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Cadence Reports Second Quarter 2026 Financial Results

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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

Category: Financial, Featured