Cadence raises 2026 revenue growth outlook to 21%
The existing repurchase program has no expiration date and can be modified, suspended or terminated at any time without prior notice.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
8-K
Rhea-AI Filing Summary
Cadence Design Systems (CDNS) reported third-quarter 2026 revenue of $1.633 billion, up 22% year over year. GAAP diluted EPS was $1.05, unchanged from Q3 2025, while non-GAAP diluted EPS was $2.11 versus $1.93. GAAP operating margin was 26.2%, compared with 31.8%, and non-GAAP operating margin was 44.1%, compared with 47.6%. Quarter-end backlog was $8.2 billion; $4.2 billion of revenue from remaining performance obligations was expected to be recognized in the next 12 months.
Cadence raised its fiscal 2026 revenue growth outlook to 21%, with revenue of $6.387 billion to $6.417 billion and non-GAAP diluted EPS of $8.37 to $8.43. Q3 operating cash flow was $424 million, versus $311 million in Q3 2025, and Cadence used $400 million to repurchase shares. The board approved repurchases of up to an additional $2.5 billion under the existing program; future timing and amounts are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. Permitted methods include open-market and privately negotiated purchases.
4 points · 1 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Major point. Forward-looking: it has not happened yet and may not happen.Fiscal 2026 revenue growth outlook rose to 21%.
- Moderate pointQ3 revenue rose 22% year over year to $1.633 billion.
- Moderate pointNon-GAAP diluted EPS increased to $2.11 from $1.93 year over year.
- Moderate pointOperating cash flow reached $424 million versus $311 million a year earlier.
Negative
- Moderate pointQ3 operating margins fell to 26.2% GAAP and 44.1% non-GAAP.
Filing Explained
The CFO commentary says Cadence expects to use about
8-K Event Classification
3 items: 2.02, 8.01, 9.01
3 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 8.01
Other Events
Other
Voluntary disclosure of events the company deems important to shareholders but not covered by other items.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Q3 revenue: $1.633 billion
GAAP operating margin: 26.2%
Non-GAAP operating margin: 44.1%
+5 more
8 metrics
Q3 revenue
$1.633 billion
Third quarter 2026; $1.339 billion in Q3 2025
GAAP operating margin
26.2%
Third quarter 2026; 31.8% in Q3 2025
Non-GAAP operating margin
44.1%
Third quarter 2026; 47.6% in Q3 2025
GAAP diluted EPS
$1.05
Third quarter 2026; $1.05 in Q3 2025
Non-GAAP diluted EPS
$2.11
Third quarter 2026; $1.93 in Q3 2025
Quarter-end backlog
$8.2 billion
Third quarter 2026
Fiscal 2026 revenue outlook
$6.387 billion to $6.417 billion
Fiscal 2026 outlook
Additional share repurchase authorization
Up to an additional $2.5 billion
Approved under the existing program
Key Terms
remaining performance obligations, Non-GAAP operating margin, Rule 10b5-1, accelerated share repurchase transactions
4 terms
remaining performance obligations financial
"revenue expected to be recognized in the next 12 months from remaining performance obligations"
Remaining performance obligations are the work a company still needs to complete for its customers, like finishing a service or delivering a product. It’s important because it shows how much future income the company has coming in from current agreements, giving a clearer picture of its ongoing business.
Non-GAAP operating margin financial
"Non-GAAP operating margin as a percent of total revenue"
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.
Rule 10b5-1 regulatory
"trading plans intended to comply with Rule 10b5-1"
Rule 10b5-1 is a regulation that allows company insiders to buy or sell their shares at predetermined times, even if they have access to non-public information. It acts like setting a schedule in advance for transactions, helping prevent accusations of unfair trading. This rule provides a way for insiders to plan trades transparently, giving investors confidence that these transactions are not based on hidden information.
Earnings Snapshot
Revenue: $1.633 billion · Guidance included
Third quarter ended September 30, 2026
Revenue
$1.633 billion
22% year-over-year growth from $1.339 billion in Q3 2025
GAAP operating margin
26.2%
Compared with 31.8% in Q3 2025
Non-GAAP operating margin
44.1%
Compared with 47.6% in Q3 2025
GAAP diluted EPS
$1.05
Unchanged from Q3 2025
Non-GAAP diluted EPS
$2.11
Compared with $1.93 in Q3 2025
Guidance
Fiscal 2026: revenue of $6.387 billion to $6.417 billion and 21% revenue growth; GAAP operating margin of 28.2% to 29.2%; non-GAAP operating margin of 44.2% to 45.2%; GAAP diluted EPS of $4.84 to $4.90; non-GAAP diluted EPS of $8.37 to $8.43.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did CDNS report in Q3 2026?
Cadence reported $1.633 billion in revenue for Q3 2026, up 22% year over year from $1.339 billion in Q3 2025. GAAP diluted EPS was $1.05, unchanged from a year earlier.
What is CDNS's fiscal 2026 revenue and EPS outlook?
For fiscal 2026, Cadence expects revenue of $6.387 billion to $6.417 billion, 21% growth, and non-GAAP diluted EPS of $8.37 to $8.43. It also expects GAAP operating margin of 28.2% to 29.2% and non-GAAP operating margin of 44.2% to 45.2%.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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): October 23, 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 October 26, 2026 Cadence Design Systems, Inc. (“Cadence”) issued a press release announcing its financial results for the quarter ended September 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 September 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 Item 2.02 of this Current Report, including Exhibits 99.1 and 99.2 attached hereto, 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 8.01. Other Events.
On October 23, 2026, the board of directors of Cadence approved the repurchase of up to an additional $2.5 billion of the Company’s common stock under its existing share repurchase program. The Company may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including accelerated share repurchase transactions or other structured repurchase transactions, block trades or pursuant to trading plans intended to comply with Rule 10b5-1 of the U.S. Securities Exchange Act of 1934, as amended. The actual timing and amount of future repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. The share repurchase program does not have an expiration date and may be modified, suspended or terminated by the Company at any time without prior notice.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
99.01 | Press Release issued by Cadence Design Systems, Inc. on October 26, 2026. | |||||||
99.02 | CFO Commentary on Results of Quarter Ended September 30, 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: October 26, 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 Third Quarter 2026 Financial Results
Raising 2026 Revenue Growth Outlook to 21% and Non-GAAP EPS to $8.40
Q3 Recurring Revenue Up 18% YoY, Record Backlog of $8.2 Billion
SAN JOSE, Calif. — October 26, 2026 — Cadence (Nasdaq: CDNS) today announced results for the third quarter of 2026.
Third Quarter 2026 Financial Results
•Revenue of $1.633 billion, compared to revenue of $1.339 billion in Q3 2025
•GAAP operating margin of 26.2%, compared to 31.8% in Q3 2025
•Non-GAAP operating margin of 44.1%, compared to 47.6% in Q3 2025
•GAAP diluted net income per share of $1.05, compared to $1.05 in Q3 2025
•Non-GAAP diluted net income per share of $2.11, compared to $1.93 in Q3 2025
•Cadence used $400 million to repurchase Cadence shares. Underscoring Cadence's continued commitment to returning capital to shareholders, Cadence's Board of Directors has authorized an additional $2.5 billion for Cadence's share repurchase program.
•Quarter-end backlog was $8.2 billion and revenue expected to be recognized in the next 12 months from remaining performance obligations was $4.2 billion.
“Cadence delivered an outstanding third quarter. With broad-based business momentum, expanding technology leadership and a record backlog, we are raising our 2026 revenue outlook to 21% year-over-year growth,” said Anirudh Devgan, president and chief executive officer. “With the launch of Maestro, our portfolio of domain specialized AI models for chip and system design, and the accelerating deployment of our AI Super Agents, Cadence is exceptionally well positioned to capitalize on the transformational Agentic AI opportunity.”
“Q3 revenue grew 22% year-over-year, with strong double-digit growth across all product categories, driven by growing momentum from AI-driven designs,” said John Wall, senior vice president and chief financial officer. “With record backlog of $8.2 billion and continued strength in recurring revenue, we are poised to deliver a strong 2026.”
CFO Commentary
Commentary on the third quarter of 2026 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
For fiscal year 2026, the company expects:
•Revenue in the range of $6.387 billion to $6.417 billion
•GAAP operating margin in the range of 28.2% to 29.2%
•Non-GAAP operating margin in the range of 44.2% to 45.2%
•GAAP diluted net income per share in the range of $4.84 to $4.90
•Non-GAAP diluted net income per share in the range of $8.37 to $8.43
The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate is subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company’s geographic earnings mix, or other changes to the company’s strategy or business operations. The company expects to use the current normalized non-GAAP tax rate through fiscal 2026 but will re-evaluate this rate periodically for significant items that may materially affect its projections.
Reconciliations of the financial results and business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, are included in this press release. Revenue growth outlook is based on the midpoint of the range.
Business Highlights
•Launched Maestro, a portfolio of domain-specialized AI models purpose-built for chip and system design, delivering initial workflow results of up to 30% higher quality and 5X greater token efficiency versus general-purpose foundation models, with several customer deployments underway
•Cadence AI Super Agents continued to gain momentum with more than 100 active customer engagements, delivering significant productivity and design improvements across digital, analog and custom, and system design workflows
•Core EDA revenue grew 20% year-over-year, driven by broad-based strength across the portfolio, including 16 new digital and signoff full-flow wins and growing adoption among memory and hyperscaler customers
•Hardware delivered another record quarter, fueled by meaningful expansions with marquee customers and strong growth in Cadence's hardware cloud offering
•IP revenue increased 24% year-over-year, driven by strong demand for Cadence's differentiated Star IP portfolio across interface, memory and foundation IP, and continued engagement with leading hyperscalers, semiconductor companies and foundries
•System Design and Analysis revenue grew 30% year-over-year, driven by continued strength in Cadence’s PCB and advanced packaging solutions, strong adoption of the Millennium platform and growing momentum across Cadence's physical SDA portfolio
Audio Webcast Scheduled
Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the third quarter 2026 financial results audio webcast today, October 26, 2026, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting October 26, 2026 at 5 p.m. (Pacific) and ending December 17, 2026 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
About Cadence
Cadence is a market leader in AI and digital twins, pioneering the application of computational software to accelerate innovation in the engineering design of silicon to systems. Our design solutions, based on Cadence’s Intelligent System Design™ strategy, are essential for the world’s leading semiconductor and systems companies to build their next-generation products from chips to full electromechanical systems that serve a wide range of markets, including hyperscale computing, mobile communications, automotive, aerospace, industrial, life sciences and robotics. In 2025, Cadence was recognized by Fortune as one of the world’s top 100 best companies to work for. Cadence solutions offer limitless opportunities—learn more at www.cadence.com.
© 2026 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
This press release and related webcast contain forward-looking statements, including Cadence’s outlook on future operating results, financial condition, strategic objectives, capital allocation and share repurchase program, business model and prospects, technology and product developments and performance, customer adoption and demand, strategic relationships, backlog, industry trends and Cadence's ability to capitalize on them, market dynamics and market growth, tax rates, legislative and regulatory developments and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. 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 acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (ix) harm caused by compromises in cybersecurity and cybersecurity attacks; (x) capital expenditure requirements and events that affect cash flow, liquidity or reserves, or estimates Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (xi) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject, including Cadence’s ongoing obligations under its July 2025 settlement agreements with the U.S. Department of Justice (“DOJ”) and Bureau of Industry and Security (“BIS”), any further inquiries or adverse actions by the DOJ, BIS or other foreign governmental authorities and any impact of the settlements on Cadence’s operations and business dealings; and (xii) Cadence’s ability to successfully meet any environmental, social and governance targets and practices. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. Cadence's share repurchase program may be modified, suspended or terminated without prior notice.
For a detailed discussion of these and other cautionary statements related to Cadence and its business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this press release are based on management's expectations as of the date of this press release and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
GAAP to Non-GAAP Reconciliation
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.
To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, income or expenses related to foreign currency forward exchange contract and settlement associated with an acquisition, investments, divestitures and Cadence’s non-qualified deferred compensation plan, restructuring, loss related to contingent liability and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.
Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
| Operating Margin Reconciliation | Three Months Ended | |||||||||||||
| September 30, 2026 | September 30, 2025 | |||||||||||||
| (unaudited) | ||||||||||||||
| GAAP operating margin as a percent of total revenue | 26.2% | 31.8% | ||||||||||||
| Reconciling items to non-GAAP operating margin as a percent of total revenue: | ||||||||||||||
| Stock-based compensation expense | 8.9% | 8.7% | ||||||||||||
| Amortization of acquired intangibles | 4.9% | 1.9% | ||||||||||||
| Acquisition and integration-related costs | 1.5% | 2.8% | ||||||||||||
| Restructuring | 2.6% | 2.0% | ||||||||||||
| Non-qualified deferred compensation expenses (credits) | 0.0% | 0.4% | ||||||||||||
| Non-GAAP operating margin as a percent of total revenue | 44.1% | 47.6% | ||||||||||||
| Net Income Reconciliation | Three Months Ended | |||||||||||||
| September 30, 2026 | September 30, 2025 | |||||||||||||
| (in thousands) | (unaudited) | |||||||||||||
| Net income on a GAAP basis | $ | 289,747 | $ | 287,122 | ||||||||||
| Stock-based compensation expense | 144,763 | 116,073 | ||||||||||||
| Amortization of acquired intangibles | 79,870 | 25,984 | ||||||||||||
| Acquisition and integration-related costs | 25,031 | 37,295 | ||||||||||||
| Restructuring | 42,159 | 27,394 | ||||||||||||
| Non-qualified deferred compensation expenses (credits) | (42) | 5,760 | ||||||||||||
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition | — | 18,561 | ||||||||||||
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets | (2,886) | 8,741 | ||||||||||||
| Income tax effect of non-GAAP adjustments | 3,545 | 1,283 | ||||||||||||
| Net income on a non-GAAP basis | $ | 582,187 | $ | 528,213 | ||||||||||
| Diluted Net Income Per Share Reconciliation | Three Months Ended | |||||||||||||
| September 30, 2026 | September 30, 2025 | |||||||||||||
| (in thousands, except per share data) | (unaudited) | |||||||||||||
| Diluted net income per share on a GAAP basis | $ | 1.05 | $ | 1.05 | ||||||||||
| Stock-based compensation expense | 0.53 | 0.42 | ||||||||||||
| Amortization of acquired intangibles | 0.29 | 0.10 | ||||||||||||
| Acquisition and integration-related costs | 0.09 | 0.14 | ||||||||||||
| Restructuring | 0.15 | 0.10 | ||||||||||||
| Non-qualified deferred compensation expenses (credits) | — | 0.02 | ||||||||||||
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition | — | 0.07 | ||||||||||||
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets | (0.01) | 0.03 | ||||||||||||
| Income tax effect of non-GAAP adjustments | 0.01 | — | ||||||||||||
| Diluted net income per share on a non-GAAP basis | $ | 2.11 | $ | 1.93 | ||||||||||
| Shares used in calculation of diluted net income per share | 275,278 | 273,798 | ||||||||||||
For more information, please contact:
Cadence Investor Relations
408-944-7100
investor_relations@cadence.com
Cadence Newsroom
408-944-7039
newsroom@cadence.com
Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
September 30, 2026 and December 31, 2025
(In thousands)
(Unaudited)
| September 30, 2026 | December 31, 2025 | |||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 1,452,020 | $ | 3,001,317 | ||||||||||
| Receivables, net | 1,110,591 | 944,939 | ||||||||||||
| Inventories | 448,824 | 303,545 | ||||||||||||
| Prepaid expenses and other | 342,452 | 419,872 | ||||||||||||
| Total current assets | 3,353,887 | 4,669,673 | ||||||||||||
| Property, plant and equipment, net | 603,189 | 517,004 | ||||||||||||
| Goodwill | 4,926,955 | 2,749,143 | ||||||||||||
| Acquired intangibles, net | 1,792,006 | 718,223 | ||||||||||||
| Deferred taxes | 789,077 | 917,733 | ||||||||||||
| Other assets | 759,660 | 581,372 | ||||||||||||
| Total assets | $ | 12,224,774 | $ | 10,153,148 | ||||||||||
| Current liabilities: | ||||||||||||||
| Revolving credit facility | $ | 150,000 | $ | — | ||||||||||
Current portion of long-term debt | 498,809 | — | ||||||||||||
| Accounts payable and accrued liabilities | 805,365 | 856,856 | ||||||||||||
| Current portion of deferred revenue | 1,012,305 | 778,435 | ||||||||||||
| Total current liabilities | 2,466,479 | 1,635,291 | ||||||||||||
| Long-term liabilities: | ||||||||||||||
| Long-term portion of deferred revenue | 138,228 | 155,997 | ||||||||||||
| Long-term debt | 1,984,433 | 2,480,150 | ||||||||||||
| Other long-term liabilities | 760,383 | 407,529 | ||||||||||||
| Total long-term liabilities | 2,883,044 | 3,043,676 | ||||||||||||
| Stockholders’ equity | 6,875,251 | 5,474,181 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 12,224,774 | $ | 10,153,148 | ||||||||||
Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Nine Months Ended September 30, 2026 and September 30, 2025
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||
| Product and maintenance | $ | 1,487,311 | $ | 1,207,703 | $ | 4,266,901 | $ | 3,489,063 | ||||||||||||||||||
| Services | 146,000 | 131,135 | 425,081 | 367,582 | ||||||||||||||||||||||
| Total revenue | 1,633,311 | 1,338,838 | 4,691,982 | 3,856,645 | ||||||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Cost of product and maintenance | 173,867 | 118,702 | 502,362 | 374,672 | ||||||||||||||||||||||
| Cost of services | 61,753 | 63,493 | 187,123 | 158,823 | ||||||||||||||||||||||
| Marketing and sales | 242,476 | 192,560 | 694,995 | 595,855 | ||||||||||||||||||||||
| Research and development | 537,541 | 423,031 | 1,577,251 | 1,304,190 | ||||||||||||||||||||||
| General and administrative | 113,020 | 78,035 | 289,785 | 210,162 | ||||||||||||||||||||||
| Amortization of acquired intangibles | 33,779 | 10,233 | 88,304 | 28,359 | ||||||||||||||||||||||
Loss related to contingent liability | — | — | — | 128,545 | ||||||||||||||||||||||
| Restructuring | 42,159 | 27,394 | 41,802 | 27,332 | ||||||||||||||||||||||
| Total costs and expenses | 1,204,595 | 913,448 | 3,381,622 | 2,827,938 | ||||||||||||||||||||||
| Income from operations | 428,716 | 425,390 | 1,310,360 | 1,028,707 | ||||||||||||||||||||||
| Interest expense | (30,375) | (29,035) | (97,124) | (87,101) | ||||||||||||||||||||||
| Other income (expense), net | 9,994 | (3,572) | 133,436 | 87,476 | ||||||||||||||||||||||
Income before provision for income taxes | 408,335 | 392,783 | 1,346,672 | 1,029,082 | ||||||||||||||||||||||
Provision for income taxes | 118,588 | 105,661 | 354,189 | 308,330 | ||||||||||||||||||||||
| Net income | $ | 289,747 | $ | 287,122 | $ | 992,483 | $ | 720,752 | ||||||||||||||||||
| Net income per share - basic | $ | 1.06 | $ | 1.06 | $ | 3.63 | $ | 2.65 | ||||||||||||||||||
| Net income per share - diluted | $ | 1.05 | $ | 1.05 | $ | 3.61 | $ | 2.64 | ||||||||||||||||||
| Weighted average common shares outstanding - basic | 273,748 | 271,152 | 273,260 | 271,471 | ||||||||||||||||||||||
| Weighted average common shares outstanding - diluted | 275,278 | 273,798 | 275,061 | 273,440 | ||||||||||||||||||||||
Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2026 and September 30, 2025
(In thousands)
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||
Cash and cash equivalents at beginning of period | $ | 3,001,317 | $ | 2,644,030 | |||||||
| Cash flows from operating activities: | |||||||||||
| Net income | 992,483 | 720,752 | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 320,159 | 163,269 | |||||||||
| Stock-based compensation | 429,836 | 342,011 | |||||||||
| Gain on divestitures and investments, net | (88,611) | (22,135) | |||||||||
| Deferred income taxes | 118,684 | 89,756 | |||||||||
| ROU asset amortization and change in operating lease liabilities | (2,105) | 1,702 | |||||||||
| Other non-cash items | 7,266 | 4,713 | |||||||||
| Changes in operating assets and liabilities, net of effect of acquired businesses: | |||||||||||
| Receivables | (84,285) | (90,666) | |||||||||
| Inventories | (172,927) | (60,858) | |||||||||
| Prepaid expenses and other | 39,812 | (14,834) | |||||||||
| Other assets | (38,982) | 5,811 | |||||||||
| Accounts payable and accrued liabilities | (263,024) | (23,237) | |||||||||
| Deferred revenue | 148,835 | 44,456 | |||||||||
| Other long-term liabilities | 7,295 | 14,546 | |||||||||
| Net cash provided by operating activities | 1,414,436 | 1,175,286 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of investments | (98,481) | (35,182) | |||||||||
| Proceeds from the sale and maturity of investments | 166,529 | 3,493 | |||||||||
Proceeds from the sale of IP and other assets | — | 11,500 | |||||||||
| Purchases of property, plant and equipment | (163,254) | (100,830) | |||||||||
| Purchases of intangible assets | (6,975) | — | |||||||||
| Cash paid in business combinations, net of cash acquired | (2,143,429) | (250,695) | |||||||||
| Net cash used for investing activities | (2,245,610) | (371,714) | |||||||||
| Cash flows from financing activities: | |||||||||||
Proceeds from revolving credit facility | 875,000 | — | |||||||||
Payments on revolving credit facility | (725,000) | — | |||||||||
| Proceeds from issuance of common stock | 139,073 | 138,069 | |||||||||
| Stock received for payment of employee taxes on vesting of restricted stock | (195,608) | (148,130) | |||||||||
| Payments for repurchases of common stock | (800,025) | (725,025) | |||||||||
| Net cash used for financing activities | (706,560) | (735,086) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (11,563) | 40,730 | |||||||||
Increase (decrease) in cash and cash equivalents | (1,549,297) | 109,216 | |||||||||
Cash and cash equivalents at end of period | $ | 1,452,020 | $ | 2,753,246 | |||||||
Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
| 2025 | 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
| GEOGRAPHY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | |||||||||||||||||||||||||||||||||||||||
| Americas | 48 | % | 49 | % | 43 | % | 47 | % | 47 | % | 45 | % | 43 | % | 43 | % | |||||||||||||||||||||||||||||||
| China | 11 | % | 9 | % | 18 | % | 12 | % | 13 | % | 13 | % | 15 | % | 16 | % | |||||||||||||||||||||||||||||||
| Other Asia | 19 | % | 19 | % | 18 | % | 20 | % | 19 | % | 20 | % | 20 | % | 19 | % | |||||||||||||||||||||||||||||||
| Europe, Middle East and Africa | 16 | % | 16 | % | 14 | % | 14 | % | 15 | % | 16 | % | 15 | % | 15 | % | |||||||||||||||||||||||||||||||
| Japan | 6 | % | 7 | % | 7 | % | 7 | % | 6 | % | 6 | % | 7 | % | 7 | % | |||||||||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||||||||
Revenue Mix by Product Category (% of Total Revenue)
| 2025 | 2026 | ||||||||||||||||||||||||||||||||||||||||||||||
| PRODUCT CATEGORY | Q1 | Q2 | Q3 | Q4 | Year | Q1 | Q2 | Q3 | |||||||||||||||||||||||||||||||||||||||
Core EDA | 71 | % | 71 | % | 71 | % | 69 | % | 70 | % | 71 | % | 68 | % | 69 | % | |||||||||||||||||||||||||||||||
Semiconductor IP | 14 | % | 13 | % | 14 | % | 15 | % | 14 | % | 14 | % | 15 | % | 15 | % | |||||||||||||||||||||||||||||||
| System Design and Analysis | 15 | % | 16 | % | 15 | % | 16 | % | 16 | % | 15 | % | 17 | % | 16 | % | |||||||||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||||||||
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of October 26, 2026
(Unaudited)
| Three Months Ending December 31, 2026 | Year Ending December 31, 2026 | |||||||||||||
| Forecast | Forecast | |||||||||||||
| GAAP operating margin as a percent of total revenue | 30% - 31% | 28.2% - 29.2% | ||||||||||||
| Reconciling items to non-GAAP operating margin as a percent of total revenue: | ||||||||||||||
| Stock-based compensation expense | 8% | 9% | ||||||||||||
| Amortization of acquired intangibles | 5% | 4% | ||||||||||||
| Acquisition and integration-related costs | 1% | 2% | ||||||||||||
| Restructuring | 0% | 1% | ||||||||||||
| Non-GAAP operating margin as a percent of total revenue† | 44% - 45% | 44.2% - 45.2% | ||||||||||||
| † | 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. | ||||
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of October 26, 2026
(Unaudited)
| Three Months Ending December 31, 2026 | Year Ending December 31, 2026 | |||||||||||||
| Forecast | Forecast | |||||||||||||
| Diluted net income per share on a GAAP basis | $1.23 to $1.29 | $4.84 to $4.90 | ||||||||||||
| Stock-based compensation expense | 0.51 | 2.07 | ||||||||||||
| Amortization of acquired intangibles | 0.29 | 1.05 | ||||||||||||
| Acquisition and integration-related costs | 0.08 | 0.45 | ||||||||||||
| Restructuring | — | 0.15 | ||||||||||||
| 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 | — | (0.35) | ||||||||||||
| Income tax effect of non-GAAP adjustments | 0.08 | 0.14 | ||||||||||||
| Diluted net income per share on a non-GAAP basis† | $2.19 to $2.25 | $8.37 to $8.43 | ||||||||||||
| † | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of October 26, 2026
(Unaudited)
| Three Months Ending December 31, 2026 | Year Ending December 31, 2026 | |||||||||||||
| ($ in millions) | Forecast | Forecast | ||||||||||||
| Net income on a GAAP basis | $339 to $355 | $1,331 to $1,347 | ||||||||||||
| Stock-based compensation expense | 139 | 569 | ||||||||||||
| Amortization of acquired intangibles | 78 | 289 | ||||||||||||
| Acquisition and integration-related costs | 23 | 122 | ||||||||||||
| Restructuring | — | 42 | ||||||||||||
| 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 | — | (98) | ||||||||||||
| Income tax effect of non-GAAP adjustments | 22 | 40 | ||||||||||||
| Net income on a non-GAAP basis† | $601 to $617 | $2,301 to $2,317 | ||||||||||||
| † | The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. | ||||
Exhibit 99.02
| CADENCE REPORTS THIRD QUARTER 2026 | ||||||||
| CADENCE DESIGN SYSTEMS, INC. | ||||||||
CFO COMMENTARY | ||||||||
Key Takeaways • Exceeded Q3 guidance for revenue, non-GAAP operating margin, and non-GAAP EPS • Raising 2026 revenue growth outlook for the third time this year to ~21% • Achieved new record backlog of $8.2 billion | Q4 2026 Outlook • Revenue: $1.695 billion - $1.725 billion • GAAP operating margin: 30% - 31% • Non-GAAP operating margin: 44% - 45% • GAAP EPS: $1.23 - $1.29 • Non-GAAP EPS: $2.19 - $2.25 • Expect to use approximately $400 million to repurchase Cadence shares in Q4 | Q3 2026 KEY METRICS | ||||||
• Revenue: $1.633 billion • GAAP operating margin: 26.2% • Non-GAAP operating margin: 44.1% • GAAP EPS: $1.05 • Non-GAAP EPS: $2.11 • Operating cash flow: $424 million | ||||||||
FY 2026 Outlook • Revenue: $6.387 billion - $6.417 billion • GAAP operating margin: 28.2% - 29.2% • Non-GAAP operating margin: 44.2% - 45.2% • GAAP EPS: $4.84 - $4.90 • Non-GAAP EPS: $8.37 - $8.43 • Operating cash flow: ~$2.0 billion • Expect to use more than 50% of free cash flow to repurchase Cadence shares for the year | Financial Results Webcast | |||||||
| Our Q3 2026 financial results webcast will begin October 26, 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 October 26, 2026 until 5:00 p.m. (Pacific) on December 17, 2026. | ||||||||
| October 26, 2026 | Cadence Q3 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 | $6,387- $6,417 | |||||||||||||||||||||||||||||||||
| Revenue growth | 11% | 19% | 15% | 13% | 14% | 21% - 21% | ||||||||||||||||||||||||||||||||||||||
3-year CAGR* | 12% | 15% | 15% | 16% | 14% | ~16% | ||||||||||||||||||||||||||||||||||||||
| GAAP operating expenses | $ | 2,209 | $ | 2,488 | $ | 2,839 | $ | 3,291 | $ | 3,805 | $4,571 | |||||||||||||||||||||||||||||||||
| GAAP operating expense growth | 8% | 13% | 14% | 16% | 16% | ~20% | ||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating expenses | $ | 1,877 | $ | 2,125 | $ | 2,373 | $ | 2,667 | $ | 2,935 | $3,540 | |||||||||||||||||||||||||||||||||
| Non-GAAP operating expense growth | 8% | 13% | 12% | 12% | 10% | ~21% | ||||||||||||||||||||||||||||||||||||||
GAAP operating margin | 26.1% | 30.1% | 30.6% | 29.1% | 28.2% | 28.2% - 29.2% | ||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin | 37.2% | 40.3% | 42.0% | 42.5% | 44.6% | 44.2% - 45.2% | ||||||||||||||||||||||||||||||||||||||
Rule of 40 Metric** | 48.6% | 59.5% | 56.8% | 56.0% | 58.7% | ~66% | ||||||||||||||||||||||||||||||||||||||
| GAAP earnings per share | $ | 2.50 | $ | 3.09 | $ | 3.82 | $ | 3.85 | $ | 4.06 | $4.84 - $4.90 | |||||||||||||||||||||||||||||||||
| Non-GAAP earning per share | $ | 3.29 | $ | 4.27 | $ | 5.15 | $ | 5.97 | $ | 7.14 | $8.37 - $8.43 | |||||||||||||||||||||||||||||||||
Non-GAAP EPS growth* | 18% | 30% | 21% | 16% | 20% | 18 | % | |||||||||||||||||||||||||||||||||||||
3-year Non-GAAP EPS CAGR* | 21% | 25% | 23% | 22% | 19% | 18 | % | |||||||||||||||||||||||||||||||||||||
Weighted average diluted shares outstanding | 278.9 | 275.0 | 272.7 | 273.8 | 273.3 | 274 - 276 | ||||||||||||||||||||||||||||||||||||||
| Cash flow from operations | 1,101 | 1,242 | 1,349 | 1,261 | 1,729 | ~$2,000 | ||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 65 | 123 | 102 | 143 | 142 | ~$240 | ||||||||||||||||||||||||||||||||||||||
* At midpoint of outlook.
** Rule of 40 Metric = Revenue growth % + Non-GAAP operating margin %.
Profitability Trends
| (In Millions) | 2021 | 2022 | 2023 | 2024 | 2025 | 2026E* | ||||||||||||||||||||||||||||||||||||||
| GAAP operating margin | 26.1% | 30.1% | 30.6% | 29.1% | 28.2% | 28.7% | ||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin | 37.2% | 40.3% | 42.0% | 42.5% | 44.6% | 44.7% | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | (7.0)% | (7.6)% | (8.0)% | (8.4)% | (8.6)% | (8.9)% | ||||||||||||||||||||||||||||||||||||||
Non-GAAP operating margin adjusted for stock-based compensation | 30.2% | 32.7% | 34.0% | 34.1% | 36.0% | 35.8% | ||||||||||||||||||||||||||||||||||||||
| GAAP operating income | $ | 779 | $ | 1,074 | $ | 1,251 | $ | 1,351 | $ | 1,492 | $ | 1,831 | ||||||||||||||||||||||||||||||||
| Non-GAAP operating income | $ | 1,111 | $ | 1,436 | $ | 1,717 | $ | 1,974 | $ | 2,361 | $ | 2,862 | ||||||||||||||||||||||||||||||||
| Non-GAAP operating income adjusted for stock-based compensation | $ | 901 | $ | 1,166 | $ | 1,391 | $ | 1,583 | $ | 1,906 | $ | 2,293 | ||||||||||||||||||||||||||||||||
* At midpoint of outlook.
| October 26, 2026 | Cadence Q3 2026 Financial Results | 2 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Fourth Quarter 2026 Financial Outlook
| Q4 2025 | Q3 2026 | Q4 2026E | |||||||||||||||||||||
| Total Revenue ($ Millions) | $ | 1,440 | $ | 1,633 | $1,695 - $1,725 | ||||||||||||||||||
| Q/Q Growth | 3% | 4% - 6% | |||||||||||||||||||||
| Y/Y Growth | 22% | 18% - 20% | |||||||||||||||||||||
| GAAP Operating Margin | 32.2% | 26.2% | 30% - 31% | ||||||||||||||||||||
| Non-GAAP Operating Margin | 45.8% | 44.1% | 44% - 45% | ||||||||||||||||||||
| GAAP EPS | $ | 1.42 | $ | 1.05 | $1.23 - $1.29 | ||||||||||||||||||
| Non-GAAP EPS | $ | 1.99 | $ | 2.11 | $2.19 - $2.25 | ||||||||||||||||||
Fiscal Year 2026 Financial Outlook
| Previous | Current | ||||||||||||||||||||||
FY 2025 | FY 2026E | FY 2026E | |||||||||||||||||||||
| Recurring Revenue | 80% | ~80% | ~80% | ||||||||||||||||||||
| Total Revenue ($ Millions) | $ | 5,297 | $6,260 - $6,340 | $6,387 - $6,417 | |||||||||||||||||||
| Y/Y Growth | 14% | 18% - 20% | 21% - 21% | ||||||||||||||||||||
| Revenue from Beginning Backlog | ~69% | ~65% | ~64% | ||||||||||||||||||||
| GAAP Operating Margin | 28.2% | 27.75% - 28.75% | 28.2% - 29.2% | ||||||||||||||||||||
| Non-GAAP Operating Margin | 44.6% | 43.75% - 44.75% | 44.2% - 45.2% | ||||||||||||||||||||
| GAAP Other Income & Expense ($ Millions) | $ | 30 | $(17) - $3 | $0 - $10 | |||||||||||||||||||
| Non-GAAP Other Income & Expense ($ Millions) | $ | (24) | $(115) - $(95) | $(101) - $(91) | |||||||||||||||||||
| GAAP Tax Rate | 27.1% | ~26% | ~27% | ||||||||||||||||||||
| Non-GAAP Tax Rate | 16.5% | 16.5% | 16.5% | ||||||||||||||||||||
| Weighted Average Diluted Shares Outstanding (Millions) | 273.3 | 275.5 - 277.5 | 274 - 276 | ||||||||||||||||||||
| GAAP EPS | $ | 4.06 | $4.76 - $4.86 | $4.84 - $4.90 | |||||||||||||||||||
| Y/Y Growth | 5% | 17% - 20% | 19% - 21% | ||||||||||||||||||||
| Non-GAAP EPS | $ | 7.14 | $8.05 - $8.15 | $8.37 - $8.43 | |||||||||||||||||||
| Y/Y Growth | 20% | 13% - 14% | 17% - 18% | ||||||||||||||||||||
| Cash Flow from Operations ($ Millions) | $ | 1,729 | ~$2,000 | ~$2,000 | |||||||||||||||||||
| DSO | 64 | ~65 | ~65 | ||||||||||||||||||||
| Capital Expenditures ($ Millions) | $ | 142 | ~$240 | ~$240 | |||||||||||||||||||
| October 26, 2026 | Cadence Q3 2026 Financial Results | 3 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Third Quarter Financial Results
Backlog
| (In Billions) | 2022 | 2023 | 2024 | 2025 | Q3 2026 | ||||||||||||||||||||||||||||||
| Backlog | $ | 5.8 | $ | 6.0 | $ | 6.8 | $ | 7.8 | $ | 8.2 | |||||||||||||||||||||||||
Revenue
| (In Millions) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
| Product and Maintenance | $ | 1,208 | $ | 1,332 | $ | 1,349 | $ | 1,431 | $ | 1,487 | |||||||||||||||||||||||||
| Services | 131 | 108 | 125 | 154 | 146 | ||||||||||||||||||||||||||||||
| Total Revenue | $ | 1,339 | $ | 1,440 | $ | 1,474 | $ | 1,584 | $ | 1,633 | |||||||||||||||||||||||||
Table may not foot due to rounding
Recurring and Up-Front Revenue
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |||||||||||||||||||||||||||||||
Revenue Recognized Over Time | 78 | % | 77 | % | 73 | % | 72 | % | 74 | % | |||||||||||||||||||||||||
Other Recurring Revenue | 4 | % | 2 | % | 4 | % | 6 | % | 5 | % | |||||||||||||||||||||||||
Recurring Revenue | 82 | % | 79 | % | 77 | % | 78 | % | 79 | % | |||||||||||||||||||||||||
Up-Front Revenue | 18 | % | 21 | % | 23 | % | 22 | % | 21 | % | |||||||||||||||||||||||||
Total Revenue | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Trailing Twelve Months Recurring and Up-Front Revenue
| Trailing Twelve Months Ended | |||||||||||||||||||||||||||||||||||
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |||||||||||||||||||||||||||||||
| Recurring Revenue | 80 | % | 80 | % | 79 | % | 79 | % | 78 | % | |||||||||||||||||||||||||
| Up-Front Revenue | 20 | % | 20 | % | 21 | % | 21 | % | 22 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Revenue Mix by Geography
| (% of Total Revenue) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
| Americas | 43 | % | 47 | % | 45 | % | 43 | % | 43 | % | |||||||||||||||||||||||||
| China | 18 | % | 12 | % | 13 | % | 15 | % | 16 | % | |||||||||||||||||||||||||
| Other Asia | 18 | % | 20 | % | 20 | % | 20 | % | 19 | % | |||||||||||||||||||||||||
| Europe, Middle East and Africa | 14 | % | 14 | % | 16 | % | 15 | % | 15 | % | |||||||||||||||||||||||||
| Japan | 7 | % | 7 | % | 6 | % | 7 | % | 7 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
Revenue Mix by Product Category
| (% of Total Revenue) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
Core EDA | 71 | % | 69 | % | 71 | % | 68 | % | 69 | % | |||||||||||||||||||||||||
Semiconductor IP | 14 | % | 15 | % | 14 | % | 15 | % | 15 | % | |||||||||||||||||||||||||
| System Design and Analysis | 15 | % | 16 | % | 15 | % | 17 | % | 16 | % | |||||||||||||||||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||
| October 26, 2026 | Cadence Q3 2026 Financial Results | 4 | ||||||
| Cadence Design Systems, Inc. | ||||||||
Gross Margin
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |||||||||||||||||||||||||||||||
| GAAP Gross Margin | 86.4 | % | 86.9 | % | 85.4 | % | 84.9 | % | 85.6 | % | |||||||||||||||||||||||||
| Non-GAAP Gross Margin | 88.0 | % | 88.5 | % | 88.0 | % | 88.2 | % | 88.8 | % | |||||||||||||||||||||||||
Total Costs and Expenses
| (In Millions) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
| Total GAAP Costs and Expenses | $ | 913 | $ | 977 | $ | 1,043 | $ | 1,134 | $ | 1,205 | |||||||||||||||||||||||||
| Total Non-GAAP Costs and Expenses | $ | 701 | $ | 781 | $ | 815 | $ | 863 | $ | 913 | |||||||||||||||||||||||||
Operating Margin
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |||||||||||||||||||||||||||||||
| GAAP Operating Margin | 31.8 | % | 32.2 | % | 29.3 | % | 28.4 | % | 26.2 | % | |||||||||||||||||||||||||
| Non-GAAP Operating Margin | 47.6 | % | 45.8 | % | 44.7 | % | 45.5 | % | 44.1 | % | |||||||||||||||||||||||||
Net Income Per Share
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |||||||||||||||||||||||||||||||
| GAAP Net Income Per Share | $ | 1.05 | $ | 1.42 | $ | 1.23 | $ | 1.33 | $ | 1.05 | |||||||||||||||||||||||||
| Non-GAAP Net Income Per Share | $ | 1.93 | $ | 1.99 | $ | 1.96 | $ | 2.11 | $ | 2.11 | |||||||||||||||||||||||||
Total DSO
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |||||||||||||||||||||||||||||||
| DSO | 55 | 64 | 67 | 65 | 66 | ||||||||||||||||||||||||||||||
Balance Sheet and Cash Review
Free Cash Flow
| (In Millions) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
| Net Cash from Operating Activities | $ | 311 | $ | 553 | $ | 356 | $ | 635 | $ | 424 | |||||||||||||||||||||||||
| Capital Expenditures | 34 | 41 | 49 | 53 | 62 | ||||||||||||||||||||||||||||||
| Free Cash Flow | $ | 277 | $ | 512 | $ | 307 | $ | 582 | $ | 362 | |||||||||||||||||||||||||
Cash and Cash Equivalents
| (In Millions) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | $ | 2,753 | $ | 3,001 | $ | 1,407 | $ | 1,440 | $ | 1,452 | |||||||||||||||||||||||||
•Approximately 15 percent of our cash and cash equivalents were in the U.S. at quarter-end.
Debt
| (In Millions) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
Debt (principal value) | $ | 2,500 | $ | 2,500 | $ | 2,925 | $ | 2,500 | $ | 2,650 | |||||||||||||||||||||||||
Share Repurchase
| (In Millions) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
| Share Repurchase | $ | 200 | $ | 200 | $ | 200 | $ | 200 | $ | 400 | |||||||||||||||||||||||||
| Number of Shares | 0.584 | 0.613 | 0.671 | 0.580 | 1.305 | ||||||||||||||||||||||||||||||
Employees
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |||||||||||||||||||||||||||||||
| Headcount | 13,693 | 13,800 | 15,110 | 15,445 | 15,753 | ||||||||||||||||||||||||||||||
| October 26, 2026 | Cadence Q3 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, capital allocation and share repurchase program, business model and prospects, technology and product developments and performance, customer adoption and demand, strategic relationships, backlog, industry trends and Cadence's ability to capitalize on them, market dynamics and market growth, tax rates, legislative and regulatory developments and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. 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 acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (ix) harm caused by compromises in cybersecurity and cybersecurity attacks; (x) capital expenditure requirements and events that affect cash flow, liquidity or reserves, or estimates Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (xi) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject, including Cadence’s ongoing obligations under its July 2025 settlement agreements with the U.S. Department of Justice (“DOJ”) and Bureau of Industry and Security (“BIS”), any further inquiries or adverse actions by the DOJ, BIS or other governmental authorities and any impact of the settlements on Cadence’s operations and business dealings; and (xii) Cadence’s ability to successfully meet any environmental, social and governance targets and practices. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. Cadence's share repurchase program may be modified, suspended or terminated without prior notice.
For a detailed discussion of these and other cautionary statements related to Cadence and its business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this 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.
| October 26, 2026 | Cadence Q3 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) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | ||||||||||||||||||||||||||||||
| GAAP total costs and expenses | $ | 913 | $ | 977 | $ | 1,043 | $ | 1,134 | $ | 1,205 | |||||||||||||||||||||||||
| Reconciling items to non-GAAP total costs and expenses | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | (116) | (113) | (138) | (147) | (145) | ||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | (26) | (30) | (51) | (80) | (80) | ||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | (37) | (49) | (41) | (33) | (25) | ||||||||||||||||||||||||||||||
| Restructuring | (27) | (2) | — | — | (42) | ||||||||||||||||||||||||||||||
Non-qualified deferred compensation (expenses) credits | (6) | (2) | 3 | (11) | — | ||||||||||||||||||||||||||||||
| Non-GAAP total costs and expenses* | $ | 701 | $ | 781 | $ | 815 | $ | 863 | $ | 913 | |||||||||||||||||||||||||
Table may not foot due to rounding
| * | 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 | $ | 4,571 | ||||||||||||||||||||||||||||||||
| 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) | (42) | ||||||||||||||||||||||||||||||||||||||
| 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 | $ | 3,540 | ||||||||||||||||||||||||||||||||
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. | ||||
| October 26, 2026 | Cadence Q3 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 | $ | 1,831 | ||||||||||||||||||||||||||||||||
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 | 289 | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 23 | 41 | 56 | 96 | 135 | 122 | ||||||||||||||||||||||||||||||||||||||
| Restructuring | (1) | — | 11 | 24 | 29 | 42 | ||||||||||||||||||||||||||||||||||||||
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 | $ | 2,862 | ||||||||||||||||||||||||||||||||
| 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 | $ | 2,293 | ||||||||||||||||||||||||||||||||
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. | ||||
| October 26, 2026 | Cadence Q3 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
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | |||||||||||||||||||||||||||||||
| GAAP gross margin as a percent of total revenue | 86.4% | 86.9% | 85.4% | 84.9% | 85.6% | ||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP gross margin as a percent of total revenue | |||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.3% | 0.3% | 0.4% | 0.4% | 0.4% | ||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 1.2% | 1.3% | 2.1% | 2.9% | 2.8% | ||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses (credits) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | ||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.1% | 0.0% | 0.1% | 0.0% | 0.0% | ||||||||||||||||||||||||||||||
| Non-GAAP gross margin as a percent of total revenue* | 88.0% | 88.5% | 88.0% | 88.2% | 88.8% | ||||||||||||||||||||||||||||||
| * | 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. | ||||
| October 26, 2026 | Cadence Q3 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
| Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | Q4 2026E | |||||||||||||||||||||||||||||||||||||||
| GAAP operating margin as a percent of total revenue | 31.8% | 32.2% | 29.3% | 28.4% | 26.2% | 30% - 31% | ||||||||||||||||||||||||||||||||||||||
| Reconciling items to non-GAAP operating margin as a percent of total revenue | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 8.7% | 7.9% | 9.4% | 9.3% | 8.9% | 8% | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 1.9% | 2.1% | 3.4% | 5.0% | 4.9% | 5% | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 2.8% | 3.4% | 2.8% | 2.1% | 1.5% | 1% | ||||||||||||||||||||||||||||||||||||||
| Restructuring | 2.0% | 0.1% | 0.0% | 0.0% | 2.6% | 0% | ||||||||||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses (credits) | 0.4% | 0.1% | (0.2)% | 0.7% | 0.0% | 0% | ||||||||||||||||||||||||||||||||||||||
| Non-GAAP operating margin as a percent of total revenue* | 47.6% | 45.8% | 44.7% | 45.5% | 44.1% | 44% - 45% | ||||||||||||||||||||||||||||||||||||||
| * | 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. | ||||
| October 26, 2026 | Cadence Q3 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% | 28.2% - 29.2% | |||||||||||||||||||||||||||||||||||||||||
| 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% | 4% | |||||||||||||||||||||||||||||||||||||||||
| 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% | 1% | |||||||||||||||||||||||||||||||||||||||||
| 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% | 44.2% - 45.2% | |||||||||||||||||||||||||||||||||||||||||
| * | 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. | ||||
| October 26, 2026 | Cadence Q3 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) | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 | Q4 2026E | ||||||||||||||||||||||||||||||||||||||
| Diluted net income per share on a GAAP basis | $ | 1.05 | $ | 1.42 | $ | 1.23 | $ | 1.33 | $ | 1.05 | $1.23 - $1.29 | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.42 | 0.41 | 0.50 | 0.53 | 0.53 | 0.51 | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 0.10 | 0.11 | 0.19 | 0.29 | 0.29 | 0.29 | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.14 | 0.18 | 0.15 | 0.12 | 0.09 | 0.08 | ||||||||||||||||||||||||||||||||||||||
| Restructuring | 0.10 | 0.01 | — | — | 0.15 | — | ||||||||||||||||||||||||||||||||||||||
Non-qualified deferred compensation expenses (credits) | 0.02 | 0.01 | (0.01) | 0.04 | — | — | ||||||||||||||||||||||||||||||||||||||
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 | 0.03 | (0.18) | (0.04) | (0.30) | (0.01) | — | ||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments | — | (0.01) | (0.05) | 0.10 | 0.01 | 0.08 | ||||||||||||||||||||||||||||||||||||||
| Diluted net income per share on a non-GAAP basis* | $ | 1.93 | $ | 1.99 | $ | 1.96 | $ | 2.11 | $ | 2.11 | $2.19 - $2.25 | |||||||||||||||||||||||||||||||||
| Shares used in calculation of diluted net income per share | 273,798 | 272,932 | 273,725 | 276,163 | 275,278 | |||||||||||||||||||||||||||||||||||||||
| * | 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. | ||||
| October 26, 2026 | Cadence Q3 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 | $4.84 - $4.90 | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 0.75 | 0.98 | 1.19 | 1.43 | 1.67 | 2.07 | ||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangibles | 0.24 | 0.22 | 0.23 | 0.33 | 0.38 | 1.05 | ||||||||||||||||||||||||||||||||||||||
| Acquisition and integration-related costs | 0.08 | 0.15 | 0.21 | 0.35 | 0.49 | 0.45 | ||||||||||||||||||||||||||||||||||||||
| Restructuring | — | — | 0.04 | 0.09 | 0.11 | 0.15 | ||||||||||||||||||||||||||||||||||||||
| 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) | (0.35) | ||||||||||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP adjustments | (0.37) | (0.19) | (0.21) | 0.06 | 0.10 | 0.14 | ||||||||||||||||||||||||||||||||||||||
Diluted net income per share on a non-GAAP basis*** | $ | 3.29 | $ | 4.27 | $ | 5.15 | $ | 5.97 | $ | 7.14 | $8.37 - $8.43 | |||||||||||||||||||||||||||||||||
| Shares used in calculation of diluted net income per share | 278,858 | 275,011 | 272,748 | 273,833 | 273,312 | 274 - 276M | ||||||||||||||||||||||||||||||||||||||
| * | 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. | ||||
| October 26, 2026 | Cadence Q3 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 | $0 - $10 | |||||||||||||||||||||
| 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) | (98) | |||||||||||||||||||||||
Non-GAAP total other income and expense* | $ | (16) | $ | (24) | $(101) - $(91) | |||||||||||||||||||||
* | 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. | ||||
| October 26, 2026 | Cadence Q3 2026 Financial Results | 14 | ||||||