Cadence (NASDAQ: CDNS) Q1 2026 surge with raised full-year outlook
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Cadence Design Systems reported strong Q1 2026 results and raised its full-year outlook. Revenue reached $1.474 billion, up from $1.242 billion in Q1 2025, with GAAP operating margin at 29.3% and non-GAAP operating margin at 44.7%. GAAP diluted EPS was $1.23 and non-GAAP diluted EPS was $1.96, both above prior-year levels.
Quarter-end backlog hit a record $8.0 billion, with $4.0 billion expected to convert to revenue over the next 12 months. For 2026, Cadence now guides revenue to $6.125–$6.225 billion, implying about 16–18% growth, and expects non-GAAP EPS of $7.85–$7.95. Management highlighted accelerating AI demand and the launch of its AgentStack and AI “Super Agent” platform as key drivers.
Positive
- Beat-and-raise quarter with strong growth: Q1 2026 revenue climbed to $1.474 billion from $1.242 billion and non-GAAP EPS rose to $1.96 from $1.57, while 2026 revenue guidance increased to $6.125–$6.225 billion (about 16–18% growth) with a record $8.0 billion backlog.
Negative
- Higher leverage and reduced cash: Cash and cash equivalents declined to $1.41 billion from $3.00 billion at December 31, 2025, while total debt increased to $2.93 billion from $2.50 billion, reflecting significant acquisition and financing activity.
Insights
Cadence delivered a clear beat-and-raise quarter with AI-driven growth.
Cadence grew Q1 2026 revenue to $1.474 billion from $1.242 billion, while expanding non-GAAP operating margin to 44.7%. GAAP EPS reached $1.23 and non-GAAP EPS $1.96, reflecting strong operating leverage as AI-related design activity accelerates.
Management raised 2026 revenue guidance to $6.125–$6.225 billion, implying 16–18% growth, and now targets non-GAAP EPS of $7.85–$7.95. A record $8.0 billion backlog, with $4.0 billion expected within 12 months, underpins this outlook, alongside new AI offerings like AgentStack and associated Super Agents.
The balance sheet shows higher debt of $2.925 billion and lower cash of $1.407 billion, largely reflecting recent acquisitions such as Hexagon D&E. Future filings will clarify how integration, AI demand and elevated leverage interact with the company’s targeted 2026 operating margins and cash flow.
8-K Event Classification
2 items: 2.02, 9.01
2 items
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.
Key Figures
Q1 2026 Revenue: $1.474 billion
Q1 2026 GAAP EPS: $1.23
Q1 2026 non-GAAP EPS: $1.96
+5 more
8 metrics
Q1 2026 Revenue
$1.474 billion
Quarter ended March 31, 2026, vs $1.242 billion in Q1 2025
Q1 2026 GAAP EPS
$1.23
Diluted net income per share, up from $1.00 in Q1 2025
Q1 2026 non-GAAP EPS
$1.96
Diluted non-GAAP EPS, up from $1.57 in Q1 2025
Q1 2026 non-GAAP operating margin
44.7%
Versus 41.7% in Q1 2025
Quarter-end backlog
$8.0 billion
Backlog at March 31, 2026; $4.0 billion expected in next 12 months
2026 revenue outlook
$6.125–$6.225 billion
Company guidance for fiscal year 2026, ~16–18% growth
Cash and cash equivalents
$1.406668 billion
As of March 31, 2026, down from $3.001317 billion at December 31, 2025
Total debt (principal)
$2.925 billion
Debt at March 31, 2026, up from $2.500 billion at Q4 2025
Key Terms
non-GAAP operating margin, backlog, Rule of 40 Metric, recurring revenue, +2 more
6 terms
non-GAAP operating margin financial
"Non-GAAP operating margin of 44.7%, compared to 41.7% in Q1 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 $8.0 billion and revenue expected to be recognized in the next 12 months"
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** | 48.6% | 59.5% | 56.8% | 56.0% | 58.7% | ~61%"
recurring revenue financial
"Recurring Revenue | 82 % | 78 % | 82 % | 79 % | 77 %"
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.
stock-based compensation expense financial
"Stock-based compensation expense | 138,183 | 107,613"
Stock-based compensation expense is the value that a company records when it gives employees or executives shares or options to buy shares as part of their pay. It matters because it shows the true cost of paying employees this way, which can affect the company's profits and how investors see its financial health.
operating cash flow financial
"Operating cash flow: $356 million"
Operating cash flow is the amount of money a company earns from its main business activities, like selling products or services. It shows how well the company can generate cash to pay bills, invest in growth, or return money to shareholders. This figure helps investors understand if the company’s core operations are healthy and sustainable.
Earnings Snapshot
Revenue: $1.474 billion · Guidance included
Q1 2026
Revenue
$1.474 billion
+18.7% YoY vs $1.242 billion in Q1 2025
GAAP diluted EPS
$1.23
up from $1.00 in Q1 2025
Non-GAAP diluted EPS
$1.96
up from $1.57 in Q1 2025
Non-GAAP operating margin
44.7%
up from 41.7% in Q1 2025
Guidance
For 2026, Cadence guides revenue to $6.125–$6.225 billion, GAAP EPS to $4.39–$4.49 and non-GAAP EPS to $7.85–$7.95, with non-GAAP operating margin of 43.5–44.5%.
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): April 27, 2026
(Exact Name of Registrant as Specified in its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices) (Zip Code)
(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 class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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 April 27, 2026 Cadence Design Systems, Inc. (“Cadence”) issued a press release announcing its financial results for the quarter ended March 31, 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 March 31, 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 April 27, 2026. | |||||||
99.02 | CFO Commentary on Results of Quarter Ended March 31, 2026. | |||||||
| 104 | Cover 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: April 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 First Quarter 2026 Financial Results
Record Backlog of $8.0 Billion
Raising 2026 Revenue Outlook to ~17% YoY Growth
SAN JOSE, Calif. — April 27, 2026 — Cadence (Nasdaq: CDNS) today announced results for the first quarter of 2026.
First Quarter 2026 Financial Results
•Revenue of $1.474 billion, compared to revenue of $1.242 billion in Q1 2025
•GAAP operating margin of 29.3%, compared to 29.1% in Q1 2025
•Non-GAAP operating margin of 44.7%, compared to 41.7% in Q1 2025
•GAAP diluted net income per share of $1.23, compared to $1.00 in Q1 2025
•Non-GAAP diluted net income per share of $1.96, compared to $1.57 in Q1 2025
•Quarter-end backlog was $8.0 billion and revenue expected to be recognized in the next 12 months from remaining performance obligations was $4.0 billion
“Cadence had a strong start to 2026, delivering a solid Q1 with accelerating AI demand and record backlog, reflecting strong customer commitment to our AI-driven portfolio,” said Anirudh Devgan, president and chief executive officer. “Cadence is leading the agentic AI transformation in semiconductor and system design, pioneering the industry's most advanced and comprehensive agentic AI full-flow platform, AgentStack, integrated with ChipStack, ViraStack, and InnoStack Super Agents.”
“Cadence delivered excellent results for the first quarter of 2026, with broad-based strength across all our businesses,” said John Wall, senior vice president and chief financial officer. “With robust design activity and solid execution, we are raising our 2026 revenue outlook to 17% year-over-year growth.”
CFO Commentary
Commentary on the first 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 $6.125 billion to $6.225 billion
•GAAP operating margin in the range of 27.5% to 28.5%
•Non-GAAP operating margin in the range of 43.5% to 44.5%
•GAAP diluted net income per share in the range of $4.39 to $4.49
•Non-GAAP diluted net income per share in the range of $7.85 to $7.95
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 AgentStack, an orchestration framework for Cadence's AI Super Agents that enables knowledge sharing and extensibility from chips to 3D-IC and systems
•Launched ViraStack AI Super Agent for analog and custom design and the InnoStack AI Super Agent for digital implementation and signoff. Along with the ChipStack AI Super Agent for RTL and verification, Cadence now provides agentic AI solutions spanning the entire chip design spectrum
•Core EDA revenue grew 18% year‑over‑year, driven by expanding customer adoption of Cadence’s AI‑driven solutions, with continued strength in advanced digital implementation, custom, and verification at leading AI infrastructure and semiconductor customers
•Hardware delivered a record quarter, led by strong demand from AI and high‑performance computing customers, along with growing adoption in automotive and robotics markets
•IP business achieved 22% year‑over‑year growth, fueled by robust demand from AI infrastructure, HPC, and automotive workloads and continued adoption of Cadence’s Star IP portfolio, including HBM, LPDDR, PCIe, SerDes, and foundation IP
•System Design and Analysis revenue increased 18% year-over-year. With the close of the Hexagon D&E acquisition, Cadence added leading structural and multibody dynamics technologies and is well positioned to capitalize on the emerging Physical AI opportunity
Audio Webcast Scheduled
Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the first quarter 2026 financial results audio webcast today, April 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 April 27, 2026 at 5 p.m. (Pacific) and ending June 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 2024, Cadence was recognized by the Wall Street Journal as one of the world’s top 100 best-managed companies. 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 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, impact of Cadence's acquisition of Hexagon's design and engineering (“D&E”) business, 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 and armed conflicts around the world; (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 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 compliance, cooperation, audit and other 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 U.S. or foreign governmental authorities and any impact of the settlements on Cadence’s operations and business dealings in China, U.S. government contracting business and other customer relationships; 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 Reconciliation | Three Months Ended | |||||||||||||
| March 31, 2026 | March 31, 2025 | |||||||||||||
| (unaudited) | ||||||||||||||
| GAAP operating margin as a percent of total revenue | 29.3% | 29.1% | ||||||||||||
| Reconciling items to non-GAAP operating margin as a percent of total revenue: | ||||||||||||||
| Stock-based compensation expense | 9.4% | 8.7% | ||||||||||||
| Amortization of acquired intangibles | 3.4% | 2.0% | ||||||||||||
| Acquisition and integration-related costs | 2.8% | 1.8% | ||||||||||||
| Restructuring | 0.0% | 0.0% | ||||||||||||
Non-qualified deferred compensation credits | (0.2)% | (0.1)% | ||||||||||||
Special charges | 0.0% | 0.2% | ||||||||||||
| Non-GAAP operating margin as a percent of total revenue | 44.7% | 41.7% | ||||||||||||
| Net Income Reconciliation | Three Months Ended | |||||||||||||
| March 31, 2026 | March 31, 2025 | |||||||||||||
| (in thousands) | (unaudited) | |||||||||||||
| Net income on a GAAP basis | $ | 335,660 | $ | 273,579 | ||||||||||
| Stock-based compensation expense | 138,183 | 107,613 | ||||||||||||
| Amortization of acquired intangibles | 50,949 | 25,416 | ||||||||||||
| Acquisition and integration-related costs | 41,258 | 23,105 | ||||||||||||
| Restructuring | (5) | (109) | ||||||||||||
Non-qualified deferred compensation credits | (2,826) | (1,573) | ||||||||||||
Special charges | — | 1,988 | ||||||||||||
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition | (3,135) | — | ||||||||||||
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets | (11,177) | 3,332 | ||||||||||||
| Income tax effect of non-GAAP adjustments | (13,380) | (2,939) | ||||||||||||
| Net income on a non-GAAP basis | $ | 535,527 | $ | 430,412 | ||||||||||
| Diluted Net Income Per Share Reconciliation | Three Months Ended | |||||||||||||
| March 31, 2026 | March 31, 2025 | |||||||||||||
| (in thousands, except per share data) | (unaudited) | |||||||||||||
| Diluted net income per share on a GAAP basis | $ | 1.23 | $ | 1.00 | ||||||||||
| Stock-based compensation expense | 0.50 | 0.39 | ||||||||||||
| Amortization of acquired intangibles | 0.19 | 0.09 | ||||||||||||
| Acquisition and integration-related costs | 0.15 | 0.09 | ||||||||||||
| Restructuring | — | — | ||||||||||||
Non-qualified deferred compensation credits | (0.01) | (0.01) | ||||||||||||
Special charges | — | 0.01 | ||||||||||||
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 | (0.04) | 0.01 | ||||||||||||
| Income tax effect of non-GAAP adjustments | (0.05) | (0.01) | ||||||||||||
| Diluted net income per share on a non-GAAP basis | $ | 1.96 | $ | 1.57 | ||||||||||
| Shares used in calculation of diluted net income per share | 273,725 | 273,631 | ||||||||||||
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
March 31, 2026 and December 31, 2025
(In thousands)
(Unaudited)
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 1,406,668 | $ | 3,001,317 | ||||||||||
| Receivables, net | 1,033,814 | 944,939 | ||||||||||||
| Inventories | 317,951 | 303,545 | ||||||||||||
| Prepaid expenses and other | 421,967 | 419,872 | ||||||||||||
| Total current assets | 3,180,400 | 4,669,673 | ||||||||||||
| Property, plant and equipment, net | 536,903 | 517,004 | ||||||||||||
| Goodwill | 4,929,581 | 2,749,143 | ||||||||||||
| Acquired intangibles, net | 1,933,262 | 718,223 | ||||||||||||
| Deferred taxes | 843,209 | 917,733 | ||||||||||||
| Other assets | 674,999 | 581,372 | ||||||||||||
| Total assets | $ | 12,098,354 | $ | 10,153,148 | ||||||||||
| Current liabilities: | ||||||||||||||
| Revolving credit facility | $ | 425,000 | $ | — | ||||||||||
| Accounts payable and accrued liabilities | 863,910 | 856,856 | ||||||||||||
| Current portion of deferred revenue | 873,598 | 778,435 | ||||||||||||
| Total current liabilities | 2,162,508 | 1,635,291 | ||||||||||||
| Long-term liabilities: | ||||||||||||||
| Long-term portion of deferred revenue | 146,574 | 155,997 | ||||||||||||
| Long-term debt | 2,481,170 | 2,480,150 | ||||||||||||
| Other long-term liabilities | 746,639 | 407,529 | ||||||||||||
| Total long-term liabilities | 3,374,383 | 3,043,676 | ||||||||||||
| Stockholders’ equity | 6,561,463 | 5,474,181 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 12,098,354 | $ | 10,153,148 | ||||||||||
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three Months Ended March 31, 2026 and March 31, 2025
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended | ||||||||||||||
| March 31, 2026 | March 31, 2025 | |||||||||||||
| Revenue: | ||||||||||||||
| Product and maintenance | $ | 1,348,922 | $ | 1,110,850 | ||||||||||
| Services | 125,298 | 131,516 | ||||||||||||
| Total revenue | 1,474,220 | 1,242,366 | ||||||||||||
| Costs and expenses: | ||||||||||||||
| Cost of product and maintenance | 153,312 | 116,672 | ||||||||||||
| Cost of services | 61,235 | 50,461 | ||||||||||||
| Marketing and sales | 211,485 | 202,700 | ||||||||||||
| Research and development | 508,437 | 439,102 | ||||||||||||
| General and administrative | 88,217 | 63,098 | ||||||||||||
| Amortization of acquired intangibles | 20,210 | 8,922 | ||||||||||||
| Restructuring | (5) | (109) | ||||||||||||
| Total costs and expenses | 1,042,891 | 880,846 | ||||||||||||
| Income from operations | 431,329 | 361,520 | ||||||||||||
| Interest expense | (31,613) | (29,118) | ||||||||||||
Other income, net | 28,387 | 23,290 | ||||||||||||
Income before provision for income taxes | 428,103 | 355,692 | ||||||||||||
Provision for income taxes | 92,443 | 82,113 | ||||||||||||
| Net income | $ | 335,660 | $ | 273,579 | ||||||||||
| Net income per share - basic | $ | 1.23 | $ | 1.01 | ||||||||||
| Net income per share - diluted | $ | 1.23 | $ | 1.00 | ||||||||||
| Weighted average common shares outstanding - basic | 272,061 | 271,973 | ||||||||||||
| Weighted average common shares outstanding - diluted | 273,725 | 273,631 | ||||||||||||
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Month Ended March 31, 2026 and March 31, 2025
(In thousands)
(Unaudited)
Three Month Ended | |||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||
Cash and cash equivalents at beginning of period | $ | 3,001,317 | $ | 2,644,030 | |||||||
| Cash flows from operating activities: | |||||||||||
| Net income | 335,660 | 273,579 | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 84,622 | 52,916 | |||||||||
| Stock-based compensation | 138,183 | 107,613 | |||||||||
(Gain) loss on divestitures and investments, net | (13,925) | 1,791 | |||||||||
| Deferred income taxes | 73,128 | (1,861) | |||||||||
| ROU asset amortization and change in operating lease liabilities | (250) | (1,446) | |||||||||
| Other non-cash items | 1,629 | 862 | |||||||||
| Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||||||
| Receivables | (18,548) | 102,136 | |||||||||
| Inventories | (31,376) | 15,018 | |||||||||
| Prepaid expenses and other | 9,100 | 10,316 | |||||||||
| Other assets | (1,870) | 12,237 | |||||||||
| Accounts payable and accrued liabilities | (232,568) | (69,621) | |||||||||
| Deferred revenue | 20,422 | (14,377) | |||||||||
| Other long-term liabilities | (8,425) | (2,142) | |||||||||
| Net cash provided by operating activities | 355,782 | 487,021 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of investments | (29,064) | (11,469) | |||||||||
| Proceeds from the sale and maturity of investments | 40,443 | 1,246 | |||||||||
Proceeds from the sale of IP and other assets | — | 11,500 | |||||||||
| Purchases of property, plant and equipment | (48,820) | (23,061) | |||||||||
| Cash paid in business combinations, net of cash acquired | (2,074,534) | — | |||||||||
| Net cash used for investing activities | (2,111,975) | (21,784) | |||||||||
| Cash flows from financing activities: | |||||||||||
Proceeds from revolving credit facility | 425,000 | — | |||||||||
| Proceeds from issuance of common stock | 72,610 | 76,789 | |||||||||
| Stock received for payment of employee taxes on vesting of restricted stock | (123,094) | (72,566) | |||||||||
| Payments for repurchases of common stock | (200,000) | (350,007) | |||||||||
Net cash provided by (used for) financing activities | 174,516 | (345,784) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (12,972) | 14,191 | |||||||||
Increase (decrease) in cash and cash equivalents | (1,594,649) | 133,644 | |||||||||
Cash and cash equivalents at end of period | $ | 1,406,668 | $ | 2,777,674 | |||||||
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
| 2025 | 2026 | ||||||||||||||||||||||||||||||||||
| GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | |||||||||||||||||||||||||||||
| Americas | 48 | % | 49 | % | 43 | % | 47 | % | 47 | % | 45 | % | |||||||||||||||||||||||
| China | 11 | % | 9 | % | 18 | % | 12 | % | 13 | % | 13 | % | |||||||||||||||||||||||
| Other Asia | 19 | % | 19 | % | 18 | % | 20 | % | 19 | % | 20 | % | |||||||||||||||||||||||
| Europe, Middle East and Africa | 16 | % | 16 | % | 14 | % | 14 | % | 15 | % | 16 | % | |||||||||||||||||||||||
| Japan | 6 | % | 7 | % | 7 | % | 7 | % | 6 | % | 6 | % | |||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||
Revenue Mix by Product Category (% of Total Revenue)
| 2025 | 2026 | ||||||||||||||||||||||||||||||||||
| PRODUCT CATEGORY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | |||||||||||||||||||||||||||||
Core EDA | 71 | % | 71 | % | 71 | % | 69 | % | 70 | % | 71 | % | |||||||||||||||||||||||
Semiconductor IP | 14 | % | 13 | % | 14 | % | 15 | % | 14 | % | 14 | % | |||||||||||||||||||||||
| System Design and Analysis | 15 | % | 16 | % | 15 | % | 16 | % | 16 | % | 15 | % | |||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of April 27, 2026
(Unaudited)
Three Months Ending June 30, 2026 | Year Ending December 31, 2026 | |||||||||||||
| Forecast | Forecast | |||||||||||||
| GAAP operating margin as a percent of total revenue | 28.5% - 29.5% | 27.5% - 28.5% | ||||||||||||
| 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† | 44.5% - 45.5% | 43.5% - 44.5% | ||||||||||||
| † | 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 April 27, 2026
(Unaudited)
Three Months Ending June 30, 2026 | Year Ending December 31, 2026 | |||||||||||||
| Forecast | Forecast | |||||||||||||
| Diluted net income per share on a GAAP basis | $1.07 to $1.13 | $4.39 to $4.49 | ||||||||||||
| Stock-based compensation expense | 0.54 | 2.06 | ||||||||||||
| Amortization of acquired intangibles | 0.29 | 1.04 | ||||||||||||
| Acquisition and integration-related costs | 0.10 | 0.40 | ||||||||||||
Non-qualified deferred compensation credits | — | (0.01) | ||||||||||||
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 | — | (0.04) | ||||||||||||
| Income tax effect of non-GAAP adjustments | 0.02 | 0.02 | ||||||||||||
| Diluted net income per share on a non-GAAP basis† | $2.02 to $2.08 | $7.85 to $7.95 | ||||||||||||
| † | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of April 27, 2026
(Unaudited)
Three Months Ending June 30, 2026 | Year Ending December 31, 2026 | |||||||||||||
| ($ in millions) | Forecast | Forecast | ||||||||||||
| Net income on a GAAP basis | $296 to $312 | $1,212 to $1,239 | ||||||||||||
| Stock-based compensation expense | 148 | 569 | ||||||||||||
| Amortization of acquired intangibles | 79 | 286 | ||||||||||||
| Acquisition and integration-related costs | 28 | 111 | ||||||||||||
Non-qualified deferred compensation credits | — | (3) | ||||||||||||
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 | — | (11) | ||||||||||||
| Income tax effect of non-GAAP adjustments | 6 | 6 | ||||||||||||
| Net income on a non-GAAP basis† | $557 to $573 | $2,167 to $2,194 | ||||||||||||
| † | 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
CADENCE REPORTS FIRST QUARTER 2026 | ||||||||
| CADENCE DESIGN SYSTEMS, INC. | ||||||||
CFO COMMENTARY | ||||||||
Key Takeaways • Exceeded Q1 revenue and EPS guidance • Record backlog of ~$8.0 billion • Raising 2026 revenue growth outlook to ~17% at the midpoint | Q2 2026 Outlook • Revenue: $1.555 billion - $1.595 billion • GAAP operating margin: 28.5% - 29.5% • Non-GAAP operating margin: 44.5% - 45.5% • GAAP EPS: $1.07 - $1.13 • Non-GAAP EPS: $2.02 - $2.08 • Expect to use approximately $200 million to repurchase Cadence shares in Q2 | Q1 2026 KEY METRICS | ||||||
• Revenue: $1.474 billion • GAAP operating margin: 29.3% • Non-GAAP operating margin: 44.7% • GAAP EPS: $1.23 • Non-GAAP EPS: $1.96 • Operating cash flow: $356 million | ||||||||
FY 2026 Outlook • Revenue: $6.125 billion - $6.225 billion • GAAP operating margin: 27.5% - 28.5% • Non-GAAP operating margin: 43.5% - 44.5% • GAAP EPS: $4.39 - $4.49 • Non-GAAP EPS: $7.85 - $7.95 • Operating cash flow: $1.875 billion - $1.975 billion • Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year | Financial Results Webcast | |||||||
Our Q1 2026 financial results webcast will begin April 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 April 27, 2026 until 5:00 p.m. (Pacific) on June 16, 2026. | ||||||||
| April 27, 2026 | Cadence Q1 2026 Financial Results | 1 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Financial Metrics
| (In Millions, except per share data) | 2021 | 2022 | 2023 | 2024 | 2025 | 2026E | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 2,988 | $ | 3,562 | $ | 4,090 | $ | 4,641 | $ | 5,297 | $6,125- $6,225 | |||||||||||||||||||||||||||||||||
| Revenue growth | 11% | 19% | 15% | 13% | 14% | 16% - 18% | ||||||||||||||||||||||||||||||||||||||
3-year CAGR* | 12% | 15% | 15% | 16% | 14% | ~15% | ||||||||||||||||||||||||||||||||||||||
| GAAP operating expenses | $ | 2,209 | $ | 2,488 | $ | 2,839 | $ | 3,291 | $ | 3,805 | $4,421 | |||||||||||||||||||||||||||||||||
| GAAP operating expense growth | 8% | 13% | 14% | 16% | 16% | ~16% | ||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating expenses | $ | 1,877 | $ | 2,125 | $ | 2,373 | $ | 2,667 | $ | 2,935 | $3,458 | |||||||||||||||||||||||||||||||||
| Non-GAAP operating expense growth | 8% | 13% | 12% | 12% | 10% | ~18% | ||||||||||||||||||||||||||||||||||||||
GAAP operating margin | 26.1% | 30.1% | 30.6% | 29.1% | 28.2% | 27.5% - 28.5% | ||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin | 37.2% | 40.3% | 42.0% | 42.5% | 44.6% | 43.5% - 44.5% | ||||||||||||||||||||||||||||||||||||||
Rule of 40 Metric** | 48.6% | 59.5% | 56.8% | 56.0% | 58.7% | ~61% | ||||||||||||||||||||||||||||||||||||||
| GAAP earnings per share | $ | 2.50 | $ | 3.09 | $ | 3.82 | $ | 3.85 | $ | 4.06 | $4.39 - $4.49 | |||||||||||||||||||||||||||||||||
| Non-GAAP earning per share | $ | 3.29 | $ | 4.27 | $ | 5.15 | $ | 5.97 | $ | 7.14 | $7.85 - $7.95 | |||||||||||||||||||||||||||||||||
Non-GAAP EPS growth* | 18% | 30% | 21% | 16% | 20% | 11 | % | |||||||||||||||||||||||||||||||||||||
3-year Non-GAAP EPS CAGR* | 21% | 25% | 23% | 22% | 19% | 15 | % | |||||||||||||||||||||||||||||||||||||
Weighted average diluted shares outstanding | 278.9 | 275.0 | 272.7 | 273.8 | 273.3 | 275 - 277 | ||||||||||||||||||||||||||||||||||||||
| Cash flow from operations | 1,101 | 1,242 | 1,349 | 1,261 | 1,729 | $1,875 - $1,975 | ||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 65 | 123 | 102 | 143 | 142 | ~$240 | ||||||||||||||||||||||||||||||||||||||
* At midpoint of outlook.
** Rule of 40 Metric = Revenue growth % + Non-GAAP operating margin %.
Profitability Trends
* At midpoint of outlook.
| (In Millions) | 2021 | 2022 | 2023 | 2024 | 2025 | 2026E* | ||||||||||||||||||||||||||||||||||||||
Revenue | $ | 2,988 | $ | 3,562 | $ | 4,090 | $ | 4,641 | $ | 5,297 | $ | 6,175 | ||||||||||||||||||||||||||||||||
Revenue Growth | 11% | 19% | 15% | 13% | 14% | 17% | ||||||||||||||||||||||||||||||||||||||
3-Year Revenue Growth CAGR | 12% | 15% | 15% | 16% | 14% | 15% | ||||||||||||||||||||||||||||||||||||||
| GAAP operating margin | 26.1% | 30.1% | 30.6% | 29.1% | 28.2% | 28% | ||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin | 37.2% | 40.3% | 42.0% | 42.5% | 44.6% | 44.0% | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | (7.0)% | (7.6)% | (8.0)% | (8.4)% | (8.6)% | (9.2)% | ||||||||||||||||||||||||||||||||||||||
Non-GAAP operating margin adjusted for stock-based compensation | 30.2% | 32.7% | 34.0% | 34.1% | 36.0% | 34.8% | ||||||||||||||||||||||||||||||||||||||
| GAAP operating income | $ | 779 | $ | 1,074 | $ | 1,251 | $ | 1,351 | $ | 1,492 | $ | 1,754 | ||||||||||||||||||||||||||||||||
| Non-GAAP operating income | $ | 1,111 | $ | 1,436 | $ | 1,717 | $ | 1,974 | $ | 2,361 | $ | 2,717 | ||||||||||||||||||||||||||||||||
| Non-GAAP operating income adjusted for stock-based compensation | $ | 901 | $ | 1,166 | $ | 1,391 | $ | 1,583 | $ | 1,906 | $ | 2,148 | ||||||||||||||||||||||||||||||||
| April 27, 2026 | Cadence Q1 2026 Financial Results | 2 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Second Quarter 2026 Financial Outlook
Q2 2025 | Q1 2026 | Q2 2026E | |||||||||||||||||||||
| Total Revenue ($ Millions) | $ | 1,275 | $ | 1,474 | $1,555 - $1,595 | ||||||||||||||||||
| Q/Q Growth | 2% | 5% - 8% | |||||||||||||||||||||
| Y/Y Growth | 19% | 22% - 25% | |||||||||||||||||||||
| GAAP Operating Margin | 19.0% | 29.3% | 28.5% - 29.5% | ||||||||||||||||||||
| Non-GAAP Operating Margin | 42.8% | 44.7% | 44.5% - 45.5% | ||||||||||||||||||||
| GAAP EPS | $ | 0.59 | $ | 1.23 | $1.07 - $1.13 | ||||||||||||||||||
| Non-GAAP EPS | $ | 1.65 | $ | 1.96 | $2.02 - $2.08 | ||||||||||||||||||
Fiscal Year 2026 Financial Outlook
| Previous | Current | ||||||||||||||||||||||
FY 2025 | FY 2026E | FY 2026E | |||||||||||||||||||||
| Recurring Revenue | 80% | ~80% | ~80% | ||||||||||||||||||||
| Total Revenue ($ Millions) | $ | 5,297 | $5,900 - $6,000 | $6,125 - $6,225 | |||||||||||||||||||
| Y/Y Growth | 14% | 11% - 13% | 16% - 18% | ||||||||||||||||||||
| Revenue from Beginning Backlog | ~69% | ~67% | ~66% | ||||||||||||||||||||
| GAAP Operating Margin | 28.2% | 31.75% - 32.75% | 27.5% - 28.5% | ||||||||||||||||||||
| Non-GAAP Operating Margin | 44.6% | 44.75% - 45.75% | 43.5% - 44.5% | ||||||||||||||||||||
| GAAP Other Income & Expense ($ Millions) | $ | 30 | $(43) - $(33) | $(101) - $(81) | |||||||||||||||||||
| Non-GAAP Other Income & Expense ($ Millions) | $ | (24) | $(43) - $(33) | $(115) - $(95) | |||||||||||||||||||
| GAAP Tax Rate | 27.1% | ~27% | ~26% | ||||||||||||||||||||
| Non-GAAP Tax Rate | 16.5% | 16.5% | 16.5% | ||||||||||||||||||||
| Weighted Average Diluted Shares Outstanding (Millions) | 273.3 | 272.5 - 274.5 | 275 - 277 | ||||||||||||||||||||
| GAAP EPS | $ | 4.06 | $4.95 - $5.05 | $4.39 - $4.49 | |||||||||||||||||||
| Y/Y Growth | 5% | 22% - 24% | 8% - 11% | ||||||||||||||||||||
| Non-GAAP EPS | $ | 7.14 | $8.05 - $8.15 | $7.85 - $7.95 | |||||||||||||||||||
| Y/Y Growth | 20% | 13% - 14% | 10% - 11% | ||||||||||||||||||||
| Cash Flow from Operations ($ Millions) | $ | 1,729 | ~$2,000 | $1,875 - $1,975 | |||||||||||||||||||
| DSO | 64 | ~55 | ~65 | ||||||||||||||||||||
| Capital Expenditures ($ Millions) | $ | 142 | ~$210 | ~$240 | |||||||||||||||||||
| April 27, 2026 | Cadence Q1 2026 Financial Results | 3 | ||||||
| Cadence Design Systems, Inc. | ||||||||
First Quarter Financial Results
Backlog
| (In Billions) | 2022 | 2023 | 2024 | 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
| Backlog | $ | 5.8 | $ | 6.0 | $ | 6.8 | $ | 7.8 | $ | 8.0 | |||||||||||||||||||||||||
Revenue
| (In Millions) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
| Product and Maintenance | $ | 1,111 | $ | 1,170 | $ | 1,208 | $ | 1,332 | $ | 1,349 | |||||||||||||||||||||||||
| Services | 131 | 105 | 131 | 108 | 125 | ||||||||||||||||||||||||||||||
| Total Revenue | $ | 1,242 | $ | 1,275 | $ | 1,339 | $ | 1,440 | $ | 1,474 | |||||||||||||||||||||||||
Recurring and Up-Front Revenue
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | |||||||||||||||||||||||||||||||
Revenue Recognized Over Time | 77 | % | 73 | % | 78 | % | 77 | % | 73 | % | |||||||||||||||||||||||||
Other Recurring Revenue | 5 | % | 5 | % | 4 | % | 2 | % | 4 | % | |||||||||||||||||||||||||
Recurring Revenue | 82 | % | 78 | % | 82 | % | 79 | % | 77 | % | |||||||||||||||||||||||||
Up-Front Revenue | 18 | % | 22 | % | 18 | % | 21 | % | 23 | % | |||||||||||||||||||||||||
Total Revenue | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Trailing Twelve Months Recurring and Up-Front Revenue
| Trailing Twelve Months Ended | |||||||||||||||||||||||||||||||||||
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | |||||||||||||||||||||||||||||||
| Recurring Revenue | 82 | % | 80 | % | 80 | % | 80 | % | 79 | % | |||||||||||||||||||||||||
| Up-Front Revenue | 18 | % | 20 | % | 20 | % | 20 | % | 21 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Revenue Mix by Geography
| (% of Total Revenue) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
| Americas | 48 | % | 49 | % | 43 | % | 47 | % | 45 | % | |||||||||||||||||||||||||
| China | 11 | % | 9 | % | 18 | % | 12 | % | 13 | % | |||||||||||||||||||||||||
| Other Asia | 19 | % | 19 | % | 18 | % | 20 | % | 20 | % | |||||||||||||||||||||||||
| Europe, Middle East and Africa | 16 | % | 16 | % | 14 | % | 14 | % | 16 | % | |||||||||||||||||||||||||
| Japan | 6 | % | 7 | % | 7 | % | 7 | % | 6 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Revenue Mix by Product Category
| (% of Total Revenue) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
Core EDA | 71 | % | 71 | % | 71 | % | 69 | % | 71 | % | |||||||||||||||||||||||||
Semiconductor IP | 14 | % | 13 | % | 14 | % | 15 | % | 14 | % | |||||||||||||||||||||||||
| System Design and Analysis | 15 | % | 16 | % | 15 | % | 16 | % | 15 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
| April 27, 2026 | Cadence Q1 2026 Financial Results | 4 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Gross Margin
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | |||||||||||||||||||||||||||||||
| GAAP Gross Margin | 86.5 | % | 85.6 | % | 86.4 | % | 86.9 | % | 85.4 | % | |||||||||||||||||||||||||
| Non-GAAP Gross Margin | 88.4 | % | 87.2 | % | 88.0 | % | 88.5 | % | 88.0 | % | |||||||||||||||||||||||||
Total Costs and Expenses
| (In Millions) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
| Total GAAP Costs and Expenses | $ | 881 | $ | 1,034 | $ | 913 | $ | 977 | $ | 1,043 | |||||||||||||||||||||||||
| Total Non-GAAP Costs and Expenses | $ | 724 | $ | 729 | $ | 701 | $ | 781 | $ | 815 | |||||||||||||||||||||||||
Operating Margin
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | |||||||||||||||||||||||||||||||
| GAAP Operating Margin | 29.1 | % | 19.0 | % | 31.8 | % | 32.2 | % | 29.3 | % | |||||||||||||||||||||||||
| Non-GAAP Operating Margin | 41.7 | % | 42.8 | % | 47.6 | % | 45.8 | % | 44.7 | % | |||||||||||||||||||||||||
Net Income Per Share
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | |||||||||||||||||||||||||||||||
| GAAP Net Income Per Share | $ | 1.00 | $ | 0.59 | $ | 1.05 | $ | 1.42 | $ | 1.23 | |||||||||||||||||||||||||
| Non-GAAP Net Income Per Share | $ | 1.57 | $ | 1.65 | $ | 1.93 | $ | 1.99 | $ | 1.96 | |||||||||||||||||||||||||
Total DSO
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | |||||||||||||||||||||||||||||||
| DSO | 44 | 51 | 55 | 64 | 67 | ||||||||||||||||||||||||||||||
Balance Sheet and Cash Review
Free Cash Flow
| (In Millions) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
| Net Cash from Operating Activities | $ | 487 | $ | 378 | $ | 311 | $ | 553 | $ | 356 | |||||||||||||||||||||||||
| Capital Expenditures | 23 | 44 | 34 | 41 | 49 | ||||||||||||||||||||||||||||||
| Free Cash Flow | $ | 464 | $ | 334 | $ | 277 | $ | 512 | $ | 307 | |||||||||||||||||||||||||
Cash and Cash Equivalents
| (In Millions) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 2,778 | $ | 2,823 | $ | 2,753 | $ | 3,001 | $ | 1,407 | |||||||||||||||||||||||||
•Approximately 21 percent of our cash and cash equivalents were in the U.S. at quarter-end.
Debt
| (In Millions) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
Debt (principal value) | $ | 2,500 | $ | 2,500 | $ | 2,500 | $ | 2,500 | $ | 2,925 | |||||||||||||||||||||||||
Share Repurchase
| (In Millions) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
| Share Repurchase | $ | 350 | $ | 175 | $ | 200 | $ | 200 | $ | 200 | |||||||||||||||||||||||||
| Number of Shares | 1.361 | 0.607 | 0.584 | 0.613 | 0.671 | ||||||||||||||||||||||||||||||
Employees
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | |||||||||||||||||||||||||||||||
| Headcount | 12,837 | 13,152 | 13,693 | 13,800 | 15,110 | ||||||||||||||||||||||||||||||
| April 27, 2026 | Cadence Q1 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, impact of Cadence's acquisition of Hexagon's design and engineering (“D&E”) business, 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 and armed conflicts around the world; (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 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 compliance, cooperation, audit and other 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 U.S. or foreign governmental authorities and any impact of the settlements on Cadence’s operations and business dealings in China, U.S. government contracting business and other customer relationships; 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.
| April 27, 2026 | Cadence Q1 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) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | ||||||||||||||||||||||||||||||
| GAAP total costs and expenses | $ | 881 | $ | 1,034 | $ | 913 | $ | 977 | $ | 1,043 | |||||||||||||||||||||||||
| Reconciling items to non-GAAP total costs and expenses | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (108) | (118) | (116) | (113) | (138) | ||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | (25) | (24) | (26) | (30) | (51) | ||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | (23) | (26) | (37) | (49) | (41) | ||||||||||||||||||||||||||||||
| Restructuring | — | — | (27) | (2) | — | ||||||||||||||||||||||||||||||
Non-qualified deferred compensation (expenses) credits | 2 | (8) | (6) | (2) | 3 | ||||||||||||||||||||||||||||||
Special charges | (2) | — | — | — | — | ||||||||||||||||||||||||||||||
Loss related to contingent liability* | — | (129) | — | — | — | ||||||||||||||||||||||||||||||
Non-GAAP total costs and expenses** | $ | 724 | $ | 729 | $ | 701 | $ | 781 | $ | 815 | |||||||||||||||||||||||||
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) | 2021 | 2022 | 2023 | 2024 | 2025 | 2026E | ||||||||||||||||||||||||||||||||||||||
| GAAP total costs and expenses | $ | 2,209 | $ | 2,488 | $ | 2,839 | $ | 3,291 | $ | 3,805 | $ | 4,421 | ||||||||||||||||||||||||||||||||
| 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) | (286) | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | (23) | (41) | (56) | (96) | (135) | (111) | ||||||||||||||||||||||||||||||||||||||
| Restructuring | 1 | — | (11) | (24) | (29) | — | ||||||||||||||||||||||||||||||||||||||
| Non-qualified deferred compensation (expenses) credits | (6) | 8 | (11) | (11) | (14) | 3 | ||||||||||||||||||||||||||||||||||||||
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 | $ | 3,458 | ||||||||||||||||||||||||||||||||
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. | ||||
| April 27, 2026 | Cadence Q1 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) | 2021 | 2022 | 2023 | 2024 | 2025 | 2026E | ||||||||||||||||||||||||||||||||||||||
| GAAP operating income | $ | 779 | $ | 1,074 | $ | 1,251 | $ | 1,351 | $ | 1,492 | $ | 1,754 | ||||||||||||||||||||||||||||||||
Reconciling items to non-GAAP operating income | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 210 | 270 | 326 | 391 | 455 | 569 | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 67 | 60 | 62 | 90 | 105 | 286 | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 23 | 41 | 56 | 96 | 135 | 111 | ||||||||||||||||||||||||||||||||||||||
| Restructuring | (1) | — | 11 | 24 | 29 | — | ||||||||||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses (credits) | 6 | (8) | 11 | 11 | 14 | (3) | ||||||||||||||||||||||||||||||||||||||
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 | $ | 2,717 | ||||||||||||||||||||||||||||||||
| 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 | $ | 2,148 | ||||||||||||||||||||||||||||||||
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. | ||||
| April 27, 2026 | Cadence Q1 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
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | |||||||||||||||||||||||||||||||
| GAAP gross margin as a percent of total revenue | 86.5% | 85.6% | 86.4% | 86.9% | 85.4% | ||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP gross margin as a percent of total revenue | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.4% | 0.4% | 0.3% | 0.3% | 0.4% | ||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 1.4% | 1.1% | 1.2% | 1.3% | 2.1% | ||||||||||||||||||||||||||||||
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% | 0.1% | 0.0% | 0.1% | ||||||||||||||||||||||||||||||
| Non-GAAP gross margin as a percent of total revenue* | 88.4% | 87.2% | 88.0% | 88.5% | 88.0% | ||||||||||||||||||||||||||||||
| * | 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. | ||||
| April 27, 2026 | Cadence Q1 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
Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026E | |||||||||||||||||||||||||||||||||||||||
| GAAP operating margin as a percent of total revenue | 29.1% | 19.0% | 31.8% | 32.2% | 29.3% | 28.5% - 29.5% | ||||||||||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP operating margin as a percent of total revenue | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 8.7% | 9.3% | 8.7% | 7.9% | 9.4% | 9% | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 2.0% | 1.8% | 1.9% | 2.1% | 3.4% | 5% | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 1.8% | 2.0% | 2.8% | 3.4% | 2.8% | 2% | ||||||||||||||||||||||||||||||||||||||
| Restructuring | 0.0% | 0.0% | 2.0% | 0.1% | 0.0% | 0% | ||||||||||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses (credits) | (0.1)% | 0.6% | 0.4% | 0.1% | (0.2)% | 0% | ||||||||||||||||||||||||||||||||||||||
Special charges | 0.2% | 0.0% | 0.0% | 0.0% | 0.0% | 0% | ||||||||||||||||||||||||||||||||||||||
Loss related to contingent liability* | 0.0% | 10.1% | 0.0% | 0.0% | 0.0% | 0% | ||||||||||||||||||||||||||||||||||||||
Non-GAAP operating margin as a percent of total revenue** | 41.7% | 42.8% | 47.6% | 45.8% | 44.7% | 44.5% - 45.5% | ||||||||||||||||||||||||||||||||||||||
| * | 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. | ||||
| April 27, 2026 | Cadence Q1 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
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026E | ||||||||||||||||||||||||||||||||||||||||||
| GAAP operating margin as a percent of total revenue | 26.1% | 30.1% | 30.6% | 29.1% | 28.2% | 27.5% - 28.5% | |||||||||||||||||||||||||||||||||||||||||
| 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% | 43.5% - 44.5% | |||||||||||||||||||||||||||||||||||||||||
| * | 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. | ||||
| April 27, 2026 | Cadence Q1 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) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026E | ||||||||||||||||||||||||||||||||||||||
| Diluted net income per share on a GAAP basis | $ | 1.00 | $ | 0.59 | $ | 1.05 | $ | 1.42 | $ | 1.23 | $1.07 - $1.13 | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.39 | 0.43 | 0.42 | 0.41 | 0.50 | 0.54 | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 0.09 | 0.09 | 0.10 | 0.11 | 0.19 | 0.29 | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.09 | 0.09 | 0.14 | 0.18 | 0.15 | 0.10 | ||||||||||||||||||||||||||||||||||||||
| Restructuring | — | — | 0.10 | 0.01 | — | — | ||||||||||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses (credits) | (0.01) | 0.03 | 0.02 | 0.01 | (0.01) | — | ||||||||||||||||||||||||||||||||||||||
Special charges | 0.01 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
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 | 0.01 | (0.17) | 0.03 | (0.18) | (0.04) | — | ||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments | (0.01) | 0.12 | — | (0.01) | (0.05) | 0.02 | ||||||||||||||||||||||||||||||||||||||
Diluted net income per share on a non-GAAP basis** | $ | 1.57 | $ | 1.65 | $ | 1.93 | $ | 1.99 | $ | 1.96 | $2.02 - $2.08 | |||||||||||||||||||||||||||||||||
| Shares used in calculation of diluted net income per share | 273,631 | 272,899 | 273,798 | 272,932 | 273,725 | |||||||||||||||||||||||||||||||||||||||
| * | 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. | ||||
| April 27, 2026 | Cadence Q1 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) | 2021 | 2022 | 2023 | 2024 | 2025 | 2026E | ||||||||||||||||||||||||||||||||||||||
| Diluted net income per share on a GAAP basis | $ | 2.50 | $ | 3.09 | $ | 3.82 | $ | 3.85 | $ | 4.06 | $4.39 - $4.49 | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.75 | 0.98 | 1.19 | 1.43 | 1.67 | 2.06 | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 0.24 | 0.22 | 0.23 | 0.33 | 0.38 | 1.04 | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.08 | 0.15 | 0.21 | 0.35 | 0.49 | 0.40 | ||||||||||||||||||||||||||||||||||||||
| Restructuring | — | — | 0.04 | 0.09 | 0.11 | — | ||||||||||||||||||||||||||||||||||||||
| Non-qualified deferred compensation expenses (credits) | 0.02 | (0.03) | 0.04 | 0.04 | 0.05 | (0.01) | ||||||||||||||||||||||||||||||||||||||
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) | (0.04) | ||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments | (0.37) | (0.19) | (0.21) | 0.06 | 0.10 | 0.02 | ||||||||||||||||||||||||||||||||||||||
Diluted net income per share on a non-GAAP basis*** | $ | 3.29 | $ | 4.27 | $ | 5.15 | $ | 5.97 | $ | 7.14 | $7.85 - $7.95 | |||||||||||||||||||||||||||||||||
| Shares used in calculation of diluted net income per share | 278,858 | 275,011 | 272,748 | 273,833 | 273,312 | 275 - 277M | ||||||||||||||||||||||||||||||||||||||
| * | 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. | ||||
| April 27, 2026 | Cadence Q1 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 | $(101) - $(81) | |||||||||||||||||||||
| 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) | (11) | |||||||||||||||||||||||
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. | ||||
| April 27, 2026 | Cadence Q1 2026 Financial Results | 14 | ||||||
FAQ
How did Cadence (CDNS) perform in Q1 2026?
Cadence delivered strong Q1 2026 results, with revenue of $1.474 billion versus $1.242 billion a year earlier. GAAP diluted EPS was $1.23 and non-GAAP diluted EPS was $1.96, supported by a 44.7% non-GAAP operating margin and robust AI-related demand.
What 2026 financial outlook did Cadence (CDNS) provide?
Cadence now expects 2026 revenue between $6.125 billion and $6.225 billion, implying about 16–18% growth. It guides to GAAP EPS of $4.39–$4.49 and non-GAAP EPS of $7.85–$7.95, with non-GAAP operating margin projected at 43.5–44.5% for the year.
How large is Cadence’s backlog and recurring revenue mix in Q1 2026?
Cadence reported a record quarter-end backlog of $8.0 billion, with $4.0 billion expected to be recognized as revenue within 12 months. In Q1 2026, recurring revenue represented 77% of total revenue, with up-front revenue accounting for the remaining 23%.
What role did AI and new products play in Cadence’s Q1 2026 results?
Management highlighted accelerating AI demand and launched AgentStack and several AI Super Agents, including ChipStack, ViraStack and InnoStack. These offerings support the full chip-to-system design flow and contributed to strong growth across core EDA, IP and system design businesses.
What guidance did Cadence give for Q2 2026 revenue and EPS?
For Q2 2026, Cadence projects revenue of $1.555–$1.595 billion, GAAP EPS of $1.07–$1.13 and non-GAAP EPS of $2.02–$2.08. It also expects a non-GAAP operating margin between 44.5% and 45.5%, reflecting continued operating discipline.