Cadence Reports First Quarter 2026 Financial Results

Record Backlog of $8.0 Billion Raising 2026 Revenue Outlook to ~17% YoY Growth 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 2025GAAP operating margin of 29.3%, compared to 29.1% in Q1 2025Non-GAAP operating margin of 44.7%, compared to 41.7% in Q1 2025GAAP diluted net income per share of $1.23, compared to $1.00 in Q1 2025Non-GAAP diluted net income per share of $1.96, compared to $1.57 in Q1 2025Quarter-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 billionGAAP 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 $4.49Non-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 systemsLaunched 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 spectrumCore 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 customersHardware delivered a record quarter, led by strong demand from AI and high‑performance computing customers, along with growing adoption in automotive and robotics marketsIP 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 IPSystem 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 Cadence Design Systems, Inc.Condensed Consolidated Balance SheetsMarch 31, 2026 and December 31, 2025(In thousands)(Unaudited)March 31, 2026December 31, 2025Current 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 StatementsFor the Three Months Ended March 31, 2026 and March 31, 2025(In thousands, except per share amounts)(Unaudited)Three Months EndedMarch 31, 2026March 31, 2025Revenue: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 FlowsFor the Three Months Ended March 31, 2026 and March 31, 2025(In thousands)(Unaudited)Three Months EndedMarch 31,March 31, 2026 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 GEOGRAPHYQ1Q2Q3Q4YearQ1Americas 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 CATEGORYQ1Q2Q3Q4YearQ1Core 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 MarginAs of April 27, 2026(Unaudited)Three Months EndingYear EndingJune 30, 2026December 31, 2026ForecastForecastGAAP operating margin as a percent of total revenue 28.5% - 29.5% 27.5% - 28.5% Reconciling items to non-GAAP operating margin as apercent 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 ShareAs of April 27, 2026(Unaudited)Three Months EndingYear EndingJune 30, 2026December 31, 2026ForecastForecastDiluted net income per share on a GAAP basis$1.07 to $1.13$4.39 to $4.49Stock-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 $7.95†The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.Cadence Design Systems, Inc.Impact of Non-GAAP Adjustments on Forward Looking Net IncomeAs of April 27, 2026(Unaudited)Three Months EndingYear EndingJune 30, 2026December 31, 2026($ in millions)ForecastForecastNet income on a GAAP basis$296 to $312$1,212 to $1,239Stock-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. CDNS-IR Category: Financial, Featured Source: Cadence Design Systems, Inc.