Cadence third-quarter revenue rises 22% to $1.633 billion and lifts 2026 outlook

Cadence Design Systems, Inc. (CDNS) said Monday in a regulatory filing that third-quarter 2026 revenue rose 22% to $1.633 billion. The company also raised its full-year revenue growth outlook to 21% and approved an additional $2.5 billion for its share repurchase program.

The filing attached a press release and a commentary from the company's chief financial officer. Both cover the quarter ended Sept. 30, 2026.

Here's how the company did:

• Revenue: $1.633 billion vs. $1.339 billion a year earlier
• Non-GAAP diluted earnings per share: $2.11 vs. $1.93 a year earlier
• GAAP diluted earnings per share: $1.05 vs. $1.05 a year earlier
• GAAP operating margin: 26.2% vs. 31.8% a year earlier
• Non-GAAP operating margin: 44.1% vs. 47.6% a year earlier

Non-GAAP measures, which the company uses in its outlook, exclude items such as stock-based compensation and amortization of acquired intangibles. The company says those items are generally not directly related to its core business operations.

GAAP net income was $289.7 million, compared with $287.1 million a year earlier. Non-GAAP net income was $582.2 million, up from $528.2 million.

Core EDA, or electronic design automation, revenue grew 20% year over year. The company said the growth was driven by broad-based strength across the portfolio.

Semiconductor IP revenue increased 24% from a year earlier, and System Design and Analysis revenue grew 30%.

The company said hardware delivered another record quarter, fueled by meaningful expansions with marquee customers.

Recurring revenue made up 79% of total revenue in the quarter, against 82% a year earlier. Up-front revenue was 21%, compared with 18%.

Quarter-end backlog was $8.2 billion. Revenue expected to be recognized in the next 12 months from remaining performance obligations was $4.2 billion.

"Cadence delivered an outstanding third quarter," said CEO Anirudh Devgan. "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."

The company launched Maestro, a portfolio of domain-specialized AI models built for chip and system design. It said the models delivered initial workflow results of up to 30% higher quality and 5X greater token efficiency than general-purpose foundation models.

The company's AI Super Agents had more than 100 active customer engagements, the company said.

"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."

For fiscal 2026 the company expects revenue of $6.387 billion to $6.417 billion, up from a previous range of $6.260 billion to $6.340 billion. The company now expects 21% revenue growth, versus a previous 18% to 20%.

It expects non-GAAP diluted earnings per share of $8.37 to $8.43, up from $8.05 to $8.15. GAAP diluted earnings per share is now expected at $4.84 to $4.90, from $4.76 to $4.86.

The company expects a non-GAAP operating margin of 44.2% to 45.2%, compared with a previous 43.75% to 44.75%.

For the fourth quarter, the company expects revenue of $1.695 billion to $1.725 billion, or 18% to 20% growth from $1.440 billion a year earlier. It expects non-GAAP diluted earnings per share of $2.19 to $2.25.

The board approved on Oct. 23 the repurchase of up to an additional $2.5 billion of common stock under the existing program. The program has no expiration date and may be modified, suspended or terminated at any time.

The company said it repurchased $400 million of shares in the third quarter and expects to use about $400 million in the fourth quarter. For the year, it expects to use more than 50% of free cash flow for repurchases.

GAAP total costs and expenses were $1.205 billion, up from $913 million a year earlier. Restructuring charges were $42.2 million, compared with $27.4 million.

Over the first nine months, the company paid $2.143 billion in cash for business combinations, net of cash acquired, compared with $250.7 million a year earlier. The filing does not name the businesses it acquired.

Cash and cash equivalents were $1.452 billion at quarter-end, down from $2.753 billion a year earlier. Headcount was 15,753 at quarter-end, up from 13,693 a year earlier.

The company's share repurchase program may be modified, suspended or terminated without prior notice.