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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 8-K
 
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 27, 2026
CADENCE DESIGN SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware   000-15867   00-0000000
(State or Other Jurisdiction
of Incorporation)		   (Commission File Number)   (I.R.S. Employer
Identification No.)
2655 Seely Avenue, San Jose, California 95134
(Address of Principal Executive Offices) (Zip Code)
(408) 943-1234
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value per share CDNS Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐







Item 2.02. Results of Operations and Financial Condition.

On July 27, 2026 Cadence Design Systems, Inc. (“Cadence”) issued a press release announcing its financial results for the quarter ended June 30, 2026.
A copy of the press release is attached hereto as Exhibit 99.01 and a copy of the commentary by the Chief Financial Officer of Cadence regarding Cadence's financial results for the quarter ended June 30, 2026 is attached hereto as Exhibit 99.02, and the press release and the commentary are incorporated herein by reference.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits

Exhibit No.    Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 27, 2026
CADENCE DESIGN SYSTEMS, INC.
By:  
/s/ John M. Wall
 
John M. Wall
 
Senior Vice President and Chief Financial Officer


EX-99.01 2 cdns07272026ex9901.htm PRESS RELEASE Document

Exhibit 99.01
Cadence Reports Second Quarter 2026 Financial Results
Record Backlog of $8.1 Billion
Raising 2026 Revenue Outlook to 19% YoY Growth
Raising 2026 Non-GAAP EPS to $8.10 and Operating Cash Flow to $2 Billion

SAN JOSE, Calif. — July 27, 2026 — Cadence (Nasdaq: CDNS) today announced results for the second quarter of 2026.
Second Quarter 2026 Financial Results
•Revenue of $1.584 billion, compared to revenue of $1.275 billion in Q2 2025
•GAAP operating margin of 28.4%, compared to 19.0% in Q2 2025
•Non-GAAP operating margin of 45.5%, compared to 42.8% in Q2 2025
•GAAP diluted net income per share of $1.33, compared to $0.59 in Q2 2025
•Non-GAAP diluted net income per share of $2.11, compared to $1.65 in Q2 2025
•Quarter-end backlog was $8.1 billion and revenue expected to be recognized in the next 12 months from remaining performance obligations was $4.2 billion

“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:
•Revenue in the range of $6.26 billion to $6.34 billion
•GAAP operating margin in the range of 27.75% to 28.75%
•Non-GAAP operating margin in the range of 43.75% to 44.75%
•GAAP diluted net income per share in the range of $4.76 to $4.86
•Non-GAAP diluted net income per share in the range of $8.05 to $8.15
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 AuraStack AI Super Agent, the industry's first agentic AI platform for advanced packaging and PCB, extending Cadence's AI Super Agents portfolio to span the full electronic system design flow
•Strong early traction for the AI Super Agents portfolio, with compelling initial customer results across ChipStack, ViraStack and InnoStack
•IP revenue grew more than 40% year-over-year, driven by strong demand for Cadence’s Star IP portfolio, highlighted by a significant agreement with Intel and additional wins with leading semiconductor companies
•Core EDA revenue grew 18% year-over-year, driven by strong demand for Cadence’s AI portfolio and expanded adoption across hyperscalers, top semiconductor companies and startups
•Hardware delivered another record quarter, adding 12 new customers and significant expansions with hyperscalers and leading AI innovators
•System Design and Analysis revenue grew 37% year-over-year, driven by strong adoption of Cadence's PCB and advanced packaging solutions and continued integration of the Hexagon D&E business

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.

For more information, please contact:
Cadence Investor Relations
408-944-7100
investor_relations@cadence.com
Cadence Newsroom
408-944-7039
newsroom@cadence.com



Cadence Design Systems, Inc.
Condensed Consolidated Balance Sheets
June 30, 2026 and December 31, 2025
(In thousands)
(Unaudited)
 
June 30, 2026 December 31, 2025
Current assets:
Cash and cash equivalents $ 1,440,443  $ 3,001,317 
Receivables, net 1,065,023  944,939 
Inventories 390,378  303,545 
Prepaid expenses and other 326,049  419,872 
Total current assets 3,221,893  4,669,673 
Property, plant and equipment, net 560,161  517,004 
Goodwill 4,914,788  2,749,143 
Acquired intangibles, net 1,874,455  718,223 
Deferred taxes 832,566  917,733 
Other assets 676,462  581,372 
Total assets $ 12,080,325  $ 10,153,148 
Current liabilities:
Accounts payable and accrued liabilities $ 823,724  $ 856,856 
Current portion of deferred revenue 1,025,118  778,435 
Total current liabilities 1,848,842  1,635,291 
Long-term liabilities:
Long-term portion of deferred revenue 144,453  155,997 
Long-term debt 2,482,200  2,480,150 
Other long-term liabilities 746,867  407,529 
Total long-term liabilities 3,373,520  3,043,676 
Stockholders’ equity 6,857,963  5,474,181 
Total liabilities and stockholders’ equity $ 12,080,325  $ 10,153,148 




Cadence Design Systems, Inc.
Condensed Consolidated Income Statements
For the Three and Six Months Ended June 30, 2026 and June 30, 2025
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended Six Months Ended
  June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Revenue:
Product and maintenance $ 1,430,668  $ 1,170,510  $ 2,779,590  $ 2,281,360 
Services 153,783  104,931  279,081  236,447 
Total revenue 1,584,451  1,275,441  3,058,671  2,517,807 
Costs and expenses:
Cost of product and maintenance 175,183  139,298  328,495  255,970 
Cost of services 64,135  44,869  125,370  95,330 
Marketing and sales 241,034  200,595  452,519  403,295 
Research and development 531,273  442,057  1,039,710  881,159 
General and administrative 88,548  69,029  176,765  132,127 
Amortization of acquired intangibles 34,315  9,204  54,525  18,126 
Loss related to contingent liability
 —  128,545  —  128,545 
Restructuring (352) 47  (357) (62)
Total costs and expenses 1,134,136  1,033,644  2,177,027  1,914,490 
Income from operations 450,315  241,797  881,644  603,317 
Interest expense (35,136) (28,948) (66,749) (58,066)
Other income, net
 95,055  67,758  123,442  91,048 
Income before provision for income taxes
 510,234  280,607  938,337  636,299 
Provision for income taxes
 143,158  120,556  235,601  202,669 
Net income $ 367,076  $ 160,051  $ 702,736  $ 433,630 
Net income per share - basic $ 1.34  $ 0.59  $ 2.57  $ 1.60 
Net income per share - diluted $ 1.33  $ 0.59  $ 2.56  $ 1.59 
Weighted average common shares outstanding - basic 273,955  271,294  273,012  271,633 
Weighted average common shares outstanding - diluted 276,163  272,899  274,948  273,264 



Cadence Design Systems, Inc.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2026 and June 30, 2025
(In thousands)
(Unaudited) 
Six Months Ended
  June 30, 2026 June 30, 2025
Cash and cash equivalents at beginning of period
 $ 3,001,317  $ 2,644,030 
Cash flows from operating activities:
Net income 702,736  433,630 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 201,611  106,592 
Stock-based compensation 285,073  225,938 
Gain on divestitures and investments, net (85,817) (36,654)
Deferred income taxes 76,189  3,241 
ROU asset amortization and change in operating lease liabilities 1,072  2,629 
Other non-cash items 3,921  3,502 
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables (38,326) (11,211)
Inventories (106,987) 7,528 
Prepaid expenses and other 56,296  (24,201)
Other assets (20,470) 12,239 
Accounts payable and accrued liabilities (255,486) 115,603 
Deferred revenue 169,728  21,824 
Other long-term liabilities 1,171  3,964 
Net cash provided by operating activities 990,711  864,624 
Cash flows from investing activities:
Purchases of investments (39,880) (21,596)
Proceeds from the sale and maturity of investments 162,889  1,989 
Proceeds from the sale of IP and other assets
 —  11,500 
Purchases of property, plant and equipment (101,448) (67,146)
Purchases of intangible assets (6,975) — 
Cash paid in business combinations, net of cash acquired (2,100,292) (122,146)
Net cash used for investing activities (2,085,706) (197,399)
Cash flows from financing activities:
Proceeds from revolving credit facility
 600,000  — 
Payments on revolving credit facility
 (600,000) — 
Proceeds from issuance of common stock 88,840  78,322 
Stock received for payment of employee taxes on vesting of restricted stock (140,722) (94,334)
Payments for repurchases of common stock (400,006) (525,016)
Net cash used for financing activities (451,888) (541,028)
Effect of exchange rate changes on cash and cash equivalents (13,991) 52,535 
Increase (decrease) in cash and cash equivalents
 (1,560,874) 178,732 
Cash and cash equivalents at end of period
 $ 1,440,443  $ 2,822,762 






Cadence Design Systems, Inc.
(Unaudited)
Revenue Mix by Geography (% of Total Revenue)
 
  2025 2026
GEOGRAPHY Q1 Q2 Q3 Q4 Year Q1 Q2
Americas 48  % 49  % 43  % 47  % 47  % 45  % 43  %
China 11  % 9  % 18  % 12  % 13  % 13  % 15  %
Other Asia 19  % 19  % 18  % 20  % 19  % 20  % 20  %
Europe, Middle East and Africa 16  % 16  % 14  % 14  % 15  % 16  % 15  %
Japan 6  % 7  % 7  % 7  % 6  % 6  % 7  %
Total 100  % 100  % 100  % 100  % 100  % 100  % 100  %

Revenue Mix by Product Category (% of Total Revenue)
 
  2025 2026
PRODUCT CATEGORY Q1 Q2 Q3 Q4 Year Q1 Q2
Core EDA
 71  % 71  % 71  % 69  % 70  % 71  % 68  %
Semiconductor IP
 14  % 13  % 14  % 15  % 14  % 14  % 15  %
System Design and Analysis 15  % 16  % 15  % 16  % 16  % 15  % 17  %
Total 100  % 100  % 100  % 100  % 100  % 100  % 100  %

















Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Operating Margin
As of July 27, 2026
(Unaudited)
 
Three Months Ending
September 30, 2026
Year Ending
December 31, 2026
  Forecast Forecast
GAAP operating margin as a percent of total revenue 27.5% - 28.5% 27.75% - 28.75%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense
9%
9%
Amortization of acquired intangibles
5%
5%
Acquisition and integration-related costs
2%
2%
Non-GAAP operating margin as a percent of total revenue† 43.5% - 44.5% 43.75% - 44.75%
† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.









































Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share
As of July 27, 2026
(Unaudited)
 
Three Months Ending
September 30, 2026
Year Ending
December 31, 2026
  Forecast Forecast
Diluted net income per share on a GAAP basis $1.11 to $1.17 $4.76 to $4.86
Stock-based compensation expense 0.53 2.06
Amortization of acquired intangibles 0.29 1.04
Acquisition and integration-related costs 0.09 0.44
Non-qualified deferred compensation expenses — 0.03
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
 — (0.01)
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
 — (0.34)
Income tax effect of non-GAAP adjustments (0.01) 0.07
Diluted net income per share on a non-GAAP basis† $2.01 to $2.07 $8.05 to $8.15
†
The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

Cadence Design Systems, Inc.
Impact of Non-GAAP Adjustments on Forward Looking Net Income
As of July 27, 2026
(Unaudited)
 
Three Months Ending
September 30, 2026
Year Ending
December 31, 2026
($ in millions) Forecast Forecast
Net income on a GAAP basis $308 to $324 $1,316 to $1,344
Stock-based compensation expense 146 569
Amortization of acquired intangibles 80 289
Acquisition and integration-related costs 26 122
Non-qualified deferred compensation expenses — 9
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
 — (3)
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
 — (95)
Income tax effect of non-GAAP adjustments (2) 19
Net income on a non-GAAP basis† $558 to $574 $2,226 to $2,254
†
The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

EX-99.02 3 cfocommentary07272026ex9902.htm CFO COMMENTARY Document
Exhibit 99.02
image0a22.jpg

CADENCE REPORTS SECOND QUARTER
2026
CADENCE DESIGN SYSTEMS, INC.
CFO COMMENTARY
Key Takeaways
• Exceeded Q2 revenue, non-GAAP operating margin and EPS guidance
• Record backlog of ~$8.1 billion
• Raising 2026 revenue growth outlook to ~19% and non-GAAP EPS outlook to $8.10 at the midpoint

Q3 2026 Outlook
• Revenue: $1.595 billion - $1.625 billion
• GAAP operating margin: 27.5% - 28.5%
• Non-GAAP operating margin: 43.5% - 44.5%
• GAAP EPS: $1.11 - $1.17
• Non-GAAP EPS: $2.01 - $2.07
• Expect to use approximately $200 million to repurchase Cadence shares in Q3
Q2 2026 KEY METRICS
• Revenue: $1.584 billion
• GAAP operating margin: 28.4%
• Non-GAAP operating margin: 45.5%
• GAAP EPS: $1.33
• Non-GAAP EPS: $2.11
• Operating cash flow: $635 million

FY 2026 Outlook
• Revenue: $6.260 billion - $6.340 billion
• GAAP operating margin: 27.75% - 28.75%
• Non-GAAP operating margin: 43.75% - 44.75%
• GAAP EPS: $4.76 - $4.86
• Non-GAAP EPS: $8.05 - $8.15
• Operating cash flow: ~$2.0 billion
• Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year
Financial Results Webcast
Our Q2 2026 financial results webcast will begin July 27, 2026 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on July 27, 2026 until 5:00 p.m. (Pacific) on September 16, 2026.
July 27, 2026 Cadence Q2 2026 Financial Results
1

Cadence Design Systems, Inc.
Financial Metrics
(In Millions, except per share data) 2021 2022
2023
2024
2025
2026E
Revenue $ 2,988  $ 3,562  $ 4,090  $ 4,641  $ 5,297  $6,260- $6,340
Revenue growth 11% 19% 15% 13%
14%
 18% - 20%
3-year CAGR*
 12% 15% 15% 16%
14%
~15%
GAAP operating expenses $ 2,209  $ 2,488  $ 2,839  $ 3,291  $ 3,805  $4,501
GAAP operating expense growth 8% 13% 14% 16% 16% ~18%
Non-GAAP operating expenses $ 1,877  $ 2,125  $ 2,373  $ 2,667  $ 2,935  $3,512
Non-GAAP operating expense growth 8% 13% 12% 12%
10%
 ~20%
GAAP operating margin
 26.1% 30.1% 30.6% 29.1%
28.2%
 27.75% - 28.75%
Non-GAAP operating margin 37.2% 40.3% 42.0% 42.5%
44.6%
 43.75% - 44.75%
Rule of 40 Metric**
48.6%
59.5%
56.8%
56.0%
58.7%
 ~63%
GAAP earnings per share $ 2.50  $ 3.09  $ 3.82  $ 3.85  $ 4.06  $4.76 - $4.86
Non-GAAP earning per share $ 3.29  $ 4.27  $ 5.15  $ 5.97  $ 7.14  $8.05 - $8.15
Non-GAAP EPS growth*
 18% 30% 21% 16%
20%
 13  %
3-year Non-GAAP EPS CAGR*
 21% 25% 23% 22%
19%
 16  %
Weighted average diluted shares outstanding
 278.9 275.0
272.7
273.8
273.3
 275.5 - 277.5
Cash flow from operations 1,101 1,242
1,349
1,261
1,729
 ~$2,000
Capital expenditures 65 123
102
143
142
~$240
* At midpoint of outlook.
** Rule of 40 Metric = Revenue growth % + Non-GAAP operating margin %.

Profitability Trends
(In Millions) 2021 2022
2023
2024
2025
2026E*
GAAP operating margin 26.1% 30.1% 30.6% 29.1%
28.2%
 28.25%
Non-GAAP operating margin 37.2% 40.3% 42.0% 42.5%
44.6%
 44.25%
Stock-based compensation
(7.0)%
(7.6)%
(8.0)%
(8.4)%
(8.6)%
 (9.0)%
Non-GAAP operating margin adjusted for stock-based compensation
30.2%
32.7%
34.0%
34.1%
36.0%
 35.25%
GAAP operating income $ 779  $ 1,074  $ 1,251  $ 1,351  $ 1,492  $ 1,799 
Non-GAAP operating income $ 1,111  $ 1,436  $ 1,717  $ 1,974  $ 2,361  $ 2,788 
Non-GAAP operating income adjusted for stock-based compensation $ 901  $ 1,166  $ 1,391  $ 1,583  $ 1,906  $ 2,219 
* At midpoint of outlook.
July 27, 2026 Cadence Q2 2026 Financial Results
2
Cadence Design Systems, Inc.
Third Quarter 2026 Financial Outlook
Q3 2025 Q2 2026 Q3 2026E
Total Revenue ($ Millions) $ 1,339  $ 1,584  $1,595 - $1,625
   Q/Q Growth 7% 1% - 3%
   Y/Y Growth 24% 19% - 21%
GAAP Operating Margin 31.8% 28.4% 27.5% - 28.5%
Non-GAAP Operating Margin 47.6% 45.5% 43.5% - 44.5%
GAAP EPS $ 1.05  $ 1.33  $1.11 - $1.17
Non-GAAP EPS $ 1.93  $ 2.11  $2.01 - $2.07


Fiscal Year 2026 Financial Outlook
Previous Current
FY 2025
FY 2026E
FY 2026E
Recurring Revenue
80%
~80%
~80%
Total Revenue ($ Millions) $ 5,297 
$6,125 - $6,225
 $6,260 - $6,340
   Y/Y Growth
14%
16% - 18%
 18% - 20%
Revenue from Beginning Backlog
~69%
~66%
 ~65%
GAAP Operating Margin
28.2%
27.5% - 28.5%
 27.75% - 28.75%
Non-GAAP Operating Margin
44.6%
43.5% - 44.5%
 43.75% - 44.75%
GAAP Other Income & Expense ($ Millions) $ 30 
$(101) - $(81)
 $(17) - $3
Non-GAAP Other Income & Expense ($ Millions) $ (24)
$(115) - $(95)
$(115) - $(95)
GAAP Tax Rate
27.1%
~26%
~26%
Non-GAAP Tax Rate 16.5% 16.5% 16.5%
Weighted Average Diluted Shares Outstanding (Millions)
273.3
275 - 277
 275.5 - 277.5
GAAP EPS $ 4.06 
$4.39 - $4.49
 $4.76 - $4.86
   Y/Y Growth
5%
8% - 11%
 17% - 20%
Non-GAAP EPS $ 7.14 
$7.85 - $7.95
 $8.05 - $8.15
   Y/Y Growth
20%
10% - 11%
 13% - 14%
Cash Flow from Operations ($ Millions) $ 1,729 
$1,875 - $1,975
 ~$2,000
DSO
64
~65
~65
Capital Expenditures ($ Millions) $ 142 
~$240
~$240


July 27, 2026 Cadence Q2 2026 Financial Results
3
Cadence Design Systems, Inc.
Second Quarter Financial Results
Backlog
(In Billions)
2022
2023
2024
2025
 Q2 2026
Backlog $ 5.8  $ 6.0  $ 6.8  $ 7.8  $ 8.1 
Revenue
(In Millions)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Product and Maintenance $ 1,170  $ 1,208  $ 1,332  $ 1,349  $ 1,431 
Services 105  131  108  125  154 
   Total Revenue $ 1,275  $ 1,339  $ 1,440  $ 1,474  $ 1,584 
Table may not foot due to rounding
Recurring and Up-Front Revenue
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Revenue Recognized Over Time
 73  % 78  % 77  % 73  % 72  %
Other Recurring Revenue
 5  % 4  % 2  % 4  % 6  %
Recurring Revenue
 78  % 82  % 79  % 77  % 78  %
Up-Front Revenue
 22  % 18  % 21  % 23  % 22  %
Total Revenue
 100  % 100  % 100  % 100  % 100  %
Trailing Twelve Months Recurring and Up-Front Revenue
Trailing Twelve Months Ended
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Recurring Revenue 80  % 80  % 80  % 79  % 79  %
Up-Front Revenue 20  % 20  % 20  % 21  % 21  %
   Total 100  % 100  % 100  % 100  % 100  %
Revenue Mix by Geography
(% of Total Revenue)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Americas 49  % 43  % 47  % 45  % 43  %
China 9  % 18  % 12  % 13  % 15  %
Other Asia 19  % 18  % 20  % 20  % 20  %
Europe, Middle East and Africa 16  % 14  % 14  % 16  % 15  %
Japan 7  % 7  % 7  % 6  % 7  %
   Total 100  % 100  % 100  % 100  % 100  %
Revenue Mix by Product Category
(% of Total Revenue)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Core EDA
 71  % 71  % 69  % 71  % 68  %
Semiconductor IP
 13  % 14  % 15  % 14  % 15  %
System Design and Analysis 16  % 15  % 16  % 15  % 17  %
   Total 100  % 100  % 100  % 100  % 100  %


July 27, 2026 Cadence Q2 2026 Financial Results
4
Cadence Design Systems, Inc.
Gross Margin
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
GAAP Gross Margin 85.6  % 86.4  % 86.9  % 85.4  % 84.9  %
Non-GAAP Gross Margin 87.2  % 88.0  % 88.5  % 88.0  % 88.2  %
Total Costs and Expenses
(In Millions)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Total GAAP Costs and Expenses $ 1,034  $ 913  $ 977  $ 1,043  $ 1,134 
Total Non-GAAP Costs and Expenses $ 729  $ 701  $ 781  $ 815  $ 863 
Operating Margin
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
GAAP Operating Margin 19.0  % 31.8  % 32.2  % 29.3  % 28.4  %
Non-GAAP Operating Margin 42.8  % 47.6  % 45.8  % 44.7  % 45.5  %
Net Income Per Share
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
GAAP Net Income Per Share $ 0.59  $ 1.05  $ 1.42  $ 1.23  $ 1.33 
Non-GAAP Net Income Per Share $ 1.65  $ 1.93  $ 1.99  $ 1.96  $ 2.11 
Total DSO
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
DSO
51
55
64
 67 65
Balance Sheet and Cash Review
Free Cash Flow
(In Millions)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Net Cash from Operating Activities $ 378  $ 311  $ 553  $ 356  $ 635 
Capital Expenditures 44  34  41  49  53 
Free Cash Flow $ 334  $ 277  $ 512  $ 307  $ 582 
Cash and Cash Equivalents
(In Millions)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Cash and Cash Equivalents $ 2,823  $ 2,753  $ 3,001  $ 1,407  $ 1,440 
•Approximately 16 percent of our cash and cash equivalents were in the U.S. at quarter-end.
Debt
(In Millions)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Debt (principal value)
 $ 2,500  $ 2,500  $ 2,500  $ 2,925  $ 2,500 
Share Repurchase
(In Millions)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Share Repurchase $ 175  $ 200  $ 200  $ 200  $ 200 
Number of Shares 0.607  0.584  0.613  0.671  0.580 
Employees
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
Headcount 13,152  13,693  13,800  15,110  15,445 

July 27, 2026 Cadence Q2 2026 Financial Results
5
Cadence Design Systems, Inc.
Forward Looking Statements
This CFO Commentary contains 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 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 document are based on management's expectations as of the date of this document 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 GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this CFO Commentary with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance. See our earnings press release issued today for further discussion of our non-GAAP financial measures, as well as the reconciliation provided in the Appendix to this CFO Commentary.

Cadence’s management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company’s core business operations and therefore provides supplemental information to Cadence’s 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’s management, including forecasting and budgeting.

© 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.
July 27, 2026 Cadence Q2 2026 Financial Results
6
Cadence Design Systems, Inc.
APPENDIX I
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses
(In Millions)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
GAAP total costs and expenses $ 1,034  $ 913  $ 977  $ 1,043  $ 1,134 
Reconciling items to non-GAAP total costs and expenses
Stock-based compensation expense (118) (116) (113) (138) (147)
Amortization of acquired intangibles (24) (26) (30) (51) (80)
Acquisition and integration-related costs (26) (37) (49) (41) (33)
Restructuring —  (27) (2) —  — 
Non-qualified deferred compensation (expenses) credits
 (8) (6) (2) 3  (11)
Loss related to contingent liability*
(129) —  —  —  — 
Non-GAAP total costs and expenses**
 $ 729  $ 701  $ 781  $ 815  $ 863 
Table may not foot due to rounding
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
**
 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses
(In Millions) 2021 2022
2023
2024
2025
2026E
GAAP total costs and expenses $ 2,209  $ 2,488  $ 2,839  $ 3,291  $ 3,805  $ 4,501 
Reconciling items to non-GAAP total costs and expenses
Stock-based compensation expense (210) (270) (326) (391) (455) (569)
Amortization of acquired intangibles (67) (60) (62) (90) (105) (289)
Acquisition and integration-related costs (23) (41) (56) (96) (135) (122)
Restructuring 1  —  (11) (24) (29) — 
Non-qualified deferred compensation (expenses) credits (6) 8  (11) (11) (14) (9)
Special charges*
 (27) —  —  (3) (2) — 
Loss related to contingent liability**
 —  —  —  (8) (129) — 
Non-GAAP total costs and expenses***
 $ 1,877  $ 2,125  $ 2,373  $ 2,667  $ 2,935  $ 3,512 
Table may not foot due to rounding
*
2021 includes costs related to a voluntary retirement program.
**
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
***
 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
July 27, 2026 Cadence Q2 2026 Financial Results
7
Cadence Design Systems, Inc.
Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and Non-GAAP Operating Income Adjusted for Stock-based Compensation
(In Millions) 2021 2022
2023
2024
2025
2026E
GAAP operating income $ 779  $ 1,074  $ 1,251  $ 1,351  $ 1,492  $ 1,799 
Reconciling items to non-GAAP operating income
Stock-based compensation expense 210  270  326  391  455  569 
Amortization of acquired intangibles 67  60  62  90  105  289 
Acquisition and integration-related costs 23  41  56  96  135  122 
Restructuring (1) —  11  24  29  — 
Non-qualified deferred compensation expenses (credits)
 6  (8) 11  11  14  9 
Special charges*
 27  —  —  3  2  — 
Loss related to contingent liability**
 —  —  —  8  129  — 
Non-GAAP operating income***
 $ 1,111  $ 1,436  $ 1,717  $ 1,974  $ 2,361  $ 2,788 
Stock-based compensation expense (210) (270) (326) (391) (455) (569)
Non-GAAP operating income adjusted for stock-based compensation***
 $ 901  $ 1,166  $ 1,391  $ 1,583  $ 1,906  $ 2,219 
Table may not foot due to rounding
*
2021 includes costs related to a voluntary retirement program.
**
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
***
 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
July 27, 2026 Cadence Q2 2026 Financial Results
8
Cadence Design Systems, Inc.
Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026
GAAP gross margin as a percent of total revenue 85.6%
86.4%
86.9%
 85.4% 84.9%
Reconciling items to non-GAAP gross margin as a percent of total revenue
Stock-based compensation expense
0.4%
0.3%
0.3%
 0.4%
0.4%
Amortization of acquired intangibles
1.1%
1.2%
1.3%
 2.1% 2.9%
Non-qualified deferred compensation expenses (credits)
 0.0% 0.0% 0.0% 0.0%
0.0%
Acquisition and integration-related costs
0.1%
0.1%
0.0%
 0.1% 0.0%
Non-GAAP gross margin as a percent of total revenue*
87.2%
88.0%
88.5%
 88.0% 88.2%
* The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.



July 27, 2026 Cadence Q2 2026 Financial Results
9
Cadence Design Systems, Inc.
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026 Q3 2026E
GAAP operating margin as a percent of total revenue 19.0%
31.8%
32.2%
 29.3% 28.4% 27.5% - 28.5%
Reconciling items to non-GAAP operating margin as a percent of total revenue
Stock-based compensation expense 9.3%
8.7%
7.9%
 9.4% 9.3%
9%
Amortization of acquired intangibles 1.8%
1.9%
2.1%
 3.4% 5.0%
5%
Acquisition and integration-related costs 2.0%
2.8%
3.4%
 2.8% 2.1%
2%
Restructuring
0.0%
2.0%
0.1%
 0.0%
0.0%
0%
Non-qualified deferred compensation expenses (credits)
 0.6%
0.4%
0.1%
 (0.2)% 0.7% 0%
Loss related to contingent liability*
 10.1%
0.0%
0.0%
0.0%
0.0%
 0%
Non-GAAP operating margin as a percent of total revenue**
 42.8%
47.6%
45.8%
 44.7% 45.5% 43.5% - 44.5%
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
**
 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.



























July 27, 2026 Cadence Q2 2026 Financial Results
10
Cadence Design Systems, Inc.
Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue
2021 2022
2023
2024
2025
2026E
GAAP operating margin as a percent of total revenue 26.1% 30.1% 30.6% 29.1%
28.2%
 27.75% - 28.75%
Reconciling items to non-GAAP operating margin as a percent of total revenue
Stock-based compensation expense
7.0%
7.6%
8.0%
8.4%
8.6%
9%
Amortization of acquired intangibles
2.2%
1.7%
1.5%
2.0%
2.0%
5%
Acquisition and integration-related costs
0.8%
1.1%
1.4%
2.1%
2.5%
2%
Restructuring
0.0%
0.0%
0.3%
0.5%
0.6%
 0%
Non-qualified deferred compensation expenses (credits)
0.2%
(0.2)%
0.2%
0.2%
0.3%
 0%
Special charges*
0.9%
0.0%
0.0%
0.0%
0.0%
 0%
Loss related to contingent liability**
0.0%
0.0%
0.0%
0.2%
2.4%
0%
Non-GAAP operating margin as a percent of total revenue***
37.2%
40.3%
42.0%
42.5%
44.6%
 43.75% - 44.75%
*
2021 includes costs related to a voluntary retirement program.
**
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
***
 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.
July 27, 2026 Cadence Q2 2026 Financial Results
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Cadence Design Systems, Inc.
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
(In Thousands, Except Per Share Data)
Q2 2025
Q3 2025
Q4 2025
 Q1 2026 Q2 2026 Q3 2026E
Diluted net income per share on a GAAP basis $ 0.59  $ 1.05  $ 1.42  $ 1.23  $ 1.33  $1.11 - $1.17
Stock-based compensation expense 0.43  0.42  0.41  0.50  0.53  0.53 
Amortization of acquired intangibles 0.09  0.10  0.11  0.19  0.29  0.29 
Acquisition and integration-related costs 0.09  0.14  0.18  0.15  0.12  0.09 
Restructuring —  0.10  0.01  —  —  — 
Non-qualified deferred compensation expenses (credits)
 0.03  0.02  0.01  (0.01) 0.04  — 
Loss related to contingent liability*
 0.47  —  —  —  —  — 
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
 —  0.07  0.04  (0.01) —  — 
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
 (0.17) 0.03  (0.18) (0.04) (0.30) — 
Income tax effect of non-GAAP adjustments 0.12  —  (0.01) (0.05) 0.10  (0.01)
Diluted net income per share on a non-GAAP basis**
 $ 1.65  $ 1.93  $ 1.99  $ 1.96  $ 2.11  $2.01 - $2.07
Shares used in calculation of diluted net income per share 272,899  273,798  272,932  273,725  276,163 
*
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
**
 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.





July 27, 2026 Cadence Q2 2026 Financial Results
12
Cadence Design Systems, Inc.
Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share
(In Thousands, Except Per Share Data) 2021 2022
2023
2024
2025
2026E
Diluted net income per share on a GAAP basis $ 2.50  $ 3.09  $ 3.82  $ 3.85  $ 4.06  $4.76 - $4.86
Stock-based compensation expense 0.75  0.98  1.19  1.43  1.67  2.06 
Amortization of acquired intangibles 0.24  0.22  0.23  0.33  0.38  1.04 
Acquisition and integration-related costs 0.08  0.15  0.21  0.35  0.49  0.44 
Restructuring —  —  0.04  0.09  0.11  — 
Non-qualified deferred compensation expenses (credits) 0.02  (0.03) 0.04  0.04  0.05  0.03 
Special charges*
 0.10  —  —  0.01  0.01  — 
Loss related to contingent liability**
 —  —  —  0.03  0.47  — 
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
 —  —  —  —  0.11  (0.01)
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
 (0.03) 0.05  (0.17) (0.22) (0.31) (0.34)
Income tax effect of non-GAAP adjustments (0.37) (0.19) (0.21) 0.06  0.10  0.07 
Diluted net income per share on a non-GAAP basis***
 $ 3.29  $ 4.27  $ 5.15  $ 5.97  $ 7.14  $8.05 - $8.15
Shares used in calculation of diluted net income per share 278,858  275,011  272,748  273,833  273,312  275.5 - 277.5M
*
2021 includes costs related to a voluntary retirement program.
**
Related to resolution of previously disclosed legal proceedings with the DOJ and BIS.
***
 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.








July 27, 2026 Cadence Q2 2026 Financial Results
13
Cadence Design Systems, Inc.
Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense
(In Millions)
2024
2025
2026E
GAAP total other income and expense $ 45  $ 30  $(17) - $3
Reconciling items to non-GAAP total income and expense
Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition
 —  29  (3)
Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets
 (61) (83) (95)
Non-GAAP total other income and expense*
 $ (16) $ (24)
$(115) - $(95)
*
 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.


July 27, 2026 Cadence Q2 2026 Financial Results
14