Cadence Design Systems (CDNS) Q3 2026 earnings summary

Executive summary

• Q3 revenue rose 22% YoY to $1.633B; key metrics exceeded guidance and backlog reached a record $8.2B on strong bookings and customer demand.

• FY 2026 revenue growth outlook was raised for the third time to 20%-21%; midpoint growth is 21% and non-GAAP EPS is $8.40.

Financial highlights

• Q3 revenue was $1.633B; Product and Maintenance revenue was $1.487B and Services revenue was $146M.

• GAAP and non-GAAP operating margins were 26.2% and 44.1%; GAAP and non-GAAP EPS were $1.05 and $2.11.

• Q3 operating margin pressure reflected acquisition costs, acquired-intangible amortization, contributions and sales mix; Hexagon D&E expanded System Design and Analysis.

• 9M revenue grew 22% to $4.692B; operating income was $1.310B, net income $992.5M and diluted EPS $3.61.

• Q3 operating cash flow was $424M and free cash flow $362M; 9M operating cash flow rose to $1.414B from $1.175B.

Outlook and guidance

• FY 2026 revenue guidance is $6.387B-$6.417B; GAAP operating margin 28.2%-29.2%, non-GAAP margin 44.2%-45.2%, GAAP EPS $4.84-$4.90 and non-GAAP EPS $8.37-$8.43.

• At FY 2026 outlook midpoints, expected revenue growth is 21%, non-GAAP operating margin 44.7% and non-GAAP EPS $8.40; operating cash flow is projected at ~$2.0B.

• Q4 revenue guidance is $1.695B-$1.725B; GAAP and non-GAAP operating margins are 30%-31% and 44%-45%, with GAAP EPS of $1.23-$1.29 and non-GAAP EPS of $2.19-$2.25.

• More than 50% of FY 2026 free cash flow is expected to go to share repurchases; outlook assumes export-control regulations remain substantially similar through year-end.