CADENCE DESIGN SYSTEMS INC (CDNS) · Material Event (8-K) SEC Filing

EX-99.01 2 cdns07272026ex9901.htm PRESS RELEASE DocumentExhibit 99.01Cadence Reports Second Quarter 2026 Financial ResultsRecord Backlog of $8.1 BillionRaising 2026 Revenue Outlook to 19% YoY GrowthRaising 2026 Non-GAAP EPS to $8.10 and Operating Cash Flow to $2 BillionSAN 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 CommentaryCommentary 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 OutlookFor 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 $8.15The 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 businessAudio Webcast ScheduledAnirudh 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 CadenceCadence 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 ReconciliationNon-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 Relations408-944-7100investor_relations cadence.comCadence Newsroom408-944-7039newsroom cadence.comCadence Design Systems, Inc.Condensed Consolidated Balance SheetsJune 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 StatementsFor 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 FlowsFor 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 MarginAs of July 27, 2026(Unaudited) Three Months EndingSeptember 30, 2026 Year EndingDecember 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 ShareAs of July 27, 2026(Unaudited) Three Months EndingSeptember 30, 2026 Year EndingDecember 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 $8.15 The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc.Impact of Non-GAAP Adjustments on Forward Looking Net IncomeAs of July 27, 2026(Unaudited) Three Months EndingSeptember 30, 2026 Year EndingDecember 31, 2026 ($ 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 DocumentExhibit 99.02 CADENCE REPORTS SECOND QUARTER2026 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 ResultsBacklog (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 roundingRecurring 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 ReviewFree 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 StatementsThis 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 ReconciliationNon-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 11 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