Highlights

  • Third quarter 2026 revenue was $1.633 billion, compared with $1.339 billion in Q3 2025, with non-GAAP diluted EPS of $2.11.
  • Cadence expects 2026 revenue of $6.387 billion to $6.417 billion and non-GAAP diluted EPS of $8.37 to $8.43.
  • The board authorized an additional $2.5 billion for share repurchases, and Cadence used $400 million to repurchase shares in the quarter.
  • GAAP operating margin was 26.2%, compared with 31.8% in Q3 2025, and GAAP diluted EPS was $1.05, unchanged from a year earlier.

Cadence Design Systems, Inc. (NASDAQ: CDNS) shares were trading at USD 347.54 on October 27, 2026, up 7.87%, with a relative volume at time of 2.53. The electronic design software company announced on October 23, 2026 an additional $2.5 billion share repurchase authorization, and on October 26, 2026 it reported third quarter 2026 results with a raised full-year outlook.

Cadence is incorporated in Delaware and lists its principal executive offices in San Jose, California. It describes itself as a market leader in AI and digital twins, applying computational software to the engineering design of silicon to systems. Its revenue is reported across three product categories: Core EDA, Semiconductor IP, and System Design and Analysis. Customers include semiconductor and systems companies in hyperscale computing, mobile communications, automotive, aerospace, industrial, life sciences and robotics. Headcount was 15,753 at the end of the third quarter of 2026, and the company issued guidance for the year ending December 31, 2026.

Third Quarter Results

Revenue for the quarter ended September 30, 2026 was $1.633 billion, compared with $1.339 billion in the third quarter of 2025. Management said revenue grew 22% year over year and recurring revenue was up 18%.

GAAP operating margin was 26.2%, compared with 31.8% a year earlier. Non-GAAP operating margin was 44.1%, compared with 47.6%. GAAP net income was $289,747 thousand, or $1.05 per diluted share, compared with $287,122 thousand, or $1.05, in the prior-year quarter. Non-GAAP net income was $582,187 thousand, or $2.11 per diluted share, compared with $528,213 thousand, or $1.93. The quarter included restructuring costs of $42,159 thousand, compared with $27,394 thousand a year earlier.

Backlog at quarter end was $8.2 billion, and revenue expected to be recognized in the next 12 months from remaining performance obligations was $4.2 billion. The company stated that Core EDA revenue grew 20% year over year, IP revenue increased 24% and System Design and Analysis revenue grew 30%.

Balance Sheet, Cash Flow and Capital Returns

Cash and cash equivalents were $1,452,020 thousand at September 30, 2026, compared with $3,001,317 thousand at December 31, 2025. For the nine months, cash paid in business combinations, net of cash acquired, was $2,143,429 thousand, and net cash provided by operating activities was $1,414,436 thousand. The balance sheet showed a revolving credit facility balance of $150,000 thousand, a current portion of long-term debt of $498,809 thousand and long-term debt of $1,984,433 thousand.

Cadence used $400 million to repurchase shares in the third quarter, and payments for repurchases of common stock were $800,025 thousand for the nine months. The board approved the additional $2.5 billion on October 23, 2026 under the existing program. The program has no expiration date and may be modified, suspended or terminated at any time.

Business Developments

The company said it launched Maestro, a portfolio of domain-specialized AI models for chip and system design, with several customer deployments underway. It said its AI Super Agents have more than 100 active customer engagements. On the earnings call, Chief Financial Officer John Wall said the Hexagon D&E business is not contributing much in operating profit this year.

Fourth Quarter and 2026 Outlook

For the fourth quarter, Cadence expects revenue of $1.695 billion to $1.725 billion, GAAP operating margin of 30% to 31%, GAAP EPS of $1.23 to $1.29 and non-GAAP EPS of $2.19 to $2.25. It expects to use approximately $400 million to repurchase shares in the fourth quarter.

For fiscal 2026, the company raised its revenue outlook to $6.387 billion to $6.417 billion, from $6,260 million to $6,340 million. It expects GAAP operating margin of 28.2% to 29.2%, GAAP diluted EPS of $4.84 to $4.90 and operating cash flow of approximately $2.0 billion. The company noted that its outlook is subject to risks, including its ongoing obligations under its July 2025 settlement agreements with the U.S. Department of Justice and the Bureau of Industry and Security.