.05 to $8.15
†
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 July 27, 2026
(Unaudited)
 
Three Months Ending
September 30, 2026
Year Ending
December 31, 2026
($ in millions)ForecastForecast
Net income on a GAAP basis$308 to $324$1,316 to $1,344
Stock-based compensation expense146569
Amortization of acquired intangibles80289
Acquisition and integration-related costs26122
Non-qualified deferred compensation expenses—9
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
—(3)
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
—(95)
Income tax effect of non-GAAP adjustments(2)19
Net income on a non-GAAP basis†$558 to $574$2,226 to $2,254
†
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.

Exhibit 99.02
image0a22.jpg

CADENCE REPORTS SECOND QUARTER
2026
CADENCE DESIGN SYSTEMS, INC.
CFO COMMENTARY
Key Takeaways
• Exceeded Q2 revenue, non-GAAP operating margin and EPS guidance
• Record backlog of ~$8.1 billion
• Raising 2026 revenue growth outlook to ~19% and non-GAAP EPS outlook to $8.10 at the midpoint

Q3 2026 Outlook
• Revenue: $1.595 billion - $1.625 billion
• GAAP operating margin: 27.5% - 28.5%
• Non-GAAP operating margin: 43.5% - 44.5%
• GAAP EPS: $1.11 - $1.17
• Non-GAAP EPS: $2.01 - $2.07
• Expect to use approximately $200 million to repurchase Cadence shares in Q3
Q2 2026 KEY METRICS
• Revenue: $1.584 billion
• GAAP operating margin: 28.4%
• Non-GAAP operating margin: 45.5%
• GAAP EPS: $1.33
• Non-GAAP EPS: $2.11
• Operating cash flow: $635 million

FY 2026 Outlook
• Revenue: $6.260 billion - $6.340 billion
• GAAP operating margin: 27.75% - 28.75%
• Non-GAAP operating margin: 43.75% - 44.75%
• GAAP EPS: $4.76 - $4.86
• Non-GAAP EPS: $8.05 - $8.15
• Operating cash flow: ~$2.0 billion
• Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year
Financial Results Webcast
Our Q2 2026 financial results webcast will begin July 27, 2026 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on July 27, 2026 until 5:00 p.m. (Pacific) on September 16, 2026.
July 27, 2026Cadence Q2 2026 Financial Results
1

Cadence Design Systems, Inc.
Financial Metrics
(In Millions, except per share data)20212022
2023
2024
2025
2026E
Revenue$2,988 $3,562 $4,090 $4,641 $5,297 $6,260- $6,340
Revenue growth11%19%15%13%
14%
18% - 20%
3-year CAGR*
12%15%15%16%
14%
~15%
GAAP operating expenses$2,209 $2,488 $2,839 $3,291 $3,805 $4,501
GAAP operating expense growth8%13%14%16%16%~18%
Non-GAAP operating expenses$1,877 $2,125 $2,373 $2,667 $2,935 $3,512
Non-GAAP operating expense growth8%13%12%12%
10%
~20%
GAAP operating margin
26.1%30.1%30.6%29.1%
28.2%
27.75% - 28.75%
Non-GAAP operating margin37.2%40.3%42.0%42.5%
44.6%
43.75% - 44.75%
Rule of 40 Metric**
48.6%
59.5%
56.8%
56.0%
58.7%
~63%
GAAP earnings per share$2.50 $3.09 $3.82 $3.85 $4.06 $4.76 - $4.86
Non-GAAP earning per share$3.29 $4.27 $5.15 $5.97 $7.14 $8.05 - $8.15
Non-GAAP EPS growth*
18%30%21%16%
20%
13 %
3-year Non-GAAP EPS CAGR*
21%25%23%22%
19%
16 %
Weighted average diluted shares outstanding
278.9275.0
272.7
273.8
273.3
275.5 - 277.5
Cash flow from operations1,1011,242
1,349
1,261
1,729
~$2,000
Capital expenditures65123
102
143
142
~$240
* At midpoint of outlook.
** Rule of 40 Metric = Revenue growth % + Non-GAAP operating margin %.

Profitability Trends
(In Millions)20212022
2023
2024
2025
2026E*
GAAP operating margin26.1%30.1%30.6%29.1%
28.2%
28.25%
Non-GAAP operating margin37.2%40.3%42.0%42.5%
44.6%
44.25%
Stock-based compensation
(7.0)%
(7.6)%
(8.0)%
(8.4)%
(8.6)%
(9.0)%
Non-GAAP operating margin adjusted for stock-based compensation
30.2%
32.7%
34.0%
34.1%
36.0%
35.25%
GAAP operating income$779 $1,074 $1,251 $1,351 $1,492 $1,799 
Non-GAAP operating income$1,111 $1,436 $1,717 $1,974 $2,361 $2,788 
Non-GAAP operating income adjusted for stock-based compensation$901 $1,166 $1,391 $1,583 $1,906 $2,219 
* At midpoint of outlook.
July 27, 2026Cadence Q2 2026 Financial Results
2
Cadence Design Systems, Inc.
Third Quarter 2026 Financial Outlook
Q3 2025Q2 2026Q3 2026E
Total Revenue ($ Millions)$1,339 $1,584 $1,595 - $1,625
   Q/Q Growth7%1% - 3%
   Y/Y Growth24%19% - 21%
GAAP Operating Margin31.8%28.4%27.5% - 28.5%
Non-GAAP Operating Margin47.6%45.5%43.5% - 44.5%
GAAP EPS$1.05 $1.33 $1.11 - $1.17
Non-GAAP EPS$1.93 $2.11 $2.01 - $2.07


Fiscal Year 2026 Financial Outlook
PreviousCurrent
FY 2025
FY 2026E
FY 2026E
Recurring Revenue
80%
~80%
~80%
Total Revenue ($ Millions)$5,297 
$6,125 - $6,225
$6,260 - $6,340
   Y/Y Growth
14%
16% - 18%
18% - 20%
Revenue from Beginning Backlog
~69%
~66%
~65%
GAAP Operating Margin
28.2%
27.5% - 28.5%
27.75% - 28.75%
Non-GAAP Operating Margin
44.6%
43.5% - 44.5%
43.75% - 44.75%
GAAP Other Income & Expense ($ Millions)$30 
$(101) - $(81)
$(17) - $3
Non-GAAP Other Income & Expense ($ Millions)$(24)
$(115) - $(95)
$(115) - $(95)
GAAP Tax Rate
27.1%
~26%
~26%
Non-GAAP Tax Rate16.5%16.5%16.5%
Weighted Average Diluted Shares Outstanding (Millions)
273.3
275 - 277
275.5 - 277.5
GAAP EPS$4.06 
$4.39 - $4.49
$4.76 - $4.86
   Y/Y Growth
5%
8% - 11%
17% - 20%
Non-GAAP EPS$7.14 
$7.85 - $7.95
$8.05 - $8.15
   Y/Y Growth
20%
10% - 11%
13% - 14%
Cash Flow from Operations ($ Millions)$1,729 
$1,875 - $1,975
~$2,000
DSO
64
~65
~65
Capital Expenditures ($ Millions)$142 
~$240
~$240


July 27, 2026Cadence Q2 2026 Financial Results
3
Cadence Design Systems, Inc.
Second Quarter Financial Results
Backlog
(In Billions)
2022
2023
2024
2025
Q2 2026
Backlog$5.8 $6.0 $6.8 $7.8 $8.1 
Revenue
(In Millions)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Product and Maintenance$1,170 $1,208 $1,332 $1,349 $1,431 
Services105 131 108 125 154 
   Total Revenue$1,275 $1,339 $1,440 $1,474 $1,584 
Table may not foot due to rounding
Recurring and Up-Front Revenue
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Revenue Recognized Over Time
73 %78 %77 %73 %72 %
Other Recurring Revenue
5 %4 %2 %4 %6 %
Recurring Revenue
78 %82 %79 %77 %78 %
Up-Front Revenue
22 %18 %21 %23 %22 %
Total Revenue
100 %100 %100 %100 %100 %
Trailing Twelve Months Recurring and Up-Front Revenue
Trailing Twelve Months Ended
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Recurring Revenue80 %80 %80 %79 %79 %
Up-Front Revenue20 %20 %20 %21 %21 %
   Total 100 %100 %100 %100 %100 %
Revenue Mix by Geography
(% of Total Revenue)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Americas49 %43 %47 %45 %43 %
China9 %18 %12 %13 %15 %
Other Asia19 %18 %20 %20 %20 %
Europe, Middle East and Africa16 %14 %14 %16 %15 %
Japan7 %7 %7 %6 %7 %
   Total100 %100 %100 %100 %100 %
Revenue Mix by Product Category
(% of Total Revenue)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Core EDA
71 %71 %69 %71 %68 %
Semiconductor IP
13 %14 %15 %14 %15 %
System Design and Analysis16 %15 %16 %15 %17 %
   Total100 %100 %100 %100 %100 %


July 27, 2026Cadence Q2 2026 Financial Results
4
Cadence Design Systems, Inc.
Gross Margin
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
GAAP Gross Margin85.6 %86.4 %86.9 %85.4 %84.9 %
Non-GAAP Gross Margin87.2 %88.0 %88.5 %88.0 %88.2 %
Total Costs and Expenses
(In Millions)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Total GAAP Costs and Expenses$1,034 $913 $977 $1,043 $1,134 
Total Non-GAAP Costs and Expenses$729 $701 $781 $815 $863 
Operating Margin
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
GAAP Operating Margin19.0 %31.8 %32.2 %29.3 %28.4 %
Non-GAAP Operating Margin42.8 %47.6 %45.8 %44.7 %45.5 %
Net Income Per Share
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
GAAP Net Income Per Share$0.59 $1.05 $1.42 $1.23 $1.33 
Non-GAAP Net Income Per Share$1.65 $1.93 $1.99 $1.96 $2.11 
Total DSO
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
DSO
51
55
64
6765
Balance Sheet and Cash Review
Free Cash Flow
(In Millions)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Net Cash from Operating Activities$378 $311 $553 $356 $635 
Capital Expenditures44 34 41 49 53 
Free Cash Flow$334 $277 $512 $307 $582 
Cash and Cash Equivalents
(In Millions)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Cash and Cash Equivalents$2,823 $2,753 $3,001 $1,407 $1,440 
•Approximately 16 percent of our cash and cash equivalents were in the U.S. at quarter-end.
Debt
(In Millions)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Debt (principal value)
$2,500 $2,500 $2,500 $2,925 $2,500 
Share Repurchase
(In Millions)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Share Repurchase$175 $200 $200 $200 $200 
Number of Shares0.607 0.584 0.613 0.671 0.580 
Employees
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
Headcount13,152 13,693 13,800 15,110 15,445 

July 27, 2026Cadence Q2 2026 Financial Results
5
Cadence Design Systems, Inc.
Forward Looking Statements
This CFO Commentary contains forward-looking statements, including Cadence's outlook on future operating results, financial condition, strategic objectives, business model and prospects, technology and product developments, customer adoption and demand, strategic relationships, backlog, industry trends, market growth, tax rates and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-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 pending acquisitions, acquisition of the Hexagon D&E business and 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 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.

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 document are based on management's expectations as of the date of this document 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 GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this CFO Commentary with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance. See our earnings press release issued today for further discussion of our non-GAAP financial measures, as well as the reconciliation provided in the Appendix to this CFO Commentary.

Cadence’s management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company’s core business operations and therefore provides supplemental information to Cadence’s 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’s management, including forecasting and budgeting.

© 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.
July 27, 2026Cadence Q2 2026 Financial Results
6
Cadence Design Systems, Inc.
APPENDIX I
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses
(In Millions)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
GAAP total costs and expenses$1,034 $913 $977 $1,043 $1,134 
Reconciling items to non-GAAP total costs and expenses
Stock-based compensation expense(118)(116)(113)(138)(147)
Amortization of acquired intangibles(24)(26)(30)(51)(80)
Acquisition and integration-related costs(26)(37)(49)(41)(33)
Restructuring— (27)(2)— — 
Non-qualified deferred compensation (expenses) credits
(8)(6)(2)3 (11)
Loss related to contingent liability*
(129)— — — — 
Non-GAAP total costs and expenses**
$729 $701 $781 $815 $863 
Table may not foot due to rounding
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
**
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.
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses
(In Millions)20212022
2023
2024
2025
2026E
GAAP total costs and expenses$2,209 $2,488 $2,839 $3,291 $3,805 $4,501 
Reconciling items to non-GAAP total costs and expenses
Stock-based compensation expense(210)(270)(326)(391)(455)(569)
Amortization of acquired intangibles(67)(60)(62)(90)(105)(289)
Acquisition and integration-related costs(23)(41)(56)(96)(135)(122)
Restructuring 1 — (11)(24)(29)— 
Non-qualified deferred compensation (expenses) credits(6)8 (11)(11)(14)(9)
Special charges*
(27)— — (3)(2)— 
Loss related to contingent liability**
— — — (8)(129)— 
Non-GAAP total costs and expenses***
$1,877 $2,125 $2,373 $2,667 $2,935 $3,512 
Table may not foot due to rounding
*
2021 includes costs related to a voluntary retirement program.
**
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
***
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.
July 27, 2026Cadence Q2 2026 Financial Results
7
Cadence Design Systems, Inc.
Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and Non-GAAP Operating Income Adjusted for Stock-based Compensation
(In Millions)20212022
2023
2024
2025
2026E
GAAP operating income$779 $1,074 $1,251 $1,351 $1,492 $1,799 
Reconciling items to non-GAAP operating income
Stock-based compensation expense210 270 326 391 455 569 
Amortization of acquired intangibles67 60 62 90 105 289 
Acquisition and integration-related costs23 41 56 96 135 122 
Restructuring (1)— 11 24 29 — 
Non-qualified deferred compensation expenses (credits)
6 (8)11 11 14 9 
Special charges*
27 — — 3 2 — 
Loss related to contingent liability**
— — — 8 129 — 
Non-GAAP operating income***
$1,111 $1,436 $1,717 $1,974 $2,361 $2,788 
Stock-based compensation expense(210)(270)(326)(391)(455)(569)
Non-GAAP operating income adjusted for stock-based compensation***
$901 $1,166 $1,391 $1,583 $1,906 $2,219 
Table may not foot due to rounding
*
2021 includes costs related to a voluntary retirement program.
**
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
***
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.
July 27, 2026Cadence Q2 2026 Financial Results
8
Cadence Design Systems, Inc.
Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026
GAAP gross margin as a percent of total revenue85.6%
86.4%
86.9%
85.4%84.9%
Reconciling items to non-GAAP gross margin as a percent of total revenue
Stock-based compensation expense
0.4%
0.3%
0.3%
0.4%
0.4%
Amortization of acquired intangibles
1.1%
1.2%
1.3%
2.1%2.9%
Non-qualified deferred compensation expenses (credits)
0.0%0.0%0.0%0.0%
0.0%
Acquisition and integration-related costs
0.1%
0.1%
0.0%
0.1%0.0%
Non-GAAP gross margin as a percent of total revenue*
87.2%
88.0%
88.5%
88.0%88.2%
*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.



July 27, 2026Cadence Q2 2026 Financial Results
9
Cadence Design Systems, Inc.
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026Q3 2026E
GAAP operating margin as a percent of total revenue19.0%
31.8%
32.2%
29.3%28.4%27.5% - 28.5%
Reconciling items to non-GAAP operating margin as a percent of total revenue
Stock-based compensation expense9.3%
8.7%
7.9%
9.4%9.3%
9%
Amortization of acquired intangibles1.8%
1.9%
2.1%
3.4%5.0%
5%
Acquisition and integration-related costs2.0%
2.8%
3.4%
2.8%2.1%
2%
Restructuring
0.0%
2.0%
0.1%
0.0%
0.0%
0%
Non-qualified deferred compensation expenses (credits)
0.6%
0.4%
0.1%
(0.2)%0.7%0%
Loss related to contingent liability*
10.1%
0.0%
0.0%
0.0%
0.0%
0%
Non-GAAP operating margin as a percent of total revenue**
42.8%
47.6%
45.8%
44.7%45.5%43.5% - 44.5%
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
**
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.



























July 27, 2026Cadence Q2 2026 Financial Results
10
Cadence Design Systems, Inc.
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
20212022
2023
2024
2025
2026E
GAAP operating margin as a percent of total revenue26.1%30.1%30.6%29.1%
28.2%
27.75% - 28.75%
Reconciling items to non-GAAP operating margin as a percent of total revenue
Stock-based compensation expense
7.0%
7.6%
8.0%
8.4%
8.6%
9%
Amortization of acquired intangibles
2.2%
1.7%
1.5%
2.0%
2.0%
5%
Acquisition and integration-related costs
0.8%
1.1%
1.4%
2.1%
2.5%
2%
Restructuring
0.0%
0.0%
0.3%
0.5%
0.6%
0%
Non-qualified deferred compensation expenses (credits)
0.2%
(0.2)%
0.2%
0.2%
0.3%
0%
Special charges*
0.9%
0.0%
0.0%
0.0%
0.0%
0%
Loss related to contingent liability**
0.0%
0.0%
0.0%
0.2%
2.4%
0%
Non-GAAP operating margin as a percent of total revenue***
37.2%
40.3%
42.0%
42.5%
44.6%
43.75% - 44.75%
*
2021 includes costs related to a voluntary retirement program.
**
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
***
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.
July 27, 2026Cadence Q2 2026 Financial Results
11
Cadence Design Systems, Inc.
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
(In Thousands, Except Per Share Data)
Q2 2025
Q3 2025
Q4 2025
Q1 2026Q2 2026Q3 2026E
Diluted net income per share on a GAAP basis$0.59 $1.05 $1.42 $1.23 $1.33 $1.11 - $1.17
Stock-based compensation expense0.43 0.42 0.41 0.50 0.53 0.53 
Amortization of acquired intangibles0.09 0.10 0.11 0.19 0.29 0.29 
Acquisition and integration-related costs0.09 0.14 0.18 0.15 0.12 0.09 
Restructuring — 0.10 0.01 — — — 
Non-qualified deferred compensation expenses (credits)
0.03 0.02 0.01 (0.01)0.04 — 
Loss related to contingent liability*
0.47 — — — — — 
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
— 0.07 0.04 (0.01)— — 
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
(0.17)0.03 (0.18)(0.04)(0.30)— 
Income tax effect of non-GAAP adjustments0.12 — (0.01)(0.05)0.10 (0.01)
Diluted net income per share on a non-GAAP basis**
$1.65 $1.93 $1.99 $1.96 $2.11 $2.01 - $2.07
Shares used in calculation of diluted net income per share272,899 273,798 272,932 273,725 276,163 
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
**
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.





July 27, 2026Cadence Q2 2026 Financial Results
12
Cadence Design Systems, Inc.
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
(In Thousands, Except Per Share Data)20212022
2023
2024
2025
2026E
Diluted net income per share on a GAAP basis$2.50 $3.09 $3.82 $3.85 $4.06 $4.76 - $4.86
Stock-based compensation expense0.75 0.98 1.19 1.43 1.67 2.06 
Amortization of acquired intangibles0.24 0.22 0.23 0.33 0.38 1.04 
Acquisition and integration-related costs0.08 0.15 0.21 0.35 0.49 0.44 
Restructuring — — 0.04 0.09 0.11 — 
Non-qualified deferred compensation expenses (credits)0.02 (0.03)0.04 0.04 0.05 0.03 
Special charges*
0.10 — — 0.01 0.01 — 
Loss related to contingent liability**
— — — 0.03 0.47 — 
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
— — — — 0.11 (0.01)
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
(0.03)0.05 (0.17)(0.22)(0.31)(0.34)
Income tax effect of non-GAAP adjustments(0.37)(0.19)(0.21)0.06 0.10 0.07 
Diluted net income per share on a non-GAAP basis***
$3.29 $4.27 $5.15 $5.97 $7.14 $8.05 - $8.15
Shares used in calculation of diluted net income per share 278,858 275,011 272,748 273,833 273,312 275.5 - 277.5M
*
2021 includes costs related to a voluntary retirement program.
**
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
***
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.








July 27, 2026Cadence Q2 2026 Financial Results
13
Cadence Design Systems, Inc.
Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense
(In Millions)
2024
2025
2026E
GAAP total other income and expense$45 $30 $(17) - $3
Reconciling items to non-GAAP total income and expense
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
— 29 (3)
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
(61)(83)(95)
Non-GAAP total other income and expense*
$(16)$(24)
$(115) - $(95)
*
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.


July 27, 2026Cadence Q2 2026 Financial Results
14

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