Cadence Design Systems (CDNS) Q1 2026 earnings summary

Executive summary

• Achieved one of the strongest Q1 performances in company history, with Q1 2026 revenue of $1.474 billion, up 19% year-over-year, driven by accelerating AI demand and disciplined execution.

• Record $8 billion backlog, reflecting robust customer confidence and strong bookings.

• Raised FY2026 revenue growth outlook to 17% (guidance: $6.125–$6.225 billion) and expect to achieve the Rule of 60 for the first time.

• Launched AgentStack, ViraStack, and InnoStack AI Super Agents, expanding agentic AI offerings and partnerships with Google, Nvidia, and MediaTek.

• Closed Hexagon D&E acquisition for $2.9 billion, expanding system analysis capabilities.

Financial highlights

• Q1 2026 revenue grew 19% year-over-year to $1.474 billion; net income was $335.7 million; GAAP operating margin was 29.3%; non-GAAP operating margin was 44.7%.

• GAAP EPS was $1.23; non-GAAP EPS was $1.96; diluted shares outstanding: ~273.7 million.

• Operating cash flow was $356 million; cash and cash equivalents at $1.41 billion, down from $3.0 billion at year-end due to acquisition payments.

• Product and maintenance revenue rose 21% year-over-year to $1.35 billion; recurring revenue accounted for 77% of total revenue.

• $200 million used for share repurchases in Q1; principal value of debt outstanding: $2.925 billion.

Outlook and guidance

• FY2026 revenue expected between $6.125 billion and $6.225 billion (17% YoY growth at midpoint); GAAP operating margin forecasted at 27.5%-28.5%, non-GAAP at 43.5%-44.5%.

• GAAP EPS guidance: $4.39–$4.49; non-GAAP EPS: $7.85–$7.95.

• Q2 2026 revenue guidance: $1.555–$1.595 billion; GAAP EPS: $1.07–$1.13; non-GAAP EPS: $2.02–$2.08.

• FY2026 operating cash flow expected at $1.875–$1.975 billion; plan to use ~50% of free cash flow for share repurchases.

• Effective tax rate for fiscal 2026 projected at approximately 26%.