Cadence Design Systems (CDNS) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $1.584 billion, up 24% year-over-year, surpassing guidance, with record backlog of $8.1 billion and strong growth across hardware, software, and IP, including contributions from acquisitions.

• Net income for Q2 2026 was $367.1 million, up 129% year-over-year, and diluted EPS was $1.33, compared to $0.59 in Q2 2025.

• AI-driven solutions and strategic partnerships with Intel, Samsung, and Rapidus fueled broad-based demand and business momentum, prompting a raised full-year outlook.

• All product groups achieved double-digit year-over-year growth, with IP business growing over 40% and recurring revenue accounting for 78% of total revenue.

• The acquisition of Hexagon's design and engineering business expanded the System Design and Analysis portfolio and contributed to revenue growth.

Financial highlights

• Q2 2026 revenue grew 24% year-over-year to $1,584 million, with GAAP operating margin at 28.4% and non-GAAP operating margin at 45.5%.

• Q2 2026 GAAP EPS was $1.33; non-GAAP EPS was $2.11.

• Operating cash flow for Q2 2026 was $635 million; cash and cash equivalents at quarter-end were $1.44 billion.

• Record backlog of $8.1 billion at quarter end.

• Product and maintenance revenue grew 22% year-over-year for Q2 2026; services revenue increased 47%.

Outlook and guidance

• Full-year 2026 revenue guidance raised to $6,260–6,340 million, reflecting 18–20% growth.

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

• Q3 2026 revenue expected at $1,595–1,625 million; non-GAAP EPS $2.01–$2.07.

• Operating cash flow for 2026 projected at ~$2 billion; capital expenditures for FY 2026 expected to be ~$240 million.

• Approximately 50% of free cash flow to be used for share repurchases in 2026.