Cadence Reports Second Quarter 2026 Financial Results
SAN JOSE, Calif.--( BUSINESS WIRE)--Cadence (Nasdaq: CDNS) today announced results for the second quarter of 2026.
Second Quarter 2026 Financial Results
“Cadence delivered an outstanding Q2 driven by broad-based strength and the accelerating demand for our AI-driven solutions across both Design for AI and AI for Design fronts,” said Anirudh Devgan, president and chief executive officer. “Cadence is leading the agentic AI transformation in semiconductor design with a healthy environment. We are uniquely positioned to capitalize on this massive TAM expansion opportunity as the only provider with agentic solutions spanning the full electronic system design flow.”
“Cadence delivered excellent results for the second quarter of 2026, with broad-based strength driving double-digit growth across all our businesses,” said John Wall, senior vice president and chief financial officer. “With a record backlog and continued business momentum, we are now raising our 2026 outlook to 19% revenue growth, non-GAAP operating margin to 44.25%, non-GAAP EPS to $8.10, and operating cash flow to $2 billion at the midpoint.”
CFO Commentary
Commentary on the second quarter of 2026 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.
Business Outlook
For fiscal year 2026, the company expects:
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
Audio Webcast Scheduled
Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the second quarter 2026 financial results audio webcast today, July 27, 2026, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting July 27, 2026 at 5 p.m. (Pacific) and ending September 16, 2026 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.
About Cadence
Cadence is a market leader in AI and digital twins, pioneering the application of computational software to accelerate innovation in the engineering design of silicon to systems. Our design solutions, based on Cadence’s Intelligent System Design™ strategy, are essential for the world’s leading semiconductor and systems companies to build their next-generation products from chips to full electromechanical systems that serve a wide range of markets, including hyperscale computing, mobile communications, automotive, aerospace, industrial, life sciences and robotics. In 2025, Cadence was recognized by Fortune as one of the world’s top 100 best companies to work for. Cadence solutions offer limitless opportunities—learn more at www.cadence.com.
© 2026 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
This press release and related webcast contain forward-looking statements, including Cadence’s outlook on future operating results, financial condition, strategic objectives, business model and prospects, technology and product developments, customer adoption and demand, strategic relationships, backlog, industry trends, market growth, tax rates and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control, and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates and realize the benefits of its investments in research and development, including opportunities presented by AI; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) changes in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence’s products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including export controls, tariffs, other trade restrictions and other government regulations, as well as rising tensions, armed conflicts around the world, increased energy costs and supply chain constraints; (vi) changes in tax laws, interest rate and currency exchange rate fluctuations, inflation rates, Cadence’s increased debt levels and obligations and Cadence’s ability to repay debt or access capital and debt markets in the future; (vii) legislative or regulatory requirements; (viii) Cadence’s pending acquisitions, acquisition of the Hexagon D&E business and other companies, businesses or technologies or the failure to successfully integrate and operate them; (ix) harm caused by compromises in cybersecurity and cybersecurity attacks; (x) capital expenditure requirements and events that affect cash flow, liquidity or reserves, or estimates Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (xi) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject, including Cadence’s ongoing obligations under its July 2025 settlement agreements with the U.S. Department of Justice (“DOJ”) and Bureau of Industry and Security (“BIS”), any further inquiries or adverse actions by the DOJ, BIS or other foreign governmental authorities and any impact of the settlements on Cadence’s operations and business dealings; and (xii) Cadence’s ability to successfully meet any environmental, social and governance targets and practices. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.
For a detailed discussion of these and other cautionary statements related to Cadence and its business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings.
All forward-looking statements in this press release are based on management's expectations as of the date of this press release and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
GAAP to Non-GAAP Reconciliation
Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.
To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, income or expenses related to foreign currency forward exchange contract and settlement associated with an acquisition, investments, divestitures and Cadence’s non-qualified deferred compensation plan, restructuring, loss related to contingent liability and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.
Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.
The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:
Operating Margin Reconciliation
Three Months Ended
June 30, 2026
June 30, 2025
(unaudited)
GAAP operating margin as a percent of total revenue
28.4
%
19.0
%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense
9.3
%
9.3
%
Amortization of acquired intangibles
5.0
%
1.8
%
Acquisition and integration-related costs
2.1
%
2.0
%
Restructuring
0.0
%
0.0
%
Non-qualified deferred compensation expenses
0.7
%
0.6
%
Loss related to contingent liability*
0.0
%
10.1
%
Non-GAAP operating margin as a percent of total revenue
45.5
%
42.8
%
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
Net Income Reconciliation
Three Months Ended
June 30, 2026
June 30, 2025
(in thousands)
(unaudited)
Net income on a GAAP basis
$
367,076
$
160,051
Stock-based compensation expense
146,890
118,325
Amortization of acquired intangibles
79,922
23,703
Acquisition and integration-related costs
32,823
26,021
Restructuring
(352
)
47
Non-qualified deferred compensation expenses
11,430
7,778
Loss related to contingent liability*
—
128,545
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
(83,496
)
(46,248
)
Income tax effect of non-GAAP adjustments
28,079
31,658
Net income on a non-GAAP basis
$
582,372
$
449,880
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
Diluted Net Income Per Share Reconciliation
Three Months Ended
June 30, 2026
June 30, 2025
(in thousands, except per share data)
(unaudited)
Diluted net income per share on a GAAP basis
$
1.33
$
0.59
Stock-based compensation expense
0.53
0.43
Amortization of acquired intangibles
0.29
0.09
Acquisition and integration-related costs
0.12
0.09
Restructuring
—
—
Non-qualified deferred compensation expenses
0.04
0.03
Loss related to contingent liability*
—
0.47
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
(0.30
)
(0.17
)
Income tax effect of non-GAAP adjustments
0.10
0.12
Diluted net income per share on a non-GAAP basis
$
2.11
$
1.65
Shares used in calculation of diluted net income per share
276,163
272,899
* Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
$
1,440,443
$
3,001,317
1,065,023
944,939
390,378
303,545
326,049
419,872
3,221,893
4,669,673
560,161
517,004
4,914,788
2,749,143
1,874,455
718,223
832,566
917,733
676,462
581,372
$
12,080,325
$
10,153,148
$
823,724
$
856,856
1,025,118
778,435
1,848,842
1,635,291
144,453
155,997
2,482,200
2,480,150
746,867
407,529
3,373,520
3,043,676
6,857,963
5,474,181
$
12,080,325
$
10,153,148
$
1,430,668
$
1,170,510
$
2,779,590
$
2,281,360
153,783
104,931
279,081
236,447
1,584,451
1,275,441
3,058,671
2,517,807
175,183
139,298
328,495
255,970
64,135
44,869
125,370
95,330
241,034
200,595
452,519
403,295
531,273
442,057
1,039,710
881,159
88,548
69,029
176,765
132,127
34,315
9,204
54,525
18,126
-
128,545
-
128,545
(352
)
47
(357
)
(62
)
1,134,136
1,033,644
2,177,027
1,914,490
450,315
241,797
881,644
603,317
(35,136
)
(28,948
)
(66,749
)
(58,066
)
95,055
67,758
123,442
91,048
510,234
280,607
938,337
636,299
143,158
120,556
235,601
202,669
$
367,076
$
160,051
$
702,736
$
433,630
$
1.34
$
0.59
$
2.57
$
1.60
$
1.33
$
0.59
$
2.56
$
1.59
273,955
271,294
273,012
271,633
276,163
272,899
274,948
273,264
2026
2025
$
3,001,317
$
2,644,030
702,736
433,630
201,611
106,592
285,073
225,938
(85,817
)
(36,654
)
76,189
3,241
1,072
2,629
3,921
3,502
(38,326
)
(11,211
)
(106,987
)
7,528
56,296
(24,201
)
(20,470
)
12,239
(255,486
)
115,603
169,728
21,824
1,171
3,964
990,711
864,624
(39,880
)
(21,596
)
162,889
1,989
-
11,500
(101,448
)
(67,146
)
(6,975
)
-
(2,100,292
)
(122,146
)
(2,085,706
)
(197,399
)
600,000
-
(600,000
)
-
88,840
78,322
(140,722
)
(94,334
)
(400,006
)
(525,016
)
(451,888
)
(541,028
)
(13,991
)
52,535
(1,560,874
)
178,732
$
1,440,443
$
2,822,762
2025
2026
48
%
49
%
43
%
47
%
47
%
45
%
43
%
11
%
9
%
18
%
12
%
13
%
13
%
15
%
19
%
19
%
18
%
20
%
19
%
20
%
20
%
16
%
16
%
14
%
14
%
15
%
16
%
15
%
6
%
7
%
7
%
7
%
6
%
6
%
7
%
100
%
100
%
100
%
100
%
100
%
100
%
100
%
2025
2026
71
%
71
%
71
%
69
%
70
%
71
%
68
%
14
%
13
%
14
%
15
%
14
%
14
%
15
%
15
%
16
%
15
%
16
%
16
%
15
%
17
%
100
%
100
%
100
%
100
%
100
%
100
%
100
%
9%
9%
5%
5%
2%
2%
0.53
2.06
0.29
1.04
0.09
0.44
-
0.03
-
(0.01)
-
(0.34)
(0.01)
0.07
146
569
80
289
26
122
-
9
-
(3)
-
(95)
(2)
19
CDNS-IR
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