Cadence Design Systems (CDNS) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 2026 revenue of $1.584 billion, up 24% year-over-year, driven by strong AI-driven demand, broad-based business momentum, and contributions from recent acquisitions.

• Net income for Q2 2026 was $367.1 million, up 129% year-over-year, with GAAP EPS of $1.33 and non-GAAP EPS of $2.11.

• All product groups delivered double-digit year-over-year growth, with IP business up over 40% and System Design and Analysis revenue up 37%.

• Strategic partnerships expanded with Intel, Samsung, and Rapidus, and the acquisition of Hexagon's D&E business strengthened the ecosystem and contributed to growth.

• Raised full-year 2026 guidance to 19% revenue growth and higher profitability, reflecting accelerating customer adoption of AI solutions.

Financial highlights

• Q2 2026 revenue grew 24% year-over-year to $1,584 million, with product and maintenance revenue at $1.43 billion and services at $153.8 million.

• GAAP operating margin was 28.4%; non-GAAP operating margin reached 45.5%.

• Operating cash flow was $635 million in Q2 and $990.7 million for the first half of 2026; cash balance stood at $1.44 billion with $2.5 billion in debt.

• Record backlog of $8.1 billion at quarter end, with $4.2 billion expected to be recognized in the next 12 months.

• Total revenue for the first six months of 2026 was $3.06 billion, up 21% year-over-year.

Outlook and guidance

• Full-year 2026 revenue guidance raised to $6.26–6.34 billion, reflecting 19% growth.

• Non-GAAP operating margin expected at 43.75–44.75%; GAAP EPS $4.76–$4.86; Non-GAAP EPS $8.05–$8.15.

• FY 2026 operating cash flow projected at ~$2 billion; plan to use ~50% of free cash flow for share repurchases.

• Q3 2026 revenue expected at $1.595–1.625 billion; non-GAAP EPS $2.01–$2.07.

• Fiscal 2026 effective tax rate projected at approximately 26%.