Cadence Design Systems 8-K
PositiveEarningsGuidance raised
AI-related designs drive Core EDA growth and higher FY2026 guidance; backlog reaches a record $8.2B.
Filed 2026-10-26 16:03 ET
- 2.02 Results of Operations
- 8.01 Other Events
- 9.01 Financial Statements and Exhibits
Summary
Q3 2026 results with higher FY2026 revenue and non-GAAP EPS guidance. Revenue grew 22% Y/Y, with double-digit growth across product categories driven by AI-related designs; Cadence also reported record backlog of $8.2B. The company launched Maestro, a portfolio of AI models for chip and system design, and said AI Super Agents had more than 100 active customer engagements. On 10/23/2026, the board authorized an additional $2.5B for share repurchases.
Key Figures
| Metric | Q3 2026 | 9M 2026 |
|---|---|---|
| Revenue | $1.63B, +22% Y/Y | $4.69B, +22% Y/Y |
| GAAP gross margin | 85.6%, vs 86.4% | — |
| Non-GAAP gross margin | 88.8%, vs 88.0% | — |
| GAAP operating margin | 26.2%, vs 31.8% | — |
| Non-GAAP operating margin | 44.1%, vs 47.6% | — |
| Net income | $290M, +1% Y/Y | $992M, +38% Y/Y |
| GAAP diluted EPS | $1.05, unchanged Y/Y | $3.61, +37% Y/Y |
| Non-GAAP diluted EPS | $2.11, +9% Y/Y | — |
| Operating cash flow | $424M, vs $311M | $1.41B, +20% Y/Y |
| Free cash flow | $362M, +31% Y/Y | — |
- Core EDA revenue grew 20% Y/Y, including 16 new digital and signoff full-flow wins and increased adoption among memory and hyperscaler customers. Semiconductor IP revenue grew 24%, and System Design and Analysis revenue grew 30%.
- Maestro’s initial workflow results were up to 30% higher quality and 5x more token-efficient than general-purpose foundation models, with customer deployments underway. Backlog reached $8.2B, and $4.2B of remaining performance obligations was expected to be recognized over the next 12 months.
- Cadence repurchased $400M of shares in Q3, or 1.305M shares. Quarter-end cash was $1.45B and debt was $2.65B on a principal-value basis. The additional $2.5B authorization has no expiration date and may be modified or terminated.
Against earlier guidance (derived from earlier filings)
| Metric | Period | Earlier guidance | Actual | Result |
|---|---|---|---|---|
| Revenue; Q/Q growth; Y/Y growth | Q3 2026 | $1.595B-$1.625B; 1%-3%; 19%-21% | $1.63B | beat |
| GAAP operating margin | Q3 2026 | 27.5%-28.5% | 26.2% | missed |
| Non-GAAP operating margin | Q3 2026 | 43.5%-44.5% | 44.1% | in line |
| Diluted EPS, GAAP | Q3 2026 | $1.11-$1.17 | $1.05 | missed |
| Diluted EPS, non-GAAP | Q3 2026 | $2.01-$2.07 | $2.11 | beat |
Guidance
| Metric | Period | Guidance | Prior | Direction |
|---|---|---|---|---|
| Revenue | Q4 2026 | $1.695B-$1.725B; 18%-20% Y/Y | — | — |
| GAAP operating margin | Q4 2026 | 30%-31% | — | — |
| Non-GAAP operating margin | Q4 2026 | 44%-45% | — | — |
| GAAP diluted EPS | Q4 2026 | $1.23-$1.29 | — | — |
| Non-GAAP diluted EPS | Q4 2026 | $2.19-$2.25 | — | — |
| Share repurchases | Q4 2026 | ≈$400M | — | — |
| Revenue | FY2026 | $6.387B-$6.417B; 21% Y/Y growth | $6.260B-$6.340B; 18%-20% growth | Raised |
| GAAP operating margin | FY2026 | 28.2%-29.2% | 27.75%-28.75% | Raised |
| Non-GAAP operating margin | FY2026 | 44.2%-45.2% | 43.75%-44.75% | Raised |
| GAAP diluted EPS | FY2026 | $4.84-$4.90; 19%-21% Y/Y growth | $4.76-$4.86; 17%-20% growth | Raised |
| Non-GAAP diluted EPS | FY2026 | $8.37-$8.43; 17%-18% Y/Y growth | $8.05-$8.15; 13%-14% growth | Raised |
| Operating cash flow | FY2026 | ≈$2.0B | ≈$2.0B | Reaffirmed |
| Share repurchases | FY2026 | More than 50% of free cash flow | — | — |
Guidance changes, derived from earlier filings
| Metric | Period | Earlier guidance | Guidance now | Change |
|---|---|---|---|---|
| Revenue | FY2026 | $6.26B-$6.34B; 18%-20% | $6.387B-$6.417B; 21% Y/Y growth | raised |
| GAAP operating margin | FY2026 | 27.75%-28.75% | 28.2%-29.2% | raised |
| Non-GAAP operating margin | FY2026 | 43.75%-44.75% | 44.2%-45.2% | raised |
| GAAP diluted EPS | FY2026 | $4.76-$4.86 | $4.84-$4.90; 19%-21% Y/Y growth | raised |
| Non-GAAP diluted EPS | FY2026 | $8.05-$8.15 | $8.37-$8.43; 17%-18% Y/Y growth | raised |
| Operating cash flow | FY2026 | ≈$2.0B | ≈$2.0B | reaffirmed |
Investor Takeaways
- Watch Q4 revenue against the $1.695B-$1.725B outlook; delivery in that range would support the raised FY2026 revenue outlook.
- Track conversion of the $8.2B backlog, including the $4.2B expected to be recognized in the next 12 months, as a measure of continued demand.
- Watch customer deployments of Maestro and adoption of AI Super Agents, building on the reported initial workflow results and more than 100 active customer engagements.
The summary is written by an AI model reading the filing.
Model 005 · prompt v111 · 2026-10-26 22:33:24Z