Cadence Reports Third Quarter 2026 Financial Results

October 29, 2026 -

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. -- 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.

Financial tables

To read financial tables, click here

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.